COMPETITION IN SOLID WASTE INDUSTRY ERODING; DISPOSAL FEES RISING

January 24, 2003

JANUARY 15, 2003

CONTACT: FRANCIS ACKERMAN, ASSISTANT ATTORNEY GENERAL
207-626-8800

Competition in Maine's solid waste industry is eroding and disposal fees are rising, according to a report issued this week by the Office of Maine Attorney General Steven Rowe. The report, An Analysis of Competition in Collection and Disposal of Solid Waste in Maine, was co-authored by University of Maine economist Dr. Ralph Townsend and Assistant Attorney General Francis Ackerman.

It makes several key findings about the competitive health of the waste hauling and disposal industry in Maine, and offers legislative recommendations. The Attorney General's analysis should be of particular interest to municipal officials around the State. Waste hauling and disposal is a very significant item in municipal budgets. Among the report's key findings:

€ Significant consolidation in the industry over the past 15 years has raised concerns that competition may be eroding;

€ Maine's ban on new commercial landfills reduces potential competition;

€ Out-of-state competition is insufficient to restrain rising disposal fees; and

€ Competition in the waste hauling sector is hampered by the use of self-renewing, so-called "evergreen" contracts, which are used to "lock up" commercial collection business.

The report proposes several remedial measures to restore competition, and guard against further price increases. Specifically, the Attorney General will submit legislation:

(1)  restricting the use of evergreen contracts;

(2)  expanding the data collection and market monitoring role of the State Planning Office; and

(3)  requiring the State Planning Office to propose corrective action if it appears that declining disposal capacity could generate supracompetitive price increases and windfall profits.

Report co-author AAG Francis Ackerman said, "On the disposal side, careful monitoring will be necessary to ensure against further erosion in competition and further price increases. Evergreen contracts erect a significant barrier to competition among haulers, and merit legislative restrictions."

"Waste disposal companies provide an essential service," said Attorney General Rowe. "Maine businesses and municipalities must have reasonable competitive options for collection and disposal of solid waste."