Exclusivity question hangs over NYC franchise zone plan in latest step forward
- New York's Department of Sanitation (DSNY) recently released a legally-required draft Environmental Impact Statement (EIS) analyzing potential effects of adopting a non-exclusive commercial waste zone system by 2024. The EIS also studied an exclusive option spurred by ongoing requests.
- While proponents touted the inclusion, DSNY didn't mention the exclusive option in its own press release. Instead, the agency touted how a non-exclusive system could reduce private truck miles by 50%, increase commercial diversion from 25% to 44% and reduce operating expenses by $14 million.
- Compared to "no action" and non-exclusive, the EIS found exclusive zones with one company each could decrease operating costs by an additional $8.7 million and reduce truck miles even further. However, it could also lead to higher pricing, reduced customer satisfaction and "substantial" logistical challenges.
DSNY's proposed non-exclusive system of 20 zones, with up to five companies in each depending on geography, could result in as many as 68 different contracts. As envisioned, this system would come with a host of recycling, labor, equipment and customer service requirements that supporters say are far different from the current open market scenario. Opponents maintain the current system is largely effective as is.
Disrupting the vast majority of business done by this industry (which generated an estimated $566 million in gross revenue as of 2015) would be among the most complex market shake-ups in the U.S. since the Los Angeles franchise transition in 2017.
While this latest draft EIS step is run-of-the-mill for any major city project, it has become characteristically politicized. The Transform Don't Trash Coalition, which continues to push for an exclusive system, claimed victory.
“The study put forward by the city confirms what our coalition has been saying all along – an exclusive zone system is the most effective way to transform an unregulated industry," said Maritza Silva-Farrell, executive director of ALIGN and part of the Transform Don't Trash Coalition. "We will continue to work with City Council to adopt exclusive zone legislation that puts workers and communities first and holds private haulers accountable."
New Yorkers for Responsible Waste Management, the local anti-zone trade association, released a statement this week saying the draft EIS raises "major process and policy questions," criticizing DSNY for not studying the industry-backed open market reform proposal and weighing in on the exclusive question.
"At best, DSNY appears to be rejecting the failed idea of exclusive-provider zones, as we watch Los Angeles continue to deal with the aftermath of its flawed choice. But it fails to explain how its Plan would avoid the same fate, or to provide sufficient analysis and details to support such a wholesale restructuring," said Executive Director Kendall Christiansen.
On a broader scale, the exclusivity question has attracted a more open-ended response.
"For advocates of exclusive franchising to describe the New York City commercial carting industry as 'unregulated' is simply wrong," SWANA CEO David Biderman told Waste Dive, referencing the multiple laws and rules under which companies operate. "We applaud DSNY's consideration of multiple options for improving commercial waste collection."
While most local service providers remain against zoning of any kind, two of the city's biggest companies joined many others in previously requesting DSNY take another look at exclusivity. Action Environmental, which remains opposed to changing the open market system, described a non-exclusive scenario as "unprecedented" and "cumbersome." Waste Connections, on record as supporting a franchise system, also asked for study of an exclusive alternative to prevent a "race to the bottom" on pricing and safety standards.
DSNY will be hosting two public hearings on the new report on March 11 and 14. Following a review of comments and the finalization of an EIS, legislation will still need to be passed by the New York City Council later this year. Now that the exclusive option has been included in this EIS, council members could technically still choose to pursue it. Antonio Reynoso, chair of the council's sanitation committee, has previously said he remains intrigued by the exclusive option.
The city aims to release an RFP by late 2019 or early 2020, begin a two-year transition period by 2021, and have a zone system fully implemented by 2024.
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