Ron Bergamini CEO Testimony to BIC on Trade Waste Cap Rates

Testimony of

Action Environmental Group

Ronald S. Bergamini, CEO

Business Integrity Commission

Public Hearing on Trade Waste Cap Rates

Daniel D. Brownell, Chairman

October 18, 2017

Commissioners, my name is Ron Bergamini, CEO of the Action Environmental Group, the parent company to Action Carting, the largest private hauler of trade waste in New York City. I am proud to be part of this vital industry that serves the largest and best city in the United States. There are many professionals in the industry who care deeply about the service they provide – from the driver to the board member, this commitment and dedication is critical to meet the growing complexity of the industry.

Today, competition is thriving and the customer has more choices than ever. Accordingly, there is no longer a need for the rate cap. The City of New York, in particular the Business Integrity Commission, deserves much of the credit for helping develop the industry to where it is now. The rate cap was a reasonable concept at one point. However, we believe that time has passed.

I have testified at several of these hearings over the years. However, today is different as we are in an era of dramatic change. The need for a repeal of the rate cap is now more urgent than ever. Starting two years ago and moving forward over the next two years, the industry faces unprecedented pressure on what the accountants call “cap ex”. This means significantly increased costs for collection vehicles and equipment. In 2017, a new garbage truck cost more than $300,000. This cost has risen substantially due to better truck standards and the tougher NYC emission standards that will be in place by 2020. The new requirements, while well-intentioned, are putting a financial strain on all companies, big and small as the industry prepares to replace older garbage trucks.

Despite the cost, we have always supported strengthening rules that clean our city’s air. We support expanding this rule beyond garbage trucks to All trucks. The challenge is that we collectively need to pay for this. You cannot ask companies to adapt tougher environmental standards without expecting costs to rise. Customers understand that. Residents understand that. The cars we drive have seen fuel mileage standards increase and as a result the cost has gone up. That makes sense to most people. The same analogy applies here. The cost of our trucks have gone up but unlike the car industry, we are required to take older models out of service and replace them. As a consequence, my company’s cap ex will be about 70% higher for the next two years.

The City has passed new commercial recycling laws. Like the emission standards, these laudable goals have always been supported by Action. However, recycling often costs more and sometimes a lot more, particularly in the market we find ourselves in today. These new rules result in most companies having to put more trucks on the road – not less. Putting aside the environmental irony, those trucks require more drivers, helpers and mechanics.   This means increased expenses for the hauler who are handcuffed from being able to charge more to hire top-of-the-line workers. This affects performance and safety. We are an industry that believes in providing jobs that pay a solid middle class wage with good benefits.

The new and growing organics recycling program also imposes additional costs. According to the research of the Citizens Budget Committee in its report, “Can We Have Our Cake and Compost It Too” (February 2, 2016), the city could spend anywhere between $177 million to $251 million annually to implement a citywide composting program. To be clear, I am not here to advocate against these worthwhile goals. I am simply saying you cannot have your cake and compost it too. Someone has to pay for it. In order to attract investment in composting infrastructure, we need to demonstrate flexibility in pricing.

Public policy and elected officials talk of our industry being in the midst of great changes. I am hard pressed to find any industry that you cannot say that about because we live in an era of breathtaking technological changes. Our industry continues embraces the better use of technology like onboard computing, onboard cameras for better training, education and performance. These changes will result in better services and safer roadways for New York City residents.

Our suggestion is to keep regulating the industry smartly, but the rate cap needs to be eliminated or substantially increased, in the alternative. We all want top-notch environmentally sustainable equipment, better service and safer working conditions. Please allow us to provide the safest and best solid waste and recycling system in the nation. This world class city needs to be able to continue to attract the strongest, brightest workforce and provide the best services for its residents. Thank you.