Waste Management is now fighting back against allegations made by the city of Mobile Aug. 13 that the company has been cheating the city out of revenue from its handling of the Chastang Sanitary Landfill.
The company pays the city 5 percent of the revenue it receives from taking solid waste at Chastang. However, the city’s Solid Waste Authority and city believe the company has been shaving numbers to pay less.
During the Aug. 13 pre-council meeting, SWA Chairman Tommy Tyrrell told the councilors 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. The different reports mean the city is receiving less money than it should, according to the city and SWA.
Waste Management officials say it isnâ€™t true. They counter that, in fact, the company has been paying the city more than it should have.
“In reference to the city and SWA’s accusation of royalty underpayment, Waste Management has actually been overpaying the city in royalty fees. This royalty overpayment to the city totals well over $1 million since 2004 alone,” said Rene Faucheux, manager government and community Affairs, Waste Management Gulf Coast area. “Chastang Landfill volumes subject to royalty payments to the city are based upon contractually specified calculations. However, the city’s and the SWA’s failure to deal in good faith and contract intransigence caused a contract review that revealed the overpayment to the city.
“If the city and the SWA are so interested in revenues from the city’s landfill, they should allow the city’s landfill to compete to maintain or grow the revenue flow to the city, as the contract anticipates. Neither the city nor the SWA have revealed why they have refused for many years to allow the landfill to compete when it has far greater than 50 years of disposal capacity.”
Waste Management also claims they have spent heavily to maintain the city-owned landfill.
“Waste Management has operated the city of Mobile’s Chastang Landfill in an efficient and environmentally responsible manner for many years. During that time, our company has made significant financial investments to upgrade the environmental monitoring and other operational mandates to meet evolving state and federal laws. Contractually, the city of Mobile is responsible to reimburse WM for those incremental and unforeseen costs and to otherwise grant appropriate financial relief,” Faucheux said.
Faucheux went on to say that repeated attempts to talk with the city about the issue of cost have been ignored.
“Costs to operate the city-owned landfill have risen significantly over the past two decades. Waste Management has delivered numerous requests for relief and meetings with the Authority to discuss this untenable situation, with little to no response,â€ he said. “Waste Management has provided documentation of the cost increases and potential solutions for the Authority’s consideration. The Solid Waste Authority has chosen to ignore our requests.”
Faucheux didn’t address the misreporting that SWA’s attorney Jim Rossler and Tyrrell alleged during the Aug. 13 meeting.
The administration noticed a difference in reports to the city and to the Alabama Department of Environmental Management for the total volume of solid waste collected by Waste Management.
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 according to the city.
Rossler admitted on Aug. 13 that 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,â€ 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. He felt that the city should only pay a portion of the $2.9 million because it does make up all of the landfill’s business.
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.
Faucheux said he doesn’t like how the allegations by the city came to light and wants more communication from Mobile and SWA.
“Waste Management regrets that the SWA has made such an allegation with no basis,” he said. “We believe in our relationship with the city of Mobile. However, this relationship must be based upon communication, mutual respect and a commitment to work together for the betterment of the city.”