I W 8r I

~ ciafizing in pollutioncontrol industries for Mabon Securities Carp. "If you look at the states' recycling goals, you'll see noth- ing but 25 percents and 50 percents. You can't tell n e they all came up with the same figures through economic analysis, They're just nice round numbers that sound good."

~ % R ~ ~ ~ ~ Doable, but S ~ ~ l ~ ~

VES GARBAGE IS SVBJECX TO THE. LAWS OF SUPPLY A & i DEXKiD,

Though we're collecting reqchbles at record rates, market E prices €or some recycled materials axe at all-time lows. With more, say, green glass and colored BDPE bottles available than mvsufacturers will buy, the d u e of these discarded materials is dropping far Mow the cost of collecting and processing &em, In its 1392 yearend review of recycling markets, the trade jour. nal Waste A g e concluded, "there were few glimpses of hope as markets remained weak,"

True, commodity prices fluctuate and often vary widely according to region. And for some matexials, it does pay to recy- cle. Used cans are a money maker in every region, net- ting more than $800 a ton in &e South. But glass is inexpensive to produce with silica sand, so recycled glass prices must stay low to compete. Plastics recycling is in its infancy. Beczuse of their bulk and light weight, plastics are a money loser to truck and a mess to sort according to resin type. Processing costs €or newspaper are cheaper than any other discard, but their high recov ery rate has p d y depressed m k e i pdm : some recyclers in the Northeast are giving the stufiaway.

Many experts predict markets will imp-ove. But until they do, you and I foot &e bill for recycling. (UTe may not be aware of it: Garbzge costs are often hidden in prop erty taxes and overall utility bills.) "hat do we pay for recycling services? The answer depends on the specifics of each city's cob !ection contract, processing costs, regional marketsfor recyciables, and a host of etcetm.

On a nationwide basis, a study by the Nztiod Solid %tes Mmagemenr: Asso- ciation, a trade group representing private refuse haulers, found the cost of processing curbside-collected materizfs in a recovery plant b $50 ;i ton, while the average market value is just s 30 a ton. A separate study by W t e Ivfanagment hc.,l the world's largest trash hauler and recycler, added in the costs of collection, and put the total average cost

to recycle at $175 a ton and the average value of recovered mate- rials at a $try $40 a ton.

S d wonder W%te ~g~~~ d&M its survey '%cy c h g in the $os : A Shared ~ ~ ~ ~ ~ ~ ~ ~ t ~ . ' ~ The title implies the company would Ike ~ u ~ ~ c i ~ ~ t i e s tobear more of the cost to recycle. To some degree, they dready do. The shortfall betweea recycling costs and market \due €or recyc1abk.s - ranging &om B 20 to $135 a ton, accordkg to the reports -is n ~ ~ s t l y made up by homeowners arad other customers xvho pay for Vices,

"A shared respc.zlibitiQ-? It's not our responsibility to see thzt K%ste ha m en^ bid the recycling contract right," says Aim Stein of ~ r o ~ ~ ~ ~ ~ F ~ ~ Industries, Wste ~ g ~ ~ ~ ' s major rival. "If they don't think materials can Ix: economically recycled, u7hy are they bd- ding for the contract in &e hrst place?"

Lnlike some of his counterparts at \V!te Man-

PRPVIOTZ~ FAGIS: BFX? Neuby Islnxd, Ca., recycling plant, built to process 1,500 tom of materials a day, takes in just 300 tons.

up fiw slightly better rfian breakem for fiscal 2992, (%%ate Management’s aaargins on recycling are barely above zero -

Browning-Faris has taken a hds-on approach to recy- cling. Mr. Stein, the grandson of a Houston wsstepapes mer- h t , heads a amup dmarketing a p who closely track price trends and buyers in five regions across the C‘S. and Canada. Their xnarhg orders: ansure that mat& aren’t “ddqdidned a”.d’ among tbird-party middlemen More rea&g the man- ufacturer.

kets are bad you tighten yom belt and muddle through. %%en markets are g o d , you can make a damn g o d living at recycling.’’

enough to cover costs.)

“Recychg is a cyclid bwiness,” he says. ”

TOGETHEX, w - m MXVAGEMJXI AND ~ ~ 0 ~ 7 ~ ~ . ~ ~ ~ ~ ALEEADY

provide recycling services to more &an 8 miDon homes. But you might wonder why, given their modest earnings, they even bother with r q & g - especidy whm you comida tbat mme jlandfJIs generate up to 6eperrent gross profit margins, accord,

The garbage companies don’t have mush choice. fvlost new municipal garbageaisposal contxacts uq4uiue recy&g. And with states targeting 3o-percent. of their trsh 8ow for recycling, trash haulers stand to lose 50 percent offheix traditio& revenue base if they don’t recycle.

“For ab--, it’s a no-brainer,” says Gary Petersen, vice president of%te b g e ” t ’ s recy&g &vSon, Recy de America. “EIdon’t get into recy&g, sa percent ofmybusi- ness goes bye-bye.”

Sothebigtrash hto recycling in a big wy- : Each invested hundredso5 dollars in adding s p e d - ized tnrcks For coBecting mater& and bdding fa arate recyclabks from one another (md from ~&bi~h). But late ly, execs at W&e Mmagmmt‘s oalc Brmk, I%mis, headqders are questioning m-hether the assumed comnon+ense reason for recycling - “because it’s wasteli;l to throw things away” -

‘s r q d q mnager,Jane b7&- n high, we’re going to have a

repeat of the ’705, when people just dabbled in recycling.” Counters h4ke Anderson, director of Garbage Reinar-

nation, Inc. of Santa Rosa, Ca., “Some .say that recycling &&‘t work in the ‘70s. But it did - we got public opinion OB ow side. And we’ll do 50 percent recycling in the ’90s whether ”asttl

ing to investment analysts.

Management is invofveca or not.”

Ta6 Mos1: QUEOTIC %CYCLERS CONCEDE 7X.A” M E ? % ARE

terrible, Nevestheless, they quickly add &at we more to avert the dreaded “gaxkge crisis.” They’d that dwindling dump space makes rec@.ng an economic h~ atix because it avoids t h ~ “ ~ g ~ cost of ~ ~ n ~ ~ g .

The mist$ken notion that we're rurmiag out oi lan&ll space pras popularized by &e -Mobvo, a barge that in 3,987 cruised &e high seas in search of this due sive grail: a port to empty its bad of trash from Isiip, Long Island. The ~Wobroi twomonth odysm- was foL lowed bv a spate of newspaper stories miouncin~ EPA * , . . 6 - .. estimates d x t 2,coo ofthe nation's 6,oco d-mps were ¶l

-RBCYCLJXG GURL KBXl CWTLE2

OF P ~ c i m c R m RWYCLLNG

duetbdoseby 1993. So states scrambled to stanch the fbw si trash

into landhlls by passing Hexcdean recycling standards. (In fact, the stated aim of most states' mandates is to conserve landfill space. 'cV%ste reduction a113 ~ecycling ax sin- ply the mearts for a&eving ''1an.m diversion" gods.)

It turns out that the tarndfill crisis might veq- well have been a bad dream. For onc thir?g. a g o d number 01 dumps are always slated for closing at my bistoricd point in time. an^^^

~~~~~s have come on line, and tkrere's an awful Lot cf competi- tion out thae to fill t-hcm,"

"V,M?sve got more capacity today than we did five yeas ago$" says M&te &hagmmt's r e q d h g chief, Jane ~ ~ ~ a i d g e . "Ii we're r.c!;&g because of a lmdhIl crisis, we're recy&s for

a s h sphnas for garbage companies. Because as long as " k i p 4 garbage managers believed there were fewer sites to b t q tx-ash, ~~~ operators had an excuse to raise "tipping fees"

Jmd raise &em they did. From ~$38 to '91, Oyster Bay, N.V., saw its gabage iljsposal contract with %Viste ~~~~~ c h b from si02 a ton to s m. to s 117. Morris Count>.., New jersey, paid ;is much as $131 a ton to

~ ~ ~ ~ p ~ g fees).

have its rubbish ~ h i p p d to F m y l - V2&. f0r &SpOd.

But: pubk works of&cids are getting a break. They're finding that after years of soaring dunrpjng costs that seemed certain to soar ever high-

di conkracts are dropphg. Whm Qpttlr Bay ~ o p ~ a t i o n

joo,ooc) put i ts q y x disposal con, tPact out to bid, ~ r o ~ ~ ~ ~ ~ s said it could profitably take &e city's trash for $77 a ton. This past Mach, &e city contracted with a local frm, Tul-

er rate - s 65 a ton. Surprised of%& are reaping the 'txa&ts of increased competition far disposal contracts - &e surest sign yet &at the industry has a surplus of landfill capacity,

"If you told me in ig8S that prices v-ould have gone down the way they have, I'd never have be+

pxkxtmdmt of environmentd con. tro1 for Oyster Bay. "A lot of private

er, &e priciles on new garbagee-dispos-

17 construction co,, fox an evexl low,

lievcld yoil," Sa>-s Eric SPrensan, su-

i

OST SOLB’YW&X% 3?LAX%RS REGARD BECYCL.4 B L E .AS ANOTB

er form ofgarbgeq a p t ofthe “ ~ v a t e s t m m ” teak “m- aged,” Veteran recycling h have tzaditiody opemt-

ed outside this framework, collectirzg reqcbbles and &g tbem on a cmnmodities market, But rates-and-jates mandates do not makesuch distinctions. The result: Thefve got comer& r c y ding companies and f k “ e 8 trash haulers duking it out for recyclables. The opening round is being fought in California.

‘‘BET has the mdus<ve h& for &e collccgon of gabage and recy&lde mat& from aU residentlat and commercial prop erties.” So reads a December 9. r ~ p missive from Browning. Ferris attorneys to the Independent Recyclers’ Asxiation, a statewide group of compnies that coaect and process reqchbks. In &e now notorious letter, Browrhg-Ferris warns it “will not tolerate incussions” by other recycling companies into 12 Bat? Area comunities.

“The l e ~ ~ ~ ~ c ~ y says ’Get out of town, we’ve got ex&,, sive risks to recycling services,”’ says Keii Cutler, p ~ o g ~ a ~ man- ager for Pa&c Rim Recycling, baed in Benicia.

Until recently, recycling accounted for just 10 percent of Wornia’s -waste stream. It was a niche of little concern to the Golden State’s r&e kdm. gut the state‘s recychg law, require ing cities and counties to cut their waste stream in half’ by the year 2000, meam trash-ollechon companies and recycling firms

d dogs for &E soljd ~vaste h t ‘ s n3 longer battle is bercest for vduable comodi tk

- computer and white ledger paper> aluminum casls - from bushesses and restaurants.

”Trash disposal is a $3 to s 5 biillioo a year inadustry irz Cdifomia,” says Gap L i s , executive director of the Caiifornia Resource Recovexg Assocbtion, a kadr g~oup represenkg recycling 6m. “W-& 50 percent of the industry changing f;om disposal to r e q c h g , you’ve got a battle of &e t i t w o’6%lr tvha a y s in business.”

California’s cities are aught in the middle. %a city &nat a&eved the reduce- and-recycle god by the year 2003, it may face hes of xo,ooo a day.

““Cities are panicking,“ says Pat -Wller, a uuu member. +‘And haulers are saying, ‘We’ll get you to the state’s goal, and in return, we want an exdusiw c o ~ - tract to collect d garbage and recyckbles.“*

In many cases, the city obliges, often ;?FCrdx&g a ~ h , c o ~ ~ c ~ g h& with-

out conipetitive bidding, The practice of requiring hy city i;iw

that all garbage go to one h d e r is known as “Bow controj,” Such a monqoly assures a &ash compny it can recycle 52. perccent of tfie city’s waste stream and s& wake a profit - or at least break even. From the city‘s standpoint, an exclusive Franchise makes it easier to track recycling rates md most importantly, transfers &e So-percent recycling burdm from the city to the bzuler.

But typically, there‘s a problem : Independent recycling &m axe already collecting discarded materiais from the city’s bwinesses and other comniercial customers. In cities throu,.h- out California, garbage companies are attempting to use their franchise agreements to grab €or the comexcid recyclers’ t ~ u d

“What i.t means i s a business’s right to contract with d~omever it chooses willbc taken away, and it will be forced to deal only with i t s francksed garbage hader, says Mike Ander- son, director o!‘Garbzge Reincar~atlon, Inc., a nonprofit compa- ny baed in Santa Rosa. ”“vhat it means to the state’s recycling industries is we will be unable to prcvide recycling serv~ces in a freemarkel: system.”

maandator y recycling targets, the same scenario will be played out all acxoss the nation, with cities fsrccd to make a choice

“The tvhole problem s t e m from. the fact that: you’ve got recycling mandates thzt have little to & with the economics of recydirig~’;,” says Mari Uari. ”‘Ti :neet those levels, cities dnost kavz to create monopolies,”

Industry anxlysts predict that with. other

between flolw control and freemz:‘ker: competition.

percent recyclinggoal? Independent recyding c o m ~ counter that campeti-

tion €or commercial accounts keeps a b prrce~ low; and a free market brings in niche c comodi t ies~ewdwasteor array of recycling services.

f;anhise garbage haulers

kc.), to collect commercial recycMAs. NO other companY was allowed to bid for the contract - a practice that’s not uncom- mon. But there was at least one c cling Center, which w~ dings collecting bottles and

RanchcMirzgeandWe~gernentsuedPalmSprings Recycling, claiming it had viohted the city’s exclusive agree ment. Paim Springs counter-sued, stating the city had granted W u;rlawful XnQX’lQpOb which wodd force it to go Out Of business. The trial court sided with the city.

BUL this past September, a CaMornia Court of Appeals overturned the lower court*s nJmg. The appellate court’s ded- sio;? hinged on the critical distjnctionbetweea recyclable wastes (which are free-market commodities) and solid wastes (which pose a he& h d and therefore must be r

&isicafly,themurtdecidedsolidwasteissu€.yxttoregu- lationby acity; but recydables are not solid waste Wnkss they

Therefore, recyclabks are outside the city’s WhileRanchoMfragecouldawardafranchise

e collection, the city’s househaMs and busc (or “donate”) their wy&leS to wfiomwer

k g e a n d WeMmagaentare+gthe theCklihmiastateSuV -Mean*

the Womb Legislature is attempting to resolve the-flowan- tcol issueby answering these fundamental questions: What is garbage? What are +hs?

Only by drawing a distinction between the mashed mess we call. garbage and the discarded materials that have value as commodities can weanswerthemostd ~~~~~

questim of all: Uihcr gets wadi to collect them? xot sur- - pri.jingly, many recycling ~ X P ~ K ~ S contend the best

%

ta I are we going to go down the path of a monopoly situation, or are we going to have an open, competitive marketplace for recycling services.”

~~~~~~~~

opc$vmus-&ee-mket conundrm ’~l/’as San Jose. In 1972% Browning-Ferris 2c- quired two local companies that were cole lecting San Jose’s trash. The Houston- ~ c ~ ~ y ~ ~ y o ~ ~ Jose‘s sole dump, the Kmby Island Lan th of the city. In effect, BrowningFerris had an exclusi on Sass lese’s trash cof- lection and disposal, which gave it. tremendous levexage ia negQ tiating the city’s pbage rates.

San Jose’s predicament was net ur&e m y other cities, where one hauler legally monopolizes the city’s h.ask But it txou- bled the city‘s solid+aste phnners,

“We didn’t have &e foggiest idea of how much garbage we were generating,*’ recalls Michelle Yesney, fermer director of %Jose‘s D e p e n t of Environmental Managenre~lt. ““The garbage c a m p y billed the city, and we had no way ofknowbg whether their bill@ was accurate.”

“Garbage rates are usually decidedby, say, sM the city go &om s 10 a household a month to , s ix , so it’s perceived by elect- .,’“ ed o&& as a $1 decision,” says Gary Liss, formexly the city’s . solid waste manager. “Wet had to get the City Gmd to look at the total cost of the rate decision over the entire life of the con, tract so they could understand what‘s really at stake. Because you better Mm &e gxbage coxnpanies do.”

In q80, San Jose attenpted to reduce its && costs by solidting bids €rum other companies for its garbage cofitract. But no other company responded. Hard>? surpkhg, since Rrown* ingFerzis controlled the city’s only hw, The following yezr Browning+Fenis, citing rising o?er&ing expenditures, slapped &e city with an Sg percent rate-increase request..

L d newspapas ran with the story. Residents howled. Eiected &cials suddenly began to pay attention to garbzge casts.s.

SanJose set abut getkg control o b d e s t waste des tiny by creating a truly competitive lection and recycling. First step : it &te h g e m e n t , to build 2 l;indfill( would compete with the Browning advocating the project befnre regularory agencies, the l ad i l l was permitted in three years -just in time €or a new round of bidding on the disposzr contract.

Arid the winning offer was from .,. B r ~ ~ ~ g ~ ~ E ~ s ! It was a jzw-dropper: : B~oPining’-Feklis lowered its price by fully one-third, &om s 12 to s 8 a ton. That’s 2 $47 d o n savings cal- culzted over the 3 ~ y e a r life o€ the disposal contract. (The fee increases with regulatory cats and inflation; cwmtly, Sara Jose pays s 28 a ton : other cities pay the $50 to $ 55 range to dump atthesamelanm.)

Thesvjngsenabled the city to reduce househdd garbage

pERK4ps MB FIRST CITY 10 T-4CX.U TXE MOG

.Q

tees, jumpstart a recy-

mately protide unlimit-

services, Kext step: San Jose fueled co~~,peti t io~~ for its collection program by clit.ldjslg &e city into three distxicts, and wkc- iting contract proposals

that more than one com-

ding program, and d&

edrecydkgand

for e& Tt-Lis op3aEritm

pasly will bid. B e g m g inJdy,

San JOSC begins a new co&ction contract with \Vestern Waste Xndus-

tries, a mid--sized collection company, and the Greenyeam, acon- sortlum of local collection 2nd recycling hms. In an anmgement khat is apparently unlike any other in the country, the compa- nies arkpaid s 6 a housebold a munth. Which issn‘t enough LO cov- er && costs.

To break even, or make a profit, the compaaries must sell of &e recyclables hey cohct to m ~ ~ ~ a c ~ ~ e r s . Sari Jose pays

Westem Wiste and the GraTeam an average of $147 for every ton of material hey recycle - that me= shipped for beneficial reuse. So it‘s in &e companies‘ interest to recycle as nuch mate- rid as pasible,

SAX jOSS’S RECYCLIXG LUMIIUARES SAY TE7.E POTENTlAL IS TKERE: TO recycle up to 80 percent of &e waste stream. C2lifom.h &e-’ ? Time will tell. But already, San Jose has sMed the entire Eecus of its collection program from trash to recycling.

”San Jose is putting the hauler’s goals in line with their vm recycling go&,” observes Marl Bari. ’6Tkey‘re betting that ifit’s econodcal to recyde a material, contractors will bid on it.

Everything from juice boxes, polystyrene, hub caps, and l a m furniture to junk mail, used motor 0% phone books, and fabric scraps are slated for recy3ng in San Jose, Also included, of course, =;.e the old rehbles : glass, aluminum, pzpe~~ plastics, and yard trimmings.

‘‘Open competition for recycling and disposd services dy means you’re going to get bettu prjces,” says

ney.. *‘And not only better prices -better prod u g r m . San rose may very well have the most comprehensive

cling program in the country And it’s entirely the result o€

Take ofI‘ the rose-colored glasses and you’ll see the down- side: Currently, it’s far cheaper for &e city to %an&ll i s 28 a ton) k It is to recycle ($247 a ton). Over &e short m, sidize recycling, But the city‘s solid-w~te pla

e compt&ive process.”

, recycling wiU pay kcame markets will

‘re sure of: If recycling is going k 0 g O W , it’s gohg haw to grow Smart.