MINUTES OF THE METRO COUNCIL

REGIONAL ENVIRONMENTAL MANAGEMENT COMMITTEE MEETING

Tuesday, July 7, 1998

Council Chamber

Chair Morissette called the meeting to order at 11:00 AM.

1.  CONSIDERATION OF MINUTES OF JUNE 2, AND JUNE 16, 1998

2.  REGIONAL ENVIRONMENTAL MANAGEMENT DIRECTOR’S UPDATE

Bruce Warner, Director of Regional Environmental Management, did not give an update, but said he would give a complete update at the next regular committee meeting.

3.  ORDINANCE NO. 98-762A, FOR THE PURPOSE OF AMENDING THE METRO CODE CHAPTER 5.01 REGARDING SOLID WASTE FACILITY REGULATION, MAKING RELATED ADJUSTMENTS TO CHAPTER 5.02, AND DECLARING AN EMERGENCY

Mr. Warner introduced Doug Anderson, Metro’s Waste Reduction Planning and Outreach Manager, who he said would be talking further about the amendments to this A version of the ordinance and issues that will still need to be addressed. He then summarized the proposed action, its history, and the rationale behind it, accompanied by a visual presentation.

Mr. Warner said the two ordinances on the agenda today, Ordinance No. 98-762A and Ordinance No. 98-761, are closely related. No. 98-762A establishes policy, and 98-761 amends the Regional Solid Waste Management Plan policy. Another piece of closely related legislation will be coming before the committee soon, and that is a new ordinance made up of items extracted from the original Ordinance No. 98-762. Those items concern mainly new fees and issues related to the excise tax. That new ordinance, Ordinance No. 98-767, will be first-read in Council on Thursday (July 9) and will come back to this committee at its next regularly scheduled meeting, on July 22.

Mr. Warner said that the passage of 98-762A would significantly change the Metro Code, Chapter 5.01, titled “Solid Waste Facility Regulation.” He said this would be the first major revision since 1981.

Mr. Warner said the reason the code needs to be revised is that Metro needs to improve its flexibility for accommodating changes in the solid waste industry and regulatory environment. He said he understands that both this committee and the Council are tired of being asked to approve variances on every franchise brought forward for approval. He said the code needs to reflect the system management policies of the regional solid waste management plan, which emphasizes a reliance on the private sector to provide needed services. He said Metro’s regulatory structure needs to be improved and clarified and the administration needs to be streamlined. He said and enforcement procedures need to be made clearer.

Mr. Warner said Metro also wants to level the playing field for the solid waste industry. He said every franchise is different, even though Metro tries to make them consistent. But with franchises being granted over a number of years, consistently is difficult to achieve. In addition, he said the code needs to reflect the recommendations of the regional Solid Waste Advisory Committee (SWAC) on solid-waste facilities and transportation efficiencies. And finally, environmental goals need to continue to be met and rate-payers need to benefit from savings resulting from greater efficiencies in the regional solid-waste system.

Mr. Warner said that two key principles guided the changes: 1) a commitment to supporting environmental goals such as recovering recyclable materials and reducing the number of vehicle miles traveled; and 2) a commitment to passing the benefits of system efficiencies on to the rate-payers.

Doug Anderson, Waste Reduction Planning and Outreach Manager, Metro Regional Environmental Management Department, re-emphasized the guiding principles introduced by Mr. Warner. He said he personally believes that every staff recommendation that comes forward is either driven by or consistent with these principles. He briefly summarized the plan amendment ordinance, Ordinance No. 98-761, which contains four amendments to the Regional Solid Waste Management Plan (RSWMP). He said in his view, the amendments represent technical changes or clarifications. However, he said some questions have been raised about Amendment C, having to do with reloads. He said Amendment C amends summary wording of a policy description on page 725 of the RSWMP to make it consistent with wording that is already on page 727. That language simply allows the siting of reload facilities for consolidation of loads to be hauled to appropriate disposal facilities. He said the issue on this amendment centered on the word “appropriate.” That was one of the discussion points that led to the entire code revision.

Mr. Anderson said that the issue was important enough that the SWAC formed a subcommittee to discuss the issue. The subcommittee met from January to April of 1998, and came up with a set of recommendations that were then forwarded to SWAC. SWAC approved these amendments unanimously in April of 1998.

Mr. Anderson said that Ordinance 98-762, the code ordinance, has been under discussion for some time. He reminded the committee of the significance of the proposed code changes.

• They introduce a distinction between how certificates and licenses are processed as compared with franchises. Certificates and licenses, in a regulatory sense, are instruments that grant permission to operate. Franchises grant an exclusive privilege. But all the franchises currently in force, with the possible exception of the one with Forest Grove, are effectively licenses. The code would introduce application procedures consistent with the distinction between permission to operate versus exclusive privileges.
• The revised code would reduce entry requirements. It would emphasize performance, standardize inspections, and clarify enforcement procedures. The current code is set up to guide a competitive public procurement process. The revised code would facilitate handling individual applications as they arise and provide criteria by which to evaluate them.
• The revisions attempt to define clearly the obligations of the regulated community. The current code is almost silent on obligations after entry into the system. Metro would like to monitor performance after that.
• The new code attempts to deal with privatization, which is something that is happening whether we want it or not. It recognizes new functions, such as facilities that have limited and special processing, not just source-separated recycling. It provides the flexibility to consider beneficial uses of waste, addresses the issue of reload facilities, and considers that hybrid and mixed-use facilities are emerging, wherein reloading, materials recovery, and other activities can take place under the same roof. This code now regulates according to types of waste and activities, not just is by whether the facility has been identified as a Materials Recovery Facility (MRF) or a reload facility.

Mr. Anderson said that conversations with committee members, the public, and staff revealed three key issues that remain: 1) the roles of the executive officer and the Council, 2) the reloading of putrescible wastes to obtain operating efficiencies; and 3) the direct haul of putrescible wastes to the Columbia Ridge Landfill.

Mr. Anderson called the committee’s attention to a matrix on the screen that shows the effect of the ordinance as it now reads. He reiterated that the three types of regulatory instruments are certificates, licenses, and franchises. The certificate grants permission to operate. If ordinance 98-762A is approved, a certificate would be issued for a very low-impact facility. Licenses would be issued for MRFs, yard debris facilities, local transfer stations that do some material recovery, and direct-haul. Franchises would be granted for major system components, such as facilities that deal in a major way with putrescible waste, energy-recovery facilities, and landfills. Anything the code has not specified would be treated initially in the same way as franchisable activities--i.e., it would receive the highest level of attention.

There are four main “touch points” where decisions are made as to who is involved and in what detail: 1) initial approval of any of the instruments; 2) whether a public process is required and what form that takes; 3) whether the Council gets the decision or whether the Council calls it up; and 4) who is in charge of variances from the code. On the first point, initial approval, the original ordinance (Ordinance No. 98-762) has them all administrative. On the second point, public processes, it inadvertently and unintentionally omitted a requirement for public processes for licenses and franchises. On the third point, the Council would have call-up on franchises. On variances, none would be allowed on certificates, and those for licenses and franchises would be administrative.

The A version changes that matrix considerably. 1) The direct hauling of putrescible waste to Columbia Ridge would be franchised 2) Licenses would remain administrative and would require a public process. Council could call any of those up. 3) Because the code as a whole is seen as a statement of Council policy with any changes requiring Council action, all variances would need to be approved by Council. Also, any franchised activity, including direct-haul, would require Council action.

Regarding reloading putrescible waste, Mr. Anderson called the committee’s attention to page 727 of the , RSWMP, which currently encourages reloads as a means of consolidating loads and thereby saving costs to the rate-payers. Mr. Anderson showed a map of the region that indicates the locations of key facilities--Metro transfer stations, the Forest Grove transfer station, the principle existing material recovery facilities, and the proposed Miller facility. He said that haulers generally haul two to five tons a load. Currently, they must bring these relatively small loads to one of the central facilities, which can mean a trip across a large portion of the region. The rate-payer ultimately pays for all that travel time. If the smaller facilities could act as locations where loads could be consolidated to 15 or 20 tons each before being hauled to a central facility, system costs could be lowered considerably--in some cases by as much as $250,000 a year. Savings like this across the suburban areas can add up to a considerable amount.

Mr. Anderson said the code regulates nuisance issues, such as odor and noise, that might be associated with reload facilities or local transfer stations. He thought that through regular inspections and the existing regulations, such nuisances could be handled in a straightforward manner. He said the code currently supports gleaning recyclables from waste--not necessarily full-scale materials recovery, but gleaning in support of recycling and environmental goals. He said Metro does not want to discourage that. The revised code would also put a limit of 50,000 tons per year per facility that could be deposited in the landfill. This would control the scale of operation until the impact of these facilities is better understood or until Metro establishes new central facilities.

On allowing the direct hauling of putrescible waste to the Columbia Ridge Landfill, Mr. Anderson said that the objective of the code here is to reduce system cost. Once a load is consolidated at a local transfer station, the question is why unload it only to take it to another transfer station for reload, incurring the additional handling costs? Can a facility operator do that and still save money? One of the key controls on the direct-haul of putrescible waste the revised code would introduce, requires that it be shown to actually lower net system costs. In other words, if a facility is allowed to bypass a transfer station and do direct-haul, the facility operator must demonstrate that the savings outweigh any loss to Metro. Mr. Anderson emphasized that the goal is to achieve net system-wide savings.

Mr. Anderson said putrescible waste must be delivered to Columbia Ridge landfill. The basic issue here is that the region must be able to share in the savings negotiated through Change Order No. 7. The revised code would require that waste be delivered to Columbia Ridge under Metro contract, not independently. That way Metro can, through protocols established by the code, manage unacceptable waste. The bottom line is that the facility must bear the cost of identifying and managing such waste and indemnify Metro in the event any unacceptable waste finds its way to the landfill. Any facility that does direct haul must also agree to abide by the long-haul transport standards that Metro has negotiated with the Friends of the Gorge. Finally, the 50-thousand-ton limit for the smaller mixed-activity facilities would ensure net savings and it would limit the potential impacts on the whole system. Any proposal to exceed 50 thousand tons would, under the code, incur significant additional service obligations for the facility.

Mr. Anderson said that reducing system costs is a key objective of Regional Environmental Management, ultimately to benefit the rate-payer. He explained how the system works. He pointed out that the hauling industry in the Portland region is highly regulated. Except for commercial haulers who work in the City of Portland, haulers do not set their own rates; local governments do. Local governments set those rates based on costs validated through their examination and that of independent auditors. When Metro does something that results in a savings, such as reducing the tipping fee, those savings get passed on because they represent validated costs.

Councilor McFarland noted that in the past Metro rate reductions had not been passed on the ratepayers.

Mr. Anderson said that sometimes the savings are offset by other increases. That is what happened in the case Councilor McFarland mentioned. In that case, local governments and haulers rely on the sale of recyclables to reduce collection costs. The bottom dropped out of the market for recyclables at the same time Metro lowered the tipping fee. In other cases, for example in Washington County, large increases in travel time in that region increased costs even more, resulting in a $0.35 increase in spite of the lower tipping fee. Washington County is an area where reloads will reduce costs considerably.

Councilor McLain said the new scenarios projected to take place under the new code are based on some assumption about where the waste will be transported. She said the new transfer station in Forest Grove resulted in 10% of the waste not going to Arlington. She said it also resulted in some differences in travel patterns. She said there was a dry-waste possibility with the Hillsboro Landfill. She said that this goes back to the issues that remain. She said she understands the scenario and thinks Mr. Anderson’s overall assessment of the situation is correct.

Mr. Anderson said his comments are based on discussions with some of the folks who actually set the rates last time and who identified for him where the increases and decreases were.

Chair Morissette reiterated the desire to make the system as efficient as possible. He said the goal is not to take the Council out of the loop. He said the goal remains to increase or at least maintain recycling levels. He said that vehicle miles traveled (VMTs) are going up, and larger trucks hauling more could help reduce those. He said the concern is to maintain a balance with current contracts and the transfer stations that Metro owns. He said he thought the staff had done a good job of achieving this balance.

Chair Morissette reminded the committee that the SWAC, short of a very few votes, unanimously supported the modifications from different points of view. He said he anticipated hearing different points of view today. He said we are still working to address the concerns of Specialty Transportation Systems (STS). He said he did not want to give the impression that we are where they are on all issues, but he did want to let them know that we want to effectively deal with some of their concerns.

Councilor Washington said the code revision is one of the most difficult things to deal with. He said this is evident in the fact that when the package came to the Council, there was no decision on the various parts of it. He said he would like to make an amendment that the committee review this in 120 days. He said we need to review this in terms of protecting Metro’s revenue base. He reminded the committee 78% of the general fund money--about $5.6 million -- comes from solid waste. He said we would be remiss if we don’t protect that. He also said that the haulers will be making major decisions based on how the Council votes on the code revision. Some will be doing two-and three-year plans. He said he would hate to see them make that investment before we make sure the changes will work for them and the Council.

Councilor Washington said major changes are occurring in the industry. Mergers are taking place here as they are in other major industries. He said that a review in five years in insufficient. He suggested a review in 120 days. He suggested that in the meantime, John Houser, Council analyst, work staff to see if major changes are needed. He said also that in six months, four new Councilors will be on board. They will be starting from scratch.

Councilor McLain asked about Councilor Washington’s proposed amendment. She said she understood that the process at hand concerns a code update. She said she understands that a code update differs from a regular ordinance or resolution. She said this code update, which as been through this committee and the advisory committee, would set up a new way of doing business. At any time we can come back and review and amend any document in this agency. She asked if Mr. Washington was saying that he would pass this out of Council if he could be guaranteed that he could review it in committee in another four months.

Councilor Washington said that is what he meant. He was not suggesting that the code be rewritten in 120 days. He was saying he wanted a mechanism that would ensure review by then.

Councilor McLain said she would rather the committee spent its time discussing the A version of the ordinance than discussing when to review it. She said if she is not comfortable with the A version, then she would not be comfortable waiting four months to review it. Councilor McLain said in her view, asking for review so soon sends a mixed message to the industry.

Chair Morissette said a lot of work has gone into writing the different versions and into discussing the STS contract. He said we are not prepared to tell STS today what the conclusions will be. Councilor Washington said he did not intend to compromise any version. He simply wants to be able to review the impacts sooner than five years from now. However, he said he did not want to send the industry mixed messages; therefore, he would not propose a formal amendment calling for review in 120 days.

Councilor McFarland proposed to amend the ordinance, changing the responsibility for approval or denial of franchises and licenses from the Executive Officer to the Council, changing the requirement for direct hauling of putrescible waste from a licensable activity to a franchisable activity, and changing the responsibility for approval or denial of all variances from the Executive Officer to the Council.

Chair Morissette said he was concerned that through passing this amendment, Council would be setting policy through the code. He said he supports leaving licensing administrative, with Council call-up. He said in his view Council should make the rules that staff operates under, obviously allowing the opportunity to discuss any issues. He said he believed that by franchising for direct-haul, the key concerns were addressed. He said that if he were being regulated, he would want the code to be as clear as possible, to facilitate making investments and setting business goals. He said he believes the A version of the code provides clear direction while providing for proper controls. He urged allowing the staff to administer the rules once Council has made them. He said he supports leaving as many items under licensing as possible, with Council call-up providing the means to discuss issues that might arise.

Councilor McFarland said she had worked with situations in which the Council had call-up, but the truth is that the volume of paper that crosses one’s desk makes it likely that a call-up would be missed. She said you might not intend to miss it, but the reality is you probably would. She said she would hold out for her modification to require Council action for licenses.

Councilor Washington said agreed with Councilor McFarland on the likelihood that important decisions will be lost in the volume of paper.

Councilor McLain said that as she reviewed the code update and looked at the new amendments, she had preferred the license with the call up, but because of Mr. Washington’s concern, she would support Councilor McFarland’s amendment if it would take away the need for a review in 120 days. She said that under Councilor McFarland’s amendment, the items of concern to Councilor Washington would be coming to the Council anyway and would be reviewed at that level.

Chair Morissette held that the vote on Councilor McFarland’s motion would be to allow discussion of the amendment during the public hearing, and that the final vote on the amendment would occur after the hearing.

Chair Morissette open a public hearing on Ordinance 98-762A, to be considered as it would be as amended. He said he had privately talked with his fellow councilors about working with something on the STS situation regarding STS’s 90% direct haul. He said he could not offer any guarantees as to what the ultimate conclusion will be.

Public Hearing

Lynn Storz, Washington County, 155 No. 1st Avenue MS #5, Hillsboro, Oregon 97124, addressed the rate-setting issue for local government. She said that in fact local governments do take Metro’s reductions into consideration. She said local governments look at about 90 line-item costs, the revenues, and then they base the final costs to the rate-payer on solid waste disposal, collection, and the recycling program.

Councilor Washington asked if they were always aware when rate decreases were being considered by Metro. Ms. Storz said they generally knew. She said she, personally, is on SWAC, and that is one way she keep apprised of the situation. Councilor Washington asked if the decreases were anticipated. Ms. Storz said the annual rate-setting process has historically corresponded with changes in Metro tip fees. Councilor Washington asked why the rate decrease had not been passed on to the public. Ms. Storz said it had been passed on. She said the rates did not go down, but the savings had been passed on. She said that the reduction in the tipping fee had been offset by higher collection costs and the drop in the recycling market. Councilor Washington said in his view, a true decrease would show up on the rate-payer’s monthly bill. He said that is what the public understands and remembers.

Ms. Storz said she wanted to make it clear that local governments do factor in a disposal decrease. But the increase costs had offset it completely. Councilor Washington asked whether, in the event the decrease had not been granted, people would have seen an increase on their monthly bills. Ms. Storz said she can speak only for Washington County. It its case, yes, most likely they would have seen an increase.

Councilor McFarland noted that during the three years she chaired the rate-review committee, they held the line in the face of inflation, and did not raise the rate for three years. But Gresham raised its garbage rates, citing as their reason that Metro anticipated increasing the rates. She said Gresham said this even though Metro did not raise the rates for three years.

Councilor Washington thanked Ms. Storz for answering his question.

Doug DeVries, Specialty Transportation Services (STS), 32234 11th Ave., SW, Federal Way, WA 98023, read the testimony of STS into the record (a copy of the testimony is attached to the record). He requested that the amendments STS proposed be incorporated into the code. (The amendments STS proposed are also attached to the meeting record.)

Chair Morissette said his view differs from that of Mr. DeVries on the amount of gas tax that would be lost under the proposed code. Nothing supports that a total of $325,000 would go away under the new code. He said there is the potential for another direct-hauler to take a small portion of that, depending on the amount of direct-haul. But it would not be $325,000. He did not want to scare the Council with that figure. But he acknowledged that he sees the contract differently from the way Mr. DeVries does. He pledged the committee’s commitment to trying to work with the Council over the next week to find a compromise, but he said he could not guarantee that everything they did would make STS happy.

Chair Morissette asked that the record reflect Metro legal counsel’s concerns with the language proposed by STS.

Marvin Fjordbeck, Senior Assistant Counsel, said the question the transportation contractor poses is whether the contract that Metro has with the transportation contractor would, assuming direct-haul is approved, require the government to make direct haulers use that contractor. He said in the view of Metro’s legal counsel, the contract does not make such a requirement. He said the committee might want to create provisions that set standards for haulers or that it might require a particular hauler. He said that can be done, but not because the contract requires it, because the contract does not. He said the arguments raised by STS about the merits of a single hauler might be true, but those are not contractual rights.

Chair Morissette said he wanted to make sure that Metro does not get into an interstate commerce problem by STS’s amendments. He said he wanted to ensure fairness to all good contractors like STS and keep the government out of trouble.

Councilor McLain said three issues posed in the package submitted by STS and in the testimony require a public statement. 1) That we are sure we are fulfilling our contract. 2) The issue of efficiency of implementation. Implementing this code is complex. The more we do to complicate the system, the more we have to pay out to make sure the code is properly implemented. If staff has a good reason as to why they think they can deal with 10 companies instead of one more efficiently, that needs to be in the public record when the issue goes to Council. 3) Metro is trying to deal with a very high level of operating standards for direct-haul. She said the code required that direct-haulers meet existing standards. She asked how many vendors out there can do that. She said STS has a good safety record and a record of doing a good job. She said she has not had those issues addressed yet to her satisfaction. Although she agreed that folks need to be able to contract with whomever they wish, she said we better not give them the impossible task of dealing with our standards for our vendor and find out there is no one else out there who can meet those standards. She said she hoped the legal staff and the solid waste staff can deal with this in a manner that can be taken care of before it goes to Council.

Chair Morissette said that he shared that hope, because people are losing money until the code is implemented.

Councilor McFarland took issue with the points of order. She felt that by discussing STS, the committee was digressing and creating confusion. She requested that the committee return to a consideration of the amendment she moved, which would amend Ordinance No. 762A to create Ordinance 98-762B.

Chair Morissette called for any additional public testimony that might relate specifically to Councilor McFarland’s amendment. No one came forwarded to testify, so he closed the public hearing on this issue.

Councilor McFarland requested that the committee pass Ordinance 98-962A as amended, but with large caveat that would allow for the contractual differences between STS and Metro be addressed with an amendment at full Council. She requested that the ordinance, complete any amendments, be made available to all Councilors a week before it goes to the full Council. She also asked that the right be reserved to make further changes after that if the proposed amendments do not fit with the committee’s intent. With that in mind, she suggested moving forward.

Chair Morissette opened a public hearing on the code itself.

Public Hearing

No one came forward to testify, so the public hearing was closed.

Councilor McLain thanked the staff for its hard work on putting together a good package. She supported Councilor McFarland’s amendment and urged support for passage with Councilor McFarland’s caveat to resolve contractual differences with STS.

Councilor Washington said he would be revisiting the code to make certain it is working the way it was intended.

Chair Morissette will carry the motion to a meeting of the full Council.

4.  ORDINANCE NO. 98-761, FOR THE PURPOSE OF AMENDING THE REGIONAL SOLID WASTE MANAGEMENT PLAN

Mr. Warner said these amendments have been recommended by SWAC. He said they clarify the language regarding reloads and their function in the solid-waste management system of the region. He said the changes in language are straightforward, as outlined in the last page of the agenda packet associated with this meeting. These amendments make the plan and the code consistent with the amended version of Ordinance 98-762A, just passed.

Chair Morissette opened a public hearing.

Public Hearing

No one came forward to testify, so the public hearing was closed.

Chair Morissette will carry the motion to a meeting of the full Council.

5.  COUNCILOR COMMUNICATIONS

None.

There being no further business before the committee, Chair Morissette adjourned the meeting at approximately 12:30 PM.

Respectfully submitted,

Pat Emmerson

Council Assistant