Acceptance of this report does not have a financial impact on the County. Additional information on this issue is provided in Section B of this report.
At the February 11, 2014 meeting, several speakers provided oral and written information to the Board regarding the proposed franchise agreement process currently being undertaken by the Central Contra Costa Solid Waste Authority (CCCSWA). The CCCSWA is a joint powers authority that governs waste and recycling services and programs for the cities of Lafayette, Orinda, Moraga, Walnut Creek and Danville, as well as a number of nearby unincorporated communities (Alamo, Blackhawk, Diablo, and Contra Costa Centre among others). The CCCSWA has an independent staff and a Board of Directors. Supervisor Andersen and Chair Mitchoff represent the County on the Board of Directors.
The CCCSWA is in the process of awarding a new franchise agreement, with the next meeting scheduled for February 27th. Individuals representing two of the prospective franchisee’s spoke at the February 11th Board meeting, along with representatives from the California Compost Coalition and the City of Pittsburg. Letters or documents were filed by representatives of Contra Costa Waste Services/Mt Diablo Recology, Republic Services and the California Compost Coalition either at the meeting and/or following which raised or responded to issues related to the award of the franchise agreement by the CCCSWA. The letters include both allegations of violations of County solid waste and land use permits as well as questions/allegations that are directed to the CCCSWA. This report responds to information related to the County’s direct involvement regulating the Keller Canyon landfill, while recognizing that many of the questions and assertions are properly answered by the CCCSWA.
In receiving the information at the February 11th meeting and directing a review by staff, the Board acknowledged that there was insufficient time for staff to research the volume of issues raised and understood that, in some cases, only a status report about work in progress may be available by the February 25th meeting.
Key Issues Raised
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Potential Unfair competition and violation of antitrust laws:
The February 11th letter from Wilson Wendt (refer to attached/pages 1-6) details assertions that Republic’s proposed rate for competitors (including their client) constitutes a violation of unfair competition law. A response to that issue has been provided by Scott Gordon representing Republic in his February 12th correspondence to the Board (refer to attached).
Issues related to unfair competition and anti-trust allegations are quite complex. At this time, and based on the information currently available, it is not possible for staff to speculate whether unfair competition or anti-trust laws are being violated. Further study would be necessary to determine if any such violations occurred and what the potential legal consequences might be. It is noted that the letter from Wilson Wendt acknowledged that his client has standing to challenge Republic’s pricing independent of the County. Should such a challenge be successful, County staff would evaluate the impact of such a finding on the land use permit compliance.
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Impact of the Franchise Decision of the CCCSWA on the County’s Revenue:
The County receives an estimated one million dollars per year in fees from the CCCSWA service area that is processed or disposed through the Martinez Transfer Station and/or the Keller Canyon Landfill. A portion of the revenue goes to the County’s general fund and supports a number of operating general fund departments. The Environmental Health Division (operating as the Local Enforcement Agency/LEA) and the Public Works Department (for the maintenance of Bailey Road) receives a portion of the revenue. Finally, the portion identified as Keller Mitigation is split with the City of Pittsburg (pursuant to previous Board direction) and the County administered Keller Mitigation Fund.
Assuming that there is no change in tonnage, and should Republic be awarded the contract, staff would expect that the amount of revenue would remain relatively constant. Should Contra Costa Waste Services be awarded the contract, the revenue would be lower (due to the use of the Pittsburg transfer station in lieu of the Martinez transfer station) or be eliminated completely (if solid waste would be sent out of the County).
That said, the price charged by Keller has a direct impact on County fees given that many of the fees are directly based on the gate revenue at the landfill. As such, if the Contra Costa Waste Services receives the franchise award, utilizes the Keller landfill, and pays a higher tipping fee than currently paid by Republic, the revenues to the County would increase.
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Violation of operational requirements at Keller Canyon Landfill:
The February 11th letter included a list of alleged violations of permit conditions at the Keller Canyon landfill, the primary of which was the use of “alternative daily cover” (ADC materials are generally exempt from County fees). The correspondence was provided to the Environmental Health Division which operates as the Local Enforcement Agency, and is responsible for working with the State agency known as Cal Recycle to enforce State regulatory requirements applicable to the transport, handling, processing and disposal of solid waste as well as Keller’s solid waste facility permit. The LEA reviewed the facility files and found that the Keller Canyon Landfill has operated with a high degree of compliance, with very few noted issues or violations. When violations or issues have been noted, the landfill has been responsive in taking corrective action. The LEA reports that Keller does not have chronic violations or operational issues. The LEA conducts monthly, unannounced inspections of the site and every 18 months conducts a joint inspection with Cal Recycle inspectors.
The February 11th letter asserts that Keller is required to process green waste prior to using it as “alternative daily cover” (ADC). This is not correct. The operational permit requires that green waste be of a certain size, and includes the allowance that 5% of the green waste may exceed the size limitation.
The correspondence also highlights a 2007 notice of a violation issued by Cal Recycle for using green waste that did not meet size standards. According to the LEA, this material was not used as ADC and, therefore, should not have been treated as a violation. Neither the LEA nor the Cal Recycle inspectors have found ADC violations since that date.
With respect to food waste, the LEA has informed Keller Canyon that green waste which is mixed with food waste cannot be used as ADC; inspections by the LEA have not found ADC mixed with food waste. State regulations allow up to 1% of contaminants (including food waste) to be included in ADC.
The correspondence questioned how the County determines compliance with load/waste type requirements and whether any complaints had been received. The LEA investigates these types of complaints as they arise. The LEA has no record of ineligible waste acceptance being reported since 2005. In that case, a load was identified that should not have been delivered to the facility; the operator self-reported the issue and took corrective action. There have not been any substantiated complaints of improper disposal.
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Potential violations of the Land use permit:
The key issue raised in the Wilson Wendt letter was whether the County has the ability to set maximum and minimum rates at the Keller Canyon Landfill. The Landfill was approved through a Land use permit that was issued by the County in 1990. When the landfill opened in 1992, the Board of Supervisors set the landfill rates.
In 1994, the Board approved a revised Franchise Agreement which allows Keller to independently set their base rates. Additionally, the Franchise Agreement provides that the operator may vary the rate charged to "different customers based on various factors determined by the Operator, including, but not limited to, the quantity and type of waste delivered by each customer to the facility and whether each customer has entered into a disposal agreement with the Operator in which the customer agrees to dispose of some or all of the customer's future waste stream at the Landfill." (reference: Franchise Agreement) The language in the land use permit providing that the County set rates was not changed at that time. Reviewing both the franchise agreement and the land use permit, the County staff has determined that Keller does have the discretion to set the base rate. This does not alter the County’s ability to set surcharge fees at the landfill.
That said, the letter supplied by Wilson Wendt references a permit condition that specifies that Keller must accept waste generated in the County provided that “appropriate disposal fees are paid.” Wilson Wendt’s correspondence raises two related issues:
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Has Republic refused to accept solid waste generated within the County?; and
The County currently does not have documentation to support the allegation that Republic has refused to accept solid waste generated within the County. With respect to the variation in rates, the rate charged to the CCCSWA competitors is clearly higher than Republic is charging itself. Rates charged at Keller for waste coming from transfer stations owned by Republic or the City of Brentwood during the past three months average between $27 and $37 per ton. Keller Canyon Landfill's schedule of rates for all customers shows a maximum rate of $70 per ton to dispose of municipal solid waste which is similar to Republic's proposed rate for the CCCSWA franchise competitors.
This, in and of itself, does not necessarily indicate that a land use permit violation has occurred, although additional research and review could be conducted. If the Board, separate from the CCCSWA, wishes to pursue further inquiry into the appropriateness of the fees, additional staff review (including consultant services) would be required. Staff would expect that this inquiry would require a measurable amount of time – including the securing of consultant services. The Scott Gordon letter dated February 12th provides Republic's position related to the rates charged at the landfill.
It should be noted that Republic has applied for a land use permit amendment with the County that would allow, if approved, an additional 1200 tons/day of disposal. An environmental impact report is currently being prepared and the hearing on this application will ultimately be scheduled before the Board of Supervisors for decision.
Staff has otherwise reviewed the allegations related to compliance with the land use permit. Many of the allegations are related to operational issues which have been responded to by the County’s Environmental Health Division. With respect to the questions about ineligible waste acceptance, the Department of Conservation and Development issued a notice of violation in 2001 addressing the disposal of ineligible waste load as a result of procedural errors by the generator and landfill. The landfill operator took appropriate corrective actions in a timely manner. The issue related to the scheduling of compliance hearings is correct, and the Department of Conservation and Development will follow up on this matter. The Department will continue to evaluate any complaints or concerns that are filed related to the compliance with the land use permit or franchise agreement.
The Board of Supervisors and the public will not have up to date important information this subject. The public may not be afforded the opportunity to provide input.
Speakers: Wilson Wendt, Miller Starr Regalia on behalf of (handout attached); Monica White, California Compost Coalition; resident of Orinda; Evan Edgar, California Compost Coalition; Wilson Wendt, Tim Argenti, General Manager of Republic Services; Scott Gordon, Allied Waste, Keller Canyon Landfill.
By unanimous vote of Supervisors present, ACCEPTED into the record correspondence received on this matter.
ACCEPTED the report: ACKNOWLEDGED the time restraints in gathering information for today's meeting; DIRECTED staff to return to the Board on April 29, 2014 with a status report on the compliance review process and include information on issues which were not included in today's report due to time restraints; DIRECTED staff to begin a compliance check review immediately and return to the Board with a report on the completed review within 6 months;
DETERMINED no input from Board Supervisors Piepho and Mitchoff, as the County's representatives on the Central Contra Costa Solid Waste Authority, was needed (Supervisor Piepho ABSTAINED from any discussion or participation on this item).