West Old Town Landfill

from Maine Townsman, June 2004)
By Alan Elliott, Freelance Writer

Word of trouble at Georgia-Pacific’s Old Town mill arrived a year ago, on April 4, when graveyard shift workers filed into a 5:45 a.m. meeting. Managers told the group that forest-products heavyweight G-P had ordered the permanent shut down of a major piece of the operation. Three hundred faced immediate layoffs. Industry conditions left the remaining 300 jobs, according to mill controller Rick Davis, “in immediate peril, probably within months.”

Fourteen months later, an innovative agreement forged between the Maine State Planning Office (SPO), Georgia-Pacific and Casella Waste Systems Inc. appears to have downsized the disaster. The unlikely lynchpin of the strategy is an 8-year-old, 67-acre landfill in West Old Town. At the outset, the sludge dump was little more than an elaborate money pit, into which Davis reports G-P was pouring more than $1 million in operating costs per year. By the time bids were accepted, agreements signed and licenses amended, that pit had generated more than $26 million in working capital and was positioned to provide a 30-year solid waste disposal horizon for much of the state.

The array of agreements at West Old Town begins with the state’s purchase of the landfill from G-P this year on February 5 for $26 million. SPO, at the same time, accepted a bid from Casella to operate the facility (there were no competing offers). As part of that bid, Casella paid the state $26 million and agreed to provide Georgia-Pacific with 100,000 tons of wood chips at a set price each year.

The state, through SPO, used the $26 million to pay Georgia-Pacific for the landfill. G-P, in turn, agreed to spend the money on building a biomass power generation facility at the mill site. Using wood chips provided by Casella and another 100,000 tons of waste wood byproduct from the mill, the plan aims to create an energy self-sufficient operation. If successful, the generator would drive down the mill’s operating costs by an estimated $5 to $7 million per year, putting it within the average range for energy costs among G-P mills elsewhere around the country.

How the complex arrangement fell together is a story told in different shades, depending on whom you ask. This much is clear: when G-P managers and state officials sat down to discuss the hard facts of rescuing the mill, the landfill rode high on G-P’s liabilities list.

“[The company] couldn’t seem to run it economically and they wanted to get out of the landfill business,” said Jack Cashman, commissioner of the Department of Economic and Community Development. “They were talking to Casella Waste Management and were going to sell it. We stepped up and said, we need a landfill.”

Forecasting such need in the solid waste business is a somewhat clairvoyant game. Space in landfills is measured in millions of cubic yards of capacity. Solid waste is recorded in tons. At last count, Maine managed more than 1.8 million tons of municipal solid waste each year, putting it above the national average of less than 1 ton of trash generated per year for every man, woman and child in the country.

It is, however, a comparatively efficient state, burning 35 percent of its solid waste in one of four waste-to-energy recovery plants before trucking the ash to a landfill. Thirty-seven percent of the state’s total MSW is recycled and 23 percent arrives unburned at municipal and commercial landfills where it is dumped into specially lined and engineered “cells.”

The process of incinerating MSW reduces its weight by two-thirds, its volume by almost 80 percent. The reduction to ash, the subtraction of recyclables and the conversion from tons to cubic yards make calculating the future capacity of permitted landfills its own branch of dismal science.

Prior to the potential new capacity at West Old Town, the State Planning Office had marked 2011 as the year in which Maine’s growing solid waste stream would outstrip its permitted landfill capacity. In a world that operates according to five-year business plans, a seven-year timeline sounds reasonably healthy. But Don Meagher, manager of planning and development for Casella’s operations in Maine, says it’s a margin just thin enough to keep him edgy.

“When you are dealing with solid waste, it’s inadequate,” Meagher said. “It takes that long to develop a concept, identify a location, get the thing permitted and operational. That alone is a five to 10-year period when you are starting from zero.”

The state was not, however, starting from zero. An arduous effort undertaken by the now defunct Maine Waste Management Agency in 1995 led to the $1.37 million purchase of a landfill site near Lincoln in northern Penobscot County.

State waste statutes called for the site, named Carpenter Ridge, to be developed when the state’s garbage clock ticked down to four years of capacity. Legislators would then move to develop the 37-acre Carpenter Ridge location, which was already permitted for 2 million yards of capacity.

Carpenter Ridge provided a place and a permit. But the price tag to develop a modern landfill hovers above $2 million per acre. Whether or not legislators opted to move forward, finding funds to develop Carpenter Ridge poses an entirely separate challenge.

The peculiar circumstance of the state’s involvement in locating and owning a landfill dates to 1989. Federal rules through the 1980s ended the era of unlined, open-pit dumpsites. The subsequent closing and capping of countless such sites throughout the east contributed to the vast migration of urban garbage flowing toward rural areas. Private and commercial landfill owners in Maine, Pennsylvania and northern New York cashed-in on the flow of refuse being channeled their way.

Maine and Pennsylvania sought to regulate the flow, but on appeal and through the years, courts have consistently held that interstate commerce law prevents state limits on the transport and disposal of such waste in commercial or privately-owned landfills. Maine dealt with the issue in a package of 1989 legislation that created the Waste Management Agency and mandated closure of unlined landfills. The rules also barred the creation of any new commercial landfills. Maine remains the only state thus far to have taken such a stringent step.

On the commercial side, and at about the same time, Casella and Waste Management Inc. (WMI) were beginning to dominate the waste hauling business in Maine. Since the early 1980s, the trash hauling industry had undergone vast consolidation, leaving fewer and larger operators in control of the solid waste equation. (WMI’s founder Wayne Huizenga led the trend, building the company from a one garbage truck outfit in Florida to a multi-billion corporation, then moved on to buy Blockbuster Video in 1987.)

In Maine, the consolidation meant Casella and WMI were buying-out many small, local trash haulers. In 1996, Casella bought Sawyer Environmental Services in Bangor and the Sawyer Environmental Recovery Facility, now the Pine Tree landfill, in Hampden. The bigger gulp came in 1999, with Casella’s $340 million purchase of Guttenberg, N.J.-based KTI Inc. Among KTI’s 161 waste businesses were an array of collection and recycling operations in Maine. The deal also gave Casella a majority interest in the Maine Energy waste-to-energy plant in Biddeford and in Penobscot Energy Recovery Corp. (PERC) in Orrington.

Casella’s acquired role as the dominant solid waste operator in the state earned it an investigation by the state attorney general. The investigation led to a 1999 consent order limiting Casella’s containerized waste operations and defined limits preventing the company from leveraging its interest in PERC to a competitive advantage. In 2001, Casella sold its interest in PERC.

Also in 2001, the company won permission to expand its Pine Tree landfill after a contentious, costly, two year legal battle with the town of Hampden. The new permit added 3 million cubic yards of capacity, putting the facility on a 6 to 8 year timeline.

But at the Crossroads Landfill in Norridgewock, WMI was undertaking a 4.1 million cubic yard expansion, opening a 7 to 10 year window for capacity. Casella needed a sharper competitive edge. One attractive possibility were the nine active landfills already permitted, developed and being operated by timber and paper mills in the state.

The company’s concept for such an arrangement stemmed from a 1996 agreement in Clinton County, NY. Casella had tried to buy a county landfill, but was turned down by voters. As an alternative, the company proposed the public/private partnership model. The county board accepted and, eight years later, County Administrator William Bingel describes Casella as a solid, community-minded operator.

“We’re a model landfill in New York State,” Bingel said, adding that Casella recently bought additional property and plans to expand the site. “With the purchase of that property we will have about 40 years (of capacity) left.”

Waste chairman and chief executive John Casella said the company first considered a similar approach in Maine last year, when Great Northern Paper closed its Millinocket mills. That situation was ultimately unworkable, Casella said, but it set the stage for the current agreement.

“Some of the seeds and some of the introductions (at Old Town) happened because we’d tried to apply the partnership model in Millinocket,” Casella said.

The golden rule of supply and demand notwithstanding, the sudden abundance of landfill capacity that will become available if the West Old Town project succeeds probably will not translate to reduced tipping fees for municipalities. It should, however, translate to longer term stability for those rates given the state's increased disposal capacity.

Guidelines in the state planning office’s request for proposals required all bidders for the operator’s contract to include projections for disposal fees over the 30 year life of the contract, including price ceilings.

George MacDonald, manager of SPO's Waste Management and Recycling Program, said Casella’s bid presented a competitive price scheme based on current rates. That scheme eliminates a critical variable, MacDonald said, one that could have potentially driven up the cost of community waste hauling contracts.

“What this will do in some ways is help stabilize future growth in landfill disposal rates,” MacDonald said.

A representative from WMI said the company carefully considered submitting a bid at West Old Town. But given the location, the requirement to supply wood chips to G-P and “just the overall business plan,” the rep said. “We could not financially make it work.”

Eric Higgins, president of LR Higgins which operates a city-owned transfer station in Portland and an RWS-owned landfill in South Portland, said he attended the pre-bid meetings and considered a proposal, then opted out.

“We just found the parameters undoable,” Higgins said.

Another potential bidder was the Municipal Review Committee, a non-profit corporation representing the waste disposal interests of 160 communities and which owns a 23% interest in the PERC plant. MRC Executive Director Greg Lounder said, after talks with the state and with Casella, it was clear that the lower risk, lower cost route would be to support Casella’s bid.

That support depended, however, upon some concerns being met with regard to both future tipping fees and the issue of out-of-state and unprocessed waste being accepted at the landfill.

“Our first stops were with the governor’s office and the state planning office to articulate the controls we felt were needed to ensure the public interest,” Lounder said. “I thought the state took our concerns seriously and we were heard.”

Lounder said MRC also discussed with Casella a rate structure for tipping fees, and concluded the new facility would provide “a continuation of the basic terms we presently have.”

Beyond the ballyhoo, the West Old Town agreement is not yet a done deal. The amendment approved by the DEP on April 9 is valid and Casella is free to develop the landfill. But on May 11, an attorney representing a local citizens' group appealed the DEP decision.

Residents near the landfill were concerned with what many see as a “back room deal,” between the governor’s office and the two companies. Urged ahead by the imperative of saving jobs, the DEP’s expedited approval process left neighboring homeowners in West Old Town and Alton, where the landfill’s 3 mile access road begins, fearing corners were cut and potential risks to water supplies and impact from increased truck traffic not thoroughly assessed.

The group has pledged to file a Superior Court appeal if the DEP does not revoke the amendment. Meagher said Casella plans to go ahead and pave the landfill’s access road this summer. Until the appeal is ultimately resolved, however, the company won’t risk paying for further improvements to the facility.

Old Town City Manager John Lord sees the entire situation as an out-of-the-ordinary case study in siting a landfill: an existing waste facility, already licensed and owned by a major local employer potentially preparing to shut-down shop.

Local officials were aware the state was working to persuade G-P to bolster the mill and save jobs. (Cashman is a lifelong Old Town resident and has close local ties.) They also knew the landfill was potentially part of the deal. But because it wasn’t a start-from-scratch landfill siting effort, Lord said it came as no surprise that the usual range of voices were not included in the mix.

“The municipality in this process is kind of a bystander,” Lord said. “Until the deal had been announced and there was a resolve drawn up to be passed by the legislature, we didn’t have any detailed knowledge or involvement.”

Old Town and Alton formed a joint oversight committee, now in the early stages of discussing a host community agreement. The effort requires clarifying the 1989 statute, which may or may not require the state to participate in the round of commitments and concessions between operator, owner and community.

“We don’t even know who the parties are going to be to the agreement at this point,” Lord said, “Never mind what the agreement itself is going to contain.”

An element the overall agreement clearly does not contain is a guarantee on how long the rescued G-P jobs might last. The company pared-down its payroll by 150 workers during the episode, but with shareholders to satisfy and international competition hammering away at corporate cost structures, a streamlined, energy efficient mill could present an attractive divestment target.

But in the long run, the advantages of hosting the landfill could potentially outweigh the benefits generated by the mill. Discussions with Hamden Town Manager Susan Lessard helped encourage the Alton/Old Town committee that overseeing a 30-year, 10 million cubic foot waste disposal relationship was a manageable, step-at-a-time chore. Step 1, hire consultants to translate the intricacies of the landfill’s complex environmental and engineering issues. Step 2, bring aboard lawyers able to structure an agreement which, to the greatest extent possible, protects the interests of the town.

“The landfill and the town are not designed to be buddies,” Lessard said, describing the ties between Hamden and Casella. “But if we raise an issue or have a concern, nobody says, ‘Oh go away.’ We get heard on the subject and it gets addressed.”