How Jim Warner helped build an integrated empire in Pennsylvania
The longtime Lancaster Solid Waste Management Authority CEO talks about the evolution of landfill, WTE and recycling technology after 30-plus years on the job.
Few county-level executives have as much national name recognition as Jim Warner. Perhaps that is because few can take credit for helping to create such a financially durable integrated system
Warner, CEO of Pennsylvania's Lancaster County Solid Waste Management Authority (LCSWMA) since 1996, now oversees an estimated $85 million budget and is responsible for moving nearly one million tons of material per year. The authority's infrastructure network includes a landfill, two waste-to-energy facilities, a transfer station and other assets.
LCSWMA is considered a model by many and Warner himself has been recognized multiple times, including earlier this year with a Robert L. Lawrence Distinguished Service award from the Solid Waste Association of North America. With a December retirement date approaching, Waste Dive spoke with Warner about LCSWA's growth and where he sees key industry trends heading next.
The following interview has been edited for clarity and annotated for context.
WASTE DIVE: It seems like LCSWMA had a lot of foresight to make these infrastructure investments in prior decades, when the easy way out may have been to start exporting to other landfills or facilities. What were those conversations like?
JIM WARNER: That was really community leaders recognizing early on — and by early, I mean in the mid-'80s — one of the most precious things in Lancaster County, and that's land. Back then, our community was disposing [enough to fill roughly] 40 acres of land, 40 feet deep each year. Updated waste management was just ready to begin its infancy with [RCRA] Subtitle D and the advent of modern waste-to-energy.
Our community leaders said, "Let's write a plan, let's have an integrated system, and then let's get all the communities to agree to that."
Their natural reaction was, "Well, we have to attack this in multiple ways and we need to have government-sponsored recycling." So, those counties went around and hired recycling coordinators, who were some of the first in the country. I was just coming out of graduate school and I got hired as a recycling coordinator. I worked for a couple years in the county across from Philadelphia, in Gloucester County, New Jersey. Then, Lancaster County, where I had some history, was setting up this management team to implement this integrated plan.
Within a few years, we sited and broke ground on a waste-to-energy plant with Ogden Martin at the time, now Covanta. We built out the first new Subtitle D double-lined landfill that, now looking back, lasted us 30 years. It's full next year and we're just ready to finish construction on a vertical expansion.
The Frey Farm Landfill could have reached capacity by 2000 at standard disposal rates. LCSWMA estimates that with 44% of its waste getting recycled, and 50% getting combusted, only about 6% has been ending up in the landfill. That capacity will now be extended by another 20 years after the vertical expansion is complete.
The main thing that attracted us to energy recovery was the volume reduction. In the last 15 years, it's all been about the back-end, the energy recovery and so forth. At the time, our community was looking at the 90% volume reduction and the energy contracts were critically important to help make it affordable to gain that volume reduction.
So LCSWMA was in a fairly unique position of being able do this all at once. Starting from scratch with the integrated system, the landfill, the waste-to-energy facility, getting recycling going. Not everybody has that luxury, or the financial or political capital, to do so.
WARNER: That's correct. We went out [with a] flow control model and borrowed a lot of money in 1988. And that would be extremely expensive money. I think our average rate on that was about 8.5% at the time.
So, it really was unique. Then we had this huge amount, I think it was $20 million a year in debt service, and the idea was, "Well, with flow control, it's pretty simple. Whatever your costs are, you just divide tons into your cost and that's your rate." And it got a lot more complicated than that a lot faster ... Fortunately, most everybody was forced to get much more creative and entrepreneurial, and make sure they utilized their assets to the fullest extent. That's been a huge part of our success.
Our rates in 2018 are less than they were in 1993. And the whole system's paid for. We've invested hundreds of millions of other dollars, and it's just because we were very entrepreneurial and efficient in diversifying our revenues.
LCSWMA acquired its second WTE facility in 2013, now called the Susquehanna Resource Management Complex, from the city of Harrisburg for $130 million. Negotiations were complex and considered financially risky at the time, as described in a recent story by The Burg, but the deal has since proven very beneficial.
Prior to the Harrisburg deal, when you knew you were running out of space, did this feel like your only option or did you also explore long distance exporting?
WARNER: [In 2008] we opened a new overhauled $35 million transfer station, so it gave us the ability to long haul things, but we really have never been an exporter. It's always been an item we've prided ourselves on. We see our mission as taking care of the waste that's generated here in our jurisdiction as efficiently as we can. So we were used to planning for, financing and building out capacity in a cost-effective way.
Warner explains that LCSWMA also considered adding another unit to its existing WTE facility to handle excess tonnage. Though this still wouldn't have been enough to make it work at the time, as WTE facilities must operate at a steady capacity, and so the concept of purchasing a whole new facility became more viable.
Whereas Harrisburg, we got a unit that had processed 300,000 tons a year. We had put-or-pay contracts for about 180,000 of that for 20 years. And so we're left with the other 120,000 [of spot waste].
So, the idea was that we're buying an asset at the price of the ongoing business, and then as we get better business, either organically or through our own initiatives, it's going to be replacing that spot waste at higher revenue above and beyond what the model called for. For example, in 2014, the first year we owned that project, I think we took in about 110,000 tons of spot waste. This year we're going to take in about 20,000.
It's interesting looking at this scenario, because for many people, the easiest move would have still been to export it and then let somebody else deal with the problem in say 10 years.
WARNER: That's right, but we like to manage our own destiny, no matter the challenge. We saw that as the bar was set so low on that facility and its management and operation that I knew that our team could come in there and make a diamond out of a piece of coal. And really, that's what we've done. Not just from the operation — which we had to rely on Covanta by making investment in their know-how — but the 59-acre site was terrible. Now, we've brought that site to look like any of our other sites, which is some of the nicest looking that you'll find anywhere.
Given your experience running a couple of these facilities now, partnering with Covanta as well as Inashco on an upcoming metals recovery facility, you know how to make WTE work. What do you think others are missing nationally, why can't the technology seem to grow in the U.S.?
WARNER: So innovation on the back-end with metal is now here, and value will be gained for these projects due to it. But the energy values are what is just hampering development in the U.S.
I think the other thing that works against it is these projects have very long development cycles, 8-10 years, and political cycles are half of that. So to get a successful project in, if it's not a pure private, you have to get through a couple political cycles, and it's just very, very difficult. It's funny. In communities that have waste-to-energy, they're generally well accepted. But in communities that don't, they are considered the absolute boogeyman. It's a shame, but it's a fact.
After a career in the industry, nothing really has changed in that there's three things you can do. You can burn, bury and recycle the majority of the waste — and I'm throwing composting in with recycling.
So, you really have landfills that are cheaper. They do what they're supposed to do. Most landfills are effective in protecting groundwater. I think they've proven that. Now, they're not the highest and best use, but even landfills have gotten better in capturing the energy. We've gone from flaring, to LNG, to now RNG, and efficient leachate collection and treatment.
Recycling seems to me to have grown, grown, grown, peaked, had a big blunder here after umpteen years, and now has to get back on its feet, restructure itself, and hope that there can be more of a domestic answer than the export reliance that blew up in our face.
[When you look at national trends] recycling is 35%, and waste-to-energy is 12%, and landfilling is 53%. I don't see that changing much. To me, recycling's sort of holding on between 30% and 35%. Waste-to-energy is losing a point here or there, and landfilling is the one who lost due to recycling, but is now gaining that market share.
Warner goes on to discuss how he has heard about many disruptive new technologies over the years that could present an alternative to landfills, but few end up being viable. In his opinion, Enerkem and Fiberight are among the most intriguing concepts to watch right now.
Did you ever do the math on a composting or an AD site. If not, why?
WARNER: We actually did look at it. We looked at it with a local food-producing industry and a renewable energy company that does landfill gas and some other stuff. There were too many uncertainties. This was about three years ago, and we just haven't quite figured out how to incentivize all the different parties. Our biggest uncertainty was, could you get the correct commercial food streams at the correct tipping fee in order to make it work?
I think we're going to look at it again, but, to be honest the food waste goes in the garbage with other less moist waste. It gets mixed, and it's all part of the fuel value that's going into our waste-to-energy plant. It's all part of the organic mix, and it comes out as dry, inert ash. So, we're managing it without a problem, and we're not really as focused on trying to pull it out.
Would it make a difference if there was a regulatory driver, say a state-level policy?
WARNER: You know what? It probably would. Since we operate facilities that have front gates and permits that need [compliance], it probably would. I've never been somebody to support waste bans. Though actually, the TVs are [covered by one] in Pennsylvania, and tires. We've been able to work around that. But food that's coming in everybody's garbage on a daily basis? It would be much harder to enforce.
I don't support it, but I don't deny that it would probably wake up a lot of large-scale producers of food, and put some programs in place, and you'd have a lot of vendor activity.
Pennsylvania is known as a big importer of out-of-state waste and appears content to maintain that free market set-up. The same goes for recycling, which has held steady but hasn't seen a major push toward "zero waste" or high diversion rate targets aside from Philadelphia's recent efforts. Warner believes this is likely for the best.
WARNER: The "zero waste" goals are not ever put forth by people that deal with the waste, who know the waste. They're done with people that are somewhere up above the pipeline. We're the ones trying to get through the day at the end of the pipeline. They're really good for political points, whether it's a department doing it upstream to the politician, or the politician coming up with it and pushing it downstream, because the dates are always like 15 to 25 years out.
There's really no risk to it, but unfortunately there's a lot of people on the fringe that start to believe in it. And when I look at it, I think here we are as a country, a city, a state, and the good ones are doing a legitimate, say 30%, 35% [recycling rate]. When I say legitimate, they're not counting car hulks and asphalt and stuff like that.
We as a country have shown that we're trying to hold together at 35%. Of the 35%, a lot of that probably is trash that's being counted going into all the MRFs throughout the United States. So the 35% might be closer to 25%. So maybe we should be trying to develop our recycling infrastructure so that we can solidly support 25%, and have domestic markets which will support that, rather than be talking about zero percent.
Over the summer, LCSWMA and its recycling processor Penn Waste announced a new reduced list of accepted materials called the "Big 4" due to market conditions. Mixed paper was cut as a result.
Does that recycling list ever expand again if domestic infrastructure comes back to support it?
WARNER: It might, but I would urge people to be very careful about getting overzealous in asking for fringe products ... When I say fringe, I'm talking primarily mixed paper and 3-7 [plastics]. You know what? That stuff was never getting recycled. Most of it was going to China, and the plastics in that mixed paper were getting picked out by somebody else and, a lot of times, disposed of or burned without environmental controls.
In another 20 years, how many newspapers are there going to be? I love our local newspaper, they do a great job, [but] the amount of newsprint being bought domestically compared to about 15 years ago is less than half. So, it becomes hard to pick it out even if it's put in the bin.
I think what we need to do is work to maintain glass markets. People want to recycle glass ... They identify it as a recyclable ... So, if you can recycle it, I think that's great. And metal cans, and cardboard.
With that in mind then, there's been more talk lately about how much landfill capacity we have left as a country. While some regions have quite a bit it won't last forever. Unless we just keep expanding, which we might, will we eventually be sending stuff out to the desert? Assuming we don't want to do that, but then some recyclable materials aren't considered viable, where does this all lead?
Warner goes on to make a comparison to Europe, where WTE usage is higher due in part to a regulatory structure that has moved away from burying untreated waste in landfills. With that example in mind, he then turns to the U.S.
WARNER: I think between now and then, you're just going to keep seeing longer haul. More and bigger transfers ... I hate to say it, but I think you're going to have to continue increases of landfills. Tipping fees now at some of these MRFs are $20, $30 or $50 more than the landfill. The incentive to recycle to avoid the landfill fee is totally backwards.
So, I think for the next decade, we're in a period where landfills will continue to probably take market share because there's no waste-to-energy development in the pipeline. Might get an expansion here or there. And recycling programs are trying to sustain their practicality, right? So where does that lead you? It leads you into more landfill.
The discussion turns to the question of whether, even if new diversion programs are introduced, the average resident will take the time to properly separate food waste or other categories if some still can't seem to properly separate bottles and cans. In Warner's view, this behavioral issue is a key piece of why disposal is often still the easiest option.
WARNER: Every time you stratify the waste stream, "We're going to take this out and we're going to take that out, and apply this technology," you're adding to cost.
Landfills are extremely forgiving. Put it all in the truck, dump it in the landfill, we'll smash it, we'll compact it, and we'll make sure when it rains, the rain doesn't get into the groundwater, right? And we'll control the gas. Those are the main things they've got to do.
[Waste-to-energy] technologies are forgiving. They can process in mass, 2,000 tons a day, 5,000 tons a day. This is what they do. That's what makes them economically viable, and we still have tipping fees from $30 to $80 or whatever.
So just think about when you try to pull out a little bit of the waste and put it through this separate technology all by itself. 100 tons rather than the 3,000 tons that are going into the one ... A) it's very little impact and B) it's very, very expensive. Not only is the process around it expensive and uncertain, but you've got to pick it up.
So these are the challenges that the industry has, and this is why large proven-scale technologies are going to rule the day for years to come.
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