Amicus Curiae Brief — C & a Carbone, Inc. v. Clarkstown

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AUG 2 5 1993

IN THE OFFICE OF mie eiEeK

SUPREME COURT OF THE UNITED

, e

No. 92-1402 ~

October Term, 1993

C & A CARBONE, INC.,

RECYCLING PRODUCTS OF ROCKLAND, INC.,

C & C REALTY, INC., and ANGELO CARBONE,

Petitioners,

oD.

TOWN OF CLARKSTOWN,

Co AM, Se SS te Operate, ~

Respondent.

ON WRIT OF CERTIORARI TO THE

SUPREME COURT, APPELLATE DIVISION,

SECOND DEPARTMENT, OF THE

STATE OF NEW YORK

BRIEF OF AMICUS CURIAE

NATIONAL ASSOCIATION OF BOND

LAWYERS IN SUPPORT OF RESPONDENT

C. Baird Brown

Counsel of Record

Robert B. McKinstry, Jr.

Brendan K. Collins

BALLARD SPAHR ANDREWS

& INGERSOLL

1735 Market Street, 51st Floor

Philadelphia, PA 19103-7599

(215) 665-8500

Counsel for Amicus Curiae

BEST AVAILABLE COPY:

TABLE OF CONTENTS

Page

DE ie sksindsesicecsdiediaditesevisieets iii

I. THE INTEREST OF THE NATIONAL ASSOCIA-

TION OF BOND LAWYERS .................... 1

II. SUMMARY OF ARGUMENT .................... 2

III. STATEMENT OF THE CASE.................... 3

RF Gal cole se vieds ccesccavesen 3

B. The Eccromic Forces Underlying the Creation of

the Waste Disposal Services Market ............ 5

C. The History of Waste Collection and Disposal

POPU viéciccupetise cescvcs txccdeséesdueceus 7

D. Institutional Means to Provide and To Finance

Waste Disposal Services. .................245- ll

E. Related Municipal Services ................... 16

SV. GEE CabundsSbaneeebecenscedadssscdsiws 17

A. Congress Has Authorized State And Local Govern-

ments To Impose Waste Flow Controls, Which

Are Therefore Not Prohibited By The Dormant

CD on 5bcecseudddesieesbasa’ 17

B. Waste Flow Control Legislation Should Be Upheld

Under The Pike Balancing Test................ 23

1. Principles of Federalism Favor Upholding State

Authority to Impose Waste Flow Control... .. 23

2. Waste Flow Control Legislation Serves Strong

Local Interests Which Outweigh Its Effect on

SE 5 os c6ndeokosnutus een ts cunennees 24

FV. GPCR 60 0600000606000806000500680000004 30

APPENDIX

Excerpts From Act of February 18, 1769, 1 Laws of the

Commonwealth of Pennsylvania 284, 287, 297....... A-l

Excerpts From Official Statement, $325,985,000 Northeast

Maryland Waste Disposal Authority Solid Waste Rev-

enue Bonds (Montgomery County Resource Recovery

Project) Series 1993A (March 31, 1993)............. A-4

Excerpts From Official Statement, $135,600,000 Lancaster

County Solid Waste Management Authority Resource

Recovery System Revenue Bonds, Series A of 1988 . A-30

Excerpts From Lancaster County, Pennsylvania, Solid

Waste Management Plan, 1986...............45:. A-52

TABLE OF AUTHORITIES

Cases: Page

A.A. Mastrangelo, Inc. v. Commissioner, Dep't of Envtl.

Prot., 449 A.2d 516 (N.J. 1982)..............e000. 21

Asson v. City of Burley, 670 P.2d 839 (Idaho 1983), cert.

denied sub nom. Chemical Bank v. Asson, 469 U.S.

DT Uie i aide eine dendeccasheedesentesees 12

Chemical Bank v. Washington Public Power Supply Sys-

tem, 666 P.2d 329 (Wash. 1983) .................. 12

Clarkstown v. C & A Carbone, 587 N.Y.S.2d 681 (N.Y.

App. Div.), app. denied, 605 N.E.2d 874 (N.Y. 1992),

cert. granted, 113 S. Ct. 2411 (1993).............. 29

DeFazio v. Washington Public Power Supply System, 679

ny oe ll

Fort Gratiot Sanitary Landfill, Inc. v. Michigan Depart-

ment of Natural Resources, 112 S. Ct. 2019 (1992) 25

Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1 (1824).... 17, 23, 24

Hughes v. Alexandria Scrap Corp., 426 U.S. 794

i hed a cee euccdcaghadseeetesstees 24, 29

Hunt v. Washington State Apple Advertising Commission,

EE ne ee 27

In re Southeast Arkansas Landfill, 981 F.2d 372 (8th Cir.

tt iti nineeeke Kebeuedeseedeseueseesdéecoecs 19

J. Filiberto Sanitation, Inc. v. New Jersey Department of

Environmental Protection, 857 F.2d 913 (3d Cir. 1988) 27

Maine v. Taylor, 477 U.S. 133 (1986)................:. 27

Merrion v. Jicarilla Apache Tribe, 455 U.S. 130 (1982) .. 17

Philadelphia v. New Jersey, 437 U.S. 617 (1977) ........ 25

Pike v. Bruce Church, Inc., 397 U.S. 137

UU OCEs Chedeeeoeseceeéods 3, 24, 25, 26, 27, 29, 30

TABLE OF AUTHORITIES — (Continued)

Cases: Page

Reeves, Inc. v. Stake, 447 U.S. 429 (1979) ............. 24

South-Central Timber Development, Inc. v. Wunnicke,

Ge Ca aah ontssececaécoccoesceseses 17, 18

United Building and Construction Trades Council v. Cam-

Gi, GE es ED ce nceseccccencseocescee: 24

Vermont Dept. of Public Service v. Massachusetts Mun.

Wholesale Electric Cooperative, 558 A.2d 215 (Vt.

1988), cert. denied, 493 U.S. 872 (1989) ........... 12

Waste Systems Corp. v. County of Martin, 985 F.2d 1381

PGs dnd canddeecckaesoonsendese cecoe

White v. Massachusetts Council of Construction Employ-

GO, Biting GED Dee BO GREED occ cccccccccccecccce 24

Constitutions & Statutes:

nn cccccccccccedéncens 2, passim

Ec nccccounseuesseeeueseueset 1

nso cvcccccccssteseessesnens 1

er es ci cccccucscseaddéuanecet 1

26 U.S.C. §§ 141(e)(1(A) (1988) ................220ee 1

ey in on ccnscecseenseessouses l

ee i vc nccnccdckeveseceoeses 14, 16

SB U.S.C. GB BERBER CIRBED.. 2 cc ccccccccccccscccces 16

BP le Oe anduldncedccceédccccessccgeceses 16

48 U.S.C. $6 GOO1-GOGEE (1GGB) .. ccc cccccccccccces 2

SB Dias Be SE vo ccccccccccccecesccesees 9

Be Bec cccccsccccedsccscosccce 9

Sp ee ao cbcosecesscedesesseesousees 22

Sp ees ED Se ccctcoséccencnceccesesoosd 9, 21

TABLE OF AUTHORITIES — (Continued)

Constitutions & Statutes: Page

gs sc cn cecccousdcescescessace 9

ee Ss oc cccccedéccecocecescess i)

ns oc vocvcvccceccccesess 18, 20

es vc cccceccéccdecceeseces 12, 18

ivccnccccctccécccccccéscocce 18

nn. cciccnccddéestedbscoucece 18

as co co ccccccesvcescoccoccecs 15

ee i ttdkobaccccsoccecoceseeceséeceoeesce 9

PR re 10

48 U.S.C. $5 TEBR-TOT le (1GBB) ... 0. wc ccccccccccccccces 9

Pub. L. No. 98-616, § 302(a)(1), 98 Stat. 3267 (1984) .... 10

Pub. L. No. 96-482, § 32(b)(3), 94 Stat. 2355 (1980) ..... 21

Ariz. Rev. Stat. Ann. § 9-511] (1990)................... 13

Ariz. Rev. Stat. Ann. § 9-516 (1990)................... 13

Conn. Gen. Stat. § 7-339a (1992) ..................... 12

Del. Code Ann. tit. 7, § 6403 (1991) .................. 21

Del. Code Ann. tit. 7, § 6404 (1991) .................. 21

Del. Code Ann. tit. 7, § 6406(a)(31) (1991) ............. 21

Ind. Code Ann. § 36-9-31-4(a) (Burns 1993) ............ 12

N.J. Stat. Ann. § 40:56-52 (West 1992) ................ 16

N.J. Stat. Ann. §§ 40A:26A-10 to -14 (West 1993) ....... 16

N.J. Stat. Ann. § 48:13A-5 (West Supp. 1993) .......... 13

N.Y. Envtl. Conserv. Law § 27-0105 (McKinney Supp.

SEED 46606006660 06060600b4bCeddSeneRdeseanséaues 9

TABLE OF AUTHORITIES — (Continued)

Constitutions & Statutes: Page

N.Y. Envtl. Conserv. Law § 27-0107 (McKinney Supp.

PD 606 vackGesddescénénnsadinéuasanniosesesss 3, 12

N.Y. Local Fin. Law § 135-3-a, -b (McKinney 1968)..... ll

N.Y. Town Law §§ 198(9) (McKinney 1984) ............ 4

N.Y. Town Law §§ 198(1)(g)-(k) (McKinney 1968) ....... 16

N.Y. Town Law § 201 (McKinney 1968) ............... 16

N.Y. Town Law § 202 (McKinney 1968) ............... 16

N.Y. Town Law § 202-a (McKinney 1968).............. 16

N.Y. Town Law § 221(1) (McKinney 1984) ............. 4

1991 N.Y. Laws ch. 369, § 1, ch. 540, § 1, ch. 569, § 1, &

Ps UY nehncdivdedeendueecovescenectcesccss 12

Se Bes Is GN OO hndcicdecoccccesceccces 12, 26

Pa. Stat. Ann. tit. 53, § 306(B)(j) (Purdon 1974)......... ll

Pa. Stat. Ann. tit. 53, § 4000.303(e) (Purdon Supp. 1993) 12

Pa. Stat. Ann. tit. 53, § 4000.304(c) (Purdon Supp. 1993) 12

Pa. Stat. Ann. tit. 53, § 23308.1 (Purdon Supp. 1993)... . iu

Pa. Stat. Ann. tit. 53, § 36901(b) (Purdon Supp. 1993)... 11

Pa. Stat. Ann. tit. 53, §§ 47043-47064 (Purdon 1966) .... 16

Pa. Stat. Ann. tit. 53, § 53202(a) (Purdon Supp. 1993)... 11

Pa. Stat. Ann. tit. 53, § 56802(a) (Purdon Supp. 1993)... 11

Pa. Stat. Ann. tit. 53, § 65802 (Purdon Supp. 1993) ..... ll

Act. of Feb. 18, 1769, ch. DXCIV, 1 Laws of Pa. 284... 7

Act of August 10, 1764, reprinted in South Carolina

es Ss ED Ee chee cacincccecéccesésecce 7

ee Ss GS OF OD esicceccocesccosccccess 21

TABLE OF AUTHORITIES — (Continued)

Constitutions & Statutes: Page

Town of Clarkstown, N.Y., 1990 Local Laws, No. 9,

DE Gebabccvbeccesdesssosecuscees 4, passim

Administrative Materials

ne 10

oo ccucccvcccecautessesssess 10

56 Fed. Reg. 50978 (Oct. 9, 1991) ...............00e0e 10

58 Fed. Reg. 40568 (July 28, 1993).................... 10

N.J. Admin. Code tit. 7, ch. 26, subch. 2A (1993)....... 10

i I ccncccccséccosccccepessces 10

Miscellaneous Materials:

H.R. Rep. No. 1491, 94th Cong., 2d Sess., pt. I (1976),

reprinted in 1976 U.S.C.C.A.N. 6238......... 9, 19, 20

C. Baird Brown & Charles S$. Henck, Structuring Munic-

ipal Solid Waste Financing in Municipal Solid Waste

Disposal Strategies, Environmental Regulation, and

Contracts and Financing (American Law Institute —

American Bar Association 1992)................... 13

The Bond Buyer, Feb. 1, 1993, at 8A, col. 1 ........... 2

The Bond Buyer, July 26, 1993, at 10A, col. 1.......... 2

Diane Buxbaum & Daniel Baumol, Service Arrangements

for Conventional Disposal, in Evaluating the Organi-

zation of Service Delivery: Solid Waste Collection and

Disposal (E.S. Savas and Barbara J. Stevens eds.,

gp Ee ee 5, 8

Franklin R. Edwards and Barbara J. Stevens, Local Gov-

By Private Firms, in Savas & Stevens ............. 6

Maud W. Goodwin, Dutch and English on the Hudson

De iacakhsacsbeseuunsestonceeeovesetonsevess 7

TABLE OF AUTHORITIES — (Continued)

Miscellaneous Materials:

Ernest S. Griffith, History of American City Government,

the Colonial Period (1938) (Da Capo Press 1972) ....

William W. Locke and Joseph B. Taylor, Reports of I.

Garbage Disposal in the Outlying Wards, II. History

of the Garbage Contract, III. Refuse Disposal Cities

(1896) (available from Univ. of Chicago Library, Pres-

ervation Dept., Negative No. N6958)..............

Stephen M. Lounsberry, The Scope and Basis of the Local

Finance Law, N.Y. Local Fin. Law at VII (McKinney

SEED dnucksbueddcdusscedcevadcteusnssaueetesee

Gs SE Hin oes ennnncdscnccduccdbedbdedcestes

Martin V. Melosi, “Out of Sight, Out of Mind” The

Environment and Disposal of Municipal Refuse, 1860-

1920, 35 Historian 621 (1973)................000--

Martin V. Melosi, Pollution and Reform in American

Se I oi ede ciccd dk neccnes

Robert B. McKinstry, Jr., Winifred M. Prendergast and

Thomas F. Doyle, Recycling and Waste. Reduction:

The Other Half of Municipal Waste Management, in

Municipal Solid Waste Disposal Strategies, Environ-

mental Regulation, and Contracts and Financing

(American Law Institute-American Bar Association

Py Scbbnecdecdacuanedeaenandddbewiadsdadwases

Christopher Niemczewski, The History of Solid Waste

Management, in Savas & Stevens .................

E. S. Savas, The Organization of Solid Waste Collection:

Findings, in Savas & Stevens.............-00000:-

U.S.E.P.A., The Solid Waste Dilemma: An Agenda for

Action, Background Document (1988) .............

Page

I. THE INTEREST OF THE NATIONAL ASSOCIATION

OF BOND LAWYERS-

The National Association of Bond Lawyers (“NABL”) is an

organization of lawyers whose practices involve the issuance of

debt obligations by state, local and regional governmental

entities. NABL’s members frequently serve as bond counsel in

municipal finance transactions, providing opinions to purchasers

of bends for the benefit of issuing states and political subdivi-

sions that bonds are properly issued and that other governmen-

tal actions in connection with a financing are properly authorized

and enforceable. NABL’s principal functions include the provi-

sion of educational programs and activities to clarify and to

strengthen the legal basis for municipal finance.

Under federal tax law, solid waste disposal facilities are

eligible for tax-exempt financing.'! Local jurisdictions may

choose to own and to operate their own facilities or to contract

for the construction and operation of facilities by private parties.

In either case, both publicly and privately owned facilities are

typically financed through the issuance of tax-exempt bonds. In

connection with the development and financing of such facilities

local jurisdictions frequently enact waste flow control legislation

similar to that enacted by Clarkstown, New York, which is the

subject of this case. This type of legislation requires waste

collectors to deliver waste from the local jurisdiction to the

facility that the jurisdiction owns or has contracted with to

provide services to its citizens. Waste flow control legislation is

the mechanism through which the local jurisdiction procures

disposal services.

Similar patterns of legislation are common in connection

with the development and financing of water systems and

sewage treatment systems. Such legislation provides the flow of

1. Gross income generally excludes interest on any state or local bond. 26

U.S.C. § 103(a) (1988). This exclusion does not apply to any bond that is a

“private activity bond” (as defined in 26 U.S.C. § 141(a) (1988)) which is not a

“qualified bond.” 26 U.S.C. § 103(b) (1988). The term “qualified bond”

includes any “exempt facility bond,” which includes any bond whose proceeds

are used to provide solid waste disposal facilities. 26 U.S.C. §§ 141(e)(1XA),

142(a)(6) (1988).

revenues necessary to secure payment of debt service for bonds

issued to finance solid waste, water and sewage facilities. This

litigation calls into question the enforceability of waste flow

control legislation. Reversal of the holding of the New York

courts would undermine the security for billions of dollars of

bonds? and weaken the ability of local jurisdictions to provide

essential governmental services to their citizens.

Il. SUMMARY OF ARGUMENT

Petitioners assert that a local law requiring that all waste

generated within the boundaries of the enacting jurisdiction be

taken to a particular solid waste facility for processing or disposal

violates the Commerce Clause of the United States Constitu-

tion, U.S. Const. art. I, § 8. Under the “dormant Commerce

Clause” doctrine, state and local laws which discriminate delib-

erately against out-of-state goods or services or which adversely

affect interstate commerce in a manner clearly disproportionate

to the local benefits they provide violate the Commerce Clause.

The Court should affirm the decision of the court below for

several reasons. First, the dormant Commerce Clause is inap-

plicable when Congress has authorized the states to adopt the

type of laws at issue. The Resource Conservation and Recovery

Act (“RCRA”), 42 U.S.C. §§ 6901-6992k (1988), authorizes the

adoption of waste flow control legislation to effectuate Congress’

mandate that state and local governments be authorized to enter

into long-term contracts for the supply of waste to solid waste

facilities and that the federal government assist state and local

governments in securing the flow of waste to those facilities.

Second, the procurement of waste disposal services by a

local government for and on behalf of its citizens has fallen

within the power of local governments since the seventeenth

century. The Commerce Clause was not intended to usurp this

2. In 1992, state and local jurisdictions in the United States issued

$2,997,500,000 in solid waste bonds. The Bond Buyer, Feb. 1, 1993, at 8A,

col. 1. Solid waste bonds are being issued at an even higher rate in 1993, with

$2,009,200,000 issued in just the first half of the year. The Bond Buyer, July

26, 1993, at 10A, Col. 1.

traditional power to provide or to procure exclusive public

services in areas affecting public health. This consideration

should weigh heavily in favor of upholding waste flow regulation

under the balancing test enunciated by the Court in Pike v.

Bruce Church, Inc., 397 U.S. 137 (1970). Waste flow control

legislation is adopted to advance legitimate local public inter-

ests: it ensures that all solid waste from the adopting municipal-

ity is disposed of in an environmentally sound manner, protects

the public health from the threats posed by improper waste

disposal services while protecting the public fisc, and serves to

compel payments from citizens of the jurisdiction for waste

disposal. Such legislation has no discriminatory intent and little

impact on interstate commerce. Exclusive municipal provision

of disposal services is often necessary to ensure long-term,

environmentally sound solid waste disposal. As a means of

implementing a municipality's decision to provide exclusive

disposal services, waste flow control legislation is the mechanism

least disruptive of the waste collection market.

ll. STATEMENT OF THE CASE

A. The Facts in this Case.

Petitioners challenge the ability of a local government in

New York to select and to provide waste disposal services to its

residents. New York law authorizes local governments to pre-

pare solid waste management plans providing for the proper

disposal of all solid waste generated within their jurisdictions.

N.Y. Envtl. Conserv. Law § 27-0107 (McKinney Supp. 1993).

Clarkstown, having been forced by the state to close a landfill it

owned and to provide for alternative disposal services, entered

into a contract with Clarkstown Recycling, Inc., for the con-

struction and operation of a transfer station. Pet. App. 4a, 35a;

J.A. 10, R. 59.

Under this contract, Clarkstown guarantees that at least

120,000 tons of waste will be delivered to the facility each year.

Id. If the facility receives less than 120,000 tons of waste in a

given year, Clarkstown is obligated to pay Clarkstown Recycling

$81 for each ton by which deliveries fall short of the minimum,

less the marginal operating costs Clarkstown Recycling would

have incurred to process the missing waste. Id. Under this

“put-or-pay” contract, to the extent the facility’s disposal fee

revenue is less than $9.72 millicn, Clarkstown is contractually

obligated to pay Clarkstown Recycling the difference, less

Clarkstown Recycling’s marginal costs. Id.

To protect the public fisc to the extent feasible and to assure

that its contractual obligations would be met, Clarkstown re-

quired that its citizens’ waste be delivered to the designated

facility for a fixed “tipping fee” by adopting Local Law 9

(“Clarkstown Law”), which is the subject of this dispute. Rather

than adopting waste flow control legislation, Clarkstown could

have purchased trucks, hired employees, collected the waste

from its own citizens and delivered it to the transfer station. It

could have entered into a contract with a hauler to collect all the

waste from its citizens and to deliver it to the transfer station.

See N.Y. Town Law §§ 198(9), 221(1) (McKinney 1984). Clark-

stown chose instead a mechanism that does not restrict compe-

tition in the waste collection market to assure that its decision to

procure waste disposal services would be given effect.

Clarkstown’s efforts, including both the contract and its

waste flow control ordinance, are typical of the measures

employed by local governments throughout the nation and

throughout the nation’s history to provide waste disposal ser-

vices to their residents.

3. Section 3 of the Clarkstown Law provides, in part:

C. All acceptable waste generated within the territorial limits of the

Town of Clarkstown is to be transported and delivered to the Town of

Clarkstown solid waste facility . . . or to such other disposal or recycling

facilities operated by the Town of Clarkstown, or to recycling centers

established by special permit . . . .

D. It shall be unlawful to dispose of any acceptable waste generated

or collected within the Town at any location other than its facilities or sites

set forth in Paragraph “C” above.

Town of Clarkstown, N.Y., 1990 Local Laws, No. 9, § 3.C. & D.

B. The Economic Forces Underlying the Creation of the

Waste Disposal Services Market.

Since the colonial era, one of the principal functions of both

states and municipalities has been the protection of public

health and safety through interrelated regulation of waste han-

dling and disposal and provision of waste collection and disposal

services. State and local government regulation and action has

largely created and shaped the market for disposal services

which Petitioners invoke in support of their Commerce Clause

claims. The need for such government regulation and the

provision of such public services is created by economic forces

directly relevant to the issues in this appeal.

The public health problems caused by accumulations of

trash and rubbish are examples of “externalities.” The failure of

one individual properly to dispose of waste adversely affects the

entire community, not just the individual. See Diane Buxbaum

& Daniel Baumol, Service Arrangements for Conventional

Disposal, in Evaluating the Organization of Service Delivery:

Solid Waste Collection and Disposal, 421, 450 (E. S. Savas and

Barbara J. Stevens eds., 1977) (hereinafter Savas and Stevens).

Conversely, if most individuals dispose of waste improperly, one

individual cannot obtain much personal benefit by his or her

own proper disposal. Because individual citizens cannot obtain

personal benefits or protect themselves from the acts of others

by their own actions, their incentives to purchase waste collec-

tion and disposal services are limited. It follows that citizens and

private collectors will generally be unwilling to pay private

disposal contractors for the public health benefits of environ-

mentally sound disposal if less expensive disposal services are

available. Disposal contractors, in turn, will be tempted to

maximize profits by spending as little as possible on disposal

while charging what the market will bear.

Federal and state regulations requiring minimum standards

for disposal facilities are an attempt to force disposal contractors

to internalize these externalities under threat of penalties or

closure. Regulations, however, can only assure that minimum

standards are met and do so only at a high cost of enforcement.

Frequently “grandfather clauses” in regulations allow less envi-

ronmentally sound facilities to continue in operation. Moreover,

regulations in some states and localities are much less stringent

than those in others. Local jurisdictions are free to provide

disposal services with a level of health and environmental

protection higher than that required by regulation and to

require their citizens to pay the cost by a variety of mechanisms.

Waste flow control legislation is one such mechanism.

When a local jurisdiction acts to provide waste disposal

services, it provides a “public good.” The health and environ-

mental benefit of proper disposal of the majority of waste accrues

to each individual whether or not that individual participates.

This creates a “free rider” problem, where some individuals fail

to participate, assuming that others’ actions will provide them

with the same benefits. See Franklin R. Edwards and Barbara J.

Stevens, Local Government Regulation of Residential Refuse

Collection by Private Firms, in Savas and Stevens, supra. The

only way to assure collective benefits is to require participation

by all.

Provision of public services may also require coercion to

avoid “cream skimming.” It may be profitable for private parties

to provide disposal services to some customers, for example,

large commercial customers or customers in densely populated

or wealthy areas, but not to provide them to others.‘ In order to

ensure that services are provided to all, it is often necessary to

require participation of all in a single disposal scheme. Because

of the economic biases arising in connection with the provision

of public goods, the market cannot be relied on to provide

appropriate disposal services. The first purpose served by waste

flow control legislation is to ensure that waste is disposed of at

4. Many recycling programs suffer because profitable aluminum cans are

removed by private scavengers from mixed recyclables set out by homeow-

ners, leaving the local jurisdiction with the remainder of the mixed recycl-

ables, disposal of which is far more costly. Similarly, because markets for

recycled goods are commodities markets, private scavengers will typically pick

up saleable recycled goods only when there is a positive price and leave the

very same goods on the curb for the local jurisdiction to handle when market

forces result in a “negative” price. Robert B. McKinstry, Jr., Winifred M.

Prendergast and Thomas F. Doyle, Recycling and Waste Reduction: The Other

Half of Municipal Waste Management, in Municipal Solid Waste Disposal

Strategies, Environmental Regulation, and Contracts and Financing (Amer-

ican Law Institute— American Bar Association 1990).

the facility chosen by a local jurisdiction, and that the public

health benefits of proper disposal are thus achieved for all on an

equal basis.

C. The History of Waste Collection and Disposal Ser-

vices.

The pattern of state legislation and municipal action which

Petitioners challenge began in colonial America. Colonial assem-

blies frequently authorized cities to provide for removal of

refuse. These statutes were initially enacted in response to odors

and interference with traffic in the streets. A number of such

enactments designated or authorized designation of specific

disposal sites, thus beginning the practice of waste flow control

in what is now the United States.5

Open dumping at specified sites and in oceans and water-

courses were the earliest disposal solutions. Much recycling was

practiced by scavengers, either directly retained or designated,

licensed or permitted by local jurisdictions.

5. Colonial laws enacted by or for the cities of New York (as New

Amsterdam), Philadelphia and Charleston all included waste flow control

measures allowing local officials to require the disposal of waste in a particular

location. The South Carolina legislature in 1764 established a street commis-

sion for Charleston, and provided it with the power:

to contract and agree with any person or persons, to be scavenger or

scavengers, to keep the streets, lanes and alleys, and other parts of said

town, clean and in good order and repair; to remove all filth and rubbish,

to such proper place or places, in or near the said town, as they shall

Act of August 10, 1764, reprinted in South Carolina Gazette, Aug. 25, 1764

(emphasis added). In 1658, in New Amsterdam, “[t]he burgomasters and

schepens ordained that all such refuse be brought to dumping-grounds near

the City Hall and the gallows or to other designated places.” Maud W.

Goodwin, Dutch and English on the Hudson 105 (1919); see also Christopher

Niemczewski, The History of Solid Waste Management, in Savas and Stevens,

supra. Philadelphia was authorized to implement waste flow controls in 1769.

Act of Feb. 18, 1769, ch. DXCIV, 1 Laws of Pa. 284, 287, 297, reprinted in the

appendix to NABL’s Brief (hereinafter “NABL App.”) at A-l. It may be

reasonably concluded that site designation was a common expedient for

dealing with waste accumulations. See Ernest S. Griffith, History of American

City Government, the Colonial Period 99-125, 258-91 (1938) (Da Capo Press

1972).

In the late 1800's, scientific connections were made be-

tween disease and improper disposal of wastes, and the tech-

nology of waste disposal began to evolve. The first incinerators

appeared during this period,® as well as competing rendering

technologies. These facilities were mostly privately owned and

operated under contract to local jurisdictions. See Melosi, Out of

Sight, supra, at 625; William W. Locke and Joseph B. Taylor,

Reports on I. Garbage Disposal in the Outlying Wards, II.

History of the Garbage Contract, III. Refuse Disposal of Cities

(1896) (available from Univ. of Chicago Library, Preservation

Dept., Negative No. N6958). During the same period, central-

ized municipal recycling and improved municipal waste collec-

tion were introducea in New York. Melosi, supra, at 626-29.

According to a Department of Interior survey of 199 major cities

in 1880, 24 percent of cities directly provided collection service,

19 percent contracted for collection service, 30 percent allowed

free competition for disposal services and 25 percent used a

combination of practices. Martin V. Melosi, Pollution and

Reform in American Cities, 1870-1930, 108 (1980).

During the first half of the twentieth century, incinerators

and open municipal dumps were the predominant means of

disposal. Concerns with sanitation and the introduction of closed

packer collection trucks reduced or eliminated much reuse and

recycling. A 1977 Columbia University survey found that 66.4

percent of cities surveyed used some form of government

procured arrangement (not counting franchises) for waste col-

lection, including 89 percent of cities over 5,000 in population.

E. S. Savas, The Organization of Solid Waste Collection:

Findings, in Savas and Stevens, supra, at 58, 83, 87. In a

companion survey, Columbia researchers found that 61 percent

of disposal facilities were government owned and another 7.4

percent were government operated even though privately

owned. Buxbaum and Baumol, supra, at 428. A significant

number of these facilities were restricted to use solely by one or

more local jurisdictions. Id. at 431. While private industry has

played a significant role in the waste disposal market, public

6. The first was in Allegheny, Pennsylvania in 1885. Martin V. Melosi,

“Out of Sight, Out of Mind,” The Environment and Disposal of Municipal

Refuse, 1860-1920 (hereinafter Melosi, Out of Sight), 35 Historian 621, 625

(1973).

~~ yh oP == .

procurement of collection and disposal services has clearly been

and remains the dominant practice.

In the 1970's, the federal Clean Air Act, 42 U.S.C. §§ 7401-

767 lq (1988), led to the closure of many municipal incinerators.

Those that remained in operation had to be equipped with

expensive pollution control equipment. RCRA ushered in in-

tense state and federal regulation of hazardous and solid waste

disposal practices. RCRA required the elimination of open

dumps and their replacement with sanitary landfills. 42 U.S.C.

§ 6943(a)(2) (1988). RCRA explicitly recognized the central role

of states and localities in providing waste disposal services’ and

required states to adopt regional plans for waste disposal. Id.

§ 6949 (1988).

In response to RCRA’s requirements, most states adopted

comprehensive solid waste legislation requiring local jurisdic-

tions to plan for ecologically sound, long-term waste disposal and

granting new or more explicit powers to local jurisdictions to

ensure their ability to carry out their plans. Federal and some

state regulators have concluded that various types of resource

recovery (including recycling) represent the most desirable

disposal alternative. See id. §§ 6901(b)(7), 6941-4la, 6943(a)

(1988); U.S.E.P.A., The Solid Waste Dilemma: An Agenda for

Action, Background Document 3.B-1 to 3.C-7 (1988); N.Y.

Envtl. Conserv. Law § 27-0105 (McKinney Supp. 1993). Both

RCRA and many state statutes require the implementation of

these and other newer and costlier technologies: cleaner incin-

erators with energy recovery, composting facilities* and mech-

These new resource recovery technologies are far more

capital intensive than the older generation of municipal dumps,

and normally require financing over a long term. H.R. Rep. No.

1491, 94th Cong., 2d Sess., pt. I, at 34 (1976), reprinted in 1976

U.S.C.C.A.N. 6238, 6272. Bond issues ranging from $50 million

7. “[Thhe collection and disposal of solid wastes should continue to be

primarily the function of State, regional, and local agencies. . . .” 42 U.S.C.

§ 6901 (a4) (1988).

8. Composting facilities utilize the organic portion of various waste

materials to generate compost which is used as a soil conditioner or potting

material. Composting is a form of “resource recovery.”

to over $250 million have been required for construction of

state-of-the-art waste-to-energy facilities.* Costs of modern land-

fills have also increased dramatically. Construction of a modern

landfill requires construction of a leachate collection and treat-

ment system, a synthetic liner, gas control piping, pumps and

flares, and groundwater monitoring equipment. See 40 C.F.R.

pt. 258 (1992); N.J. Admin. Code tit. 7, ch. 26, subch. 2A (1993);

25 Pa. Code ch. 273 (1993).

Although many older incinerators and “open dumps” have

been forced to close, many other older facilities that meet

certain minimal requirements applicable to existing facilities

continue to operate under “grandfather clauses” which exempt

them from more stringent requirements applicable to new

facilities.'° These grandfathered facilities are not subject to the

same capital and operating costs as new facilities and therefore

often have a substantial competitive advantage in price.!! Thus,

the solid waste disposal market has become skewed, conflicting

with public policy; although RCRA and state laws favor the

construction of state-of-the-art facilities, such facilities may be

unable to compete against cheaper, less environmentally sound

disposal facilities.

9. By way of example, Lancaster County, Pennsylvania, issued bonds in

the amount of $135,600,000 million to finance its solid waste system, while

Montgomery County, Maryland, issued bonds in the amount of $325,985,000

to finance its system. NABL App. A-30, A-4.

10. Although in 1984 Congress required upgraded standards for munic-

ipal solid waste landfills, Pub. L. No. 98-616, § 302(a)(1), 98 Stat. 3221, 3267

(1984), codified at 42 U.S.C. § 6949a(c) (1988), those standards were not

promulgated until 1991, 56 Fed. Reg. 50978 (Oct. 9, 1991), codified at 40

C.F.R. pt. 258 (1992), and EPA has now proposed to delay the effective date

of those regulations. 58 Fed. Reg. 40568 (July 28, 1993). Even when these new

standards are in effect, they will apply certain requirements that are critical to

environmental protection, such as liners, only to new landfills. See 40 C.F.R.

§ 258.40 (1992). Thus, unlined facilities built before the effective date of the

new regulations will continue, perhaps for decades, to provide cheaper, less

environmentally sound alternatives to state-of-the-art facilities

11. The disposal cost at the new county-owned composting facility at

issue in Waste Systems Corp. v. County of Martin is $72 per ton, while the

disposal cost at the appellants’ grandfathered landfill is only $30 per ton. 985

F.2d 1381, 1387 (8th Cir. 1993).

Because of competition from these grandfathered facilities,

private contractors are generally unwilling to undertake the

construction of a new solid waste disposal facility, particularly

the statutorily favored resource recovery facilities, unless a

minimum amount of income is guaranteed. Waste flow control

measures provide this guaranteed level of income in the form of

tipping fees for disposal of waste.

D. Institutional Means to Provide and To Finance Waste

Disposal Services.

As waste disposal facilities have grown more expensive,

development and financing of such facilities has grown more

complex. To understand the role played by waste flow control

legislation, it is necessary to understand its place in the array of

institutional mechanisms for development and financing of solid

waste facilities.

Profligate municipal financing of private railroads in the

nineteenth century led to imposition of statutory or state

constitutional limits on the ability of states and municipalities to

incur debt and to lend credit. See, e.g., Stephen M. Louns-

berry, The Scope and Basis of the Local Finance Law, N.Y.

Local Fin. Law at VII (McKinney 1968). In many states these

limits also restrict the ability of local jurisdictions to enter into

long-term contracts. See, ¢.g., N.Y. Local Fin. Law § 135-3-a,

-b (McKinney 1968). Alternative means of financing projects

were therefore developed to avoid exposure of municipal credit.

These included the use of separately chartered authorities to

construct, own or finance projects and payment for services

through enterprise funds kept separate from a jurisdiction's

general funds.'* The use of authorities or enterprise funds,

12. For example, in Oregon, long term contracts can be entered into

from an enterprise fund but not directly by a municipality. See DeFazio v.

Washington Public Power Supply System, 679 P.2d 1316 (Or. 1984). Many

jurisdictions cannot enter long term contracts that are not subject to annual

appropriations, but authorities chartered in the same jurisdiction frequently

can. Compare Pa. Stat. Ann. tit. 53, § 306(B)(j) (Purdon 1974) with id,

§§ 23308.1, 36901(b), 53202(a), 56802(a), 65802 (Purdon Supp. 1993).

which may have no independent source of revenue, i.e., no

taxing authority, led to financing techniques such as rate

covenants!* and put-or-pay contracts.'¢

More recently, in response to the increased capital cost of

providing solid waste facilities and RCRA’s mandate that states

eliminate legal barriers to financing such facilities, 42 U.S.C.

§ 6943(a)(5) (1988), states have granted local jurisdictions a

variety of powers for the specific purpose of providing and

financing solid waste services. These include powers to enter

into long-term solid waste supply contracts,'5 to enter into

put-or-pay solid waste supply contracts,'* to finance solid waste

facilities,!” to adopt solid waste flow control legislation, * to form

authorities!® and to enter into inter-governmental agreements.”°

Depending on the specifics of local authorization and on

technological and political choices, a local jurisdiction may

exercise these powers in different ways to assure waste disposal

at a facility it has developed or procured. A local jurisdiction may

(a) own its disposal site which it may operate itself or

13. A rate covenant is a legally enforceable promise to set rates high

enough to pay the costs of a project, including debt service, independent of the

level of services provided by the project.

14. A put-or-pay contract is a contract which obligates a local jurisdiction

to pay for certain minimum levels of disposal service whether or not those

services are actually used.

15. See, ¢.g., Pa. Stat. Ann. tit. 53, § 4000.304(c) (Purdon Supp. 1993).

16. Power to enter into such contracts without explicit authorization has

been called into doubt. Chemical Bank v. Washington Public Power Supply

System, 666 P.2d 329 (Wash. 1983); Asson v. City of Burley, 670 P.2d 839

(Idaho 1983), cert. denied sub nom. Chemical Bank v. Asson, 469 U.S. 870

(1984); Vermont Dept. of Public Service v. Massachusetts Mun. Wholesale

Electric Cooperative, 558 A.2d 215 (Vt. 1988), cert. denied, 493 U.S. 872

(1989).

17. See, e.g., Ind. Code Ann. § 36-9-31-4(a) (Burns 1993).

18. See, e.g., 1991 N.Y. Laws ch. 369, § 1, ch. 540, § 1, ch. 569, § 1, &

ch. 631, § 1 (identical provisions); Pa. Stat. Ann. tit. 53, § 4000.303(e) (Purdon

Supp. 1993).

19. See, e.g., N.Y. Envtl. Conserv. Law § 27-0107 (McKinney Supp.

1993).

20. See, ¢.g., Conn. Gen. Stat. § 7-339a (1992).

contract for operation by a third party,?! (b) take waste to a

disposal site pursuant to a contract for its use entered into either

through a procurement process or by sole source negotiations,

by itself to perform such functions, or (e) together with other

jurisdictions, charter an authority or enter into intergovern-

mental agreements to perform such functions. This range of

options allows local jurisdictions to use a wide variety of

privately provided services for the construction and operation of

disposal facilities. There is an active market with many national

and international competitors seeking municipalities as custom-

ers to provide such services.

When local jurisdictions procure capital intensive facilities,

they often use project financing techniques. These techniques

allow debt service for the facility to be spread over a long term

and shift many project risks to private participants. In a project

financing, project debt is repaid with revenues from the project

without recourse to the general credit of the project sponsor.

This relieves the sponsoring jurisdiction of the risk of general

obligation debt? and may permit financing in circumstances

where state law would not allow general obligation debt to be

incurred.

Because project financings rely on project revenue for the

repayment of debt, revenue streams from a project must be

21. In some states municipalities are expressly authorized to acquire

existing privately owned facilities by condemnation. See, e.g., Ariz. Rev. Stat.

Ann. §§ 9-511, 9-516 (1990).

22. A grant of a franchise will be enforced as a contract in the courts.

However, unlike a contractor, the franchisee typically collects fees from users

of its services, not payments from the local jurisdiction. Cable television

franchising is a familiar example. The grant of an exclusive franchise is typically

accompanied by rate regulation. See, e.g., N.J. Stat. Ann. § 48:13A-5 (West

Supp. 1993).

23. General obligation debt that is secured by the full faith and credit,

i.e., the taxing power, of the jurisdiction. General obligation debt is subject to

the debt limits discussed above; nonrecourse debt is not.

24. See C. Baird Brown and Charles S$. Henck, Structuring Municipal

Solid Waste Financing, in Municipal Solid Waste Disposal Strategies, Envi-

ronmental Regulation, and Contracts and Financing (American Law Institute

— American Bar Association 1992).

secured for the term of the debt. There are two important

sources of revenue for waste disposal projects. One source is

sales of resources recovered through the disposal process, such

as electricity, steam energy, compost or recycled materials. For

all currently available technologies, these revenues are insuffi-

cient to support a resource recovery facility. Accordingly, the

principal source of revenue for any waste disposal project, and

the principal source for repayment of debt, is payments for

disposal services.

The payments for disposal services for any waste disposal

facility are ultimately made by citizens of the local jurisdiction.

Where the municipality provides collection and transportation

services, citizens may make general tax payments or special

payments for waste collection and disposal services and may

make them either directly to the local jurisdiction or to an

authority with rate setting powers. Where private collection

contractors are used, citizens are generally required either to

pay a government-fixed rate to a designated contractor (as

pursuant to a franchise), or to make individual arrangements

with the contractors of their choice. The collection contractors in

turn pay tipping fees for waste disposal services at the disposal

facility.

Where the local jurisdiction makes arrangements for the

provision of disposal services, tipping fees are paid to or for the

benefit of the local jurisdiction. If the local jurisdiction or an

authority operates the disposal facility, the tipping fees are set

by and paid directly to the jurisdiction or authority. Where a

local jurisdiction contracts for a private facility to provide

disposal services, minimum revenues from tipping fees are

generally guaranteed as part of the contract, which also com-

monly specifies the tipping fee to be charged. Tipping fees at

private facilities operating pursuant to a public contract are

usually the property of the local jurisdiction and are placed in a

special fund to be used by the local jurisdiction to make its

25. There is no interstate market for unprocessed waste. Rather, there

are overlapping interstate markets for various solid waste services, including

waste collection, transportation, storage, treatment and disposal services.

‘

}

oe Ba ane ~

contract payments to the operator.” In a few cases, the tipping

fees may be paid directly for the operator's account, but

regardless of the precise arrangement, the payment of tipping

fees directly or indirectly offsets the obligation of the local

jurisdiction to pay for services under its contract. Waste flow

control legislation enables the local jurisdiction to ensure that

the tipping fees paid will be sufficient to satisfy its contractual

obligations.27

Waste flow control ordinances serve other purposes as well.

Fir.., by assuring delivery of waste, such legislation assures that

the designated facility receives revenues from the sale of

recovered resources, e.g., energy or recycled materials, arising

from the processing of waste. These revenues are particularly

important to the financing of waste-to-energy and composting

facilities and will subsidize tiping fees to a limited degree.*

Second, waste flow control legislation makes possible the public

26. The fund may also be used to pay for waste management adminis-

tration or other waste system components such as recycling services. Congress

encourages such cross-subsidization. See 33 U.S.C. § 1281(e) (1988); 42 U.S.C.

§ 6948(d)(3) (1988).

27. Petitioners’ argument that they should be entitled to compete freely

with the Clarkstown Recycling facility to provide waste disposal services is

essentially an argument that Clarkstown’s power to compel disposal of waste

and payment for disposal services must be deployed for its benefit. By analogy,

where a local jurisdiction has decided to create a new road, has used its power

of eminent domain to condemn a right of way and has selected a contractor to

build the road through competitive bidding, a disappointed bidder might

argue that it is entitled to force the local jurisdiction to use the power of

eminent domain to help it site an alternative road and to help it collect

tolls.

28. It would be incorrect to conclude that waste flow control legislation

hordes some valuable commodity for the benefit of a local facility and deprives

disposal facilities in other states of revenues from recovered resources.

Revenues from electricity, steam, compost production, and recyclables do not

alone produce positive cash flow for resource recovery facilities; no disposal

facility can operate at a profit, even before debt service, without receiving

tipping fees. Directing all waste to a designated facility does not have an

appreciable effect on commerce, because the recovered resources revenues,

by themselves, would not induce any private enterprise to provide disposal

services for free. It is only the action of the local jurisdiction to compel

payments for disposal services that produces a positive cash flow and creates a

market for disposal services.

good of proper waste disposal by allowing a jurisdiction to select

a more expensive and environmentally superior facility, such as

a statrtorily-favored resource recovery facility.

E. Related Municipal Services.

The same economic issues that underlie provision of solid

waste disposal services underlie provision by local jurisdictions

of sewer and water supply services. Local governments gener-

ally are authorized by state statute to provide sewage treatment

and water supply services to secure public health benefits. They

are empowered to require participation and payment of service

charges by all members of the community served by public

facilities or publicly sanctioned private monopolies, even though

private services in the form of bottled water, private wells,

septic removal and private treatment plants may compete and

may be adequate to meet the needs of some. See, e.g., N.J. Stat.

Ann. § 40:56-52 (West 1992); id. §§ 40A:26A-10 to -14 (West

1993); N.Y. Town Law §§ 198(1)(g)-(k), 201, 202 & 202-a

(McKinney 1968); Pa. Stat. Ann. tit. 53, §§ 47043-47064

(Purdon 1966). These mandatory connection and service fees

support the financing of the water and sewer systems.”

Thus, Petitioners’ challenge to exclusive provision of waste

disposal services has far wider ramifications than disposal of solid

waste. The provision of exclusive sewer and water supply

services presents the same policy issues and fact patterns as the

provision of waste disposal services, and governmental provision

of all such services is called into question. Also called into

question is the validity of billions of dollars of financings by local

jurisdictions, local and regional authorities and special services

districts, the proceeds of which have been used to construct

waste disposal facilities, water mains, sanitary sewers, waste-

water treatment facilities and sewage sludge disposal facilities.%°

29. Such fees are mandated where the sewer system has been financed

through the Clean Water Act Construction Grants Program. 33 U.S.C.

§§ 1281(h)(2), 1284(b) (1988).

30. Wastewater treatment facilities can be integrated with solid waste

disposal systems. The Clean Water Act encourages “waste treatment manage-

ment which results in integrating facilities for sewage treatment and recycling

with facilities to treat, dispose of, or utilize other industrial and municipal

IV. ARGUMENT

A. Congress Has Authorized State And Local Govern-

ments To Impose Waste Flow Controls, Which Are

Therefore Not Prohibited By The Dormant Commerce

Clause.

The doctrine of the “dormant” Commerce Clause is based

on a negative inference arising from the affirmative grant of

power to Congress to regulate interstate commerce. Gibbons v.

Ogden, 22 U.S. (9 Wheat.) 1, 203 (1824). “Judicial review of

state [laws] under the . . . Commerce Clause is intended to

ensure that States do not disrupt or burden interstate commerce

when Congress’ power remains unexercised. . . .” Merrion v.

Jicarilla Apache Tribe, 455 U.S. 130, 154 (1982).

Where Congress has exercised its authority to regulate

interstate commerce to authorize particular state conduct, the

states may engage in such conduct without violating the Com-

merce Clause. Courts “only engage in this [dormant Commerce

Clause] review when Congress has not acted or purported to act.

. . . Once Congress acts, courts are not free to review state taxes

or other regulations under the dormant Commerce Clause.” Id.

Congress may grant authorization to the states to interfere with

interstate commerce either expressly or impliedly; in either

case, the delegation of authority requires “a clear expression of

approval by Congress.” South-Central Timber Development,

Inc. v. Wunnicke, 467 U.S. 82, 92 (1984). Congressional consent

to state regulation of interstate commerce will be found where

Congress has “affirmatively contemplate[d] otherwise invalid

state legislation,” as evidenced in the statute or legislative

history. Id. at 91-92. Such affirmative Congressional contempla-

tion of waste flow control is found in RCRA.

As a condition of receiving certain financial assistance,

RCRA requires the states to develop and to submit solid waste

wastes, including but not limited to solid waste,” and mandates that “[s}uch

integrated facilities shall be designed and operated to produce revenues in

excess of capital and operation and maintenance costs and such revenue shall

be used . . . to aid in financing other environmental improvement programs.”

33 U.S.C. § 1281(e) (1988).

management plans to the Administrator of the United States

Environmental Protection Agency (“EPA”) for EPA's approval.

42 U.S.C. §§ 6946, 6947 (1988). The criteria for approval of

these state solid waste management plans include the following

“minimum requirements’:

(4) The plan shall provide for the establishment of such

State regulatory powers as may be necessary to implement

the plan.

(5) The plan shall provide that no State or local government

within the State shall be prohibited under State or local law

from negotiating and entering into long-term contracts for —

the supply of solid waste to resource recovery facilities,

from entering into long-term contracts for the operation of

such facilities, or from securing long-term markets for

material and energy recovered from such facilities or for

conserving materials or energy by reducing the volume of

waste.

42 U.S.C. § 6943(a)(4), (5) (1988) (emphasis added).

Thus, in these planning requirements, Congress has re-

quired that all states examine their laws applying to state and

local governments and assure that no state or local laws prohibit

these governments from entering into three kinds of “long-

term’ relationships: (1) long-term contracts for the supply of

solid waste to resource recovery facilities; (2) long-term contracts

for the operation of resource recovery facilities; and (3) long-

term contracts to secure markets for material and energy

recovered by resource recovery facilities. It is “unmistakably

clear” that Congress intended that states and local governments

have the affirmative power and authority to “regulate interstate

commerce’ to the extent necessary to achieve these purposes.

See South-Central Timber Development, Inc. v. Wunnicke, 467

U.S. at 91.

The legislative history of section 4003(a)(5) of RCRA, 42

U.S.C. § 6943(a)(5), demonstrates that Congress intended this

provision to force states to remove the institutional barriers to

the construction and, in particular, the financing of resource

recovery facilities:

[T]o assure the builder of a resource recovery facility that

he will have a steady source of garbage and trash in the

future, the state plan must provide that no state or local

government shall prohibit such local community from en-

tering into long-term contracts to supply discarded materi-

als of the community to resource recovery facilities.

* . *

. . . [MJany cities cannot enter into long-term contracts.

Resource recovery facilities cannot be built unless they are

guaranteed a supply of discarded material.

* e *

The reasons for this [requirement that state and local laws

prohibiting long-term contracts be abolished] are that cur-

rently a number of private companies capable of and willing

to enter resource recovery ventures if a sufficient volume of

refuse can be generated over a sufficiently long period of

time /sic]. Often municipalities are constrained in their

ability to enter long term contracts (5 to 30 years) by their

own charters or by state laws. . . . The federal government

will not commit technical or financial resources to aid states

in the establishment of resource recovery systems if these

states maintain barriers to the establishment of such sys-

tems.

H.R. Rep. No. 1491, 94th Cong., 2d Sess., pt. I, at 7, 10, 34

(1976), reprinted in 1976 U.S.C.C.A.N. 6238, 6245, 6248, 6272.

Congress understood that resource recovery facilities would

not be built unless the financiers of those facilities could be

assured of a reliable income stream from waste tipping fees and

sales of recovered resources to secure the repayment of the debt

incurred to construct the facilities. Congress required in RCRA

that state and local governments be able to enter into long-term

waste supply contracts in order to secure that reliable income

stream. It would be futile to empower a state or local govern-

ment to enter into such a contract if that governmental unit is

constitutionally prohibited from employing means which di-

rectly or indirectly require that solid waste generated within

that jurisdiction be disposed of at that facility. The authority to

direct the flow of solid waste through the adoption of waste flow

control laws is necessary to allow state and local governments to

enter into long-term waste supply contacts, and therefore waste

flow control laws must be authorized by RCRA.* If municipal-

ities are prohibited from adopting waste flow control ordinances,

they cannot guarantee to the developers of resource recovery

facilities a stable waste stream to provide a stable source of

income for the repayment of debt, and resource recovery

facilities will not be built.22

Congress also expressed the clear understanding that waste

flow control legislation was a legitimate and effective means of

assuring long-term waste supply already in use at the time

RCRA was adopted. Congress expressly acknowledged state

authority to adopt waste flow control legislation.”

This prohibition [on state or local laws prohibiting long-

term contracts] is not to be construed to affect state

planning which may require all discarded materials to be

transported to a particular location, nor should this provi-

sion be construed to confer upon local authorities substan-

tive rights that would interfere with the states /sic] respon-

sibility for developing and implementing a discarded

materials plan.

H.R. Rep. No. 1491, 94th Cong., 2d Sess., pt. I, at 34 (1976),

reprinted in 1976 U.S.C.C.A.N. 6238, 6272 (emphasis added).

Congress thus expressed the clear intention not to interfere with

then-existing waste flow control legislation.33 Congress “affirma-

31. The Court of Appeals for the Eighth Circuit has held that RCRA does

not authorize the imposition of waste import restrictions. In re Southeast

Arkansas Landfill, 981 F.2d 372, 377 (8th Cir. 1993). In Waste Systems Corp.

v. County of Martin, 985 F.2d 1381 (8th Cir. 1993), that court mistakenly held

that there is no difference between waste import restrictions and waste flow

control laws under RCRA, and followed its earlier holding. 985 F.2d at 1389.

RCRA’s authorization of long-term waste supply contracts and other institu-

tional arrangements for mandatory waste flow is explicit. The same cannot be

said of waste import restrictions.

32. RCRA requires that solid waste management plans provide for “the

establishment of such State regulatory powers as may be necessary to

implement the plan{s].” 42 U.S.C. § 6943(a)(4).

33. Two years prior to the adoption of RCRA, Wisconsin adopted a

statute establishing the Wisconsin Solid Waste Recycling Authority, which was

- BAP aan TT ~ =—e eS

tively contemplate[d]” that states were and would continue to be

authorized to adopt waste flow control legislation, which is

nothing more than legislation requiring “all discarded materials

to be transported to a particular location.”

The Congressional intent to authorize waste flow control by

state and local governments was reaffirmed and clarified in the

Solid Waste Disposal Act Amendments of 1980, Pub. L. No.

96-482, 94 Stat. 2334 (1980).% In order to encourage develop-

ment of resource recovery facilities and to aid communities in

solid waste planning, Congress authorized EPA to assist state

and local governments in removing “legal, institutional and

economic impediments” to the development of resource conser-

vation and recovery systems, including:

(B) impediments to the financing of facilities to conserve or

recover energy and materials from municipal waste through

the exercise of State and local authority to issue revenue

bonds and the use of State and local credit assistance; and

undertake projects for the conservation or recovery of

energy and materials from municipal waste, including the

creation of special districts, authorities, or corporations

where necessary having the power to secure the supply of

waste of a project, to conserve resources, to implement the

project, and to undertake related activities.

Pub. L. No. 96-482, § 32(f), 94 Stat. at 2355, codified at 42

U.S.C. § 6948(d)(3)(B)&(C) (1988) (emphasis added). The refer-

ence to “institutional arrangements necessary . . . to secure the

supply of waste to a project” makes it clear that Congress

contemplated that state plans would use a variety of mecha-

nisms, not necessarily limited to contracts, to secure waste flow.

Congress recognized that “various communities throughout the

authorized to impose waste flow controls requiring use of the Authority's

facilities. 1973 Wisc. Laws ch. 305, § 11.

34. By 1980, Delaware and New Jersey had joined Wisconsin in autho-

nizing or implementing statewide waste flow control. Del. Code Ann. tit. 7,

§§ 6403-04, 6406(a)(31) (1991); AA. Mastrangelo, Inc. v. Commissioner, Dep't

of Envtl. Prot., 449 A.2d 516, 521 (N.J. 1982).

nation have different needs and different potentials for conserv-

ing resources and for utilizing techniques for the recovery of

energy and materials from waste.” Pub. L. No. 96-482,

§ 32(a)(6), 94 Stat. at 2353, codified at 42 U.S.C. § 6941a(6)

(1988). Some communities will need to utilize waste flow control

legislation to satisfy their particular economic or social needs.

RCRA’s solid waste management planning requirements

are imposed on state“and local governments. Congress intended

to give those state and local gover:ments all of the tools needed

to establish rational solid waste management planning mecha-

nisms that would lead to the environmentally sound disposal of

solid waste in more costly state-of-the-art facilities. 42 U.S.C.

§ 6941 (1988). In 1976 and again in 1980, Congress expressly

authorized state and local governments to enter into long-term

waste supply contracts supported by waste flow control

legislation. Accordingly, such legislation, including section 3 of

the Clarkstown Law, is not subject to challenge under the

dormant Commerce Clause.

35. The provisions of RCRA relate to supply of waste to resource

recovery facilities and supply of recovered materials. This should not lead the

Court to conclude that waste flow control legislation is authorized only to

provide a supply of waste for resource recovery favilities. Resource recovery

facilities are always built as a part of a larger solid waste system. For example,

landfills are always needed to receive residue from processing at a resource

recovery facility (e.g. ash), non-processable waste, and waste generated during

certain periods which exceeds the capacity of the resource recovery facility.

Therefore, a long term contract for landfill disposal is a necessary part of

resource recovery facility financing. Lancaster County, Pennsylvania, has a

solid waste management system based on waste flow control which incorpo-

rates both a landfill and a waste-to-energy facility. See NABL App. at A-47; see

also NABL App. at A-12. Moreover, as evident from the facts of this case,

there is often no clear line indicating whether a solid waste facility is a resource

recovery facility. Both facilities here, like many transfer stations, practice

resource recovery by removing recyclables. It is for these reasons that

Congress required revision of general authorization laws to allow states to

tailor the requirement to their particular needs rather than passing a preemp-

tive federal law.

Oo ee

~ == ae Chet kh Oe

B. Waste Flow Control Legislation Should be Upheld

Under The Pike Balancing Test.

1. Principles of Federalism Favor Upholding State

Authority to Impose Waste Flow Control.

The Framers of the Constitution did not intend that the

Commerce Clause would displace the basic local governmental

power to provide essential services such as waste disposal. A

ruling by this Court invalidating the Clarkstown Law would

undermine the basis for exclusive public provision of such public

health services. Provision of exclusive services to citizens by

local jurisdictions necessarily has an impact on commerce, but it

is an impact with which the Framers were familiar and which the

Framers must have expected to continue.

American colonial cities had the power to provide waste

disposal services and to designate disposal sites. In describing

the new constitution, James Madison made it clear that these

types of services would not be disrupted:

The powers delegated by the proposed constitution to the

federal government are few and defined. Those which are

to remain in the state governments are numerous and

indefinite. The former will be exercised principally on

external objects as war, peace, negotiation and foreign

commerce, with which last the power of taxation will, for

the most part, be connected. The powers reserved to the

several states will extend to all the objects, which in the

ordinary course of affairs, concern the lives, liberties and

properties of the people and the internal order, improve-

ment and prosperity of the state.

The Federalist No. 45, at 293 (Madison) (Clinton Rossiter ed.,

1961). The dormant Commerce Clause doctrine arises from the

silent implication that, in granting Congress the power to

regulate commerce, the Framers intended that states not exer-

cise concurrent powers which would interfere with the power of

Congress. Gibbons v. Ogden, 22 U.S. (9 Wheat.) at 203.

Clearly, however, the Framers did not imagine that the ordinary

and necessary powers of state and local government would be

usurped. In Gibbons, this Court distinguished between the

power of Congress to regulate commerce and “that immense

mass of legislation, which embraces everything within the

territory of a state, not surrendered to the general government,

[including] health laws of every description.” Id.

Local jurisdictions provide exclusive waste disposal services

to assure public health, because economic analysis and the

experience of government has shown that provision of these

services is often not safely left to individual incentives. To hold

that the dormant Commerce Clause prevents local governments

from imposing flow control or otherwise exercising traditional

powers to provide exclusive services would turn the structure of

the Constitution on its head — making state governments into

governments of limited powers and giving the federal govern-

ment the unlimited and preemptive police power. This was

not the Framers’ intent.

2. Waste Flow Control Legislation Serves Strong Local

Interests Which Outweigh Its Effect on Commerce.

These principles of federalism weigh heavily in favor of

upholding waste flow control legislation under the balancing test

that this Court has applied to state actions affecting commerce,

as set forth in Pike v. Bruce Church, Ine., 397 U.S. 137 (1970):

Where the statute regulates evenhandedly to effectuate a

legitimate local public interest, and its effects on interstate

commerce are only incidental, it willbe upheld unless the

burden imposed on such commerce is clearly excessive in

36. “If a public enterprise undertakes an integral operatio[n] in areas of

traditional governmental functions, the Commerce Clause is not directly

relevant.” Reeves, Inc. v. Stake, 447 U.S. 429, 447-54 (1979) (Powell, J.,

dissenting) (citing National League of Cities v. Usery, 426 U.S. 833, 852

(1976)). In several cases, the Court has enunciated a “market participant”

doctrine that protects local governments’ power to provide services. See, e.g.,

Reeves, supra; Hughes v. Alexandria Scrap Corp., 426 U.S. 794 (1976); White

v. Massachusetts Council of Construction Employers, Inc., 460 U.S. 204

(1983); and United Building and Construction Trades Council v. Camden, 465

U.S. 208 (1984). By providing waste disposal services for its citizens, local

junsdictions undertake integral operatons in the area of traditional govern-

mental functions. Enactment of flow control legislation is part of such integral

operations.

relation to the putative local benefits. If a legitimate local

purpose is found, then the question becomes one of degree.

And the extent of the burden that will be tolerated will of

course depend on the nature of the local interest involved,

and on whether it could be promoted as well with lesser

impact on interstate activities.

397 U.S. at 142 (citations omitted).

Petitioners deny that the Pike test should be applied, based

on the incorrect assertion that a waste flow control ordinance is

a discriminatory ban of the type addressed in Philadelphia v.

New Jersey, 437 U.S. 617 (1977), and Fort Gratiot Sanitary

Landfill, Inc. v. Michigan Department of Natural Resources,

112 S. Ct. 2019 (1992). The Clarkstown Law applies to all waste

and all citizens over which Clarkstown has any power, without

any discrimination whatsoever; if there is any discrimination it is

based upon the limits of the local government's powers. Waste

flow control legislation is employed by local governments to

enable them to provide and to pay for waste disposal services for

their citizens and does not prevent others from using those

services on the same terms.

Petitioners’ claim that the decision to provide services or to

purchase from a single source discriminates is an oddly twisted

view of the local jurisdiction’s action. Where a jurisdiction

decides to arrange for disposal services, it may either decide to

hire a single contractor (who often comes from out-of-state and

may have a disposal facility located out-of-state) or to provide

services itself. In either case, this decision necessarily excludes

all other competitors who have not been selected to perform

those services, wherever located. Private commercial interests

are not treated differently on the basis of their location.

Local waste flow control by one jurisdiction is not the same

as a statewide import ban. In Fort Gratiot, this Court invali-

dated Michigan legislation banning the disposal of out-of-county

waste without the consent of the county in which the disposal

facility is located. 112 S$. Ct. at 2028. The Court found that this

statewide ban requiring affirmative consent of counties was no

different from New Jersey's statewide ban requiring consent of

the state. Id. By contrast, New York's authorizing

legislation,®” which has not been challenged, does not designate

any location for disposal, in state or out-of-state, and does not

impose any statewide controls.

applied in this case. Waste flow control legislation in general,

and the Clarkstown Law in particular, should be upheld under

that test. Waste flow control advances legitimate state and local

purposes. Any burden imposed on interstate commerce by such

legislation is not “clearly excessive in relation to the putative

local benefits.” Other means of achieving those purposes do not

have a less adverse effect upon the various overlapping inter-

state waste disposal service markets which are affected.

Waste flow control legislation serves two predominant

purposes. First, it serves to assure the public health and

environmental benefits by requiring waste disposal in selected

facilities which maximize resource recovery, serve all of the

people all of the time, and employ greater pollution controls

than those meeting the lowest standard for existing facilities

imposed in the state with the least stringen t regulations. Sec-

ond, it serves as a mechanism for requiring payments for

, ices by citi dette

Petitioners’ arguments against flow control do not address

this first purpose. Petitioners’ argument with respect to the

second purpose — that measures to protect the public fisc

amount to economic protectionism — is misplaced. The mea-

sures that this Court has struck down as economic protectionism

have generally been measures to shield local private businesses

from interstate competition. See, e.g., Hunt v. Washington

1991 N.Y. Laws ch. 569, § 1.

State Apple Advertising Commission, 432 U.S. 333 (1977).

Measures employed to assure that public monies are not wasted

or public credit overextended clearly serve legitimate local

public interests.%*

In serving legitimate local interests, waste flow control

legislation does not discriminate in either intention or effect.

The local jurisdiction may exercise its power to designate an

out-of-state facility as well as an in-state one. Designation of a

transfer station, as in the case of the Clarkstown Law or the

ordinance at issue in J. Filiberto Sanitation, Inc. v. New Jersey

Department of Environmental Protection, 857 F.2d 913 (3d Cir.

1988), may, in fact, facilitate ultimate disposal in out-of-state

facilities. A local jurisdiction providing disposal services discrim-

inates only in the trivial sense that by choosing to provide one

form of disposal it excludes all others, both in-state and out-of-

state. Although particular interstate competitors may be dis-

placed, so are all competitors. If this can be viewed as an effect

on interstate commerce, it is only an incidental effect of the

traditional governmental power to provide exclusive disposal

services. More importantly, waste flow control legislation affects

in-state and out-of-state interests :

Waste flow control legislation also passes muster under the

second prong of the Pike test, in that its burden on interstate

commerce is not clearly excessive in relation to the benefits to

be achieved. Both economic analysis and the experience of

38. Petitioners’ arguments confuse the concept of simple economic

protectionism with that of laws aimed at serving legitimate local economic

interests. Promotion of economic interests is a legitimate purpose. In Pike, 397

U.S. at 143, this Court recognized that even laws promoting local private

economic interests could be legitimate. The fact that the interest promoted is

“local” — viz restricted to the jurisdiction enacting the law — obviously could

not render the purpose “protectionist.” All state and local laws must, by

necessity, serve interests within the state or locality. The Court has recognized

this fact by referring to a “legitimate local interest” in its formulation of the

Pike test. This Court, in Maine v. Taylor, 477 U.S. 133, 148 (1986), described

laws promoting economic interests which should be deemed protectionist as

those “motivated solely by a desire to protect local industries from out-of-state

competition.” This Court found that the critical question to be addressed in

determining whether a law is discriminatory or protectionist is whether

“out-of-state residents were forced to bear the brunt of the conservation

program for no apparent reason other than that they lived and voted in other

States.” Id at 149, n.19.

government teach us that unregulated, private decision-making

by waste generators or waste collectors cannot assure sound

disposal. Private competition will tend to produce a race for the

lowest priced legal means and a strong temptation to the illegal.

Moreover, enforcement is far more difficult with neither cen-

tralized disposal nor exclusive collection as a check on illegal

practices.

Alternative means to achieve the purposes of waste flow

control would be more destructive of interstate commerce in the

market for waste collection services. This is evident from

consideration of the various alternatives whereby a local juris-

diction may ensure delivery to its chosen disposal facility. It

may: (a) collect its own waste and deliver it to the disposal

facility; (b) contract with haulers to collect waste and require

delivery of waste to the facility by contract; (c) franchise haulers

on an exclusive or non-exclusive basis to collect waste and

require delivery of the waste to the facility as a term of the

franchise; or (d) adopt a waste flow control ordinance. Of these

alternatives, public collection eliminates private collection en-

tirely. Contracting or the use of an exclusive franchise will

reduce the collection market to a single choice and may not be

available to some jurisdictions under their authorizing legisla-

tion or charters. A system of non-exclusive franchises is func-

tionally equivalent to waste flow control, with an ordinance

requiring a franchise, and contractual provisions requiring the

use of the designated facility. By contrast, with a waste flow

control ordinance, multiple haulers may compete. Many hauler

firms operate in interstate commerce and waste generators are

free to make whatever contractual relationships they wish with

their haulers. Free competition and interstate competition in

this market are maintained. Only the location of the disposal

facility is mandated — a result that would flow from any of the

foregoing alternatives.*%

39. For example, as reflected in its solid waste management plan, NABL

App. A-52, Lancaster County, Pennsylvania, had a tradition of providing

publicly owned landfill disposal services while relying upon private, unregu-

lated collection and transportation services. When the County decided to

replace its outdated landfill with a state-of-the-art resource recovery facility

and modern lined landfill, to secure financing the County selected waste flow

control legislation in order to disrupt the existing private collection market as

little as feasible. NABL App. A-65, A-66; see also NABL App. A-42.

;

In addition, the local jurisdiction may use fees for services

or tax revenues that it collects directly to subsidize services or to

provide free services at its chosen facility so that collectors,

while not legally compelled, are presented with an irresistible

market alternative. Petitioners suggest that this is less

restrictive, because collectors are not legally compelled to use

the jurisdiction’s chosen facility. However, although subsidies

are different from waste flow control legislation in form, they are

not different in substance. A subsidy that is high enough will

have the same effect on interstate commerce as waste flow

control legislation, but will not protect the public fisc and will

discourage recycling and waste minimization.

Building a facility, charging a price that reflects the cost of

the facility, and simply hoping that waste will be disposed of

there does not represent a real alternative. It does not provide

the public good of assuring sound disposal methods,*! and it

improvidently commits a community's resources to provide

services that may not be used. A facility in most cases could not

be financed on this basis without a commitment of the local

jurisdiction's full faith and credit to repayment of the debt. A

local jurisdiction, in many cases, would not be empowered to

incur general obligation debt for such a speculative endeavor.

Accordingly, even if this Court does not find waste flow

control legislation to be authorized by RCRA, waste flow control

legislation is consistent with the requirements of the Commerce

Clause under the Pike test. It achieves legitimate state and local

purposes without a disproportionate adverse effect upon interstate

commerce.

40. This procedure is clearly authorized in some jurisdictions, while in

others taxing power may not be available to back up a long-term contract

obligation. The power to subsidize waste disposal activities on behalf of in-state

residents was upheld by this Court in Hughes v. Alexandria Scrap Corp., 426

U.S. 794 (1976). Montgomery County, Maryland has begun to implement such

a system. See NABL App. A-18.

41. There is evidence in the record to suggest that Petitioners’ facility,

unlike Clarkstown’s facility, is less than state-of-the-art. Petitioners acknowl-

edge that if their facility were in operation today, it would be subject to more

stringent regulations. See Clarkstown v. C & A Carbone, 587 N.Y.S.2d 681.

682 (N.Y. App. Div.), app. denied, 605 N.E.2d 874 (N.Y. 1992), cert. granted,

113 S. Ct. 2411 (1993).

V. CONCLUSION

For the foregoing reasons, this Court should affirm the

decisions of the New York courts on two grounds. First, waste

flow control is authorized by Congress in RCRA. Second, waste

flow control is integral to the exclusive provision of essential

governmental services by states and local governments as con-

templated by the Constitution, and is constitutional under the

test formulated in Pike because it serves legitimate purposes

without a disproportionate adverse effect upon interstate

commerce.

Respectfully submitted,

C. Bai rown

Counsel of Record

Robert B. McKinstry, Jr.

Brendan K. Collins

BALLARD SPAHR ANDREWS & INGERSOLL

1735 Market Street, 51st Floor

Philadelphia, Pennsylvania 19103-7599

(215) 665-8500

Counsel for Amicus Curiae

National Association of Bond Lawyers

APPENDIX

From Laws of the Commonwealth of Pennsylvania

CHAPTER DXCIV.

An ACT for regulating, pitching, paving and cleansing, the

highways, streets, lanes and alleys; and for regulating, mak-

ing and amending the water courses and common sewers,

within the inhabited and settled parts of the city of Philadel-

phia; for raising of money to defray the expenses thereof; and

for other purposes therein mentioned.

WHEREAS the paving the streets, lanes and alleys, within

the inhabited and settled parts of the city of Philadelphia, so far

as they have been already paved, and the keeping the same

clean, hath greatly contributed to the preservation of the health

of the people inhabiting therein, and resorting thither; And

whereas the law for effecting these good purposes is near

expiring, and divers streets, lanes and alleys, within the said city

remain yet unpaved;

. * *

VII. And be it enacted, That the said commissioners, or a

majority of them, from time to time, shall employ, hire, and

agree with proper capable persons to clean, the cart-way of the

said streets, lanes and alleys, which have been heretofore, or

shall be so paved as aforesaid, and to remove and carry off from

thence all mud, dirt and other filth there found, that shall or may

incommode the inhabitants, in such manner and form, and at

such time or times, as they, the said commissioners, or a

majority of them, with the Mayor or Recorder, and any four of

the Aldermen aforesaid, shall direct and appoint; which said

persons, so agreed with and employed, shall take upon them-

selves the office and duty of scavengers, pursuant to their

respective agreements aforesaid, under the penalty of five

pounds for every neglect or refusal; and if any such scavenger

shall neglect or refuse to carry off and remove all and every part

of the mud, mire, dirt and other filth, found in the streets, lanes

and alleys aforesaid, agreeable to his contract with the said

commissioners, he shall forfeit and pay any sum, not exceeding

twenty shillings for every such offence.

VIII. And be it further enacted, That the inhabitants and

occupiers of the houses and lots, and the sextons, porters, or

A-l

A-2

other keepers of churches, meeting-houses, academies, schools,

and other public buildings, and burying-grounds, fronting the

paved streets, lanes and alleys, within the said city, shall rake

and sweep into the cartway the dirt, soil and other filth, to be

found on the brick pavement or foot-way before their respective

houses, lots or dwellings, or cause the same to be done, once at

least in every week; that is to say, on every Friday, when the

snow or ice on the said pavements does not prevent, that it may

be removed by the said scavengers on the same day, or the day

following, under the penalty of any sum, not exceeding five

shillings, for every neglect or refusal.

IX. And be it further enacted, That no person or persons

whatsoever shall cast or lay, or cause to be cast or laid, any

shavings, ashes, dung, or other filth or annoyance, on any

pavement within the said city, under the penalty of any sum, not

exceeding twenty shillings, for every such offence; but every

such person and persons, having such shavings, ashes, dung, or

other filth, shall keep the same in some other place, until the

scavenger shall attend with his cart to carry off the same, which

he is hereby enjoined to do once in every week, at least, if

required, at the door of every such person, under the penalty of

five shillings for every refusal, and to take and receive the same

into his cart, and to remove the same out of the inhabited parts

of the said city, under the penalty of five shillings for every

neglect or refusal; Provided always, and be it enacted, That

every such person having such mud, dung, ashes or other filth,

so to be carried off, shall pay to every scavenger, for all such

filth, and no other, as shall be occasioned by or arise from his

particular trade, business or occupation, and is not incident to

common house-keeping, at such rate as shall be from time to

time settled and ascertained by the said commissioners, unless

he, she or they shell choose to carry off the same at his, her or

their own expense, in another manner.

* * .

XXX. And be it further enacted, That if any person or

persons shall, after the publication of this act, cast or throw

down, out of any cart, waggon or other carriage, any rubbish,

dirt or earth, in any public street, lane or alley of the city of

Philadelphia, save only in such parts and places as shall be

A-3

appointed and agreed on by the said commissioners for pitching

and paving the said streets, every such person or persons shall

forfeit and pay, for every such offence, the sum of five shillings,

and pay the costs of removing the same... .

* * *

1 Laws of the Commonwealth of Pennsylvania 284, 287-88, 297.

A4 -

Excerpts from

OFFICIAL STATEMENT

$325,985,000

NORTHEAST MARYLAND

WASTE DISPOSAL AUTHORITY

SOLID WASTE REVENUE BONDS

(MONTGOMERY COUNTY

RESOURCE RECOVERY PROJECT)

SERIES 1993A

INTRODUCTION

General

This Official Statement, the cover page (excluding prices

and yields) and appendices set forth certain information for use

in connection with the offering of $325,985,000 aggregate prin-

cipal amount of Solid Waste Revenue Bonds (Montgomery

County Resource Recovery Project), Series 1993A (the “Series

1993A Bonds”) of the Northeast Maryland Waste Disposal

Authority (the “Authority”). The Series 1993A Bonds are to be

issued pursuant to the Northeast Maryland Waste Disposal

Authority Act, being Title 3, Subtitle 9, of the Natural Resources

Article of the Annotated Code of Maryland (the “Act”) and the

Indenture of Trust, dated as of March 1, 1993 (the “Indenture”),

between the Authority and Signet Trust Company, as Trustee

(the “Trustee”).

* * *

Purpose of Issue

The proceeds of the Series 1993A Bonds will be used to

finance a portion of the costs of the Authority’s solid waste

disposal project (the “Project”), which includes (a) a mass-burn

resource recovery facility to be located in Dickerson, Maryland

with a design capacity of 1,800 tons-per-day (the “Facility”), (b)

improvements to an existing transfer station (the “Transfer

Station”) owned by Montgomery County, Maryland, and (c) an

A-5

intermodal solid waste transportation system (the “Transpor-

tation System”) utilizing primarily rail transportation.

The Authority also expects to issue its Solid Waste Revenue

Bonds (Montgomery County Resource Recovery Project) Tax-

able Series 1993B under the Indenture in the aggregate princi-

pal amount of $34,660,000 (the “Series 1993B Bonds”) simulta-

neously with the issuance of the Series 1993A Bonds. The

proceeds of the Series 1993B Bonds, together with investment

earnings, will finance the remaining costs of the Project. The

Series 1993B Bonds are not offered by this Official Statement.

The Series 1993A Bonds and the Series 1993B Bonds are

collectively referred to as the “Series 1993 Bonds.” The Series

1993 Bonds together with all additional bonds issued under the

Indenture are collectively referred to as the “Bonds.” All Bonds

will be secured by the pledge of Project Revenues as provided in

the Indenture.

In addition to paying the costs of constructing and equip-

ping the Project, the Series 1993 Bond proceeds will be used to

fund (1) a Debt Service Reserve Fund for the Series 1993A

Bonds in an amount equal to the Debt Service Reserve Fund

Requirement for the Series 1993A Bonds, (2) capitalized interest

on the Series 1993 Bonds, (3) the repayment to the County and

the Authority of previously-expended Project development costs

and payment of certain Project development fees and expenses

of the County and the Authority, (4) the costs of certain

improvements required by the Potomac Electric Power Com-

pany (“PEPCO”) under the Facility Site Agreement (described

herein), and (5) certain costs of issuance of the Series 1993

Bonds. The Series 1993B Bonds are not secured by the Series

1993A Bonds’ Debt Service Reserve Fund.

The Project will be owned by the Authority, which will

provide certain solid waste disposal services to the solid waste

management system (the “County System”) of Montgomery

County, Maryland (the “County”), pursuant to a long-term

agreement between the County and the Authority (the “Waste

Disposal Agreement”). Pursuant to a long-term service agree-

ment with the Authority (the “Service Agreement”), the Project

will be designed, built and operated by Ogden Martin Systems

of Montgomery, Inc. (the “Company”), an indirect subsidiary of

Ogden Corporation. In order to guarantee the Company’s

obligations under the Service Agreement (including the Com-

pany’s obligation to make damage payments), Ogden Corpora-

tion has entered into a Guaranty Agreement (the “Guaranty

Agreement’) in favor of the Authority. The Waste Disposal

Agreement obligates the County to make monthly service fee

payments solely from its Solid Waste Collection and Disposal

Fund (the “Solid Waste Enterprise Fund”) for solid waste

disposal services provided by the Authority sufficient to pay the

Authority's net cost of operation of the Project (a component of

which is debt service on the Bonds), except that under certain

circumstances, all or a portion of these payments need not be

made by the County when the Company is required to make

damage payments under the Service Agreement; these damage

payments are required to be in an amount sufficient to provide

for the timely payment of debt service on all (or the applicable

portion) of the Bonds. See “Sources of Payment and Security for

the Bonds — Sources of Project Revenues.”

The County has entered into a Master Authorization con-

taining covenants relating to the financial and operational man-

agement of the County System and the Solid Waste Enterprise

Fund (the “Master Authorization”). The Waste Disposal Agree-

ment is a Long Term Obligation authorized to be entered into

by the County by its Master Authorization which is incorporated

in the Waste Disposal Agreement. The County may issue other

Long Term Obligations in accordance with its Master Authori-

zation, and Long Term Obligations will be payable pursuant to

the Master Authorization on a parity basis with amounts payable

by the County to the Authority under the Waste Disposal

Agreement. On June 4, 1992 the County issued $34,365,000 of

its Solid Waste System Revenue Bond Anticipation Notes Series

A and Series B (the “System Bond Anticipation Notes”) to

finance the cost of a materials recovery facility and certain other

capital costs of the County System. The System Bonds Antici-

pation Notes mature on June 1, 1993. The County expects to

_refinance the System Bond Anticipation Notes and finance

certain other capital costs of the County System by issuing

long-term County System revenue bonds (the “1993 System

Bonds”) in an aggregate principal amount of approximately $51

A-7

million in accordance with the requirements of the Master

Authorization. The 1993 System Bonds will be Long Term

Obligations. The 1993 System Bonds will be issued by the

County on or about the date of the issuance by the Authority of

the Series 1993 Bonds, but are not offered by this Official

Statement.

Project Participants

The Authority. The Authority was established in 1980 to

assist participating political subdivisions within the State of

Maryland with waste management and the development of solid

waste recycling and disposal facilities. The Authority's four

original participating subdivisions, the City of Baltimore, Balti-

more County, Anne Arundel County and Harford County, were

joined in 1987 by the County. The Authority has developed

three major solid waste disposal facilities: (1) a 2,250 ton-per-day

resource recovery facility in the City of Baltimore, which serves

the City of Baltimore and Baltimore County, (2) a 55,500

ton-per-year sewage sludge composting facility in the City of

Baltimore, and (3) a 360 ton-per-day resource recovery facility in

Harford County. The Authority also assists its members with the

implementation of regional recycling programs and has devel-

oped State-mandated recycling plans for the City of Baltimore,

Baltimore County and Anne Arundel County. For further

information about the Authority, see “The Authority.”

The County. Montgomery County, Maryland is located

adjacent to the nation’s capital, Washington, D.C., and consists

of 495 square miles of land area and a total population (from the

1990 census) of 757,027. The County is responsible under

Maryland law for assuring that adequate facilities exist for the

disposal of solid waste generated in the County. Since 1943, the

County has provided a County-wide system for the disposal of

solid waste and in 1976 established its Solid Waste Enterprise

Fund to account for the revenues and expenses of the County

System. For further information about the County System, see

“County System.” According to a 1992 United States Depart-

ment of Commerce survey, the County ranks eighteenth highest

in 1990 per capital income among the 3,106 counties and

A-8

county-equivalents covered by such survey. The County gov-

ernment consists of a legislative branch governed by a nine-

member elected County Council (the “County Council”) and an

executive branch headed by an elected County Executive (the

“County Executive”). For further information about the County,

see Appendix M.

The Company. The Company, a Maryland corporation,

was formed in 1989 and is a wholly owned subsidiary of Ogden

Martin Systems, Inc. (“Ogden Martin”), a Delaware corpora-

tion. Ogden Martin holds the rights to the Martin GmbH fir

Umwelt- und Energietechnik (“Martin GmbH”) technology for

solid waste disposal and energy recovery on an exclusive basis in

the United States, Mexico, Canada, parts of the Caribbean and

Israel. Ogden Martin is a wholly owned subsidiary of Ogden

Projects, Inc. (“OPI”), a public company organized under the

laws of the State of Delaware. Ogden Corporation currently

owns approximately 84.7% of OPI. OPI, through Ogden Martin,

is a leading developer of waste-to-energy facilities in the United

States. OPI currently has 23 waste-to-energy facilities in oper-

ation (seven of which do not use the Martin GmbH technology)

and three facilities under construction. Ogden Corporation, a

Delaware corporation, is engaged in providing a variety of

services through corporate subsidiaries concentrating primarily

on waste-to-energy services, the environmental and energy

services area, and entertainment and aviation services. For

further information about the Company, Ogden Martin, OPI

and Ogden Corporation, see Appendix L.

PEPCO. Electricity generated by the Facility will be sold

to PEPCO pursuant to the Electricity Sales Agreement.

PEPCO, which was incorporated in the District of Columbia in

1896 and in the Commonwealth of Virginia in 1949, is engaged

in the generation, transmission, distribution and sale of electric

energy in the Washington, D.C. metropolitan area. PEPCO’s

retail service territory includes the District of Columbia and

major portions of Montgomery and Prince George’s counties in

suburban Maryland. The retail service territory served covers

approximately 640 square miles and has a population of approx-

imately 1.9 million. The executive offices of PEPCO are located

A-9

at-1900 Pennsylvania Avenue, N.W., Washington, D.C. 20068.

For further information about PEPCO, see “PEPCO.”

Feasibility Report

The Authority has retained R. W. Beck and Associates

(“R. W. Beck”) on a non-contingent basis to assess the technical,

environmental and economic aspects of the Project and the

other components of the County System. R. W. Beck has

reported its conclusions with respect thereto in the Independent

Consulting Engineer’s Report (the “Feasibility Report”), a copy

of which is included in this Official Statement as Appendix A.

The estimates, opinions and conclusions expressed in the Fea-

sibility Report are based on assumptions and calculations set

forth or described therein. The Feasibility Report should be

read in its entirety in order to evaluate such assumptions and

calculations. Further information about the Feasibility Report is

contained under the caption “Feasibility Report.”

Project Agreement Obligations

The Series 1993 Bonds and all Additional Bonds issued

under the Indenture are limited obligations of the Authority

payable solely from the Authority’s Project Revenues (herein-

after defined) and certain amounts available under the Inden-

ture, including certain proceeds of the Series 1993 Bonds. The

Bonds are not payable from the general funds of the Authority

and do not constitute a legal or equitable pledge of, or lien or

encumbrance upon, any of the assets or property of the Author-

ity or upon any of its income, receipts or revenues, except as

provided in the Indenture. The Bonds do not constitute a debt,

liability or pledge of the faith and credit of the State or any

political subdivision, including the County. Neither the State

nor the Authority nor any political subdivision of the State,

including the County, shall be obligated to pay the principal of,

or redemption premium, if any, or interest on, or the purchase

price of, the Bonds except from the Project Revenues and the

other amounts pledged therefor under the Indenture. Neither

the faith and credit nor the taxing power of the State or the

Authority or any political subdivision of the State, including the

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County, is pledged to the payment of the Bonds. The issuance of

the Bonds is not directly or indirectly or contingently an

obligation, moral or other, of the State, or the Authority or any

political subdivision of the State, including the County, to levy

any tax or make any appropriation for their payment. There is no

provision for appropriations for the benefit of the Authority by

the State. The Authority has no taxing power. The Authority has

no claim with respect to the Bonds on any revenues or receipts

of the State or any agency or political subdivision thereof, except

its rights to receive payments from the County pursuant to the

Waste Disposal Agreement and its rights arising as an obligee

under a Long Term Obligation under the Master Authorization.

The Authority's Project Revenues generally consist of (1)

amounts paid by the County from its Solid Waste Enterprise

Fund to the Authority for services provided pursuant to the

Waste Disposal Agreement, (2) payments by PEPCO to the

Authority pursuant to the Electricity Sales Agreement for

electricity generated and electrical capacity made available by

the Facility, (3) amounts (generally, damage or indemnification

payments) which may be paid to the Authority or the Trustee by

the Company under the Service Agreemient or by Ogden

Corporation under the Guaranty Agreement, (4) the Authority’s

share of the revenues from the sale of Recovered Materials, and

(5) certain other receipts of the Authority attributable to the

Project, including insurance proceeds and investment earnings

on funds (other than the Designated Bonds Fund) held under

the Indenture. For a discussion of certain exclusions from

Project Revenues, see “Sources of Payment and Security for the

Bonds — Project Revenues Defined” and “— Designated Bonds.”

Under the Waste Disposal Agreement, the Waste Disposal Fee

payable by the County is intended to cover the aggregate costs

of the Authority with respect to the Project, a component of

which is debt service on the Bonds. It includes a credit to the

County for PEPCO payments, Recovered Materials revenues

received, investment earnings and damage payments made to

the Authority pursuant to the Project Agreements. Under the

Indenture, the Authority will assign certain of its rights under

the Project Agreements to the Trustee for the benefit of the

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Bondholders, but will not grant for the benefit of the Bondhold-

ers a mortgage on the Project. See “Sources of Payment and

Security for the Bonds — Pledge of Project Revenues.”

The liability of the County under the Waste Disposal

Agreement to pay for services rendered by the Authority to the

County thereunder is a limited obligation of the County payable

solely from amounts in the Solid Waste Enterprise Fund

available for such purposes pursuant to the Master Authoriza-

tion. This liability does not obligate payment from the general

fund of the County and does not constitute or create a legal or

equitable pledge of, or lien or encumbrance upon, or claim

against, any of the assets or property of the County or of its

income, receipts or revenues, except amounts available in the

Solid Waste Enterprise Fund pursuant to the Master Authori-

zation. Subject to prior payment of certain operating costs of the

County System, the County has provided for the pledge of

certain County System revenues (as described below, the

“System Revenues”) for the payment of certain long term

obligations (the “Long Term Obligations”), including the Waste

Disposal Agreement. See “Introduction — Solid Waste System —

County System Expenses.” If the County defaults in its obliga-

tion to pay the Waste Disposal Fee, the Indenture precludes the

Authority from terminating the Waste Disposal Agreement and

requires the Authority to bring appropriate legal actions (in-

cluding mandamus) to require the County to fulfill its obligations

under the Waste Disposal Agreement, including the obligations

of the County under the Master Authorization.

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The Authority will make the entire disposal capacity of the

Facility available to the County System pursuant to the Waste

Disposal Agreement and will sell the entire net electrical output

of the Project to PEPCO pursuant to the Electricity Sales

Agreement. The ability of the Authority to generate sufficient

Project Revenues to pay the expenses of the Project and debt

service on the Bonds depends in part upon (i) the ability of the

Authority to perform its obligations under the Waste Disposal

Agreement and (ii) the ability of the County to generate

sufficient System Revenues to make payments from the Solid

Waste Enterprise Fund for all System Expenses, including

amounts due under the Waste Disposal Agreement.

Solid Waste System

General. Under Maryland law, the County is responsible

for the long-term planning of adequate facilities for the disposal

of solid waste generated in the County. The County at present

provides for the disposal or recycling of solid waste generated in

the County through the operation of the County System, an

integrated solid waste management system which includes the

Transfer Station, the Dickerson Composting Facility (the “Com-

posting Facility”), a materials recovery facility (the “MRF”), a

landfill (the “Oaks Landfill”) and source reduction and recycling

programs. The County System will be expanded to include the

- Project and a new landfill located near the Facility (the “Site

Two Landfill”).

Statutory Framework. Chapter 48 of the Montgomery

County Code 1984, as amended (“Chapter 48”) provides the

County's statutory framework for the County System. Chapter

48 governs many aspects of solid waste collection and disposal in

the County and includes provisions relating to: the establish-

ment and maintenance of public and private disposal facilities;

the establishment of service districts, such as the existing service

district in the southern part of the County servicing residences

with six or less dwelling units (the “Collection and Disposal

District’); the licensing of all waste collectors in the County; the

establishment of recycling programs and facilities; and the

creation of a solid waste advisory committee. The County has

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also enacted a comprehensive zoning and land use regulatory

scheme, applicable throughout the County (except for certain

municipalities specified in Chapter 59 of the County Code)

which limits the zones available in the County for the siting of

private solid waste management facilities.

County Ten Year Plan. In accordance with the require-

ments of Maryland law, the County has adopted a County

Comprehensive Solid Waste Management Plan (the “County

Ten Year Plan”). The County Ten Year Plan provides for the

management of all solid waste generated in the County through

the following methods (in order of priority): waste reduction;

recycling; incineration of waste that cannot be recycled; and

landfilling of waste that cannot be recycled or incinerated.

Pursuant to the County Ten Year Plan, the County has desig-

nated the Facility as “the central facility” for the disposal of

municipal solid waste generated in the County. In addition, the

County Ten Year Plan provides for other County System

disposal and recycling facilities, including the Site Two Landfill

and the MRF. Except for short-term, out-of-County haul ar-

rangements prior to the completion of the Site Two Landfill or

another in-County landfill, the County Ten Year Plan makes no

provision for the use of out-of-County municipal solid waste

disposal facilities. As required by the Maryland Solid Waste Plan

Act, the County Ten Year Plan has received all required

approvals from the State or has as a matter of law been deemed

to be approved. The 1992 amendments to the County Ten Year

Plan have been approved by the State.

Solid Waste Enterprise Fund. The Solid Waste Enter-

prise Fund is an enterprise fund established by County law to

account for all revenues and expenditures of the County System.

Under County law, the County must maintain and manage the

Solid Waste Enterprise Fund so that revenues equal expenses;

provided, however, that contributions from the general fund of

the County may be (but are not required to be) appropriated by

the County Council to fund a portion of the costs or to cover

emergency needs, unusual capital expenditures or unplanned

deficits not covered by adjustments of collection and disposal

fees. No such contribution has been made or been requested to

date. Chapter 48 provides that to the extent that annual

A-14

expenses exceed or are less than annual revenues, solid waste

collection, and disposal charges (described below) shall ordi-

narily be adjusted at least annually to fund such deficits or to

utilize such surpluses. However, retention of surpluses over a

multi-year period is permitted when necessary to fund esti-

mated future expenses or to provide funding for future antici-

pated short term deficits. As of June 30, 1993, the Solid Waste

Enterprise Fund is projected to have an available cash balance

(unencumbered assets which are available for the timely pay-

ment of obligations) of approximately $32 million.

Master Authorization. In order to secure the timely pay-

ment of amounts owed under the Waste Disposal Agreement

and other Long Term Obligations of the County System, the

County has entered into the Master Authorization, which is

appended to and incorporated into the Waste Disposal Agree-

ment. The Master Authorization contains various covenants

related to financial and operational aspects of the County

System. Subject to the provisions of the Master Authorization

permitting the application of System Revenues for other System

Expenses, the Master Authorization provides for the pledge of

all System Revenues to the payment of its Long Term Obliga-

tions. Pursuant to the Master Authorization, all revenues of the

County attributable to the County System, including Service

Charges imposed by the County and Tipping Fees collected by

the County at the Transfer Station, are required to be deposited

into the Solid Waste Enterprise Fund. All the costs incurred by

the County in providing collection and disposal services through

the County System are paid from the Solid Waste Enterprise

Fund. The Master Authorization includes covenants relating to

the establishment of accounts and payment priorities for ex-

penses of the County System; limitations on the ability of the

County to enter into certain long term contracts; the mainte-

nance of specified reserves; the prudent operation and mainte-

nance of the County System; the engagement of a consulting

engineer to review the status of the County System on an

ongoing basis; compliance with laws; and insurance require-

ments. The Master Authorization covenants are described in

A-15

“The County System— Master Authorization Covenants” and

“Appendix D—Summary of Certain Provisions of the Master

Authorization.”

The Master Authorization includes a rate covenant (the

“Rate Covenant”), which obligates the County to impose and

charge rates, fees and other charges for solid waste services

provided by the County System so as to comply with the

requirement of Chapter 48 that the Solid Waste Enterprise

Fund be maintained so that revenues equal expenses. The Rate

Covenant also requires the County to impose Collection

Charges sufficient to pay Collection Expenses. Specifically, the

Rate Covenant requires the County to fix, charge and collect

rates, fees and charges for Disposal Services so as to produce in

each Fiscal Year System Revenues which, when combined with

balances in certain accounts established under the Master-

Authorization, will in each Fiscal Year at least equal the sum of

(1) 100% of the Operating Expenses of the County System for

such Fiscal Year plus (2) 110% of the Long Term Expenses of the

County System respecting debt service (which includes debt

service on the Bonds) plus 100% of the sum of the balances of

amounts payable as Long Term Expenses of the County System

for such Fiscal Year plus (3) 100% of the sum of the amounts, if

any, required to be deposited in accounts established under the

Master authorization for such Fiscal Year.

The Master Authorization contains a service covenant (the

“Service Covenant”), which requires the County to operate and

maintain sufficient capacity in the County System in accordance

with the County Ten Year Plan for the disposal or recycling of all

Disposable Refuse generated in the County.

The flow control covenant of the Master Authorization (the

“Flow Control Covenant”) requires the County to deliver or

cause the delivery to the County System of all Disposable

Refuse generated (a) from Collection and Disposal District

Residences (defined below) and (b) from County facilities. It also

obligates the County to use its best efforts (other than by

legislation) to deliver or cause the delivery to the County System

of substantially all other Disposable Refuse generated within the

County. This obligation is subject to the provisions of the

County Ten Year Plan that provide for the development of

A-16

source reduction programs and commercial recycling programs

which may be implemented through private facilities.

In addition, as long as the County meets its Rate Covenant

contained in the Master Authorization relating to the generation

of System Revenues at minimum levels, the Master Authoriza-

tion permits the County to provide free or reduced rate disposal

service with respect to specific types of solid waste in order to

provide incentives for the use of certain components of the

County System. If the County is not in compliance with its Rate

Covenant, the Master Authorization prohibits the County from

providing such service without charging for the cost of the

service.

The County has agreed pursuant to the Master Authoriza-

tion that, to the extent permitted by law, it will not operate, or

permit in the County, any waste disposal facilities that will

compete with the County System.

County System Revenues. The County deposits all reve-

nues of the County System (the “System Revenues”) into the

Solid Waste Enterprise Fund. The System Revenues are ex-

pected to consis: of (1) Service Charges collected by the County

for providing solid waste management services through the

County System (the “Service Charges”), (2) Tipping Fees paid to

the County by private collectors and municipalities utilizing the

County System, (3) payments from the County's general fund for

services rendered to certain County facilities utilizing the

County System (“County Facilities”), (4) revenues from the sale

of recyclable materials, yard waste compost and methane gas

generated at certain County landfills and fees collected for

miscellaneous services and (5) investment earnings on balances

in the Solid Waste Enterprise Fund. System Revenues do not

include that portion of the service charges imposed on Collec-

tion and Disposal District Residences for the collection of

disposable waste, as opposed to the collection and processing of

recyclable materials or the provision of Disposal Services, even

though these service charges are deposited in the Solid Waste

Enterprise Fund. County Facilities do not include certain

governmental facilities, including public schools and higher

education facilities that are not under direct County control. In

general, these entities retain private collectors for disposal of

A-17

solid waste generated from such facilities. The County Ten Year

Plan precludes the acceptance by the County System of solid

waste generated outside the County. Accordingly, the Feasibil-

ity Report does not assume, and neither the County, the

Authority nor the Company expect, that there will be any

System Revenues from disposal of such solid waste or electricity

revenues generated from the disposal thereof.

Service Charges will consist of either (1) solid waste man-

agement service charges (“District Service Charges”) collected

by the County from residential housing with six or fewer units

(“Collection and Disposal District Residences’) in the Collection

and Disposal District, which is to be expanded to include all of

the unincorporated areas of the County or (2) system benefit

charges imposed for solid waste management services on all

residential and non-residential beneficiaries within a County-

wide solid waste management district (the “Systems Benefit

Charge”).

The Systems Benefit Charge was authorized by Bill No.

42-92 enacted by the County Council on December 8, 1992 (the

“Solid Waste Management District Legislation”), which empow-

ered the County to impose the Systems Benefit Charge on

residential and non-residential properties located within special

service district covering the entire County (the “Solid Waste

Management District”). The Systems Benefit Charge may be

imposed on all generators of solid waste located in the Solid

Waste Management District (or their collectors) to generate

funds to provide for all or part of the costs of the County’s solid

waste management programs regardless of whether the solid

waste is delivered to the County System. Although the County

is empowered by the Solid Waste Management District Legis-

lation to generate funds to provide for all System Expenses

through the Systems Benefit Charge, it expects to continue to

establish Tipping Fees and develop other sources of System

Revenues.

Sufficient signatures to petition the Solid Waste Manage-

ment District Legislation to referendum were filed on March

22, 1993. Therefore, the Solid Waste Management District

Legislation and the Systems Benefit Charge will be effective

only if and when a majority of County voters upholds the

A-18

Legislation in an election (anticipated in November, 1994).

Neither the County nor the Authority can give any assurance as

to the outcome of such an election. In anticipation of such a

petition, the County Council adopted an amendment to the

County Ten Year Plan to expand the Collection and Disposal

District and to empower the Country to impose District Service

Charges on Collection and Disposal District Residences in the

expanded Collection and Disposal District for solid waste man-

agement services made available by the County to Collection

and Disposal District Residences. This amendment to the

County Ten Year Plan is not subject to referendum. Thus,

Service Charges will consist of District Service Charges from

July 1, 1993, until such time as, and only if, a majority of County

voters upholds the Systems Benefit Charge. Thirty days after

any voter approval, (i) the Solid Waste Management District

would go into effect, and (ii) the Collection and Disposal District

would govern collection arrangements only in the approximately

80,000 households in the existing Collection and Disposal

District. The County expects waste collected from Collection

and Disposal District Residences in the expanded Collection

and Disposal District to be delivered to the County System

because the disposal cost will be paid through District Service

Charges, and hence no Tipping Fee is payable by the collector

for the delivery of this waste to the Transfer Station. Collectors

delivering waste from generators other than Collection and

Disposal District Residences are required to pay a Tipping Fee

or other disposal fee at the Transfer Station. This waste (“Non-

District Waste”) consists primarily of waste generated by resi-

dential facilities with more than six units, commercial, light

industrial facilities, certain governmental facilities (other than

County Facilities) and certain incorporated municipalities lo-

cated in the County. The County expects most collectors of

Non-District Waste to use the County System because the

Tipping Fee will be established for Non-District Waste at a level

that is sufficiently competitive with alternate disposal facilities to

attract Non-District Waste to the County System.

There have been threats of litigation challenging the valid-

ity and certain other aspects of both the Systems Benefit Charge

and the District Service Charges. See “Project and Bond

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Related Litigation” and the opinions of the County Attorney and

Co-Bond Counsel described therein.

Whether Service Charges consist of the Systems Benefit

Charge or of District Service Charges, Service Charges imposed

by the County on on residential property will be collected with

the tax bill for the applicable properties. Pursuant to either

method of charging, the County expects that once the Project is

operational, Tipping Fees or other disposal fees at the Transfer

Station would be established and collected from non-residential

collectors and collectors of solid waste from certain incorporated

municipalities in the County. The County intends that the

Tipping Fee or other disposal fees will be established and

collected at a level which is sufficiently competitive to maximize

System Revenues and result in the delivery of substantially all of

the solid waste generated in the County to the County System in

accordance with the County's Flow Control Covenant in the

Master Authorization. With the Tipping Fee or other disposal

fees so set at a sufficiently competitive rate, the County expects

that the balance of the System Revenues would be derived from

the Service Charges (i.e., the District Service Charges or

Systems Benefit Charge) and to a limited extent from the

revenues from the sale of recyclables, yard waste compost,

methane gas generated at certain County landfills and invest-

ment earnings in the Solid Waste Enterprise Fund.

County System Expenses. Amounts on deposit in the

Solid Waste Enterprise Fund may only be used to pay for

expenses of the County System, including the Waste Disposal!

Fee payable under the Waste Disposal Agreement (“System

Expenses’). The Waste Disposal Fee is expected to constitute

approximately 44% of the projected System Expenses in 1997,

the first full year that the Project is expected to be operational.

The remainder of the System Expenses is projected to consist of

the cost of operating County System collection and recycling

programs, of constructing and operating County System land-

fills, of payment of $9,737,226 (outstanding principal amount as

of June 30, 1993) of County general obligation bonds issued to

finance certain other County System facilities (as defined below,

the “Prior County Bonds”), of the payment of County solid

waste system revenue bonds or notes issued pursuant to the

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Master Authorization and of services of County employees in

connection with the County System. Some System Expenses are

payable pursuant to multi-year contracts for the operation of the

existing Oaks Landfill and the MRF.

The Project. The Project will be owned by the Authority

and will function as a component of the County System. The

Project will consist of (1) the Facility, (2) improvements to the

County's existing Transfer Station, and (3) the Transportation

System. In the County Ten Year Plan, the County has desig- -

nated the Project as the central disposal facility for municipal

solid waste generated in the County. The Facility will be

designed to process 1,800 tons-per-day of solid waste through

the use of the Martin GmbH mass-burning technology and to

have an annual effective operating capacity of 558,450 tons-per-

year assuming the design heat value of the waste. The Facility is

designed with a net electricity generating capacity of approxi-

mately 48 megawatts. The Facility’s air pollution control equip-

ment will include furnace lime injection, acid gas scrubbers,

baghouses, nitrogen oxide control equipment and mercury

control equipment.

The Transfer Station is located in Derwood, Maryland, in

the central portion of the County, approximately 18 miles from

the Facility. It is and will remain the primary facility in the

County System where solid waste is accepted from collectors. It

has been in commercial operation since 1982 as the only facility

in the County System where non-recycled solid waste (except

for certain County-generated construction debris which is di-

rected to a County System landfill after being weighed at the

scales at the Transfer Station) is accepted for disposal. The

County will continue to operate the scales at the Transfer Station

and to collect Tipping Fees from private collectors delivering

waste to the Transfer Station. Transfer Station improvements

(the “Transfer Station Improvements”) will include the installa-

tion of compaction equipment.

The Transportation System includes rail cars and inter-

modal sealed containers for the transportation of solid waste

between the Transfer Station and the Facility. Waste will be

A-21

transported from the Transfer Station to the Facility by rail.

Residue generated by the processing of waste at the Facility

(“Residue”), as well as bypassed Waste and Nonprocessible

Waste will be transported by truck from the Facility to the Site

Two Landfill. Rail yards will be constructed at the Transfer

Station and the Facility. As provided in the County Ten Year

Plan, waste will be transported from the Transfer Station to the

Facility only by rail.

System Landfills. The County System also includes land-

fill capacity which will be used for the disposal of Residue and

waste that is not processed at the Facility. Since 1982, the

County System's primary solid waste disposal facility has been

the Oaks Landfill, which is owned by the County and is

currently operated by Browning Ferris Industries, Inc. pursuant

to a multiyear contract. Pursuant to the County Ten Year Plan,

the County will not use the Oaks Landfill as the County's

primary disposal facility once it enters into short-term arrange-

ments for the disposal of waste at an out-of-County facility or

after the Site Two Landfill or another in-County landfill is

operational. The County Ten Year Plan provides that until the

Site Two Landfill or another County-owned landfill is com-

pleted, the Oaks Landfill shall be maintained in readiness as a

backup landfill for unrecycled solid waste (including Residue) if

the short-term arrangements are not consummated for any

reason or if out-of-County disposal is interrupted (temporarily or

permanently) for any reason. The County has also acquired

options on a portion of the site, and is in the final phase of the

permitting process, for the Site Two Landfill, which, when

operational, will have separate monofill capacity for Residue, as

well as separate cells for Bypassed Waste and Nonprocessible

Waste. The Site Two Landfill is expected to be able to accom-

modate the disposal of 9.5 million cubic yards of waste and to be

available by January 1, 1996. When the Site Two Landfill or any

other County-owned landfill opens, the Oaks Landfill will be

permanently closed.

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Project Agreements

Waste Disposal Agreement. The Authority will use the

Project to provide certain solid waste disposal services to the

County System under the Waste Disposal Agreement. The

Waste Disposal Agreement obligates the Authority to cause the

Company to design, construct and operate the Project, which

will function as a component of the County System. The County

will have the exclusive right to the waste disposal capacity of the

Project pursuant to the Waste Disposal Agreement. The Waste

Disposal Agreement will be in effect when the Series 1993

Bonds are issued and will remain in effect until the maturity date

of all outstanding Bonds or the date on which all outstanding

Bonds are defeased, unless the Service Agreement is terminated

due to a Company event of default (a “Company Default

Termination”) and the Company is obligated to pay debt service

on all or a portion of the outstanding Bonds as a component of

damages. See “Sources of Payment and Security for the Bonds —

Debt Service Payable Primarily from Company Damage

Payments.” The Indenture provides that the Authority shall not

terminate the Waste Disposal Agreement in the event of a

County event of default under the Waste Disposal Agreement,

but shall enforce its rights under the Waste Disposal Agree-

ment. The Waste Disposal Agreement requires the County to

pay the Authority monthly installments of the Waste Disposal

Fee for the solid waste disposal services provided by the

Authority. The Waste Disposal Fee includes amounts in respect -

of debt service on the Bonds, plus amounts payable by the

Authority to the Company under the Service Agreement, plus

other Authority costs of operating, maintaining, or administer-

ing the Project or of providing services under the Waste

Disposal Agreement, less Authority Component Revenues.

Authority Component Revenues generally consist of payments

by PEPCO in respect of the sale of electricity generated and

electrical generating capacity made available by the Facility, the

Authority's share of any revenues from the sale of Recovered

_ Materials, investment earnings on funds held under the Inden-

ture and damages paid to the Authority under any Project

Agreements, including the Service Agreement. The Waste

A-23

Disposal Fee automatically increases to account for any net

increases in the cost of providing service, including the portion

of cost increases due to the occurrence of Uncontrollable

Circumstances not borne by the Company. The County’s obli-

gations under the Waste Disposal Agreement are limited to

amounts in the Solid Waste Enterprise Fund available for such

purposes pursuant to the Master Authorization. See “Sources of

Payment and Security for the Bonds — Project Revenues from

Waste Disposal Fees.” With certain exceptions, the Waste

Disposal Agreement does not require payment by the County of

the debt service component of the Waste Disposal Fee during

the Extension Period or if Facility operations are terminated in

connection with a termination of the Service Agreement due to

Company default. If the Service Agreement is terminated for

Company default and Facility operations are continued, the

Company may be responsible for the payment of debt service on

a portion of the Bonds and the Waste Disposal Fee will include

a debt service component for the remaining Bonds. See

“Sources of Payment and Security for the Bonds — Debt Service

Payable Primarily from Company Damage Payments’ and

“— Designated Bonds.” Under the Indenture, certain conditions

apply to the termination of the Service Agreement by the

Authority. The Indenture provides that the Authority may not

terminate the Service Agreement and continue operations at the

Facility unless, among other things, the Authority engages the

services of an acceptable substitute operator of the Facility (a

“Qualified Substitute Operator”) and unless the County and the

Authority enter into an amendment of the Waste Disposal

Agreement which provides for continued payment of the Waste

Disposal Fee (including the portion of the debt service compo-

nent not payable by the Company as part of its termination

damages) following the termination of the Service Agreement.

In addition, the Indenture provides that the Authority may not

terminate the Service Agreement due to Company default and

abandon operations at the Facility if the Project satisfies the

Minimum Performance Standards during a Termination Perfor-

mance Test and a Qualified Substitute Operator assumes the

A-24

Company's obligations under the Service Agreement. See “Ap-

pendix C: Summary of Certain Provisions of the Indenture —

Exercise of Certain Rights.”

Service Agreement. The Authority has entered into a

long-term Service Agreement with the Company to serve as a

full-service vendor for the Project. All obligations of the Com-

pany under the Service Agreement are guaranteed by Ogden

Corporation pursuant to its Guaranty Agreement in favor of the

Authority. The Service Agreement is in effect for an initial term

of 20 years from the acceptance of the Project (or, if later, the

date of maturity or prior payment of the Bonds) and provides for

two additional 5-year extensions at the option of the Authority.

The Company's agreements under the Service Agreement

to design, construct and operate the Project correspond substan-

tially to the Authority's obligations under the Waste Disposal

Agreement. Pursuant to the Waste Disposal Agreement, the

County recognizes that performance by the Company of these

obligations in accordance with the Service Agreement consti-

tutes performance by the Authority under the Waste Disposal

Agreement.

The Company must design, build, equip, startup and test

the project. The estimated construction price of the Project is

approximately $278,000,000. The Company is required to com-

plete the construction and testing of the Project by the Sched-

uled Acceptance Date, which is 1,011 days after the Commence-

ment Date. Both the Fixed Construction Price and Scheduled

Acceptance Date must be adjusted for certain delays and costs

caused by Uncontrollable Circumstances and changes to the

Project required by the County or the Authority, and such

adjustments do not constitute defaults by the Company under

the Service Agreement. See “Appendix G: Summary of Certain

Provisions of the Service Agreement—Operation of the

Project — Uncontrollable Circumstances.”

Beginning on a date in 1993 designated by the County, the

Company will operate and maintain the Transfer Station and

accept and dispose of at the Designated Landfill all Acceptable

Waste delivered to the Transfer Station, subject however to the

Company's rights to reject waste, including its right to reject

waste in amounts greater than specified in daily, weekly and

A-25

annual limits. Pursuant to the County Ten Year Plan, the

County may select one or more service providers to provide

hauling and out-of-County disposal service for waste generated

in the County until the Site Two Landfill or another County-

owned landfill is completed. Upon such selection, certain

provisions of the Service Agreement will be modified to comport

with the terms and conditions of this short-term hauling arrange-

ment. Upon finalization of these short-term hauling arrange-

ments, waste accepted by the Company at the Transfer Station

that is not needed for start-up or testing of the Project will be

loaded at the Transfer Station and transported to the contracted

out-of-County facilities for disposal. The County Ten Year Plan

provides that if the out-of-County disposal facilities are not

available for any reason during this period, the County will make

available capacity at its in-County landfill for disposal of unrecy-

cled solid waste accepted by the Company at the Transfer

Station. This may include Residue. See “Appendix G: Summary

of Certain Provisions of the Service Agreement — Construction

of the Project — Operations of the Transfer Station During the

Extension Period.”

Upon completion of the construction of the Project, accep-

tance tests will be performed to determine the ability of the

Project to meet specified guarantees, including processing ca-

pacity, electrical generation, and environmental compliance.

The Performance Standards for waste throughput and electricity

production provide that the Facility will be able to process up to

558,450 tons-per-year of solid waste, and generate for sale to

PEPCO at least 643 kilowatt hours of electrical energy per ton of

waste processed, net of electricity consumption by the Facility,

subject in each case to adjustment based upon the heating value

of the waste, the operating effects of the mercury control

equipment, and the availability of certain minimum quantities of

process water. If the Company fails to cause the Project to be

accepted at the full Performance Standards by the Scheduled

Acceptance Date, an Extension Period of up to one year (subject

to further extension as a result of Authority Changes or Uncon-

trollable Circumstances) may be elected by the Company.

During the Extension Period, the Company may elect to have

the Facility accepted at standards less than the full Performance

A-26

Standards (but no lower than the applicable Minimum Perfor-

mance Standards). See “Appendix G: Summary of Certain

Provisions of the Service Agreement—Construction of the

Project — Extension Period” and “—Acceptance of Project at

Reduced Performance Standards.”

At the Company's request, the Authority and the County

Representative may (in their sole discretion) elect to have the

Project accepted at a standard lower than the Minimum Perfor-

mance Standards. If the Project is accepted at a Performance

Standard lower than the Minimum Performance Standards (the

“Substituted Performance Standards”), then (1) the Acceptance

Date will occur and (2) at the sole election of the Authority, the

Company must pay either (A) liquidated damages to the Author-

ity during the remaining term of the Service Agreement or (B)

Reduced Capacity Liquidated Damages. See “Construction and

Operation of the Project—Construction—Extension Period.”

Reduced Capacity Liquidated Damages are required by the

Indenture to be applied to an extraordinary redemption of the

Bonds. The Authority may terminate the Service Agreement if

Performance Tests demonstrate that the Project does not satisfy

the Minimum Performance Standards by the end of the Exten-

sion Period.

After acceptance of the Project, the Company must operate

the Project for a period of 20 years or, if longer, the period

ending on the final maturity date of the Bonds. The Company

must provide all personnel, supplies and materials for the

Project and perform all ordinary and extraordinary maintenance

on the Project during the term of the Service Agreement. It will

also administer the Electricity Sales Agreement, the Facility

Site Agreement and the Rail Transportation Agreement. The

Authority will pay the Company a monthly Service Fee consist-

ing of an Operating Charge plus Approved Pass Through Costs

and Service Fee Adjustments plus a share of energy revenues

less damages payable to the Authority. See “Construction and

Operation of the Project — Operation” for a description of certain

obligations of the Company and the Authority after acceptance

has occurred.

If during any Fiscal Year Acceptable Waste in an amount

less than the Guaranteed Throughput Capacity is delivered to

A-27

the Facility by or on behalf of the County as a result of increased

recycling or a decrease in the amount of Processible Waste

generated in the County, then the Company’s annual Operating

Charge will be reduced. See “Appendix G: Summary of Certain

Provisions of the Service Agreement—Changes in Design,

Construction or Operation — Reduced Facility Operating Level.”

If the Service Agreement is terminated due to Company

default, the Company is obligated to pay termination damages to

the Authority in an amount at least sufficient to defease all or a

portion of the Bonds depending on the throughput capacity of

the Project at the time of termination and on whether the

Authority and the County intend to continue operations at the

Project. If the Authority and the County elect to continue to

operate the Project, the Service Agreement obligates the Com-

pany to pay as a component of termination damages an amount

equal to a portion of the outstanding Bonds determined based

upon the shortfall in the throughput capacity of the Facility, if

any (as compared to the Guaranteed Throughput Capacity) and

such amount is required to be applied to redeem the designated

portion of the Bonds (the “Designated Bonds”) or, at the

Company's election in certain circumstances, to pay principal

and interest on such Designated Bonds in accordance with the

scheduled payment terms thereof. See “Sources of Payment and

Security for the Bonds— Debt Service Payable Primarily from

Company Damage Payments” and “—Designated Bonds.” For a

discussion of the enforceability of the Company's obligations to

pay damages, see “Sources of Payment and Security for the

Bonds — Limits on Enforceability.”

Guaranty Agreement. In the Guaranty Agreement, Og-

den Corporation has unconditionally guaranteed the perfor-

mance by the Company of all of the Company's obligations

under the Service Agreement. In order to further secure

performance by the Company of its obligations under the

Service Agreement, the Authority may require the Company to

provide a Guarantor Security Letter of Credit in an amount not

to exceed $50 million if (1) requested by the County or (2) Ogden

Corporation's senior debt, subordinated debt, or preferred stock

does not have a rating in the category of “Baa” or better by

Moody’s or in the category of “BBB” or better by Standard &

A-28

Poor's. See “Sources of Payment and Security for the Bonds —

Ogden Corporation Guaranty of Company’s Performance.” The

County may also require delivery of a Guarantor Security Letter

of Credit at any time at its option. Neither the Authority nor the

County has required delivery of a Guarantor Security Letter of

Credit prior to the issuance of the Series 1993 Bonds.

Rail Transportation Agreement. The Authority has en-

tered into a Railroad Transportation Agreement (the “Rail

Transportation Agreement”) with CSX Transportation, Inc.

(“CSX”"), which obligates CSX to provide a locomotive and crew

and to haul the Authority-owned rail cars and containers be-

tween the Transfer Station and the Facility. The Authority must

pay CSX for rail haul services based on the tonnages of solid

waste and Residue hauled except that a minimum annual

payment of $1,500,000 is required. The Company will adminis-

ter certain provisions of the Rail Transportation Agreement

pursuant to the Service Agreement.

Electricity Sales Agreement. The Authority has entered

into an Electricity Sales Agreement with PEPCO (the “Elec-

tricity Sales Agreement”), which obligates PEPCO to make

capacity made available by the Facility pursuant to the Electric-

ity Sales Agreement. The prices for energy and capacity deliv-

ered under the Electricity Sales Agreement are established by

reference to PEPCO’s tariff for purchases from cogeneration

facilities that is filed with and approved by the Maryland Public

Service Commission (the “PSC”) from time to time. The tariff

reflects PEPCO’s avoided cost of producing electricity and

capacity. The rates for electricity and capacity may be changed

due to a change in PEPCO’s future demand for electricity, the

future addition of generating units by PEPCO or a change in the

operating cost of future generating units in the PEPCO system.

See “Appendix H: Summary of Certain provisions of the Elec-

tricity Sales Agreement — Purchase and Sale of Electricity.” The

Facility’s electrical generating capacity is established by the

Authority and will be tested periodically. The Electricity Sales

Agreement imposes damages on the Authority if the Facility falls

substantially below the certified capacity level. See “Appendix

H: Summary of Certain Provisions of the Electricity Sales

A-29

Agreement — Capacity Guarantee.” The Company will adminis-

ter certain provisions of the Electricity Sales Agreement pursu-

ant to the Service Agreement.

Landfill Agreement. The Authority and the County have

also entered into a Landfill Agreement (the “Landfill Agree-

ment’), which obligates the County to make available to the

Authority landfill capacity for the disposal of Bypassed Waste

and Residue for the first five years of Project operations and

thereafter to provide such capacity to the extent it is available.

The Landfill Agreement is effective as long as any Series 1993

Bonds are outstanding (unless the Service Agreement is termi-

nated due to the fault of the Company and the Project is

abandoned, in which case the Landfill Agreement will termi-

nate). During the term of the Waste Disposal Agreement, the

County may charge the Authority a Landfill Fee based on the

County’s actual cost of operating the landfill for waste delivered

by or on behalf of the Authority. The Landfill Fee paid by the

Authority will in turn be included in the Waste Disposal Fee.

Project Site Lease. The County owns the Project Sites,

which include the Transfer Station, the Facility Site, an access

road through the Composting Facility and easements granted

under the Facility Site Agreement between the Authority and

PEPCO (the “Facility Site Agreement”), and has leased them to

the Authority under a Project Site Lease for a term of 40 years

unless sooner terminated as described in Appendix K.

* * *

A-30

Excerpts From

OFFICIAL STATEMENT

$135,600,000

LANCASTER COUNTY

SOLID WASTE MANAGEMENT AUTHORITY

RESOURCE RECOVERY

SYSTEM REVENUE BONDS

SERIES A OF 1988

SUMMARY STATEMENT

The following presents summary information regarding the

offering of the Series A Bonds and is qualified in its entirety by

reference to the more detailed descriptions appearing in this

Official Statement and by reference to the documents described

in this Official Statement. No person is authorized to make offers

to sell, or solicit offers to buy, the Series A Bonds unless the

entire Official Statement is delivered in connection with such

offer or solicitation.

Reference should be made to the definitions appearing in

Appendices D and G and in the Indenture for the definitions of

certain capitalized terms used in this summary and elsewhere in

this Official Statement.

Issuer —

Lancaster County Solid Waste Management Authority is a

body corporate and politic organized and existing under the

Municipality Authorities Act of 1945 of the Commonwealth of

Pennsylvania. Under the Lancaster County Solid Waste Man-

agement Plan 1986 (the “1986 Plan”), the Intermunicipal Agree-

ment and the County Agreement, the Authority has various

responsibilities for waste disposal in Lancaster County. The

Authority has no taxing power.

Bonds

The Authority is offering $135,600,000 of its Series A Bonds

pursuant to this Official Statement. The Series A Bonds are

being issued pursuant to a Trust Indenture dated as of June 1,

A-31

1988 between the Authority and Fulton Bank, Lancaster, Penn-

sylvania (the “Trustee”), and between the Authority and Hamil-

ton Bank, Philadelphia, Pennsylvania (the “Co-Trustee”). The

Authority intends to issue not in excess of $45,000,000 of

Landfill Bonds to finance a portion of the cost of the Landfill

Project.

Use of Proceeds

The proceeds of the Series A Bonds will be used to finance

a portion of the cost of the acquisition, construction, equipment

and installation of a mass burn resource recovery facility and

related facilities for the combustion of solid waste and electricity

generation (the “Facility”), the Facility Site and related facilities

for the transmission of electricity (the “Resource Recovery

Project”). The proceeds of the Series A Bonds will also be used

to pay capitalized interest on the Series A Bonds during the

construction of the Facility, to make a deposit into the Series A

Bonds Debt Service Reserve Fund and to pay certain costs of

issuance of the Series A Bonds.

Except for the payment of costs of issuance, the proceeds of

the Series A Bonds will be held in escrow and will not be

disbursed until (1) the governmental permits and approvals

necessary for the commencement of construction of the Facility

shall have been received, (2) the Pennsylvania Public Utility

Commission shall have taken the actions necessary to be taken

by it for effectiveness of the Electricity Sales Contract, (3) the

Company shall have honored or agreed to honor the Construc-

tion Notice to Proceed given by the Authority under the

Construction Agreement and (4) the Consulting Engineer shall

have given an opinion that there have been no material adverse

changes to the conclusions of the Consulting Engineer's Feasi-

bility Report dated June 16, 1988.

Security for the Series A Bonds

The Series A Bonds, the Landfill Bonds and all Additional

Bonds issued under the Indenture are and will be secured, as

provided in the Indenture, by the pledge thereunder of all of the

Authority's right, title and interest in and to the Authority's

A-32

Revenues and by all moneys and securities held from time to

time in specified Funds and Accounts held by the Trustee (other

than the Rebate Fund) under the Indenture. Revenues include,

among other things, all Tipping Fees and, after the construction

and commencement of operation of the Facility, amounts to be

paid by Metropolitan Edison Company under the Electricity

Sales Contract. The Revenue Fund, into which the Authority is

to deposit all Revenues other than certain proceeds from a Loss

Event, is to be held by the Authority unless there is an Event of

Default and, unless there is an Event of Default, will not be a

trust fund under the Indenture. The Series A Bonds, but not the

Landfill Bonds, are secured by amounts in the Series A Bonds

Debt Service Reserve Fund.

Under the Indenture, disbursement of moneys from the

Revenue Fund shall be under the sole management of the

Authority and the Authority is required to disburse money in

the Revenue Fund in a particular order so long as no Event of

Default has occurred and is continuing. Upon the occurrence of

an Event of Default, the Indenture provides that the Authority

shall transfer the Revenue Fund to the Trustee and, until such

Event of Default is cured, the Revenue Fund shall be main-

tained by the Trustee and shall be part of the Trust Estate. See

Appendix C, “Summary of Indenture” herein.

In addition to the foregoing, the Authority has assigned and

pledged to the Trustee, for the benefit of the owners of the

Bonds issued under the Indenture, all of its right, title and

interest in and to the County Agreement, the County Assign-

ment, the Construction Agreement, the Service Agreement, the

Guarantee Agreement and the Electricity Sales Contract, ex-

cluding certain reserved rights.

The Indenture includes a rate covenant pursuant to which

the Authority covenants to fix, ch-rge and collect, or cause to be

fixed, charged and collected, rates, fees and charges for the use

of the System and for services provided by the Authority which,

together with all other Revenues and all other available funds,

will, in each Fiscal Year, be sufficient to provide for payment of

expenses of operating, maintaining and repairing the System,

administration expenses of the Authority, debt service on all

Bonds issued under the Indenture, debt service on all other

A-33

debt obligations of the Authority, and amounts required, if any,

to be deposited into applicable debt service reserve funds.

The Series A Bonds are special limited obligations of the

Authority and are payable solely from and secured by the Trust

Estate, which includes, among other things, the Revenues and

the Funds pledged therefor under the Indenture. Neither the

credit nor the taxing power of the County or of any municipality

in the County or of the Commonwealth or of any other political

subdivision thereof is pledged for the payment of the Series A

Bonds nor shall the Series A Bonds be deemed to be an

obligation of any of such entities. The Authority has no taxing

power.

Construction and Operation of the Facility

The Facility is to be designed and constructed by the

Company pursuant to the Construction Agreement and oper-

ated by the Company pursuant to the Service Agreement. The

Authority currently expects the Construction Date to occur on

or about February 1989. Construction of the Facility is antici-

pated to be completed in 28 months from the Construction

Date. Under the Construction Agreement, the Facility is re-

quired to meet certain Performance Guarantees. The Construc-

tion Agreement sets forth various consequences if the Facility

does not meet the Performance Guarantees. In addition, the

Construction Agreement incluces various provisions related to

Uncontrollable Circumstances aad Work Changes.

Under the Service Agreement, the Company is to operate

and maintain the Facility for 20 years after the earlier of the

Acceptance Date or the date the Facility is placed in service,

with the Authority having an option to extend the period for five

years (such periods being subject to certain adjustments). The

Authority will pay the Company a fee for its services, including

a fixed component which is adjusted each year based on an

inflation factor and a share of energy and recovered materials

revenues. The Service Agreement requires the Company to

operate the Facility to continually meet the Performance Guar-

antees and specifies various consequences if it does not. In

A-34

addition, the Service Agreement includes various provisions

related to Uncontrollable Circumstances and Work Changes.

See Appendix D, “Information Concerning Agreements

Related to the Facility and Parties Thereto” for summaries of the

Construction Agreement and the Service Av~ecment.

Company under the Construction Agreement and the Service

Agreement. See Appendix D, “Information Concerning Agree-

ments Related to the Facility and Parties Thereto — Guarantee

Agreement’.

Electricity Sales Contract

The Authority has entered into an Electricity Sales Con-

tract with Metropolitan Edison Company pursuant to which

electricity generated by the Facility and not used in the

operation of the Facility will be sold to Metropolitan Edison

Company. The Electricity Sales Contract has a term of 25 years

beginning on the date the Facility commences commercial

operation. See Appendix D — “Information Concerning Agree-

ments Related to the Facility and Parties Thereto” for more

information regarding the Electricity Sales Contract.

Waste Flow Control

The 1986 Plan was prepared to comply with the require-

ments of Pennsylvania's Solid Waste Management Act, which is

a comprehensive law regulating the management of solid waste

disposal throughout Pennsylvania. The 1986 Plan was approved

by Lancaster County and all municipalities in Lancaster County

and received final approval from the Pennsylvania Department

of Environmental Resources on September 30, 1986. In order to

implement the 1986 Plan, Lancaster County entered into the

Intermunicipal Agreement with each of the municipalities in the

County, entered into the County Agreement with the Authority

and adopted a Waste Flow Ordinance and each municipality in

the County adopted a Municipal Waste Flow Ordinance and

entered into the Intermunicipal Agreement. The effect of such

agreements and ordinances is to require the delivery to the

System of substantially all municipal solid waste generated

A-35

within Lancaster County and not source separated or recycled,

require licensing by the Authority of all municipal waste collec-

tors and haulers and provide for Authority administration and

County enforcement of the ordinances, including Authority

establishment of fees for delivery of waste to the System. See

“Waste Flow Control” herein.

A-36

OFFICIAL STATEMENT

Relating to

$135,600,000

LANCASTER COUNTY SOLID WASTE

MANAGEMENT AUTHORITY

Resource Recovery System Revenue Bonds

Series A of 1988

INTRODUCTION

General

The purpose of this Official Statement, which includes the

cover page and the Appendices hereto, is to provide information

in connection with the issuance and sale by Lancaster County

Solid Waste Management Authority (the “Authority”), of its

Resourse Recovery System Revenue Bonds, Series A of 1988 in

the aggregate principal amount of $135,600,000 (the “Series A

Bonds”). The Series A Bonds are being issued to finance a

portion of the cost of the Resource Recovery Project.

The Series A Bonds are being issued by the Authority

pursuant to a Trust Indenture dated as of June 1, 1988 (the

“Indenture”) between the Authority and Fulton Bank, Lan-

caster, Pennsylvania, as trustee (the “Trustee”), and Hamilton

Bank, Philadelphia, Pennsylvania, as co-trustee (the “Co-

Trustee”), and in accordance with the provisions of the Munic-

ipality Authorities Act of 1945, Act of May 2, 1945, P.L. 382, as

amended and supplemented (the “Act”).

The Authority intends to issue not in excess of $45,000,000

‘of its Resource Recovery System Revenue Bonds, Landfill

Series of 1988 (the “Landfill Bonds”) to finance a portion of the

costs of the Landfill Project.

Certain capitalized terms used in this Official Statement

that are not defined elsewhere herein are used with the

meanings set forth in Appendix G hereto or in the Indenture.

Purpose of the Financings

The proceeds of the Series A Bonds will be used to finance

a portion of the cost to acquire, construct, equip and install a

A-37

mass burn resource recovery facility and related facilities for the

combustion of solid waste and electricity generation (the “Facil-

ity”) in Lancaster County, Pennsylvania, the Facility Site and

related facilities for the transmission of electricity (the “Resource

Recovery Project”). The Facility will be acquired, constructed,

equipped and installed pursuant to a Design and Construction

Agreement dated as of September 25, 1987, as amended or

modified (the “Construction Agreement”), between the Author-

ity and Ogden Martin Systems of Lancaster, Inc. (the “Com-

pany”), a Pennsylvania corporation. The Facility will be owned

by the Authority. The Company will operate the Facility

pursuant to a Service Agreement dated as of September 25,

1987, as amended or modified (the “Service Agreement’),

between the Authority and the Company. The Company is a

direct wholly-owned subsidiary of Ogden Martin Systems, Inc.,

a Delaware corporation, which in turn is an indirect wholly-

owned subsidiary of Ogden Corporation, a Delaware corpora-

tion. The Company was formed in 1987 for general corporate

purposes, including designing, constructing and operating the

Facility. The obligations of the Company under the Construc-

tion Agreement and the Service Agreement are guaranteed by

Ogden Corporation.

The proceeds of the Landfill Bonds will be used to pay a

portion of the costs of the Landfill Project. The Authority has

acquired ownership of a 153 acre parcel of land adjacent to its

existing Creswell landfill and intends to develop this parcel of

land as an additional landfill. The proceeds of the Landfill Bonds

are intended to be used to refinance temporary indebtedness

incurred to acquire this parcel and to pay costs for design and

engineering of the landfill to be constructed on this parcel,

construction and equipment of a leachate treatment system and

construction of the first two cells of the landfill.

The Resource Recovery Project and the Landfill Project are

integral parts of the Authority’s planned overall solid waste

management and disposal system (the “System”). In addition to

these components, the Authority owns and operates a transfer

station, an existing landfill and vehicles, machinery and equip-

ment used in connection with the transfer station, transportation

A-38

of solid waste from the transfer station to the existing landfill and

disposal of solid waste at the existing landfill.

USE OF PROCEEDS

The proceeds of the sale of the Series A Bonds will be used,

together with investment earnings thereon and other funds, to

pay a portion of the costs of the Resourse Recovery Project, to

fund the Series A Bonds Debt Service Reserve Fund for the

Series A Bonds, to fund interest on the Series A Bonds prior to

and during the first twenty-five months of the anticipated

construction period and to pay certain costs of issuance.

The Authority is an operating entity which, since its

formation in December 1954, has provided solid waste disposal

services to municipalities and private haulers in the County. The

Authority's first landfill began operation on October 3, 1955.

This landfill was located in Manheim Township, to the west of

Lancaster City, at property owned by the Lancaster Brick

Company. In 1955, landfill disposal fees ranged from 30 cents

per cubic yard decreasing to 15 cents per cubic yard for persons

delivering larger volumes. In 1962, the Authority started land-

filling at a site south of Lancaster City. This site is now a part of

the Lancaster County Park. In 1964, the Authority acquired

land at Creswell, Manor Township, and in 1968 began landfilling

at the Creswell site. In order to minimize the effects of the

longer hauling distance to the Creswell landfill, the Authority

constructed a transfer station in Manheim Township which also

has been in operation since 1968. The Authority completed

landfilling operations at both the Lancaster Bri

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