- The upcoming November election could significantly impact the waste and recycling industry, according to experts. Speakers at this year's virtual WasteExpo addressed the potential for the federal election outcome to affect issues like taxes and major environmental policies, as well as areas like M&A.
- Stifel Managing Director Michael E. Hoffman said the corporate tax and capital gains tax would likely go up under a Democratic administration, which could also prioritize issues like climate change and per- and polyfluoroalkyl substances (PFAS). Both Hoffman and Ron Mittelstaedt, executive chairman of Waste Connections, said M&A activity could also see a decline after several years of growth.
- While the presidential race will be significant, congressional races will also play a role in determining the trajectory of the next four years, Mittelstaedt said. Hoffman noted an administration led by former Vice President Joe Biden could also opt to enact major climate policies through executive order even if unable to do so through Congress.
One area hinging on the election is the federal government's approach to regulations — particularly concerning issues like climate change and toxic chemical contamination.
President Donald Trump has overseen a largely deregulatory agenda, according to Hoffman, who cited the administration's "two-for-one" rule, which states that for every new regulation issued at least two must be identified for elimination by agencies including the U.S. EPA. A Biden administration, Hoffman said, would take a different approach, as would a Democratic-controlled Congress.
For example, an action plan released by Democratic members of the House Select Committee on the Climate Crisis in July endorsed extended producer responsibility policies along with several federal recycling bills. While that committee has no lawmaking power, experts at the time said the document indicated where Democratic priorities are focused. Hoffman similarly indicated the party could scrutinize the solid waste sector over greenhouse gas emissions, with major implications if Democrats control both chambers of Congress.
"The current proposals by the Democratic Party clearly are very much about an aggressive focus on climate," he said, adding that focus could hit landfills given their role in emitting methane.
Under Trump, EPA has sought to delay promulgating landfill emissions regulations, sparking litigation by Democratic governors.
Another area already closely watched by the waste industry is PFAS. Under Trump, EPA has released a PFAS action plan and initiated several studies around disposal of the chemicals. But many Democrats support swift action, including setting drinking water regulations and possibly banning the incineration of material like PFAS-laden firefighting foam. Democrats would take a "much more aggressive position on PFAS," said Hoffman. During a separate WasteExpo session devoted to PFAS, speakers also previewed growing regulations on the state level, which could ramp up depending on the trajectory of the federal government's actions.
Tax increases will also hinge on the election's outcome, following a significant reduction in the corporate tax rate under Trump. Hoffman said raising the corporate tax would impact C-corporations, or the industry's bigger players. Raising the capital gains tax would affect smaller and family-owned businesses, he continued, stating that would lead to "about a 10-15% reduction in total free cash flow generated."
Hoffman went on to say raising taxes would hit M&A, as small companies would see costs rising if they choose to sell their businesses. Mittelstaedt similarly said M&A has proceeded at "a record" pace under Trump but could see a decline if Biden were elected.
"[If Biden] enacts the policies he has talked about with tax increases, with the elimination of capital gains taxes above certain income levels, with dramatic increases in the corporate tax rate — you are going to see a dramatic deceleration of M&A, a dramatic deceleration in our industry and in most industries in my opinion," he said.