WASHINGTON -- Standard & Poor's Corp. does not expect to change any ratings on solid waste projects financed with bonds following the demise of flow control legislation in Congress over the weekend.
The rating agency reviewed about 65 unenhanced projects, which affect about $4.5 billion of municipal bonds, since last spring on the assumption "that nothing would happen in terms of legislative changes," said Standard & Poor's analyst Malachy Fallon.
"With the exception of Camden [County, N.J., Pollution Control Financing Authority], which is on Creditwatch-negative, we don't foresee anything happening" in the near term to solid waste credits rated by Standard & Poor's, said Fallon, a director overseeing municipal utilities.
"Even if Congress had taken action in a positive fashion, we probably wouldn't have changed any ratings," other than potentially Camden, "because the ones we have looked at, they can withstand ... legislative change" or the Supreme Court's ruling last May that struck down flow control authority, Fallon said.
Standard & Poor's changed only one rating after the ruling, lowering to BBB from A its rating of Lancaster County Solid Waste Management Authority's resource recovery system revenue bonds.
The agency placed Camden County on CreditWatch with negative implications at the same time in June, leaving the authority's BBB-plus rating one step away from a potential downgrade.
The projects reviewed by the agency have turned to other methods to secure revenue or are economic without flow control, Fallon said. The projects can levy types of charges other than tipping fees that are directly related to the amount of tonnage delivered to a disposal facility, he said.
Fallon's comments came a day after Moody's Investors Service said it would review about 100 solid waste ratings affecting $5 billion in unenhanced debt and might downgrade some of the credits.
Flow control refers to the ability of localities to force haulers to deliver locally generated garbage to designated facilities. The Supreme Court struck down this authority in Carbone v. Clarkstown, N.Y., saying it obstructed interstate commerce in violation of the Constitution's commerce clause.
Localities used flow control to force haulers to deliver waste to a facility that charged high tipping fees, even if cheaper alternatives were readily available, to ensure a steady waste supply and associated revenue to pay debt service.
There is a lot of pressure on local governments as a result of the ruling, "but a lot of that risk has been factored into the ratings," Fallon said.
"The real issue is Carbone and what happened there and what our evaluation was subsequent to Carbone, and we've affirmed the great majority of ratings we had out there," Fallon said.
