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entitled 'Waste Management: Observations on the Congressionally 
Approved New Hampshire-Vermont Solid Waste Compact' which was released 
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December 13, 2002:

The Honorable Bob Smith

Ranking Minority Member

Committee on Environment

and Public Works

United States Senate:

Subject: Waste Management: Observations on the Congressionally Approved 

New Hampshire-Vermont Solid Waste Compact:

Dear Senator Smith:

Managing garbage and other solid waste poses a significant challenge 

for many communities, particularly small ones.[Footnote 1] Over the 

past 4 decades, the amount of waste destined for landfills--the 

traditional method of solid waste disposal--increased dramatically, 

from 88 million tons in 1960 to 232 million tons in 2000, or by about 

6.6 percent annually. During the same period, significant numbers of 

landfills closed as federal and state regulatory requirements were 

strengthened. From 1988 to 2000 alone, about 75 percent of the nations 

landfills ceased operation, according to data from the Environmental 

Protection Agency (EPA). To meet these challenges, some communities 

have banded together under regional agreements or interstate 

agreements--sometimes referred to as compacts--that help them jointly 

manage their waste. Such agreements help participating communities 

avoid duplication of costs and take advantage of economies of scale.

In 1982, Congress approved an interstate compact between a solid waste 

management district in New Hampshire and a solid waste management 

district in Vermont to establish the New Hampshire-Vermont Solid Waste 

Project. The purpose of the project was to develop joint solid waste 

disposal and resource recovery facilities, including a waste-to-energy 

incinerator and a landfill for disposal of the incinerator 

ash.[Footnote 2] After the member districts adopted a cooperative 

agreement to implement the compact, project officials contracted with a 

waste management company to build the incinerator and to operate and 

maintain it until 2007. Project officials issued separate contracts for 

the design and construction of the ash landfill. After disputes arose 

regarding expansion of the landfills capacity, the ash landfill was 

closed in 2001 and project officials entered into a contract to have 

the incinerator ash hauled to a landfill in Massachusetts. Other 

disputed issues over the years have included the financing of major 

capital projects, the cost of the incineration services, the cost of 

the electricity generated by the incinerator, the potential 

environmental impact of the incinerator and landfill, and other 

matters.

The federal government plays a role in the implementation of the New 

Hampshire-Vermont Solid Waste Compact. The projects waste disposal 

operations must comply with applicable federal environmental laws. 

Moreover, because the compact required initial congressional approval, 

the Congress must approve any changes to it. The compact has now been 

in place for over 20 years, and questions have arisen about the future 

of waste disposal in the affected region. This report provides 

information on (1) the structure and operations of the New Hampshire-

Vermont Solid Waste Project; (2) how the projects structure and 

operations compare to those of other interstate waste management 

projects; and (3) issues that need to be addressed in the future, as 

the expiration of the incineration contract approaches and the 

districts consider their options. In addressing the second question, we 

were unable to identify any other congressionally approved interstate 

solid waste compacts. However, we identified 10 interstate compacts for 

the management of low-level radioactive waste and one solid waste 

agreement that was not congressionally approved[Footnote 3] and used 

them as a basis for comparison.

In summary, we found that:

To implement the New Hampshire-Vermont Solid Waste Compact, the two 

member districts adopted a cooperative agreement that established a 

two-tiered management structure: a Joint Meeting with representatives 

from each community in the two districts and a smaller Executive 

Committee composed of representatives from the Joint Meeting. The Joint 

Meeting authorizes actions needed to carry out the purposes of the 

cooperative agreement, such as the acquisition or disposition of 

property, and adopts the annual budget under which the project 

operates. The Executive Committee implements the policies and actions 

authorized by the Joint Meeting, proposes an annual budget, oversees 

the projects day-to-day operations, and approves all project 

contracts. Executive Committee members develop a budget sufficient to 

cover the estimated costs of waste incineration and ash disposal; real 

estate taxes; bond repayments; and running the project office. Once the 

budget has been approved, the communities in the member districts are 

responsible for generating sufficient revenues to pay for their share 

of the budget, an allocation determined by the waste management 

districts and based on the percentage of the total waste tonnage that 

each community generates. The communities are also responsible for 

organizing a collection site for their waste and its transport to the 

incinerator.

The structure and operations of the New Hampshire-Vermont Solid Waste 

Project differ from those of other interstate waste management projects 

in several ways. For example, the two-tiered structure used in the New 

Hampshire-Vermont project differs from that of the other projects, each 

of which has a single governing body. From an operational standpoint, 

major differences between the New Hampshire-Vermont project and the 

others include the degree of authority granted to the projects 

governing bodies and how clearly the implementing agreements define 

roles and responsibilities. For example, under the low-level 

radioactive waste compacts, the projects governing bodies are 

specifically defined as independent legal entities, separate and 

distinct from the participating members. However, the cooperative 

agreement that implements the New Hampshire-Vermont project is not as 

explicit, and the question of whether the project exists as a 

separate legal entity has been the subject of litigation. Similarly, 

the cooperative agreement either does not address important functions 

that have been retained by the member districts, such as the authority 

to issue bonds to finance major capital investments, or is unclear 

about how certain responsibilities are divided between the project and 

the districts. The New Hampshire-Vermont compact and the other waste 

management agreements are similar in several respects, however, 

including the extent to which they address how accounts and records 

will be maintained, audit services will be engaged, and the agreements 

will be modified.

By the time the contract for incineration services expires in July 

2007, project officials must address a variety of issues in three broad 

categories: alternative waste disposal options, the long-term liability 

of communities in the member districts, and the disposition of project-

related land. Much depends on whether the districts decide to dissolve 

their cooperative agreement and, as a result, are faced with making new 

arrangements for the disposal of their solid waste. If the agreement is 

dissolved, project officials must ensure that existing obligations are 

met. For example, although the ash landfill was officially closed in 

2001, project officials are responsible both for ensuring that post-

closure maintenance and monitoring requirements will be met over a 30-

year period and for establishing a trust fund to meet related financial 

obligations. Consequently, communities in the member districts may 

retain certain financial liabilities long after the cooperative 

agreement is dissolved. Dissolving the agreement would also raise 

issues regarding the disposition of project-related land. For example, 

although the member districts jointly own the land on which the 

incinerator is sited, the company that currently holds the incineration 

contract has two 10-year options to renew its lease of the incinerator 

property and could do so whether or not the districts decide to 

dissolve the cooperative agreement.

Background:

The management of the nations solid waste is regulated under Subtitle 

D of the Resource Conservation and Recovery Act of 1976, as amended. 

The statute and EPAs implementing regulations prohibit the open 

dumping of solid waste and the establishment of new open dumps, and 

required that existing open dumps be upgraded or closed within specific 

time frames.[Footnote 4] Communities are allowed to manage their waste 

through other means, such as incineration or disposal in sanitary 

landfills, as long as the alternatives meet certain criteria 

established to protect public health and the environment. Partly in 

response to these restrictions, smaller communities throughout the 

country began to look for cost-effective alternatives to address their 

solid waste management problems.

By the late 1970s and early 1980s, some neighboring communities along 

the New Hampshire-Vermont border recognized that they needed to address 

the limited capacity and environmental problems at their existing 

landfills and began to explore waste disposal alternatives. In 1979, 

EPA funded a study that examined the feasibility of developing a joint 

resource recovery project for Sullivan County in New Hampshire and the 

Southern Windsor Regional Planning Commission in Vermont. As the study 

progressed, the member communities in each state formed solid waste 

management districts and moved toward entering into an interstate 

agreement or compact, as authorized under the Resource Conservation 

and Recovery Act.[Footnote 5] After the New Hampshire and Vermont 

legislatures approved the interstate agreement in 1981, EPA and the 

Congress formally approved the New Hampshire-Vermont Solid Waste 

Compact in April and October 1982, respectively. Following these 

approvals, the two solid waste management districts entered into a 

cooperative agreement to implement the compact and establish a 

framework for the joint management and disposal of their solid waste.

A Two-Tiered Management Structure Controls Project Operations:

In approving the New Hampshire-Vermont compact, the Congress authorized 

the adoption of cooperative agreements for the construction, 

maintenance, and operation of a resource recovery facility or sanitary 

landfill or both and established requirements for the contents of such 

agreements, including provision for a joint board and/or 

administrator, responsible for administering the cooperative 

undertaking and the powers to be exercised thereby. Accordingly, the 

cooperative agreement that implements the compact provides for a 

management structure consisting of (1) a governing body called the 

Joint Meeting, which has representatives from each participating 

community, and (2) a smaller Executive Committee that oversees the 

projects day-to-day operations.

The Joint Meeting consists of representatives from the member solid 

waste districts, who are appointed by the boards of selectmen or city 

councils in the district communities. In accordance with the rules of 

their respective solid waste management districts, representatives from 

New Hampshire communities serve 3-year terms and Vermonts 

representatives serve 1-year terms. In total, the Joint Meeting has 34 

members representing 29 communities in accordance with the terms of the 

district agreements. Although most of the participating communities 

have one representative to the Joint Meeting, six of them qualify for 

additional votes based on the amount of waste they generate.[Footnote 

6]

The Joint Meeting is responsible for authorizing the actions needed to 

carry out the purposes of the cooperative agreement, namely, to meet 

the solid waste disposal needs of the communities in the member 

districts. For example, the Joint Meeting was responsible for 

authorizing the acquisition of land on which the incinerator and 

landfill were sited and, later, voted to close the landfill. In 

addition, the Joint Meeting adopts the annual budget under which the 

project operates and allocates the budget between the two districts 

based on the total tonnage of waste their communities generated during 

the prior year.

An 11-member Executive Committee implements the policies and actions 

authorized by the Joint Meeting, proposes an annual budget, oversees 

the projects day-to-day operations, and approves all project 

contracts. In addition, the committee is responsible for appointing a 

project manager and other project staff as needed. The committee 

includes individuals in key leadership positions--the chair of the 

Joint Meeting and the chair and vice-chair of each district--as well as 

three additional representatives from each solid waste district, whom 

the respective districts appointed representatives select annually. 

Members of the Executive Committee serve 1-year terms and may be re-

elected.

Executive Committee members develop a budget sufficient to cover (1) 

waste disposal costs, including incineration services and disposal of 

the ash; (2) the interest and principal repayment associated with the 

bonds issued to construct the landfill; and (3) other operating costs, 

such as real estate taxes, salaries for project staff, and amounts 

needed to run the projects office. Project officials compute an 

estimated cost per ton of waste, called a tipping fee, by dividing 

the total budgeted costs by the projected waste tonnage. For 2002, the 

projects budget was about $4.4 million, including $2.2 million for the 

incineration of 49,000 tons of solid waste.

When the Joint Meeting approves the budget, the members allocate it 

between the two districts based on the total waste tonnage generated by 

their respective communities during the prior year. The districts, in 

turn, determine each communitys share based on the volume or tonnage 

of waste generated in the prior year. Historically, New Hampshire is 

responsible for about 57 percent of the budget allocation and Vermonts 

share is about 43 percent. Communities in each member district are 

responsible for generating sufficient revenue to pay their share of the 

districts budget and, with few exceptions, obtain this revenue through 

property tax assessments. The project collects the funds when the 

project manager bills the communities--or independent waste haulers, in 

some instances--for each ton of waste delivered to the incinerator 

based on the tipping fee in the adopted budget.

In addition to contributing a share of the project budget, each 

community in the member districts is responsible for providing a 

collection site for its waste and transporting it from the collection 

site to the incinerator. In some instances, communities make 

arrangements for joint collection sites or shared waste transport.

Key Aspects of the New Hampshire-Vermont Project Differ from Other 

Waste Management Projects:

The structure of the New Hampshire-Vermont Solid Waste Project differs 

from those of other waste management projects we examined. For example, 

the New Hampshire-Vermont project has a two-tiered structure that 

allows each of the 29 communities in the member districts to be 

represented in a governing body and also provides for a smaller, more 

manageable Executive Committee to oversee day-to-day operations. In 

contrast, the low-level radioactive waste projects have fewer 

participants--about four states, on average--and have a single 

governing body. In the I-95 Complex project, the participating entities 

signed a memorandum of understanding that gave Fairfax County full 

authority to manage all financial and operational aspects of the 

project, including the contract for incineration services and landfill 

operations. The structural differences in the waste management 

agreements may be a reflection of the differences in the number of 

entities participating in each project.

We also found differences between the New Hampshire-Vermont Solid Waste 

Project and the other waste management projects we examined from an 

operational standpoint, based on their implementing 

agreements.[Footnote 7] Among the major differences are the extent of 

the authority granted to the projects governing bodies compared to the 

projects members and how clearly their respective roles and 

responsibilities are defined in the implementing agreements. For 

example, under the low-level radioactive waste compacts, the projects 

governing bodies are explicitly defined as independent legal entities, 

separate and distinct from the participating members. In these 

projects, the relationship between the governing body and member states 

is clearly defined. For example, some agreements authorize the 

governing bodies to designate host states for the disposal facilities 

and to enter into contracts to accomplish project objectives.[Footnote 

8] However, while the cooperative agreement that implements the New 

Hampshire-Vermont project describes the roles and responsibilities of 

the Joint Meeting and Executive Committee, it is not explicit about the 

legal status of these entities. The question of whether the project 

exists as a separate legal entity has been an issue in litigation 

involving the project, for example, in a case in which a district 

representative sought copies of the projects legal bills.[Footnote 9] 

Clarifying this issue from the beginning might have allowed the project 

to avoid some legal problems.

Similarly, problems might have been avoided if the cooperative 

agreement for the New Hampshire-Vermont Solid Waste Project had 

addressed the projects responsibility for certain important functions. 

For example, the cooperative agreement does not address how major 

capital projects will be financed; authority to issue long-term debt is 

addressed only in the agreements for the solid waste 

districts.[Footnote 10] This omission may have been a factor in an 

internal dispute over project financing. Specifically, the Joint 

Meeting recommended the issuance of long-term debt to finance certain 

costs related to the ash landfill, and one of the member districts 

issued the bonds. However, a problem arose when the other district did 

not want to pay its portion of the allocated budget related to bond 

repayment, arguing that it was not responsible for repayment of bonds 

issued by the first district. While the problem was eventually resolved 

through arbitration, it might have been avoided altogether had the 

cooperative agreement been explicit about who had authority to issue 

long-term debt for the benefit of the project--and under what 

circumstances--and who was responsible for repaying it. In contrast to 

the New Hampshire-Vermont project, the memorandum of understanding used 

for the I-95 Complex agreement clearly gives the county responsible for 

managing the project authority to finance the design and construction 

of waste disposal facilities and to charge the participating entities 

for their share of the capital costs.[Footnote 11]

Other operational differences between the New Hampshire-Vermont Solid 

Waste Project and the other projects we examined, based on their 

implementing agreements, were in the areas of annual accountability 

reporting and public access to meetings and records. Under the low-

level radioactive waste compacts, the governing bodies must publish 

annual reports to the governors and legislative bodies of their member 

states on the projects operations and finances, including copies of 

annual budgets and independent audits. In addition, 8 of the 10 low-

level radioactive waste compacts included in our comparison require, 

with certain exceptions, that project meetings and records be open to 

the public. While the memorandum of understanding for the I-95 Complex 

does not address either accountability reporting or public access, 

Fairfax County, which manages the I-95 project, has a process in which 

the public can gain access to project records. The cooperative 

agreement for the New Hampshire-Vermont project does not address either 

area.[Footnote 12]

We also found some similarities in the operations of the New Hampshire-

Vermont project and the other waste management projects based on their 

implementing agreements. For example, most of the agreements contain 

provisions requiring the maintenance of accurate accounts and 

independent audits of the projects finances. The agreements also 

contain provisions on amendments by project members and the entry and 

withdrawal of members from the project.

Waste Disposal Options, Long-term Liability of Participating 

Communities, and Other Matters Will Need to Be Addressed in the Near 

Future:

Officials with the New Hampshire-Vermont Solid Waste Project will have 

to address a number of important issues relating to waste disposal, 

long-term liability, and other matters by July 2007, when the projects 

contract for incineration services expires. Recognizing this need, 

project officials formed a transition committee to identify more 

specifically the kinds of questions that will have to be answered and 

the decisions that will have to be made. The committee is not expected 

to report its findings until December 2002. However, based on our 

discussions with project officials and our review of applicable 

contracts and other project documents, we noted some of the key issues 

that will need to be resolved.

Extension of incineration contract. Regarding waste disposal, the most 

critical decision facing project officials is whether to negotiate an 

extension of the incineration contract. Furthermore, according to 

project officials, the need to make a decision on the incineration 

contract is prompting representatives from the member districts to 

reconsider their participation in the cooperative agreement. If the 

representatives vote to dissolve the cooperative agreement, then the 

districts and their participating communities will have to examine 

waste disposal alternatives, the costs associated with each option, and 

whether certain communities or districts will make new arrangements to 

jointly manage their waste or decide to go it alone.

Long-term liability of participating communities. Another set of issues 

for project officials to consider involves the long-term liability 

associated with the projects landfill, which was closed in 2001. 

According to federal and state requirements for the management of solid 

waste, the New Hampshire-Vermont Solid Waste project, as the permit 

holder for the ash landfill, is responsible both for meeting post-

closure maintenance and monitoring requirements, generally for 30 

years, and for maintaining a trust fund or other mechanism to meet 

related financial obligations. As a result, communities in the member 

districts may retain certain financial liabilities even after the 

cooperative agreement is dissolved. Selling or transferring the 

landfill property is a possibility, but the project--and by definition, 

the communities in the member districts--would continue to be liable 

for meeting the technical and financial obligations associated with the 

permit unless the new owner agreed to assume responsibility.

Disposition of project-related land. If the members of the Joint 

Meeting vote to dissolve the cooperative agreement, project officials 

must ensure that existing obligations are met and that land and other 

assets are disposed of in an orderly manner. Disposition of project-

related land, in particular, raises significant issues. For example, 

although the member districts jointly own the land on which the 

incinerator is sited, the company that currently holds the incineration 

contract has two 10-year options to renew its lease of the property and 

could do so whether or not the cooperative agreement is dissolved. In 

addition, under the terms of its agreement with the project, the 

incineration company pays just $100 per year for the lease, a provision 

that would likely remain in effect in the event that the property was 

transferred or sold to a new owner. These restrictions could affect the 

ability of project officials to dispose of the incinerator property by 

limiting the potential buyers.[Footnote 13] Similarly, a restriction on 

the use of the landfill property could hinder the projects ability to 

dispose of it. An April 2000 amendment to the cooperative agreement 

provided that the property could not be used as a municipal sanitary 

landfill without approval by the town of Newport, New Hampshire, where 

the property is located.

With only a few years remaining on the contract for incineration 

services, project officials have already taken some preliminary steps 

to prepare for the future and ensure that various aspects of the 

project will be concluded in 2007. For example, when project officials 

contracted with a company to haul the incinerator ash to a 

Massachusetts landfill after the projects own landfill was closed, 

they made sure that the ash hauling contract expires on the same date 

as the projects contract for incineration services. Project officials 

also refinanced the bonds that had been issued to pay for expenses 

related to the design and construction of the ash landfill so that the 

bond repayments end in 2007 rather than in 2009, as originally 

scheduled. Finally, after borrowing from the trust fund established for 

the landfill to pay for its permanent closure, project officials 

established a repayment schedule that would ensure that the trust fund 

is fully funded by 2007.

Comments from Project Officials:

We provided a summary of our findings to the New Hampshire-Vermont 

Solid Waste Project to obtain technical comments on the factual 

accuracy of the contents. Project officials generally agreed with the 

facts presented and suggested some clarifications and technical 

corrections, which we incorporated as appropriate.

Scope and Methodology:

To gain an understanding of the structure and operations of the New 

Hampshire-Vermont Solid Waste Project, we interviewed key officials 

from the Executive Committee, Joint Meeting, and solid waste management 

districts and reviewed the compact, cooperative agreement, major 

contracts, and other pertinent documents. To determine how the 

structure and operations of the New Hampshire-Vermont project compare 

with those of other interstate waste management projects, we identified 

other projects and reviewed their implementing agreements. 

Specifically, we compared the structure and operations of the New 

Hampshire-Vermont project with 10 low-level radioactive waste compacts 

and a memorandum of understanding between jurisdictions in Virginia and 

the District of Columbia. To identify issues that will need to be 

addressed in the near future, we interviewed key project officials to 

obtain their views and officials from the New Hampshire Department of 

Environmental Services to obtain information on the requirements 

associated with the ash landfill. We also reviewed pertinent documents 

relating to the environmental, financial, and legal obligations of the 

project and the member districts. We conducted our review from February 

through November 2002 in accordance with generally accepted government 

auditing standards.

As agreed with your office, unless you publicly announce the contents 

of this report earlier, we plan no further distribution until 7 days 

from the report date. At that time, we will send copies of this report 

to interested parties. In addition, the report will be available at no 

charge on GAOs Web site at http://www.gao.gov. If you or your staff 

have questions about this report, please call me at (202) 512-3841. Key 

contributors to this assignment were Ellen Crocker, Les Mahagan, 

Richard Johnson, and Cynthia Norris.

Sincerely yours,

Signed by John B. Stephenson:

John B. Stephenson, Director

Natural Resources and Environment:

FOOTNOTES

[1] For the purposes of this report, solid waste means the nonhazardous 

garbage or trash typically generated by industries, businesses, 

institutions, and households.

[2] Under state law in New Hampshire and Vermont, communities may join 

together to form waste management districts to manage the disposal of 

their solid waste.

[3] In 1971, Fairfax County, Virginia; the District of Columbia; and a 

regional waste management agency, which encompassed these and other 

jurisdictions (including some in Maryland), entered into a memorandum 

of understanding to jointly develop an interim landfill. By 1986, the 

solid waste management project had evolved to include a waste-to-energy 

incinerator and a landfill; project participants included jurisdictions 

in Virginia and the District of Columbia. The project is called the I-

95 Resource Recovery, Land Reclamation, and Recreation Complex or, more 

commonly, the I-95 Complex. 

[4] An open dump is any landfill that poses a reasonable probability of 

adverse effects on health or the environment, as provided for under EPA 

regulations. 

[5] The act authorizes two or more states to enter into agreements or 

compacts for the management of solid waste, hazardous waste, or both; 

the enforcement of applicable laws; and the establishment of agencies 

to implement the compacts. For such compacts to be binding, they must 

be approved by the EPA Administrator and the Congress.

[6] One community has three votes (the maximum allowed) and five 

communities have two votes.

[7] We compared the cooperative agreement used to implement the New 

Hampshire-Vermont Solid Waste Compact with the 10 low-level radioactive 

waste compacts and a memorandum of understanding that was used for the 

I-95 Complex agreement. 

[8] As indicated earlier, instead of having a governing body, the 

participants in the I-95 Complex project agreed that one county would 

be responsible for managing the project. 

[9] Franklin v. Callum, 804 A.2d 444 (N.H. 2002). As part of its 

ruling, the court determined that the project is not a separate entity 

but rather a creation of the two waste management districts.

[10] For example, the agreement for the New Hampshire district states 

that the district has authority to incur debt for the purpose of 

acquiring land and for planning, constructing, and equipping a refuse 

disposal facility. 

[11] The governing bodies established under the low-level radioactive 

waste compacts do not issue long-term debt to finance major capital 

projects.

[12] The lack of a clear, consistent policy on access to records became 

an issue in litigation, after the executive committee denied a district 

representatives request to review certain invoices from the projects 

attorney, citing attorney-client privilege. New Hampshires Supreme 

Court ultimately ruled in favor of the district representative, holding 

that the representative was a client of the attorney who provided 

services to the project, and therefore was entitled to see the 

projects legal bills. Franklin v. Callum, 804 A.2d 444 (N.H. 2002).

[13] According to project officials, the member districts jointly own 

more than 50 acres of land, including 6 acres on which the incinerator 

is sited, and there is no restriction on the districts ability to 

dispose of the unencumbered portion of the property.