Waste Not, Want Not: Economic and Legal Challenges of Regulation-Induced Changes in Waste Technology and Management

Beginning in the early 1990s, stricter government regulation to protect public health and the environment led to radical changes in waste technology and management in the United States. More stringent regulation induced wholly new technologies, including the lining of landfills, the control of their gas emissions, and changes in the economic scale and geographic location of operation. Economic integration of waste management transformed “the local dump” into a nationwide and modernized industry. These changes led to unprecedented intervention by local government in attempts to control price, quantity, and location-specific attributes of the $40 billion waste market. Regulatory-induced changes in markets have long been a topic of academic and policy interest, but unique in this case was the emergence of legal challenges—under the dormant commerce clause—concerning public governance and the private sector. This paper reviews the regulation-induced changes in the market, its subnational governmental interventions, and protection of interstate commerce when new technology restructures a local service into a national business.

In times past, municipal waste was typically deposited at a local dump site. In the 1990s, concerns about human health and environmental damage from such sites brought stricter government regulations intended to more effectively manage disposal of garbage and other solid waste. These regulations led to new technologies and management practices to handle huge quantities of waste. They also engendered long-distance, interstate transport of waste to state-of-the-art regional facilities.

Such developments brought new tensions—between cities and states where garbage is transferred; between public and private providers that collect, haul, and dispose of waste; and between competing legal jurisdictions where regulation and technical innovation combine to create a nationwide market from a traditionally local market. At the heart of the matter are legal issues related to the effects of state and local actions on interstate commerce, for which the courts interpreted waste simply as a regular commodity and thus one for which many subnational restrictions violated the U.S. Constitution.

In a new RFF Discussion Paper, "Waste Not, Want Not: Economic and Legal Challenges of Regulation-Induced Changes in Waste Technology and Management," Senior Fellow Molly K. Macauley analyzes the myriad and complex conflicts that have grown over the past two decades around the issue.

"A traditionally provincial local service—the town dump—was transformed into a nationwide industry," Macauley writes. "The new industrial organization sought to balance the transportation costs of long-haul waste shipments with the opportunity to arbitrage differences in disposal fees. The sheer geographic girth of the market—yet the allocation of responsibility for regulatory oversight by state and local government—made conditions ripe for interstate tension."

After an extensive review of recent court decisions, Macauley concludes that market competition and interstate restrictions will continue to be at loggerheads for the foreseeable future.