Legislation submitted in the Senate yesterday to end uncertainty raised by a recent Supreme Court decision on controlling the flow of solid waste will not be enough to solve the problem, the Public Securities Association warned this week.
Sen. Frank Lautenberg, D-N.J., submitted legislation that would preserve flow control programs already in existence for any type of waste, but would forbid the use of flow control for new commercial waste financings. The plan was submitted to the Senate Environment and Public works Committee as an amendment to an interstate waste transportation bill.
The amendment is Lautenberg's attempt to resolve problems created by the Supreme Court's May 16 ruling in C&A Carbone v. Clarkstown, N.Y., which held that under the Constitution's interstate commerce clause local governments cannot dictate the handling of garbage and solid waste.
The decision raised concern about the ability of local governments to continue to use flow control as a tool in solid-waste financings, and has called into question the creditworthiness of issues that rely on the technique.
The PSA, a champion of continued flow control powers for local governments, said this week that Lautenberg's "grandfathering" strategy is inadequate. In addition, members criticized the amendment because it would not allow the use of flow control financing techniques for future commercial waste projects.
"Our position is that local governments should have broad authority to flow-control various streams of waste subject to competitive bidding either currently or in the future," said Michael Decker, PSA's director of policy analysis. "In that respect, Sen. Lautenberg's draft is insufficient."
Micah Green, the PSA's executive vice president, said: "There are municipalities around the country that need time to respond [to Carbone]. Lautenberg's amendment does not fully address prospective issues. Just looking retroactively does not do the trick."
In a letter to Lautenberg dated June 20, the PSA argued that "simply grandfathering existing projects until contracts expire or debt is paid off preclude environmental retrofitting, expansion, and refinancing of such existing projects.
"Grandfathering also denies local governments that have not yet planned or financed recycling, composting or other environmental projects the opportunity to do so," the letter said, adding that the approach would also freeze in place existing environmental technology.
It is generally assumed by those familiar with the issue that some legislation on flow control will eventually be passed because the federal government's jurisdiction on the subject is unclear at present. Recent court cases like Carbone v. Clarkstown have heightened both the anticipation of and need for such legislation, sources say.
In addition to the developments in the Senate, the House Energy and Commerce Committee's subcommittee on transportation and hazardous materials is expected later this month to address the flow control issue in conjunction with its vote on interstate waste transportation.
However, the House is "not on as imminent a time schedule" as the Senate, Decker said.
The PSA, along with other organizations like the Government Finance Officers Association and the National Association of Counties, has been pushing for legislation that would preserve local governments' flow control powers. Localities need such authority to hold down costs and ensure that waste facilities operate at or near capacity, the trade groups say.
"Pending resolution of the flow control issue, over one billion dollars of municipally sponsored solid waste infrastructure projects are now on hold," the PSA said in a press release this week. Furthermore, the PSA and other groups have said a lack of flow control authority will hurt the credit quality of many municipalities.
Marie Pisecki, it vice president at Moody's Investors Service, said "it's too early to tell" what the ratings fallout from the Carbone decision will be, but added that "there is every possibility it could negatively impact municipalities."
However, Standard & Poor's Corp. last month downgraded the Lancaster County, Pa., Solid Waste Management Authority and placed the Camden County, N.J., Pollution Control Financing Authority on negative Creditwatch, citing the Supreme Court ruling.
Martha Canan contributed to this article.
