Allegations that Waste Management has misreported revenue to the city of Mobile in order to pay less to the city dominated the pre-council meeting for the Mobile City Council Aug. 13.
The city appears to have missed out on revenue from Waste Management for waste dumped in Chastang Sanitary Landfill, according to the city’s Solid Waste Authority. Waste Management pays the city 5 percent of the revenue it receives from taking solid waste. However, the authority and city believe the company has been shaving numbers to pay less.
The authority’s chairman Tommy Tyrrell told the councilors during the meeting about the discrepancy in reports from the company for the solid waste collected at Chastang Sanitary Landfill, which is located near Creola and run by Waste Management.
“For the last six quarters, the reports Waste Management have submitted to (the Alabama Department of Environmental Management) and the city show misreporting,” he said. “The royalty checks paid to the sight have been less than what they should have been. With what was reported to ADEM, they should have been significantly more.”
City attorney Larry Wettermark said the discrepancies were caught the second quarter of 2012, but the city and authority decided to investigate the matter. According to Wettermark, the investigation proved Waste Management made a one-sided decision to change the way they reported the volume of solid waste and gross revenue received. This was done without talking with the city’s Solid Waste Authority, which puts Waste Management in breach of the contract between the two groups, according to Wettermark.
The authority is having a forensic audit and examination done by Linda Steele, who is with the Forensic Financial Services Group based out of Fairhope. Steele will be looking at information from 2010 to 2013 and seeing if there were any other similar reports. The city and authority are giving Waste Management 90 days to submit accurate quarterly reports for 2012 and the first two quarters of 2013 and to pay all of the royalty owed to the city.
If the company does not, then the city and authority will take control over Chastang Sanitary Landfill, which is owned by the two entities.
Currently, the city’s trash goes to Chastang, with trash being picked up from city residents’ houses and taken to a transfer facility on Rangeline Road. Waste Management then uses larger trucks to haul the waste to Chastang for disposal.
Jim Rossler, who acts as attorney for the city’s Solid Waste Authority, said if Waste Management does not comply with the city in 90 days, then the city would have to make the transfers until a new company is selected.
“The city would not have a difficult time finding a new company if it comes to that,” Rossler said. “We would just have to make due until a new company could be put into place. However, John Bell (Executive Director of the city of Mobile’s Public Services) has assured me it is doable.”
Rossler provided documentation showing the discrepancies between the two reports submitted to ADEM and the city. The different reports sometimes leave out more than half the tons of solid waste collected, which means the city is not receiving the 5 percent royalty on the waste not reported.
Rossler said there is no way to put a dollar amount on how much money is owed to the city because of the way Waste Management files its quarterly reports.
However, during the first quarter of 2012, Waste Management reported to ADEM it took in 43,870.26 tons of solid waste. When the company reported to the city for the same quarter, the reports showed it only took in 20,444.53 tons. The underreporting was more than half and according to the authority, it has since become a pattern.
During the second quarter of 2012, Waste Management reported a total volume of 49,840.61 tons to ADEM, but reported 26,872.61 tons to the city. The third quarter in 2012 report to ADEM stated the company took in 49,992.76 tons, but the report to the city showed only 34,245.55 tons.
Waste Management reported to ADEM for the fourth quarter in 2012 was for 43,548.10 tons. However, the company reported 22,279.56 tons to the city. The report to ADEM for the first quarter of 2013 stated the company collected 79,835.32 tons, but showed only 59,955.18 tons to the city of Mobile.
The last report Waste Management has sent to ADEM stated it collected 54,830.89 tons, but only showed 34,365.22 tons to the city of Mobile. Rossler admitted the city has had an ongoing dispute with Waste Management over how much Mobile should pay for improvements to the Chastang Sanitary Landfill.
“The city’s waste makes up about 24 to 25 percent of all received at Chastang,” Rossler said. “Waste Management wanted the city to pay $2.9 million for improvements, but we feel we should only pay 24 or 25 percent.”
The remaining 75 percent of the waste collected by Waste Management comes from dumpsters located behind businesses and other areas, Rossler said.
“Waste Management makes a lot of money from the other groups that use Chastang,” he said. “The city shouldn’t have to pay for everything.”