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DSHW-2023-003722 - 0901a068811d8b3e
file:///C/...51810-0000030-jknudsen-dwmrcsubmit-Fwd_%20Public%20Comment%20on%20Promontory%20Point%20Class%20V%20L.htm[2/7/2025 2:03:17 PM] SUBJECT: Fwd: Public Comment on Promontory Point Class V Landfill - NERA on behalf of Promontory Point Resources, LLC FROM: JaLynn Knudsen <jknudsen@utah.gov> TO: Deq submit <dwmrcsubmit@utah.gov> DATE: 11/04/2023 15:18 ATTACHMENTS (20230411-151810-0000030 ): NERA_Reply_to_Provisional_Statement_of_Basis.pdf , NERA_PowerPoint_Slides_for__03_27_2023_Public_Meeting.pdf ---------- Forwarded message --------- From: Cahoon, Tyler R. <tyler.cahoon@dentons.com> Date: Saturday, April 8, 2023 at 10:19:14 PM UTC-6 Subject: Public Comment on Promontory Point Class V Landfill - NERA on behalf of Promontory Point Resources, LLC To: dwmrcpublic@utah.gov <dwmrcpublic@utah.gov> Cc: Doug Hansen <djhansen@utah.gov>, Raymond Wixom (rwixom@agutah.gov) <rwixom@agutah.gov>, Cahoon, Brad R. <brad.cahoon@dentons.com>, Smith, Anne <Anne.Smith.affiliate@nera.com>, Glasgow, Garrett <Garrett.Glasgow@nera.com>, MacKay, Carol <carol.mackay@dentons.com>, Crowther, Cole P. <cole.crowther@dentons.com> Director Hansen, We write on behalf of Promontory Point Resources, LLC (PPR) and its expert NERA Economic Consulting (NERA). Attached are the following two documents that are NERA’s (on behalf of PPR) public comments on your provisional Statement of Basis: Intention to Deny – Class V Landfill Application: 1.NERA Reply to [provisional] Statement of Basis: Intention to Deny Class V Landfill Application 2.NERA’s PowerPoint presentation titled “Reply to ‘Statement of Basis: Intention to Deny Class V Landfill Application’”, presented at the March 27, 2023 public meeting Will you please confirm that you have received this email and can open/access the attachments? We also will submit copies by mail and hand-delivery on Monday. Please let me know if you have any questions. Our firm will send another written public comment on behalf of PPR under separate cover. Cheers, DSHW-2023-003722 file:///C/...51810-0000030-jknudsen-dwmrcsubmit-Fwd_%20Public%20Comment%20on%20Promontory%20Point%20Class%20V%20L.htm[2/7/2025 2:03:17 PM] Tyler Tyler Cahoon Associate What’s Next? The answer is Talent. With more than 20,000 people, 12,000 lawyers and 200 locations, Dentons has the talent for what you need, where you need it. O +1 801 375 6600 | US Internal 801422 tyler.cahoon@dentons.com Bio | Website Dentons Durham Jones Pinegar P.C. 3301 North Thanksgiving Way, Suite 400, Lehi, UT 84043 Zaanouni Law Firm & Associates > LuatViet > Fernanda Lopes & Associados > Guevara & Gutierrez > Paz Horowitz Abogados > Sirote > Adepetun Caxton-Martins Agbor & Segun > Davis Brown > East African Law Chambers > For more information on the firms that have come together to form Dentons, go to dentons.com/legacyfirms Dentons is a global legal practice providing client services worldwide through its member firms and affiliates. This email may be confidential and protected by legal privilege. If you are not the intended recipient, disclosure, copying, distribution and use are prohibited; please notify us immediately and delete this email from your systems. Dentons records and stores emails sent to us or our affiliates in keeping with our internal policies and procedures. Please see dentons.com for Legal Notices. 1 Reply to “Statement of Basis: Intention to Deny Class V Landfill Application” NERA Economic Consulting Project Team: Garrett Glasgow, Ph.D., Associate Director Anne E. Smith, Ph.D., Affiliated Consultant Prepared for Promontory Point Resources, LLC March 27, 2023 Background on NERA’s Needs Assessment Project Plan On August 13, 2020, prior to starting its analytic work, NERA project director Dr. Anne Smith, PPR leadership, & PPR counsel (via web-based conferencing) met with Division Director Ty Howard and other senior Utah DEQ staff to discuss our planned approach for addressing the requirements of Sec. 19 -6-108 (10) and (11). Purpose ➔to obtain feedback on: –PPR’s view that the statutory interpretation of “need” should be market-based –NERA’s proposed plan for using economic concepts to assess PPL’s market potential and to quantify potential benefits Points Dir. Howard made after NERA presented its planned approach: –Dir. Howard said NERA’s plan to assess benefits as Utah’s economic gains from greater competition using a market - based approach made sense to him, noting that it goes well beyond just considering capacity itself, which was more the focus in past PPR needs assessment efforts –Dir. Howard identified two components still missing in PPR’s Needs Assessment record: (1) evaluation of ECDC’s market and how PPL would fit into that market; (2) “regional assessment” of landfill markets –Dir. Howard said he thought NERA’s economics-based approach was on the right track and does seem to pull in the things that are needed 2 NERA’s Approach Defines “Need” as an Economics Based Concept, and Identifies the Following Public Benefits: •Public (economic) benefits to Utah citizens identified in NERA report: 1.Reduced total-cost-of-disposal for municipal solid waste (MSW) disposers in a large region including much of northern Utah, plus indirect savings through competition a.$793,000 in direct savings annually for commercial MSW generated in Utah b.$676,000 in direct savings annually for residential MSW generated in Utah 2.Macroeconomic benefits to Utah from the waste streams that would flow to PPL, with each increment of 100,000 tons that PPL imports into the state benefitting the economy of Utah by: a.30 to 40 additional jobs b.$5.5 to $6.1 million dollars of annual output c.$200,000 in revenue to Box Elder County d.$21,000 in revenue to the State of Utah 3.Disposal of nonhazardous waste from other states would allow PPL to operate at scale and lead to a reduced total-cost-of-disposal for in-state waste disposers (we do not quantify this benefit) The Statement of Basis does not refute these findings 3 3 Key Points in NERA’s Response to the Statement of Basis 1.By assigning no weight to the potential market need of out-of-state waste generators, ✓the Statement of Basis would burden interstate commerce 2.Rejecting an economics-based definition of need and interpreting “need” as solely based on capacity and location relative to in-state waste generation, ✓would have anticompetitive effects within the State of Utah ✓It is also internally inconsistent with another clause in the statute that requires analysis of competition 3.As the authors of the Needs Assessment analysis, we find that ✓the Statement of Basis misrepresents key elements of NERA’s economic wasteshed analysis We discuss each of these points in more detail in the rest of this presentation 4 1 By Assigning No Weight to the Potential Market Need of Out -of-State Waste Generators, the Statement of Basis Would Burden Interstate Competition 5 By Assigning No Weight to the Potential Market Need of Out-of-State Waste Generators, the Statement of Basis Would Burden Interstate Competition •The NERA Needs Assessment Report demonstrated: 1.There is an interstate MSW market that includes northern Utah 2.There is an interstate nonhazardous solid waste market (CA excavated soils) that includes northern Utah 3.PPL as a Class V landfill would be the lowest-cost competitor for many waste disposers in both of these interstate markets 4.PPL as a Class V landfill would be a competitive substitute for consumers seeking disposal of both MSW and nonhazardous solid waste •The Statement of Basis does not refute these findings •Ignoring the needs of out-of-state waste generators burdens interstate commerce by: 1.Preventing out-of-state demand for a new northern Utah Class V landfill from being met 2.Protecting incumbent Class V landfills (which can currently accept out-of-state waste) from facing new competition 6 2 The Interpretation of “Need” in the Statement of Basis Would Have Anticompetitive Effects within the State of Utah 7 Interpreting “Need” as the Physical Airspace Within a Given Geographic Region Would Have Anticompetitive Effects •For a new commercial landfill to compete with existing commercial landfills, both the new and incumbent landfills must: 1.Be similar distances to at least some of the same sources of waste 2.Have the physical airspace to accept the waste •That is, competition only happens when there is “excess capacity” within comparable travel times to the sources of waste •The interpretation of “need” in the Statement of Basis prevents new commercial landfills from entering the market if they could compete with incumbent commercial landfills •This protects the incumbent commercial landfills from competition, and thus would have anticompetitive effects •Further, interpreting “need” as the physical airspace within a given wasteshed contradicts Subsection (10)(a)(iii), which calls for a review of competing commercial landfills –There is no need to review competition if potentially competing landfills cannot be approved 8 3 The Statement of Basis Misrepresents Key Features of NERA’s Economic Wasteshed Analysis 9 The Statement of Basis Incorrectly States That the “Primary Benefit” We Describe for PPL Is “Lower Tipping Rates” Than Competing Landfills •NERA made no assertions that PPL’s tipping rates would be higher or lower than those of competitors, and differences in tipping rates are not counted as benefits in the NERA Needs Assessment –The hundreds of thousands of dollars of annual benefits estimated in the NERA analysis (see slide 3) are solely from lowered total cost of disposal in a portion of Utah as a result of PPL’s better location for an identified area of northern Utah’s waste generators. –These benefits are estimated under the assumption that PPL’s tipping fees would be equal to the tipping fees of its existing regional competitors. •Our report mentions reductions in tipping rates generally (not just lower rates at PPL) as a likely secondary benefit from the additional competitive forces that PPL’s Class V permit would unleash in northern Utah –Our report does not quantify these potential secondary benefits, nor are they included in the report’s dollar estimates of benefits to Utah. 10 The Statement of Basis Misrepresents PPL’s MSW Economic Wasteshed •The MSW economic wasteshed in which PPL has a competitive advantage in waste transportation costs over its commercial competitors is a broad region covering much of northern Utah and southern Idaho –It is not limited to the small number of sites where current transfer stations exist, as implied by the Statement of Basis when it presents a selective subset of our results –It is not limited to residential MSW •Commercial MSW is not required to go through a transfer station, and commercial haulers of MSW have a strong business incentive to switch their landfill destination if a lower total-cost-of-disposal option becomes available –PPL appears to be the lowest cost-of-disposal option for the approximately 220,000 tons of commercial MSW generated annually within the Utah portion of its economic wasteshed –This commercial MSW represents the most likely near-term demand for MSW disposal at PPL –It is also precisely the portion of Utah’s MSW landfill needs that PPL cannot serve unless its Class V permit is granted 11 The Statement of Basis Incorrectly States That NERA Defined the PPL Wasteshed Using a 2.5-hour Travel Time •NERA defined the PPL wasteshed as the area in which PPL has a competitive advantage in waste transportation costs over its commercial competitors –The 2.5-hour travel time calculation played no role in NERA’s needs and benefits analyses –The wasteshed is not defined by an arbitrary travel time from PPL, including the 1.75 hours endorsed in the Statement of Basis –All of NERA’s in-state benefits analyses for waste disposers showed a reduction in waste transportation costs within PPL’s wasteshed 12 Reply to Statement of Basis: Intention to Deny Class V Landfill Application Prepared for Promontory Point Resources, LLC April 7, 2023 © NERA Economic Consulting i Project Team Garrett Glasgow, Ph.D., Associate Director Anne E. Smith, Ph.D., Affiliated Consultant About NERA NERA Economic Consulting (www.nera.com) is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For over half a century, NERA's economists have been creating strategies, studies, reports, expert testimony, and policy recommendations for government authorities and the world’s leading law firms and corporations. We bring academic rigor, objectivity, and real-world industry experience to bear on issues arising from competition, regulation, public policy, strategy, finance, and litigation. This report reflects the research, opinions, and conclusions of its authors, and does not necessarily reflect those of NERA Economic Consulting, its affiliated companies, or any other organization. © NERA Economic Consulting ii Report Qualifications/Assumptions and Limiting Conditions Information furnished by others, upon which all or portions of this report are based, is believed to be reliable, but has not been independently verified, unless otherwise expressly indicated. Public information and industry and statistical data are from sources we deem to be reliable; however, we make no representation as to the accuracy or completeness of such information. The findings contained in this report may contain predictions based on current data and historical trends. Any such predictions are subject to inherent risks and uncertainties. NERA Economic Consulting accepts no responsibility for actual results or future events. The opinions expressed in this report are valid only for the purpose stated herein and as of the date of this report. No obligation is assumed to revise this report to reflect changes, events or conditions, which occur subsequent to the date hereof. All decisions in connection with the implementation or use of advice or recommendations contained in this report are the sole responsibility of the client. This report does not represent investment advice nor does it provide an opinion regarding the fairness of any transaction to any and all parties. © NERA Economic Consulting iii Contents 1. Introduction .......................................................................................................................1 1.1. “Public Benefits” is an Economics-Based Concept ................................................................ 1 1.2. Public Benefits Associated with a Class V Permit for PPL .................................................... 2 1.3. NERA’s Responses to the Statement of Basis ........................................................................ 3 2. Denying PPL’s Class V Permit Would Burden Interstate Commerce ........................4 3. Denying PPL’s Class V Permit Would Have Anticompetitive Effects Within the State of Utah ................................................................................................................................5 4. The Interpretation of Subsection 10(b)(i) in the Statement of Basis Conflicts with Subsection (10)(a)(iii) ........................................................................................................7 4.1. Interpreting “Need” as Physical Airspace in a Given Geographic Region Renders Subsection (10)(a)(iii) Irrelevant ............................................................................................................... 7 4.2. Consideration of Non-Commercial Landfills Renders Subsection (10)(a)(iii) Incorrect or Incomplete ............................................................................................................................... 7 5. The Statement of Basis Misrepresents Key Elements of NERA’s Economic Wasteshed Analysis ..............................................................................................................................9 5.1. The Statement of Basis Incorrectly Claims That the “Primary Benefit” We Describe for PPL Is “Lower Tipping Rates” Than Competing Landfills ................................................................ 9 5.2. The Statement of Basis Misrepresents PPL’s MSW Economic Wasteshed .......................... 10 5.3. The Statement of Basis Incorrectly States That the Needs Assessment Defined the PPL Wasteshed Using a 2.5-Hour Travel Time ............................................................................ 10 6. NERA’s Findings and Conclusions, NERA’s Needs Assessment Report, and Utah Code § 19-6-108(10)-(11) ..........................................................................................................12 6.1. How Requirements of Section 10(a) Have Been Met by NERA’s Needs Assessment Report12 6.2. How Requirements of Section 10(b) Have Been Met by NERA’s Needs Assessment Report15 6.3. How Requirements of Section 10(c) Have Been Met by PPL .............................................. 17 6.4. How Requirements of Section 11(a) Are Supported by NERA’s Needs Assessment Report17 6.5. How Requirements of Section 11(b) Are Supported by NERA’s Needs Assessment Report18 6.6. Conclusion ............................................................................................................................. 19 1 1. Introduction In this document NERA responds to the provisional Statement of Basis1 published by the Director of the Division of Waste Management and Radiation Control, Utah Department of Environmental Quality with an intention to deny the Promontory Point Landfill Class V Application. The Class V Application requests that the existing Class I Promontory Point Landfill (“PPL”) be reclassified Class V. As Class V landfill, PPL could take nonhazardous solid waste from within and outside of Utah. 1.1. “Public Benefits” is an Economics-Based Concept In NERA’s Needs Assessment we explained that the “need” for a new Class V landfill should be evaluated as an economics-based concept, and we described the specific public benefits derived from changing the Promontory Point Landfill to Class V.2 Specifically, Utah Code § 19-6-108(10)(b) calls for “a description of the public benefits of the proposed facility, including: (i) the need in the state for the additional capacity for the management of nonhazardous solid or hazardous waste; (ii) the energy and resources recoverable by the proposed facility; (iii) the reduction of nonhazardous solid or hazardous waste management methods, that are less suitable for the environment, that would be made possible by the proposed facility; and (iv) whether any other available site or method for the management of hazardous waste would be less detrimental to the public health or safety or to the quality of the environment” (emphasis added.) Utah Code § 68-3-12(1)(f) directs that the term “’including’ means that the items listed are not an exclusive list, unless the word ‘only’ or similar language is used to expressly indicate that the list is an exclusive list. Subsection (10)(b) does not use the term “only” or similar limiting language; therefore, the four listed items in Subsection (10)(b) do not constitute an exclusive list. Further, Utah Code § 68-3-12 states, “Words and phrases are to be construed according to the context and the approved usage of the language; but technical words and phrases, and such others as have acquired a peculiar and appropriate meaning in law, or are defined by statute, are to be construed according to such peculiar and appropriate meaning or definition” (emphasis added.) The term “public benefits” used in Subsection (10)(b) is not defined in Section 19-6-108 or elsewhere in Utah’s Solid and Hazardous Waste Act or Environmental Quality Code. As we 1 Statement of Basis, State of Utah, Department of Environmental Quality, Division of Waste Management and Radiation Control. Intention to Deny – Class V Landfill Application, Promontory Point Resources, LLC. Promontory Point Landfill (hereafter “Statement of Basis”). 2 Promontory Point Landfill Class V Permit Needs Assessment Report Volume I, October 2020 (hereafter “Needs Assessment”). 2 have explained in detail previously, the term “public benefits” is a technical economics term that has a peculiar meaning: The specific choice of the term ‘public benefits’ is consistent with the standard terminology of benefit-cost analysis (‘BCA’), a methodology developed in the economics profession for evaluation of public policy decisions, and which is now widely accepted in policy making circles. In BCA, the term ‘benefit’ refers to an addition to societal well-being or an economic gain. Generally speaking, ‘public benefits’ refers to the aggregate combination of added forms of societal welfare from a market or policy change. That is, it is the sum of changes in company profits (across all companies in the economy, not just profits of new entrants), in individual/consumer surplus (e.g., the net change in overall cost of living), and societal willingness to pay for non-market amenities, such as changes in environmental risk.3 1.2. Public Benefits Associated with a Class V Permit for PPL In the Needs Assessment and in harmony with Subsection (10)(b)’s non-exclusive list of items, we described the public benefits that would be provided from reclassifying PPL to Class V. The economic public benefits to Utah citizens include: • A reduced total-cost-of-disposal for municipal solid waste (MSW) disposers in a large region including much of northern Utah, plus indirect savings through competition.4 o Up to $793,000 in direct savings annually for commercial MSW generated in Utah. o Up to $676,000 in direct savings annually for residential MSW generated in Utah. • Macroeconomic benefits to Utah from the waste streams that would flow to PPL, with each increment of 100,000 tons that PPL imports into the state benefitting the economy of Utah by:5 o 30 to 40 additional jobs. o $5.5 to $6.1 million dollars of annual output. o $200,000 in revenue to Box Elder County. o $21,000 in revenue to the State of Utah. 3 NERA’s Reply to SC&A’s Response to NERA’s “Promontory Point Landfill Class V Permit Needs Assessment Report,” p. 3 (hereafter “NERA’s Reply to SC&A”). See also Needs Assessment, pp. 3-4. 4 Needs Assessment, Section 2.1. 5 Needs Assessment, Section 2.3. 3 • A reduced total-cost-of-disposal for in-state waste disposers due to disposal of nonhazardous waste from other states that would allow PPL to operate at scale (we do not quantify this benefit).6 Additionally, the Needs Assessment identified non-economic benefits, such as providing access to a landfill meeting modern standards of environmental protection to communities and businesses in northern Utah (and southern Idaho), some of which currently rely on older, less environmentally sound landfills (for example, Box Elder County’s Little Mountain Landfill is unlined).7 The Statement of Basis does not refute these findings. 1.3. NERA’s Responses to the Statement of Basis The Statement of Basis proposes to deny a Class V permit for PPL based on a narrow interpretation of one of the four non-exclusive items listed under Subsection (10)(b)(i), which calls for an assessment of “the need in the state for the additional capacity for the management of nonhazardous solid … waste.” The Statement of Basis argues that “need” in this Subsection refers to “the need in the state for physical airspace that is proximate to the locations of waste generation within a given wasteshed.”8 In response to this part of the Statement of Basis we offer the following comments: • By assigning no weight to the potential market need of out-of-state waste generators, the Statement of Basis would burden interstate commerce. • Rejecting an economics-based definition of need and interpreting “need” as solely based on capacity and location relative to in-state waste generation would have anticompetitive effects within the State of Utah. • Interpreting “need” in Subsection (10)(b)(i) as the physical airspace within a given geographic region cannot be correct, as it would render Subsection (10)(a)(iii) irrelevant. Further, we show that consideration of non-commercial landfills in the assessment of need cannot be correct, as it would render Subsection (10)(a)(iii) incorrect or incomplete. • As the authors of the Needs Assessment analysis, we also find that the Statement of Basis misrepresents key elements of NERA’s economic wasteshed analysis. 6 Needs Assessment, Section 2.2. 7 Needs Assessment, Section 3.1.1. 8 Statement of Basis, p. 6. 4 2. Denying PPL’s Class V Permit Would Burden Interstate Commerce Our Needs Assessment demonstrated that there was an interstate market for waste disposal that includes northern Utah. Specifically: • There is an interstate MSW market including at least northern Utah and southern Idaho, and PPL as a Class V landfill would be a competitive substitute and the lowest-cost competitor in terms of transportation costs for many waste disposers in this market.9 • There is an interstate nonhazardous solid waste market including at least northern Utah and California, and PPL as a Class V landfill would be a competitive substitute and the lowest-cost competitor for many waste disposers in this market.10 • There are other interstate waste markets that include northern Utah that were not specifically analyzed in the Needs Assessment.11 The Statement of Basis does not refute these findings. However, the Statement of Basis assigns no weight to the potential market need of out-of-state waste generators in proposing to deny a Class V permit for PPL. This imposes a burden on interstate commerce in two ways: • It would prevent out-of-state demand for a new northern Utah Class V landfill from being met, and force out-of-state waste disposers to incur higher waste transportation costs than they would otherwise face. • It would protect existing Class V landfills in Utah (which can currently accept out-of- state waste) from facing new competition. Preventing greater competition among commercial landfills will lead to higher disposal costs for out-of-state waste disposers (e.g., through less competition on tipping fees). 9 Needs Assessment, Section 2.1. 10 Needs Assessment, Section 2.2. 11 Needs Assessment, Section 2.3.2. 5 3. Denying PPL’s Class V Permit Would Have Anticompetitive Effects Within the State of Utah To justify denying PPL’s Class V permit, the Statement of Basis claims “[t]he available airspace within PPR’s market is as much as 346 years, and includes multiple facilities with comparable travel times.”12 First, we note that this statement is inaccurate. As described below in Section 5.2, PPL’s economic wasteshed is defined as the area in which PPL has a competitive advantage in waste transportation costs over its commercial competitors (for MSW this is a broad region covering much of northern Utah and southern Idaho).13 Travel times to other facilities are only comparable at the edges of this economic wasteshed. Second, the situation at the edges of PPL’s economic wasteshed is precisely what produces competition among landfills. For a new commercial landfill to compete with existing commercial landfills for a source of waste, both the new and incumbent landfills must: 1. have comparable travel times to the source of waste, and 2. have the physical airspace to accept the waste If a new landfill is “too far” from a source of waste, or does not have the physical airspace to accept the waste, it cannot compete with the incumbent landfills to provide disposal services for that waste. In contrast, if the new landfill is at a similar distance to a source of waste as the incumbent landfills, and all landfills in the region have adequate physical airspace, then waste disposers have multiple options available, and all landfills must compete to win contracts from the waste disposers. That is, competition between landfills only happens when there is “excess capacity” within comparable travel times to sources of waste. Under the interpretation of “need” in the Statement of Basis, if there is “sufficient capacity” within a given travel time of the proposed new landfill, that landfill will not be approved. This means that a new commercial landfill cannot be approved under this interpretation if the landfill would compete with existing commercial landfills. Likewise, a new commercial landfill could be approved only if it is far from existing landfills, or near landfills without adequate physical airspace. But in that case, there is no competition between the new landfill and incumbent landfills. Thus, the interpretation of “need” in the Statement of Basis would protect the incumbent commercial landfills from competition, and thus would have anticompetitive effects. It is well- established that competition leads to public benefits – see for example the reduction in prices for Weber County from the competition between PPL and Wasatch Regional Landfill.14 In contrast, 12 Statement of Basis, p. 6. 13 Needs Assessment, Figures 2 and 3. 14 Needs Assessment, p. 23 (“PPL’s competitive presence saved Weber County about $2.81/ton, or about $560,000 per year, in the County’s waste management costs”). Note this benefit was due to competition for residential MSW disposal services, 6 restrictions that harm competition, such as barriers to entry for new competitors, will have negative effects on public welfare through higher prices, reduced quality or levels of service, and less innovation.15 Thus, the interpretation of Subsection (10)(b)(i) in the Basis is anticompetitive and forfeits the public benefits that would accrue from increased competition. which PPL can currently provide under its Class I permit. The competitive benefits of a Class V permit for PPL (e.g., for commercial MSW and out-of-state waste) will not be observed until PPL has the permit and can compete for those waste streams. 15 See for example https://www.ftc.gov/system/files/attachments/competition-counts/pdf-0116_competition-counts.pdf 7 4. The Interpretation of Subsection 10(b)(i) in the Statement of Basis Conflicts with Subsection (10)(a)(iii) 4.1. Interpreting “Need” as Physical Airspace in a Given Geographic Region Renders Subsection (10)(a)(iii) Irrelevant Subsection (10)(a) envisions competition among commercial landfills for waste disposal services. Specifically, Subsection (10)(a)(iii) calls for “a review of other existing and proposed commercial nonhazardous solid or hazardous waste facilities regionally and nationally that would compete for the treatment, storage, or disposal of the nonhazardous solid … waste” (emphasis added).16 As described above, the interpretation of Subsection (10)(b)(i) in the Basis would not allow for the approval of a new commercial landfill that could compete with incumbent commercial landfills. However, Subsection (10)(a)(iii) specifically calls for a review of competing landfills. If the interpretation of “need” in the Basis is correct, then this would mean that the evidence called for in Subsection (10)(a)(iii) is irrelevant – but this cannot be the correct interpretation of the Code. If the legislature intended only non-competing landfills to be approved, then it would not have called for a review of competition in Subsection (10)(a)(iii). 4.2. Consideration of Non-Commercial Landfills Renders Subsection (10)(a)(iii) Incorrect or Incomplete Subsection (10)(a)(iii) requires “a review of other existing and proposed commercial nonhazardous solid or hazardous waste facilities regionally and nationally that would compete for the treatment, storage, or disposal of the nonhazardous solid … waste” (emphasis added). This is the review that we provided in our Needs Assessment.17 The Statement of Basis argues that non-commercial landfills also should be considered in the assessment of need.18 The Statement of Basis then reviews several non-commercial landfills (e.g., “[t]he Little Mountain Landfill is one hour closer to most of the populated areas of Box Elder County than the PPL facility, making the Little Mountain Landfill the closer option”).19 However, Subsection (10)(a)(iii) specifically limits the review to commercial facilities only. If the review also requires consideration of non-commercial landfills, as the Statement of Basis implies, then this would mean Subsection (10)(a)(iii) is incorrect or incomplete. Again, this cannot be the correct interpretation of the Code. If the legislature intended the review to cover 16 See also Section (10)(a)(ii), which calls for “a market analysis of the need for a commercial facility given existing and potential generation of nonhazardous solid or hazardous waste in the state and regionally.” 17 Needs Assessment, Sections 2.1.1 for MSW and 2.2.1 for excavated soils. 18 Statement of Basis, p. 6. 19 Statement of Basis, p. 5. 8 both commercial and non-commercial landfills, it would have stated that in Subsection (10)(a)(iii). 9 5. The Statement of Basis Misrepresents Key Elements of NERA’s Economic Wasteshed Analysis 5.1. The Statement of Basis Incorrectly Claims That the “Primary Benefit” We Describe for PPL Is “Lower Tipping Rates” Than Competing Landfills The Statement of Basis claims “[t]he primary benefit that PPR described in its application is that it can compete for waste at lower tipping rates (disposal cost per ton) than competing landfills.”20 This statement is incorrect. The Needs Assessment made no assertions that PPL’s tipping rates would be higher or lower than those of competitors, and differences in tipping rates are not counted as benefits in the Needs Assessment. Instead, the hundreds of thousands of dollars of annual benefits estimated in the Needs Assessment described above were derived solely from the reduced total cost of disposal as a result of PPL’s better location for many waste generators. These benefits were estimated under the assumption that PPL’s tipping fees would be equal to the tipping fees of its existing regional competitors. It is true that reductions in tipping fees generally (not just lower rates at PPL) are a likely secondary benefit from the additional competitive forces that PPL’s Class V permit would unleash in northern Utah. In fact, the State of Utah has already benefitted from the increased competition offered by PPL under its Class I permit. As we described in the Needs Assessment Report:21 [I]n 2018 Weber County used a lower-cost offer by PPL to invoke a section in its decades-old contract with Republic/Wasatch Regional Landfill, allowing it to change providers for a 10% reduction in price. Republic matched PPR’s price rather than lose the contract. As a result, PPL’s competitive presence saved Weber County about $2.81/ton, or about $560,000 per year, in the County’s waste management costs. This is one discrete example of a public benefit PPL was able to provide through competition on the total-cost-of-disposal under its Class I permit. This example also demonstrates why “PPR did not provide proposed pricing for disposal services.”22 Tipping fees are subject to competitive forces and are negotiated on a case-by-case basis, and thus cannot be determined in advance. These competitive forces would likely be even stronger if PPL is granted a Class V permit, although our report does not quantify these potential secondary benefits, nor are they included in the report’s dollar estimates of benefits to Utah. 20 Statement of Basis, p. 4. 21 Needs Assessment, p. 23. 22 Statement of Basis, p. 4. 10 5.2. The Statement of Basis Misrepresents PPL’s MSW Economic Wasteshed The Statement of Basis examines a small number of sites in Utah where current transfer stations exist, and concludes “[w]ith only the exception of the Logan City Transfer Station, PPL is in no better location than the existing options shown above in PPR’s own comparison of travel times, which does not include even closer travel times to the additional non-commercial landfills in the wasteshed.” This statement is misleading. The MSW economic wasteshed in which PPL has a competitive advantage in waste transportation costs over its commercial competitors is a broad region covering much of northern Utah and southern Idaho.23 It is not limited to the small number of sites where current transfer stations exist, as implied by the Statement of Basis when it presents a selective subset of our results. Individual existing transfer stations were used as point of relative cost comparisons solely to help identify the boundaries of the region where PPL would be lower cost relative to all the other commercial landfills in northern Utah. The competitiveness of PPL lies with wastes generated inside those boundaries, not at those specific points used to identify the loci of the PPL market’s boundaries. Further, PPL’s MSW economic wasteshed is not limited to residential MSW, as implied by the Statement of Basis. The approximately 220,000 tons of commercial MSW generated annually within the Utah portion of PPL’s economic wasteshed is not required to go through a transfer station, and commercial haulers of MSW have a strong business incentive to switch their landfill destination if a lower total-cost-of-disposal option becomes available. As we explained in the Needs Assessment Report, this commercial MSW represents the most likely near-term demand for MSW disposal at PPL.24 However, these MSW disposal needs cannot be met until PPL’s Class V permit is granted. 5.3. The Statement of Basis Incorrectly States That the Needs Assessment Defined the PPL Wasteshed Using a 2.5-Hour Travel Time The Statement of Basis claims “PPR proposes that its attainable waste market has a range of up to 2.5 hours travel time, one way, to transfer stations and to available waste within its economic wasteshed.”25 This statement is incorrect. Economic wastesheds are not defined by an arbitrary travel time, including the 1.75-hour travel time considered in the Statement of Basis. Instead, the Needs Assessment Report defined PPL’s economic wasteshed as the area in which PPL has a competitive advantage in waste transportation costs over its commercial competitors. All of the in-state benefits for MSW waste disposers in the Needs Assessment were based on the reduced waste transportation costs within PPL’s economic wasteshed. The 2.5-hour travel time calculation played no role in the benefits calculation, and was only included to demonstrate a maximum, if unlikely, potential economic wasteshed.26 The 1.75-hour travel time that the Basis 23 Needs Assessment, Figures 2 and 3. 24 Needs Assessment, pp. 17-18. 25 Statement of Basis, p. 5. 26 Needs Assessment, p. 15. 11 selected also fails to make sense under the definition of an economic wasteshed as it too fails to account for the location of PPL relative to its commercial competitors. 12 6. NERA’s Findings and Conclusions, NERA’s Needs Assessment Report, and Utah Code § 19-6-108(10)-(11) This section sets forth the key findings and conclusions of NERA’s Needs Assessment Report (the “NERA report”) organized in a manner that demonstrates how the contents of that report satisfy all the requirements of Utah Code § 19-6-108(10)-(11). The NERA report supports positive determinations by the Director regarding Utah Code § 19-6-108(10)-(11). None of the NERA report’s quantitative findings summarized below, nor any part of the analysis that generated them, has been contradicted or otherwise repudiated in the Statement of Basis. Utah Code § 19-6-108(10) lists specific information that is required as part of a demonstration of the need for a new additional commercial landfill in Utah. In condensed form, Subsection 10 requires:27 a) evidence that the proposed commercial facility has a proven market of nonhazardous solid […] waste, b) a description of the public benefits of the proposed facility, and c) compliance history of an owner or operator of a proposed commercial nonhazardous solid […] waste treatment, storage, or disposal facility, which may be applied by the director in a nonhazardous solid […] waste operation plan decision, including any plan conditions. Additionally, Subsection 11 requires the Director to determine that: a) the probable beneficial environmental effect of the facility to the state outweighs the probable adverse environmental effect; and b) there is a need for the facility to serve industry within the state. 6.1. How Requirements of Section 10(a) Have Been Met by NERA’s Needs Assessment Report Section 10(a)’s requirement for evidence of a proven market of nonhazardous solid waste consists of three specific components: 10(a)(i): the source, quantity and price charged for disposing of potential nonhazardous solid waste in the state and regionally; 10(a)(ii): a market analysis of the need for a commercial facility given existing and potential generation of it in the state and regionally; 27 The ellipses in these quotes from the statute have removed references to hazardous waste, which are irrelevant to the Class V permit application for PPL, which does not seek permission to accept hazardous wastes. 13 10(a)(iii): a review of other commercial solid waste facilities regionally and nationally that would compete for disposal. NERA’s market analysis, as documented in the Needs Assessment Report, meets all three of the requirements of Section 10(a) listed above: • To satisfy Subsection 10(a), NERA performed a market analysis for two key waste streams that both already have a substantial proven market for disposal in Utah: municipal solid wastes (MSW) and contaminated soils from California that are considered nonhazardous solid waste in Utah. These are not the only waste stream markets for which PPL could compete but are given the detailed focus that a full market analysis requires because they are demonstrably non-trivial in magnitude already. • Satisfying 10(a)(i), detailed quantitative data on the sources and quantities of these two markets are provided in the NERA report.28 • The market analyses for both waste streams start with a thorough and complete listing of commercial solid waste facilities regionally and nationally that could potentially compete with PPL for each respective waste stream. As required by Subsection (10)(a)(iii), NERA identifies and reviews six competing landfills in the Utah and Idaho region for MSW,29 and 12 competing landfills for California soils in the states of California, Utah, Nevada, Idaho, Oregon, and Arizona.30 This satisfies 10(a)(iii). • NERA conducted its market analysis pursuant to Subsection 10(a)(ii) demonstrating that PPL would be the least-cost provider of disposal services for MSW and California soils relative to any of the commercial landfills regionally and nationally that would compete for each of those waste streams, respectively. PPL’s ability to compete in these markets is based on its relative advantage locationally with respect to each of the potentially competing alternative commercial landfills, which translates into PPL’s ability to provide a lower total-cost-of-disposal service even without offering lower tipping fees than competing landfills. A brief synopsis of the findings of the NERA’s analysis required under Section 10(a) is as follows: 28 For MSW, total tons per year in 2020 are estimated to be 400,896 in just three Utah counties that are identified by the market analysis as being PPL’s competitive region and 117,469 in seven Idaho counties also projected as in PPL’s competitive region (see Needs Assessment, Table 3, p. 17). NERA has projected that these totals will remain stable, or likely grow through 2050 based on population growth and waste per person trends (see Needs Assessment, Figure 6, p. 21). For California excavated soils, total tons generated per year were about 700,000 in 2017 (see Needs Assessment, Table 9, p. 34) and projected to grow through the next ten years (see Needs Assessment, p 35). Demonstrating that California soils already has a proven disposal market within Utah is the fact that the ECDC landfill has been receiving these wastes since about 1996 (see Needs Assessment, p. 31). 29 Needs Assessment, Table 2, p. 10. 30 Needs Assessment, Table 6, p. 26. 14 For the state and regional MSW market: • NERA’s detailed transportation cost analysis demonstrates that PPL would be the least- cost commercial waste disposal site for MSW throughout a broad region that extends southward along the east of the Great Salt Lake nearly to Ogden, UT and northward across at least seven counties in southwestern Idaho.31 PPL’s market region encompasses the Utah counties of Box Elder, Weber, and Cache. • Based on its relative transportation cost analysis, and data it assembled for current and projected sources and quantities of MSW within the region determined to be PPL’s economic wasteshed for MSW, NERA found that: o PPL’s lower total-cost-of-disposal services for commercial MSW in the three Utah counties for which it has a demonstrated market would generate benefits to Utah businesses and consumers of up to $790,000 per year,32 with that benefit stable or increasing in value through 2050.33 o The benefits related to Utah residential MSW disposal within those three counties are up to $680,000 per year and stable or increasing in value through 2050. The report recognizes that these benefits would be realized more gradually, as those counties start to consider alternatives to their present publicly-owned landfills. o The benefits to MSW disposers in the seven Idaho counties could be as high as $630,000 for commercial MSW and $540,000 for residential MSW as it transitions away from the existing older and smaller publicly-owned landfills. For the state, regional and national California excavated soils market: • PPL would be the least-cost landfill for California soils from the San Francisco Bay area, which accounts for about half of all of California’s soils output. Due to advantages of convenient rail transport lines to PPL’s location, PPL would be competitive for soils from the Los Angeles area compared to Arizona landfills, which accounts for the other main portion of California’s soils output. • Based on its detailed relative cost analysis, and data it assembled for current and projected sources and quantities of California excavated soils, NERA found that: 31 Needs Assessment, Figures 2 and 3, pp. 13-14. 32 Needs Assessment, Table 5, p. 22. 33 Needs Assessment, Figure 6, p. 21. 15 o PPL can reasonably expect a demand for disposal of 100,000 to 200,000 tons per year of California soils soon after receiving its Class V permit.34 This demand can be expected to be stable or increasing over the next ten years.35 o Financial benefits to Utah from PPL being able to serve this demand are indirect but two-fold: (a) incremental revenues at PPL will translate into macroeconomic and fiscal benefits to Utah households, businesses, and local governments; (b) the scale of immediate demand at PPL from this waste stream will synergistically enable PPL to offer lower tipping fees to its in-state customer base, such as the commercial MSW disposers.36 o California entities seeking lowest cost excavated soil disposal options who already dispose outside of California could save $3 million to $6 million per year.37 The NERA report makes clear that the above two waste streams for which there is a proven market in northern Utah that PPL is competitively positioned to support are not the only types of waste streams that PPL will be prepared to support. Other waste stream markets that are potential businesses of PPL, once it has its Class V permit, include: industrial nonhazardous wastes in the northern Wasatch Range and rail-connected states such as Idaho, Wyoming, and Montana, that presently are disposed in industry-owned landfills; MSW from southern Wyoming and northeastern Idaho, excavated soils from brownfield and other sites in the Wasatch Range, automobile shredder residue, and excavated soils from wildfire cleanups, particularly those in California.38 While these additional markets could not be fully analyzed due to the extensive scope of work that full market analysis requires, the same fundamental locational and relative cost considerations that led to a demonstration of PPL’s competitiveness for state and regional MSW and California soils would apply to full analyses of these additional markets. 6.2. How Requirements of Section 10(b) Have Been Met by NERA’s Needs Assessment Report Section 10(b) requires that the public benefits of the proposed nonhazardous Class V landfill be described and identifies three forms of public benefits that can be accounted for: • 10(b)(i): The State’s need for additional capacity for management of nonhazardous solid waste; • 10(b)(ii): Energy and resources recoverable by the proposed facility; 34 Needs Assessment, p. 33. 35 Needs Assessment, p. 34. 36 Needs Assessment, p. 36 and pp. 37-39. 37 Needs Assessment, p. 36. 38 Needs Assessment, Section 2.3.2, pp. 40-43. 16 • 10(b)(iii): Reduction of nonhazardous solid waste management methods that are less suitable for the environment. As described above, NERA’s market analysis clearly addresses the question of the State’s need and thus satisfies Subsection 10(b)(i). The analysis under 10(a) identifies that PPL would be competitive within proven markets for waste disposal and does so based on comparisons of the total cost of disposing wastes at PPL versus at the next most cost-effective of the potentially competing commercial landfills. Waste generators located where the NERA analysis shows that PPL can provide a lower-cost commercial option than those currently available are the portion of the Utah economy that has a need for additional capacity. Their need is defined by the locational convenience and cost savings that PPL’s availability will create, making Section 10(b)(i) consistent with the requirements for a market analysis under Subsection 10(a). Again, NERA’s analysis of market need found these public benefits: • There is current need among commercial MSW disposers in three Utah counties (Box Elder, Weber, and Cache) that has a financial value to them and their customers of up to $790,000 per year, with likely growth in the value over time. • There will be need emerging over a longer period of time in those three counties as they consider how to handle their residential MSW landfill capacity limits. That also would have financial value on the order of tens of thousands of dollars per year, once it becomes a fact. • There is need for more conveniently located modern commercial and residential waste disposal options across six counties in southwestern Idaho. • There is need for lower cost disposal options among excavated soil waste disposers in California. To satisfy Section 10(b)(ii), NERA notes PPL’s plans for installing a solar microgrid to meeting facility power needs and installation of a gas-collection system to capture methane, as well as its ability to use parts of the site to segregate waste, stockpile inert materials for beneficial reuse and implement waste-processing technologies to recover embodied energy.39 To satisfy Section 10(b)(iii), NERA notes that PPL has been designed, constructed, and will be operated consistent with the high standards of modern landfilling practices for nonhazardous wastes as required under the federal Resource Conservation and Recovery Act (RCRA), Subtitle D. Transition from older landfills to such state-of-the-art waste management is less costly and therefore can be faster in areas that are located reasonably close to Subtitle D landfills developed by the private sector (i.e., commercial landfills). NERA’s market analysis demonstrates that PPL is located in an area of the state and region that presently lacks economically accessible commercial Subtitle D landfill capacity and hence continues to rely on less environmentally sound landfills. This area thus has a need, and its residents and business would publicly benefit 39 Needs Assessment, Section 2.4, pp. 43-44. 17 from PPL being able to operate in their vicinity at the economic scale that the Class V permit would enable.40 6.3. How Requirements of Section 10(c) Have Been Met by PPL Addressing Section 10(c) is not a question of economics expertise and thus was addressed by PPR directly in its Class V permit application. While NERA played no role in providing the requisite PPR compliance history information, we note that the Statement of Basis indicates it has identified no deficiencies in PPR compliance history and describes PPR’s compliance as being responsive to the Division’s all past requests for preventive maintenance at PPL.41 6.4. How Requirements of Section 11(a) Are Supported by NERA’s Needs Assessment Report Section 11(a) requires the Director to determine that probable beneficial environmental effect of the facility outweighs probable adverse environmental effects. As discussed for Subsection 10(b)(iii) above, NERA found probable beneficial effects of PPL in terms of a greater rate of transition from older landfills to state-of-the-art waste management practices across the region of the northern Wasatch Front and into southwestern Idaho that NERA has demonstrated to be within PPL’s economic wasteshed for MSW.42 NERA also identified a number of beneficial environmental/energy features, as discussed for Section 10(b)(ii) above. Added to that list, NERA also notes that (1) PPR has permit agreements with Box Elder County for minimizing dusts from the access road and site; (2) the route for transporting wastes to PPL that are within its economic wasteshed will be on less-congested freeways than if those same wastes were to be transported to any of the landfills on the south side of the Great Salt Lake; (3) because the PPL economic wasteshed for MSW is defined in terms of PPL’s having a shorter distance and/or travel time than to competing commercial landfills, there will be a net reduction in greenhouse gases and criteria pollutants associated with usage of PPL as an additional disposal option in the region. Finally, to the extent that soils from northern California are disposed at PPL rather than at ECDC, there will be a net reduction in rail emissions through Utah, because the rail route to ECDC passes directly next to PPL, and thus the approximately 200 mile in-state rail transport segment from PPL to ECDC could be eliminated, along with its air pollutant emissions and energy consumption. To make the determination of Subsection 11(a), the Director would need to identify a greater degree of probable adverse environmental effects of PPL than the set of probable beneficial environment effects described above. The Statement of Basis has not identified any probable adverse environmental effects that would result from changing PPL to a Class V landfill. In contrast, NERA found a number of reasons why PPL will have no probable adverse environmental effects to the State. These include its state-of-the-art design, which does not need to be changed to become a Class V landfill, that it has already been approved by the Division as 40 Needs Assessment, Section 3.1.1, pp. 45 -47. 41 Statement of Basis, p. 4. 42 See also Needs Assessment, pp. 45-47. 18 meeting all siting and location standards in R315-301-1, that Box Elder County has determined PPL faces no zoning restrictions and that the land disturbances at the site are acceptable, and that the Director has approved PPL’s Plan of Operations for ongoing monitoring and environmental protection procedures.43 Thus, NERA analyses and findings support a determination by the Director that the probable beneficial environmental effect of changing PPL to Class V outweighs probable adverse environmental effects, as required under Section 11(a). 6.5. How Requirements of Section 11(b) Are Supported by NERA’s Needs Assessment Report Section 11(b) requires the Director to determine that there is a need for the facility to serve industry in the state. This determination reflects the findings under Section 10(b)(i) discussed above. Based on guidance from Division Director Ty Howard during a meeting prior to NERA initiating its analyses, NERA interpreted the term “industry” in this provision to refer broadly to businesses, state and local governments, and residents of the State, rather than narrowly as “industrial activities” only. In giving that guidance, Director Howard explained that he perceived the purpose of Subsection 11(b) to be to avoid permitting a Class V facility that would do nothing but dispose of out-of-state (“imported”) wastes. As is clear from the discussion above regarding NERA’s findings relevant to meeting the requirements of Subsections 10(a) and 10(b)(i), there is no reason to conclude that PPL’s purpose would be to accept only out-of-state/imported wastes. The NERA analyses demonstrate that there are clear economic benefits, and hence need (economically defined) by businesses, residents, and local governments for the services of an PPL as a Class V landfill that also provides the environmental benefits of the PPL design and waste management features. Stated in terms of the quantitative findings of NERA’s full economic analysis, by serving this need, Utahns specifically would gain the following benefits:44 • Up to $1.5 million per year of direct savings from PPL’s ability to cost-effectively serve the MSW disposal needs of Utahns in the northern Wasatch Front. • Potential additional reductions in disposal costs even for waste disposal that remains at other competing commercial landfills in the state due to competitive pressure that PPL as a Class V landfill) would place on tipping fees across the region. • Potential reductions in tipping fees that PPL can offer to Utah disposers due to the synergistic effect on PPL’s cost structure of being able to compete for out-of-state wastes as well as serving in-state needs. 43 Needs Assessment, p. 47. 44 Needs Assessment, Section 3.2, pp. 48-50. 19 • Based on host fees PPL will pay, new income to the Box Elder County government in the hundreds of thousands of dollars per year in the near-term, which could increase well above $1 million per year in the longer run. • Macroeconomic benefits to the Utah economy of about $5.5 million to $6.1 million per year to Utah’s total economic output and dozens of added in-state jobs for every 100,000 tons per year of incremental imported wastes disposed. These also imply fiscal benefits to the state from increased personal and corporate income taxes, sales taxes, and could also potentially lead to property value increases that can raise property tax revenues. Counties will also benefit from increased sales tax revenues and potential property value increases that can raise property tax revenues. • The last bullet’s estimates of macroeconomic and fiscal benefits that PPL will provide to the state are separate from and in addition to the reductions in cost of living and cost of doing business for Utahns described in the first three bullets. Although not quantified by NERA, it is reasonable to anticipate that those reductions in cost of living and cost of doing business will help attract new businesses into the northern Wasatch Front region and further increase the economic benefits to Utah from changing PPL to Class V. Thus, NERA’s analyses and findings support a determination by the Director that there is a need for PPL as a Class V landfill to serve industry in the state as required under Subsection 11(b). All of the above ways that PPL will serve the needs of Utah industry, businesses, and residents from an economic and financial perspective are gained while providing net environmental benefit by helping reduce the cost and thus speed the transition to the state-of-the-art waste management practices of regional landfills that are considered more protective of health and the environment. 6.6. Conclusion The findings, analyses and conclusions of the NERA’s Need Assessment Report satisfy all the requirements of Utah Code § 19-6-108(10)-(11). None of the NERA report’s quantitative findings summarized above, nor any part of the analyses that generated them, has been contradicted or otherwise repudiated in the Statement of Basis. 20 NERA Economic Consulting 4 Embarcadero Center Suite 400 San Francisco, CA 94111 +1 415 291 1000