WASHINGTON -- Congress' failure to let municipalities-control the flow of trash to solid waste facilities will hurt many solid waste revenue bonds, Duff & Phelps Credit Rating Co. said yesterday.
The firm's comment came a week after Congress adjourned without acting on legislation to overturn a Supreme Court ruling last May that struck down flow control. Flow control refers to the ability of localities to force haulers to deliver locally generated waste to designated disposal facilities.
Duff & Phelps is reviewing solid waste credits following Congress' inaction on flow control, and it will focus first on vulnerable New Jersey bond-financed projects that relied on flow control to secure a steady waste supply and associated revenue to pay debt service, said Michael Ross, a Duff & Phelps analyst.
The review is part of Duff & Phelps' effort to expand its electric power utility credit rating activity to include solid waste credits, Ross said. The agency sees the solid waste sector as a growth area that is being propelled by environmental and regulatory concerns and the high volume of garbage being generated, he said.
Congress' inaction "has hastened the arrival of market competitiveness and efficiency to this highly regulated sector," Ross said.
Demand for recycling, waste-to-energy, and composting projects, as well as new landfills that meet new regulatory requirements, means "there's going to be some [bond] issuance out there," he said.
Duff & Phelps believes that many municipalities will be able to enter into contracts with independent haulers without using flow control authority. "But if Congress fails to take legislative action, some technical defaults could occur," the agency said in a statement.
-- Martha M. Canan
