John Locke Update / Research Brief

Laying Waste to the Landfill Monopoly

posted on in City & County Government, Economic Growth & Development, Government Reform, Land Use Planning, Local Government
Featured Image

North Carolina House Bill 56 got a lot of press earlier this autumn when the General Assembly overrode the governor’s veto of the legislation.  But most of the discussion was about GenX, an industrial chemical that had been found in the Cape Fear River, and the associated health concerns.

However, tucked away in that legislation were various other environmental provisions, including one concerning landfills.  And that particular provision – related to an activity called flow control – seems to be causing a lot of anxiety for some local governments.

It seems that some local governments are worried about provisions in the law that would make it difficult for them to require trash collected within their particular areas to be taken to their own landfills.  As I understand it, before the law passed, a county could build a landfill and then require all garbage collectors within the county to dump their trash in that landfill.

This was a pretty sweet deal.  All communities generate garbage.  We know that it will be collected either by local governments or by private companies, and it will have to be dumped somewhere.  So, if the local government can require that trash be dumped at the site they own and can charge for the dumping of that garbage, then they have a guaranteed revenue source.

Not only that, but they don’t have any incentive at all to lower costs, explore creative ways to become more efficient, or provide better services to their customers.  After all, those customers are required to use the local government’s landfill.

But HB 56 changes that.  Now, local governments will only be able to maintain this monopoly in limited circumstances – where local governments have taken on debt to build a landfill and are paying debt service on it or where there are contracts in place between haulers and landfills.

Even this is still a pretty sweet deal.  Ordinary businesses can’t require customers to use them until they pay off their building or cover other capital costs.  That said, it introduces competition and an associated unknown where local governments have previously had certainty.

Jeff Linville of The Mount Airy News wrote, “Imagine if businesses could just decide to haul their garbage to another county offering a cheaper rate, (County Manager) Knopf said last month. This could harm the landfill’s operating budget.”

Similarly, Star News Online reported that, after New Hanover County pays off its debt on the local landfill in 2020, “roughly 95 percent of the landfill’s annual revenue of about $15 million – from haulers of residential and commercial waste – is up for grabs….Since private companies also operate landfills, Suleyman said it is conceivable that haulers, including Wilmington and private operators, will see if they can get a better price than at the county landfill.”

I understand why these changes make local governments nervous.  Of course, it’s easier to balance budgets when you can require businesses to purchase a product from you.  If I were an elected official in New Hanover County, I wouldn’t love the idea of having to compete for $15 million in revenue either.

But that $15 million comes from individuals and businesses who, either through their taxes or private fees, pay to have their garbage collected and disposed of.  Garbage hauling companies pass along the fees for dumping in landfills to their customers.  Across the state, that’s hundreds of millions of dollars.

Competition for those dollars will encourage better service.  Maybe counties don’t even need to operate landfills at all.  Introducing competition into this market may be advantageous for cities, counties, residents, and businesses.  And it will create new business opportunities for companies that want to operate landfills but find it difficult to compete with a government monopoly.

This landfill provision may not have been the main focus of HB 56, but it offers positive change to North Carolina businesses and taxpayers.

Julie Tisdale is City and County Policy Analyst at the John Locke Foundation. Before coming to the Locke Foundation, she worked at the Centre for Civil Society in New Delhi, India, where she wrote about various economic and public policy… ...

Donate Today

About John Locke Foundation

We are North Carolina’s Most Trusted and Influential Source of Common Sense. The John Locke Foundation was created in 1990 as an independent, nonprofit think tank that would work “for truth, for freedom, and for the future of North Carolina.” The Foundation is named for John Locke (1632-1704), an English philosopher whose writings inspired Thomas Jefferson and the other Founders.

The John Locke Foundation is a 501(c)(3) research institute and is funded solely from voluntary contributions from individuals, corporations, and charitable foundations.