Canada-based Waste Connections, with U.S. headquarters in The Woodlands, Texas, has sued the city of Port Angeles, Washington, for $4.8 million in unpaid fees, citing breach of contract and collapse in the global recycling market.
According to the Peninsula Daily News, Port Angeles city officials deny the claims in Waste Connections June 2 lawsuit, and have taken steps to prepare for a legal fight.
The City Council voted unanimously last week to approve a $40,000 added expenditure to Foster Garvey PC, the Seattle firm that is representing the city in mediation—and now litigation—with Waste Connections.
“Really what is happening is Waste Connections is asking the ratepayers of the city of Port Angeles to pad their profit margin, and I don’t think that’s acceptable,” Council member Mike French said before the Dec. 1 vote.
The city, which entered into a 20-year contract with Waste Connections in 2005, originally tasked the company to construct and operate its Regional Transfer Station in west Port Angeles. In addition, Waste Connections agreed to perform ancillary functions such as the transportation and disposal of solid waste, recycling, handling of moderate-risk waste and the operation of the Blue Mountain Transfer Station east of Port Angeles, city attorney Bill Bloor said.
However, in 2017 Waste Connections began making a series of claims against the city for additional compensation, Bloor told the council. With mediation still in progress, Waste Connections then filed a lawsuit in Clallam County Superior Court in June, seeking “at least” $4.8 million in damages for the disputed claims, reports the Daily News.
Public Works and Utilities Director Thomas Hunter estimated that the impact to ratepayers would be between $1.6 million and $2.2 million were a judge to rule against the city.
Three of the six components in the city’s 2005 agreement with Waste Connections are in dispute, which include transportation and disposal, recycling and moderate-risk waste.
“Since 2017, the market for recycling has changed dramatically,” said Waste Connections attorney, Alexander Wu of the Seattle firm Hillis Clark Martin & Peterson P.S., in a filed complaint. “For example, in March 2017, the resale rate for commingled recycling was $82.56 per ton. Then in March 2018, the resale rate for recycling fell to negative $62.32 per ton.”
According to Wu, Waste Connections is entitled to revenues from the sale of recyclable commodities to offset the costs of collection and hauling of recyclables and other less profitable or unprofitable services.
In response to 2018 market conditions related to China’s ban on importing plastics and other materials for recycling, Waste Connections requested a $25.57 per ton increase for long-haul transport and disposal of acceptable waste and a $76.15 per ton increase for long-haul transportation and disposal of self-haul tires.
Transportation and disposal account for a $3.8 million share of the disputed claims. Waste Connections also sought a $73.59 per hour increase for the disposal of moderate-risk waste, according to the lawsuit.
“The city denied the rate modifications requested by Waste Connections, but the reasons for the city’s denials are invalid even though the city has repeatedly changed them over time,” Wu said.
The city has hired Stephen DiJulio of Foster Garvey to represent the city in mediation.
“Mr. DiJulio is probably one of the half-a-dozen lawyers in the state who are really, really familiar with the solid waste industry, with their practices, with their contracts,” Bloor said before the council vote. “We feel like we have been very lucky to have him representing the city.”