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A bill to regulate the prices charged by solid waste landfills has been suggested by Michigan state Senate Minority Leader Art Miller (D., Warren). Although not yet recorded and assigned a number at the time of this writing, this proposal is interesting for what it doesn't say.
Sen. Miller claims that landfill operators should be regulated in the same way electric utilities are because "State regulations banning transport of waste between counties gives landfill operators the power to set take-it-or-leave-it prices for local waste haulers. He contends that the Public Service Commission or the Department of Natural Resources should periodically review the prices charged by landfill operators. In addition, he argues that operators should be required to accept waste from any approved haulers, outlawing the alleged practice of refusing to accept waste from competing haulers. [152]
What's the problem? Is the problem too many landfills or too few? If too few, why are there too few? Is it because there aren't enough entrepreneurs willing to build and operate environmentally state-of-the-art landfills or is it because the state has been slow in moving on requests for siting authorization?
Move to expedite the landfill siting process and Sen. Miller's "problem" will take care of itself. Move to encourage counties to expand their "waste sheds" in their solid waste plans so that waste can move across counties and the problem will tend to take care of itself. To his credit, Sen. Miller has offered support for the latter idea.
The idea that a landfill operator will push customers away so as to reserve space for his own waste-hauling vehicles assumes that those who both own landfills and operate waste hauling firms don't know how to calculate their own internal costs so as to identify, at every moment in time, whether they should be in the landfill business or the waste hauling business.
The three major waste management companies currently operating in Michigan – Waste Management, Inc., Laidlaw, and Browning-Ferris Industries – license their landfill operations and their waste hauling operations as separate and distinct corporations. In this way it is possible, at every moment in time, to know how much it costs them to haul waste and how much it costs them to dump waste – even in their own landfills.
These firms charge themselves for dumping waste in their own landfills in the same way that the Chevrolet Division of General Motors Corporation used to charge the Pontiac Division of the same corporation for parts sold across division lines. In that way each unit knew exactly whether it was smarter to buy from the other or from someone else.
If a landfill operator also owns a waste hauling firm, it will welcome all the business it can get, whatever its source. If it is running short of space, it will attempt to acquire new space. Indeed, if anything, space constraints would signal the operator to get out of the waste hauling business so that he could concentrate on selling space to those who would bring in outside revenues. In a word, he would prefer to charge rising fees to non-related firms rather than make non-cash-flow internal bookkeeping charges internally.
Absent some real hard evidence, I am inclined to suggest that Sen. Miller's proposal is based less on fact that it is on anecdote.
Why should Sen. Miller or anyone else be concerned about higher landfill tipping fees? Unless the Senator is prepared to lead the charge for more expeditious siting of new landfills, he should welcome rising tipping fees if for no other reason than the simple fact that rising tipping fees lead to higher garbage collection charges and higher garbage collection charges make recycling and incineration more economically feasible.
Encouraging and subsidizing recycling while at the same time posing legislation demanding that landfill operators not raise their prices when space becomes scarce are contradictory. If we are to have state laws mandating recycling and if the state is going to spend huge sums to subsidize such programs, the best thing that could happen would be to allow markets, not state agencies, to set landfill tipping fees. Higher tipping fees make recycling sensible. Low legislatively-set low tipping fees do not.
While Sen. Miller wants to regulate landfill charges because the lack of landfills, in his opinion, grants landfill operators monopoly pricing power, Senator Doug Carl (R., Mt. Clemens) wants a law which would place a two-year moratorium on licensing new landfills (SB 0716'89). That would certainly grant present landfill operators monopoly power. Perhaps Sen. Carl and Sen. Miller ought to talk to one another every now and then.
SB 478: Introduced by Senator John Cherry (D., Clio), this bill would expand the 1976 "Bottle Deposit Act" to include a 10 cent deposit on all non-carbonated fruit juices and teas.
Maine does this, so why not Michigan? Maybe Michigan should do this. On the other hand, maybe Maine should not have done this. What Maine does is beside the point. Maine also burns 57% of its MSW and landfills only 37%. Michigan doesn't come close in either category. [153]
Despite the fact that Sen. Cherry's bill is supported by the state DNR and the Michigan United Conservation Clubs (MUCC), the first response of food dealers and processors was to oppose this bill. Food dealers and processors argued that requiring the same 10 cent deposit on single-service juice containers as is currently imposed on pop and beer containers would impose additional space and sanitation costs on food stores. Moreover, the industry contended, unlike pop and beer bottles which come from relatively few local distributors, single-service juice products come from all over the country. Whereas the return problem can be managed relatively easily for pop and beer, getting containers back to dozens of widely-spread suppliers would be extremely costly.
These arguments have only made proponents of the bill angry. Richard Jameson of MUCC says that if food stores don't go along, MUCC would "launch a petition drive to put juice returnables on the ballot." [154]
Is this nothing more than a move to get industry involved in recycling? Senator Vern Ehlers (R., Grand Rapids) has implied as much. But what is really the problem? Can cardboard juice containers really be easily recycled? Given that they have been filled with juices, what would be the cost of processing them to make them secondary material for something else? Gerber Products spokesman Richard Jarman says that the bottles used for his company's juices aren't reusable because they are too brittle. [155] In a word, many of these containers aren't technically recyclable.
The DNR notes that the bottle deposit law has kept six million tons of refuse out of landfills. Very well, that brings the issue full circle: the real problem is the lack of an expanding landfill space. The real problem is not the fact that such institutional sites as schools, jails, Head Start programs, hospitals and nursing homes find such single-service containers advantageous and need to be deterred from finding them advantageous. The problem is that we have not followed the lead of states like Texas and Arkansas to expedite the siting of landfills or waste-to-energy incinerators which could effectively accept and safely dispose of single-service containers.
Not surprisingly, many Michigan food chains have jumped on the bandwagon to support an additional tax on consumer goods to fund recycling programs. [156] In that way, they have attempted to deter what they correctly believe to be the far more costly deposit and storage law on single-service juice containers. However, to assume that their support proves the worth of this proposal would be a mistake. Food chains are simply trying to support what they see as the lesser of two evils.
Sen. Ehlers, who chairs a special committee on increasing recycling, welcomes the support of the state's largest grocery chains. Mr. Jameson of MUCC welcomes it also: "A lot of this is self-defense, but it's enlightened self-interest, and it's welcomed as far as the environmental community is concerned." [157] Mr. Jameson is right. It is self-interest – but only in the same sense that it's in one's self interest to jump off a bridge to avoid being run over by a truck.
One of the more interesting claims made for the tax on consumer goods as a way to avoid the deposit law on single-service juice containers is the following claim from MUCC: "Charging customers small fees up front to conserve resources will yield lower costs for consumers in the long run." [158]
But how can charging more for goods now (which is precisely what the tax will do) reduce goods prices in the long run? MUCCs Jameson explains: "If you are going to have some sort of tax, it's also important to provide incentives to businesses that buy recycled products. I think the two need to go together." [159]
The threat of this single-service container deposit bill and the counter-support for a broad tax on all consumer goods is clearly an additional tax on consumers above and beyond the current state sales tax on taxable consumer goods. In addition, it is a new tax on grocery store food purchases which are currently not subject to the sales tax. Consequently, this legislative proposal reduces to being nothing more than a device for creating a system of taxes combined with a system of subsidies and other types of "incentives" to generate outcomes which the forces of the market would not yield on their own – i.e., it's nothing more than a system of indicative central economic planning. Absent market forces compelling the recycling of some goods, the landfilling of some goods, and the incineration of others in a waste-to-energy plant, the goal of this proposal is to collect revenues and disperse them to those uses which fit the plan – a plan which is inconsistent with market forces or it would never need to have been dreamed up in the first place.
Start something like this, and there will never be an end to it. Firms will quickly arise to claim some share of the subsidies. Firms will arise to claim that their product should be exempted from the tax on consumer goods for one reason or the other. Cries will arise from those who represent the poor to argue – correctly, as every student of economics knows but lawmakers too often forget – that taxes on consumables impact the poor far more than the non-poor since the poor spend virtually all their income and the tax would raise prices of ordinary consumer goods. Exemptions for the poor will be sought and, maybe, granted.
Hard cases make bad law.
