Bill Sheehan (zerowaste@grrn.org)
Mon, 12 Apr 1999 13:41:59 -0400


By Jeff Nesmith, Cox Washington Bureau
Atlanta Journal Constitution, April 11, 1999, A4

While the government presses its charges that Microsoft
Corp. tried to unfairly dominate America's access to
computer software, a rapid consolidation of corporate power
is quietly taking place around a humbler but equally
pervasive part of life: garbage.

As a result, some critics think, your garbage bill inevitably
will go up and the national trend toward recycling will

If a series of announced mega-mergers is approved, the
country will enter the next millennium with two companies
in control of picking up, hauling off, dumping and recycling
more than half its municipal and industrial solid waste.

The two corporations will be Waste Management Inc. of
Houston and the entity created by the merger of Browning-
Ferris Industries, also of Houston, and Allied Waste
Industries of Phoenix.

They will share more than $18 billion in annual revenue for
handling what's left when we get through with newspapers,
coffee grounds, milk jugs and just about everything else.

That's over half the estimated $35 billion Americans pay
every year for garbage collection and disposal. What's left
will be divided among local governments, one other national
garbage collector and several thousand small local and
regional haulers.

The consolidations are being driven primarily by the
companies' efforts to deal with depressed revenues caused by
a national glut of landfills and have been followed by price

Some experts also say the national trend toward recycling
will reverse.

Big solid waste companies lose money every time something
is recycled instead of going into one of their landfills, said
Peter Anderson, a Madison, Wis., solid waste consultant and
recycling promoter.

"The concern I have is that recycling is going to be hitting
some rough times," he said. "An oligopoly in waste will
naturally extend itself over recycling and put the brakes on."

Not everyone thinks consolidation in the business is
necessarily bad for consumers. Large companies may be
more efficient and cost-effective than small, mom-and-pop
garbage haulers.

"Running a landfill has gotten to be a pretty complex
business in a lot of respects," said Winston Porter, president
of the Waste Policy Center and a former assistant
administrator of the Environmental Protection Agency.
"When I was at EPA eight or 10 years ago, there were 6,000
to 8,000 landfills in this country. Today there are 2,900."

Regardless of their size or the size of the company that owns
them, all landfills must meet federal environmental
standards, Porter said.

Consolidation accelerates

Consolidation in the business of hauling and disposing of
municipal and industrial solid waste has been going on for
years. It has accelerated in the past decade, first because of
new federal regulations for waste disposal, and second
because of an unexpected national glut in waste disposal
sites, industry analysts say.

The new regulations went into effect in 1989 and 1990 by
the EPA. They required that landfills be lined with thick
plastic and a layer of compacted clay several feet thick. The
landfills also must have systems of collecting and removing
the water that leaches through buried waste, wells for
monitoring underground water supplies, and systems for
managing gases, principally methane, given off by virtually
every landfill.

With the regulations, the local city dump was replaced by a
"solid waste landfill," a highly engineered system for
managing millions of tons of garbage. As economies of scale
took over, the landfills became very large.

But while city and county governments operate dozens of
megalandfills built or modified to meet the new EPA
standards, most facilities are privately owned. Until this
year, four companies--Waste Management Inc., Browning-
Ferris Industries, USA Waste Inc., and Allied Waste
Industries--owned most of them.

This year, USA Waste, the third-largest company, took over
Waste Management, the largest. And last month, Allied
Waste Industries, until last year the fourth-largest,
announced that it was taking over Browning-Ferris
Industries, the second-largest.

"This is the culmination of many years of activity," said Neil
Seldman, president of the Washington-based Institute for
Local Self-Reliance, a recycling advocacy group. "The large
companies have spent years driving small haulers out of
business or buying them up."

Seldman said that because they now control so many
landfills, the big companies can control the industry by
setting the price for dumping.

EPA officials said that when they issued the 1990 rules, they
expected large regional landfills to replace smaller local

"It would not make good economic sense to build a small
landfill, if you could get together with your neighbor and
build a larger landfill," said Robert Dellinger, director of the
EPA division of municipal and industrial solid waste. "We
projected there would be a reduction of the number of

What was not anticipated by the EPA was that a country
worried in 1990 about "running out of places to put garbage"
would overbuild and suddenly find itself with too many
landfills. As they grew and bought competitors, the handful
of national solid waste haulers were largely responsible for
this development.

Fees start to rise

Anderson said a landfill glut in the past few yearshas
resulted in prices that are depressed by competition. Small
haulers, who typically empty their trucks in downtown
"transfer stations" operated by regional haulers and landfill
operators, could shop for the lowest fees.

But as weaker landfill oper- ators were bought by the
national firms, these fees started rising. After USA Waste
took over Waste Management Inc., it kept the former
company's name. It did not keep its landfill prices. Within
weeks of Justice Department approval of the deal, USA
Waste announced a 40-percent increase at many landfills.

Anderson said that while the Justice Department requires
merging companies to divest themselves of landfills in areas
where mergers would otherwise depress competition, he
believes "price signaling" and other informal means of
avoiding competition will inevitably lead to continuing price
increases. Pressures on the industry will almost demand it,
he said.

Anderson said the industries of hauling and disposing of
garbage should be divided so haulers compete for local and
regional hauling contracts, and landfill operators then
compete for the haulers' business.

"The solid waste industry is about to reach its endgame after
nearly three decades of consolidation," he said. "That is the
point where two or three major integrated firms control the
landfills in many of the major markets."

Meanwhile, the depressed landfill market is only one thorn
in the industry's side. Recycling is another.

Seldman said studies have shown that hauling a piece of
garbage to a landfill is six times as profitable to a waste
disposal company as recycling it, even when the company
collects an extra fee for handling recyclable materials.

"The only way they do recycling is under duress," he said.

According to some estimates, about 27 percent of America's
waste stream is now recycled.

Steve Railel, a spokesman for Waste Management, said the
company will continue to "grow" its recycling operations.

A spokesman for Allied Waste Industries did not respond to
telephone messages.