ACTION ENVIRONMENTAL GROUP
RONALD S. BERGAMINI, CEO
BUSINESS INTEGRITY COMMISSION
PUBLIC HEARING ON TRADE WASTE CAP RATES
DANIEL D. BROWNELL, CHAIRMAN
APRIL 9, 2018
Good afternoon Commissioners, my name is Ron Bergamini, CEO of the Action Environmental Group, the parent company to Action Carting, the largest private hauler of solid waste in New York City.
At the hearing on October 18, 2017, I testified on the merits of the rate cap and additional costs facing all responsible solid waste companies. Please refer to that testimony for your review as it frames the discussion in terms of business fundamentals affecting all industry participants.
We feel the need for a rate cap has passed. The basic economic problem with any artificial price restraint is that it distorts markets. One consequence is less investment and less customer choice. These are hardly the goals of an enlightened industry. I would also like to echo and support the written testimony of Mr. Steve Changaris, the New York City Chapter Director of the National Waste & Recycling Association (“NWRA”).
As a member of the BIC’s Trade Waste Advisory Board, I share the responsibility of conveying the challenges and goals of the industry. In today’s testimony, I would like to address two critical and related issues that have drastically changed the recycling landscape in New York City and beyond since October.
The first issue concerns the City’s new mandate with respect to commercial recycling. Our company has put three additional trucks on the road to better manage clean recyclable materials. The monthly cost of having an additional truck in service is approximately $20,000. While we share the general goals of recycling, contrary to popular belief, recycling often costs more to process than solid waste.
The second issue is even more profound. The international recycling market has been upended by new policies instituted by China. China has long been the dominant player as the biggest importer of recyclable products such as plastics and fiber based products.
Beginning January 1, 2018, China banned 24 types of solid waste, including unsorted paper and various plastics. Additionally, bales of acceptable paper and cardboard must meet an unworkable standard of .5% contamination, whereas previously the standard was 2%. In many parts of the United States, mixed paper is going to landfills. The problem is not that the market is soft, there is no market.
A year ago a ton of OCC sold for $200. Today, the price is about $65. Mixed paper sold for $150 a ton a year ago and today mixed paper is worth zero. You simply cannot move it. Unlike previous movements in these markets, this time is different in that market forces are not causing the decline. Instead, a radical shift in China’s public policy is the cause. There are no indications that this situation will change in the near or mid-term.
Markets in this country and others may eventually increase demand to deal with the great disparity of supply. At best this is several years away. I would urge this body and members of the public to simply Google “recycling markets China” to learn about the impact this policy shift is having all over the world. Further you can listen to a conference call from this past Friday where Michael Hoffman, Environmental Services Analyst for Stifel Capital Markets interviewed Bill Moore of Moore & Associates to discuss the China Impact on the Recycling Markets.
One obvious forward looking consequence is that prices charged for the collection of solid waste and recycling must change to reflect the industry’s changing economics. Thus, I would urge a rate cap increase of at least 20 percent. I would also urge that the BIC not wait the traditional two years to review the rate cap but to do so annually until the day finally comes when this artificial restraint on the market is ended.