By Dan Christensen, FloridaBulldog.org
State antitrust regulators who OK’d Waste Management’s $525-million buyout of the company that handles recycling for most Broward cities did so only after being assured that those cities would be allowed to renew their contracts this year on the same terms and conditions.
The Houston-based garbage titan’s pre-merger “agreements or commitments,” long rumored but never publicly disclosed, are spelled out in a confidential two-page letter sent by regulators to Waste Management’s lawyers on Dec. 3, 2015. A copy of the letter was obtained by Florida Bulldog.
The letter comes to light as the cities’ single-stream recycling contracts are set to expire July 2, and Waste Management and another company tied to it, LGL Recycling, are demanding fee hikes of 70 to 100 percent before they’ll renew. The situation is so vexing that there is talk among frustrated city officials that municipal recycling programs might need to be changed or even discontinued.
In addition to saying it would allow cities to renew their contracts for five years, the letter details six other conditions Waste Management agreed to in order to avoid state opposition to its takeover deal – including an understanding that should Waste Management breach its obligations, it would be required to pay damages.
Still, rather than enforce Waste Management’s compliance, Florida Attorney General Pam Bondi has chosen to do nothing. From the cities’ point of view such inaction has been worse than nothing because the state never informed them of its antitrust understanding with Waste Management or the protections it sought to establish.
“Why would they not have shared that? That’s a great question,” said Sunrise City Manager Richard Salamon, who chairs Broward’s Solid Waste Working Group. “Obviously, the attorney general chose to make these confidential documents. I can’t understand why when it seems to be in the public’s interest that they be public.”
Waste Management spokeswoman Dawn McCormick declined to comment on the letter. “I cannot discuss any parts of this confidential letter,” she said after consulting a company attorney
The attorney general’s office declined Florida Bulldog’s request to release records about its Waste Management antitrust review, citing a state law requiring it “to maintain the secrecy of all evidence, testimony, documents work product or other results” it had gathered.
Details under wraps
Thus, details about the state’s review remain under wraps, but the letter says it examined how the deal would impact “competition in Broward County for waste disposal and recycling and the operation of the Sun Bergeron Joint Venture.”
Sun Bergeron, owned 50-50 by LGL Recycling (formerly known as Sun Recycling) and Bergeron Environmental and Recycling, currently contracts for recycling with 17 Broward cities, representing half of the county’s approximately 2 million residents.
The 17 Sun Bergeron cities are Coconut Creek, Coral Springs, Deerfield Beach, Fort Lauderdale, Hillsboro Beach, Lauderdale-by-the-Sea, Lauderhill, Margate, Miramar, North Lauderdale, Oakland Park, Pembroke Park, Plantation, Sunrise, Tamarac, West Park and Wilton Manors.
The Department of Justice and the Federal Trade Commission also reviewed the acquisition and took no action. Both declined further comment.
But in May 2017 Bergeron attorney Mitchell Berger wrote to Justice Department antitrust attorney Frederick Parmenter to inquire about a similar “fix-it-first” agreement it apparently had with Waste Management to let the merger go through it if would allow cities to renew their recycling contracts until at least July 2023. The letter, copies of which were sent to the county and numerous cities, asked Justice to disclose details about the “fix-it-first” agreement. Justice’s response is not known and Berger declined to comment.
No action, yet
The state’s letter was written by the attorney general’s chief of multistate antitrust enforcement, Lizabeth A. Brady, at the conclusion of the state’s review of Waste Management’s proposed acquisition of the assets of Southern Waste Systems, including Sun Recycling (now LGL). It declares that Florida “does not presently intend to take antitrust enforcement action in connection with the proposed acquisition,” yet goes on to list seven specific assurances it had received by Waste Management to forestall state action.
Florida Bulldog obtained a copy of the letter this month when it was filed as an exhibit in a bitter breach of contract lawsuit in Broward Circuit Court that pits Davie real estate baron Ron Bergeron and his Bergeron Environmental and Recycling against LGL, his partner in Sun Bergeron. The letter was subsequently sealed and is no longer available in the court file. Numerous other documents in the case are also sealed.
Fort Lauderdale lawyer Berger, representing Bergeron Environmental, filed Brady’s letter and a number of other exhibits May 7 in support of assertions that Waste Management has “withheld material information” from both state and federal regulators “in order to obtain anti-trust clearance” for its acquisition of Sun/LGL’s assets. Berger’s filing included a notice to the clerk that he was submitting confidential material, but the clerk nevertheless left it on the record for a period of time before sealing it.
Berger declined to comment. West Palm Beach attorney Louis Mrachek, who represents LGL, did not respond to a voicemail message requesting comment.
Brady’s December 2015 letter was sent to Waste Management lawyers in the Washington, D.C. office of K&L Gates and New York’s Bracewell & Giuliani, the firm of ex-New York city Mayor Rudolph Giuliani, who has since departed and now represents President Donald Trump.
Here is how Brady recounted the attorney general’s understanding of Waste Management’s commitment to allow cities to extend their contracts: “Should any JV [Joint Venture] customer choose to extend the term of its existing JV agreement, Sun has consented to any such extension for one five-year renewal term on the same terms, conditions and prices as the initial term. Sun’s JV obligations, as a result, run through at least July 2023, after which Sun has the option to consent to additional renewal terms.”
Additional commitments included an understanding that after the acquisition Sun/LGL would make its former facilities available to Sun Bergeron and its customers for the disposal and recycling of waste.
“To ensure that Sun meets these JV obligations, WM [Waste Management] has entered into a subcontract with Sun to provide access to facilities and services through July 2, 2018 and for at least two five-year renewal periods,” the letter says. “Additionally, through at least July 2023, Sun will have access to facilities and services to support any new JV customers and any existing JV customers that choose to receive new bids.”
The subcontract specifically did not change the terms, conditions or pricing of the cities’ contracts. The letter adds that Sun Bergeron’s access to certain “ultimate MSW [municipal solid waste] disposal sites outside Broward does not change.”
“Should WM breach its obligations under the subcontract, WM will be required to pay liquidated damages equal to 1.5 times the amount of performance bonds provided by the JV, or Sun, under the JV customer contracts,” the letter says.
Further, the letter says Waste Management agreed that its purchase agreement with Southern Waste Systems would not be “interpreted to restrict Sun’s performance of JV obligations, nor the JV’s solicitation of new customers.”
“If anything should change in these agreements or commitments or if this letter does not accurately describe the representations the parties have made to us during our review, please call me,” Brady concluded. “This office reserves the right to bring an enforcement action in the future if actions taken by the parties should prove anticompetitive in purpose or effect.”
Jackson Rip Holmes / May 30, 2018 9:20 am
Thank you for doing what we all need to do. Pay attention to the waste problem which has led to horrors — like apparently plastic particles have made it into the human food chain.