Waste Management sues SF over garbage contract

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San Francisco has been trucking its waste to Waste Management's Altamont landfill since 1987
Luke Thomas

The already intense fight between Recology (formerly NorCal Waste) and Waste Management over SF’s next landfill contract just got more intense: today Waste Management of Alameda County announced that it is filing a lawsuit in San Francisco Superior Court to prevent the final award of a new long-term solid waste transportation agreement and landfill disposal contract to Recology on the grounds that awarding the contract would violate SF’s “competitive bidding ordinances.”

Now, Recology boosters will likely seek to frame this legal challenge as sour grapes over the city's $11 million-a-year landfill contract. But WMAC’s suit represents a fundamental challenge to how SF's $225-million-a-year solid waste stream is controlled: the suit requests a judicial declaration regarding the scope of the city’s 1932 Refuse Collection and Disposal Ordinance as it pertains to the transportation of residual wastes to a designated landfill outside city limits.

“The Department of the Environment [DoE] inappropriately and unlawfully expanded the scope of its 2009 ‘Request for Proposal for Landfill Disposal Capacity’ and, therefore, violated the City’s competitive procurement laws,” WMAC alleges.

WMAC has long held that DoE inappropriately issued a tentative contract award for both the transportation and disposal of solid waste to Recology on September 10, 2009, without soliciting any other transportation bids and in violation of longstanding City ordinances. Thanks to the 1932 ordinance, Recology has ended up with a monopoly over collecting and transporting waste through the streets of San Francisco. But that ordinance clearly does not apply to waste transported outside city limits, so folks have been asking if it would be greener to barge the city's waste to nearby landfills. And they have been questioning whether ratepayers would benefit from lower rates if all of San Francisco's garbage services, and not just the landfill contract, were put out to competitive bid.

Meanwhile, DoE, which sees $7 million of its own annual operating expenses for recycling, green building, and environmental justice programs and long-term planning for waste disposal incorporated into the garbage rates that Recology’s residential and business customers pay, ruled last year that WMAC’s objections were “without merit.”

So, now WMAC is taking its concerns to the Superior Court, asking that the court require DoE to scrap its tentative contract award to Recology for both waste disposal and waste transportation, and issue a new request for proposal to comply with existing competitive bidding requirements.

“WMAC is resolute in its commitment to providing the City and County of San Francisco with superior disposal services and responding to a Request for Proposal that is fairly administered,” WMAC’s Area President Barry Skolnick stated in a July 18 letter to the SF Board of Supervisors.

The move comes two days before the Board’s Budget and Finance subcommittee was scheduled to vote on approving a 10-year landfill disposal and facilitation agreement with Recology.

 The Board scheduled the vote last week, after it became clear that an initiative to require competitive bidding and franchise fees from waste management companies that seek to collect garbage in San Francisco, would not qualify in time for the November ballot. (Proponents of that initiative say they have enough signatures to qualify it for the June 2012 ballot. And they believe the question of whether candidates support competitive bidding on the city's lucrative municipal solid waste collection, recycling, and disposal business continue to be a defining issue during the 2011 election.)

The landfill disposal and facilitation vote had already been delayed several months this year, following a Budget and Legislative analyst report that threw a curveball at the DoE's plan by recommending that the Board consider submitting a proposition to the voters to a) repeal the city's existing 1932 refuse ordinance such that future collection and transportation services be put to bid, and b) that future residential and commercial refuse collection rates be subject to Board approval. But so far, no supervisors have placed such a charter amendment on the November election.

The landfill disposal contract that the Budget and Finance sub-committee was to consider July 20 authorizes 5 million tons of solid waste disposal, or ten years, at Recology’s Ostrom Road landfill in Yuba County. It is worth in excess of $120 million, if the maximum of 5 million tons is reached, with all associated fees and costs to be passed onto, and  paid for by, refuse rate payers, not city funds. It allows for the Hays Road landfill in Vacaville to be used as a "back-up landfill." And would allow Recology to pass on up to $10 million in rail hauler penalties, should the Ostrom Road landfill rail spur not be completed on time.

The facilitation agreement that the Board was also set to consider July 20, which governs how San Francisco's waste is transported to its designated landfill, includes an additional rail transportation fee of $563 per rail container in future residential rate application increases that the Director of the Department of Public Works approves. (Unless there is an appeal, in which case it goes to the Rate Board, which is composed of the City Administrator (the post Ed Lee held before he was named mayor, and to which he wants to return,) the SF Public Utilities Commission director, and the Controller. And. in the event the cit

CCSF paid Recology $6.2 million to dispose of solid waste from city-owned facilities in FY 2010-11, and those costs are expected to increase by three percent to $6.4 million, according to the language of the ordinance that the Board's budget and finance committee was set to consider this week.

As of press time, the Guardian was unable to reach anyone at City Hall to see if the city is seeking injunctive relief from WMAC’s filing, which provides a summary of San Francisco’s existing ordinances, a chronology of the events leading up to the DoE’s tentative award of the transportation and disposal contract to Recology and the subsequent bid protest filed by WMAC. {We'll be sure to provide an update as the city's response to the suit becomes available.)

“WMAC has exhausted all available and/or required administrative remedies,” WMAC states, noting that its filing also documents conflicting positions by DoE regarding the scope of the city’s Refuse Collection and Disposal Ordinance that San Francisco voters approved almost 80 years ago.

According to WMAC, DoE’s May 8 2008 Request for Qualifications stated that “the 1932 Refuse Collection and Disposal Ordinance …. does not address consolidating materials, processing for material recovery or transporting them to other facilities.”

According to WMAC, DoE re-stated this position in its Feb. 9, 2009 Request for Proposals.

“Yet in response to WMAC’s bid protest on (date) the Department stated there was no need to competitively bid transportation services outside the City limits since Recology was the only entity permitted under the 1932 ordinance to transport wastes from the in-city transfer station to an out-of-city landfill. “

As a result, WMAC is requesting the Court to rule on the scope of the 1932 Ordinance.

WMAC also notes that the Board of Supervisors designated the Altamont Landfill as the disposal site for all refuse collected within the City from November 1, 1998 through October 31, 2053, or until the City deposits 15 million tons. And that the 15 million ton has yet to be reached.

“There is ample time for the Department to issue a new RFP,” WMAC claims.

Comments

Skip bins are big business, if there was anything I took away from this article. But this shows that in the business environment, people often have to fight the law to get things righted, and that is dismaying.

Posted by Sarah Carmicheal on Apr. 12, 2012 @ 1:28 am

Very often the government unwittingly commits such mistakes and end up getting under public fire for them, and in this case there was no way they were going to be able to skip out of the accusation easily.

Posted by Sarah Carmicheal on Apr. 16, 2012 @ 7:34 pm