Go with the flow: a C&D recycler wins a legal battle over franchising in Florida, but the fight over flow control and franchising agreements is far from finished.

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The regulatory landscape of the construction and demolition recycling industry can be treacherous. Whether dealing with local problems obtaining permits for new facilities and expansions of current operations or statewide fights like the New Hampshire ban on the burning of C&D wood as a fuel source, many recyclers of C&D debris have found themselves besieged by legal battles in recent years.

Earlier this year, Southern Waste Systems of Lantana, Fla., found itself in the center of a legal battle over access to material in its region. And while the company emerged as the victor in this particular case, the light against municipal franchise agreements and opening access to material is far from over.

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FIGHTING CITY HALL

Southern Waste Systems (SWS) and the recycling arm of its business, sister company Sun Recycling, faced off against the city of Sunrise, Fla., over the company's access to C&D material in the area. The city of Sunrise has an exclusive franchise agreement with Republic Services of Fort Lauderdale, Fla., and had gone as far as making it a criminal offense for any company besides its contracted waste service provider to pick up debris from construction sites. When such charges were filed against Southern Waste Systems, the company fought back.

"One of our employees was arrested for picking up C&D debris on a facility that was LEED certified," says Phil Medico, the Southern Waste government liaison. "We mounted a challenge."

The company took the issue to court, arguing that C&D debris is not solid waste and therefore, Southern Waste Systems provides a different service than the city's contracted waste handler. In short, the court agreed, says Medico. In late May, a Broward County Circuit Court judge dismissed the criminal charges Sunrise had filed against SWS.

Such franchise agreements are commonplace in Florida, Medico says. Such contracts give exclusive rights to a waste hauler and typically cover the collection of residential and commercial municipal solid waste. Under state law in Florida, Medico says C&D debris is defined as solid waste, meaning the collection of that material is often lumped together under franchise agreements, locking smaller, independent C&D processors and recyclers out of the market.

"Florida is predominantly a franchise state," Medico says. "They have included in these agreements a prohibition for independent haulers that take C&D debris." Southern Waste Systems owns and operates 11 such facilities, where it achieves an 80 percent recycling rate, he adds.

To get around such agreements, independent recyclers must navigate the legal roadblocks to convince city lawmakers that recycling and hauling are not the same service.

MAKING THE CASE

These kinds of agreements are prevalent in Florida, but are not contained to that state alone. Other regions have experienced the same conflict.

"We've seen this happen up in the Pacific Northwest," says William Turley, executive director of the Construction Materials Recycling Association (CMRA). California has also seen its share.

"This happens where tipping fees are very low," says Sanford Pollack, director of legal services for SWS. "Where there's no real demand for [recycling], it's a practical matter--it does get coupled with municipal Waste."

Separating the business of C&D processing and recycling from waste hauling in the minds of legislators is the heart of the issue, says Pollack. "If they want to solve this problem, they need to carve out C&D hauling from the MSW hauling," he says. "As long as they couple it together, you will have what we have today."

The problem, according to Turley, is that through franchise agreements, material ends up in the hands of companies that are unlikely to recycle it. "It has a negative impact on C&D recycling because it diverts [material] to the landfill operator who has far less interest in recycling."

Pollack agrees, and adds that the difference between the two services is evidenced by how companies draw their bottom lines: "Our profit comes from recycling," he says. "Their profit comes from landfilling."

This issue has come to the forefront in recent years, particularly in Florida, because of the massive amount of C&D debris generated in the state by the destruction perpetuated by the onslaught of hurricanes, Medico says. The storms of the last few years have added thousands of cubic yards to the regular amount of debris generated by the construction and demolition markets, and independent companies have found themselves locked out, he says.

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The victory in Sunrise is encouraging, but it is only the first step on a long journey to open markets in franchise states.

FAIR PLAY

Lobbying and court action are two avenues independent companies can take to secure their rights to material in their region. However, Medico points out that these types of protracted legal battles take resources that many smaller companies affected by the agreements simply don't have. "Little guys just don't have the resources to fight it," he says.

Larger scale lobbying by the CMRA has been attempted, says Turley. "There was a movement to get C&D out of the solid waste definition in Florida," he says. "C&D would be exempted like other materials like tires." However, the association was unable to accomplish its lobbying goal. "The cities down there opposed that action," he says. "They are pro-franchise."

The decision in the Sunrise case is among the first where a local court recognized that recyclable material is not part of the waste stream, says Pollack. While encouraging, it is only a small victory, he adds. "It was a hard fought victory," he says. "Most judges don't understand the difference between garbage and C&D."

In addition, legal battles, even when won, aren't always final, according to Pollack. "Any victory you win is short-lived because [the cities] control their legislation," he says.

There are success stories in addition to Sunrise in the franchise state of Florida, including the cities of Boca Raton and West Palm Beach, says Medico. "They have regulated open markets, or just plain open markets, where C&D recyclers are free to pick up," he says. "People are getting the information and educating themselves that C&D has an incredibly high value and recycling rate and that these are products of commerce that are put back in the materials stream that have reuse and recycling value."

Medico sees these successes as reasons to keep fighting, despite the many hurdles to opening markets in states like Florida. He says the company currently has a request before the governor to create a statutory exemption for C&D material. "We're still making efforts," he says. "Our company is committed to do whatever it takes to open these markets."

N.Y. Counties Win Flow Control Ruling

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It is not a reversal of the 1994 Carbone decision, but two New York counties have won a U.S. Supreme Court case that upholds a flow control plan steering some materials to county-owned facilities.

In a 6-3 vote, the court upheld a solid waste plan that was adopted by the two New York counties (Oneida and Herkimer) in part to spur recycling activities.

According to a Bloomberg news service item, the court rejected arguments from hauling companies and solid waste trade groups that the rules violate the Interstate Commerce Clause.

Haulers operating in the two counties will now have to take municipally-collected solid waste to the designated county-owned landfills, which are currently charging more than $70 per ton. Haulers would prefer to have the option of shipping the waste out of state to landfills that charge less than $30 per ton.

The Oneida-Herkimer Solid Waste Management Authority says the intention of its plan is to charge more at the landfill to encourage and promote recycling.

Most commercial recyclers will not be affected in any major way, predicts Scott Home, general counsel of the Institute of Scrap Recycling Industries Inc. (ISRI).

Based on his initial reading of the decision, Home says the ruling seems to apply narrowly to materials collected in city and county programs, and not to materials collected on commercial routes or for transactions across scrap yard scales.

The Oneida-Herkimer case is "distinct from other, earlier cases attempting to address all materials generated within a county or jurisdiction," Horne comments.

"I don't think the court's decision would extend beyond materials that are voluntarily put at the curbside in a municipally-run program," says Horne. The ordinance in this case, "didn't take away the right of individuals to do with the materials as they please," he adds.

Additionally, Home was pleased to see the justices make distinctions between the solid waste and recycling programs. "I think the court continually distinguished between solid waste and recyclables--I think that's important."

The author is associate editor of Construction & Demolition Recycling and can be contacted at [e-mail].