By Dan Christensen, FloridaBulldog.org
Last month, Sunrise City Manager Richard Salamon fired off an ominous email to more than two dozen of his fellow municipal managers across Broward.
The subject: solid waste disposal and single stream recycling. The urgent message: “most of us are facing the reality we don’t have anyone lined up to accept our recyclables in 2 ½ months.” That’s as of July 3.
For the past five years 17 municipalities have contracted with Sun Bergeron, the upstart joint venture that helped break Waste Management’s decades-old monopoly on the county’s solid waste disposal business, to process tons of their recycled trash. In the interim, however, Waste Management managed to re-establish its stranglehold in Broward – paying $525 million to acquire the assets and operations of Southern Waste Systems, including Sun Recycling, according to U.S. Securities and Exchange Commission records. The move gave Waste Management, owner of the mountainous Monarch Hill landfill in Coconut Creek, control of the recycling waste stream.
Sun kept its interest in Sun Bergeron, whose municipal contracts feature five-year renewal terms by mutual agreement. Cities would like to renew under the same terms and conditions, but Sun Bergeron and Waste Management, which some city officials believe controls the joint venture, have let it be known that they won’t agree without a substantial rate hike and other changes.
That’s left cities with limited options, all unpleasant – including changing the way about half of Broward’s nearly two million residents recycle their trash, or even discontinuing recycling programs altogether.
A more likely outcome is that the cost of recycling garbage in those cities is about to go significantly higher. But because single stream recycling – the paper, cans and bottles that homeowners put into roll carts to be separated later during processing – accounts for only about 10 percent of Broward’s trash tonnage, the financial hit to cities and their residents should be limited, for now.
“It will definitely cost us more money under the new scenarios. I don’t know how much,” said Salamon, noting that in prior years his city and others actually made money on recycling because of rebates received after the recovered material was sold.
Under existing recycling contracts, Sun Bergeron charges cities roughly $50 a ton.
Sun Recycling, now known as LGL Recycling, recently put out new quotes of $85 and $105 a ton, depending upon where trash to be recovered is delivered. Further, the quotes include a caveat that threatens to cost cities even more should their trash loads contain “contamination of greater than 10%.” Contamination, meaning items like plastic bags or pizza boxes with residue that shouldn’t be recycled, typically runs from 25 to 35 percent, officials say.
Will cities be forced to accept such an increase? “Waste Management is completely in the driver’s seat,” said Salamon. “Right now they hold the power.”
LGL’s proposal is contained in an April 24 letter to Hillsboro Beach. LGL Chief Executive Charles Gusmano said the deal is available to any Sun Bergeron customer that renews thru May 26. Oddly, though, representatives of several cities interviewed for this story said that neither LGL nor Waste Management made them aware of any offers.
“Waste Management hasn’t given us any pricing,” said Coconut Creek City Manager Mary Blasi. “We have all been very concerned about how much pricing would go up.”
Gusmano did not respond to requests for comment. A Waste Management spokeswoman said that company does not provide quotes unless asked.
Faced with the approaching July deadline, Coral Springs and Deerfield Beach sought bids for single stream recycling services earlier this year, offering a processing price of up to $75 a ton. Neither city attracted a responsive bidder.
Recently, Coral Springs has been trying to cut a recycling deal with Waste Management for handling the 8,000 tons a year of recyclables it generates. Other cities are hopeful that if an acceptable agreement is reached they might piggyback on it.
Coral Springs Public Works Director Rich Michaud declined to discuss the status of the negotiations or the proposed terms. “When we agree, we will report that to the city manager and the commission,” he said. The target date for getting a proposal to the commission is June 6, he said.
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.
Cities are questioning why
Some cities are questioning why all this is happening now. Three years ago Gusmano wrote to the cities to say that Waste Management’s acquisition of Southern Waste Systems would not affect their agreements with Sun Bergeron, a joint venture (JV) between Sun Recycling and Bergeron Environmental and Recycling LLC. Those agreements include five-year-renewal options.
For example, on Sept. 23, 2015 Gusmano assured then-Margate City Manager Douglas E. Smith the acquisition “will not change the terms and conditions of the JV’s existing contracts with its municipal customers, including the Margate Agreement, as such terms and conditions currently exist (including pricing).”
Waste Management’s $525-million acquisition of Southern Waste Systems’ assets also drove a wedge between Sun Bergeron’s 50-50 partners, LGL/Sun Recycling and Bergeron Environmental.
In 2016, Bergeron Environmental sued LGL, Gusmano and other LGL executives, accusing them of breach of contract and conspiracy for allegedly selling out to Waste Management without informing Ron Bergeron, the Davie real estate magnate who owns Bergeron Environmental.
“In a silent act of betrayal, Charles Gusmano and Charles Lomangino also secured employment or consulting agreements with Waste Management and now promote the interests of Waste Management to regain monopolistic power over the waste disposal business,” Bergeron’s complaint alleges.
The suit also contends that Waste Management now controls Sun Bergeron and with it the power to determine “whether and how long the contracts with the cities will remain in place, whether the recycling facilities dedicated to the cities will continue to operate, and whether or not basic insurance, bonding, and indemnity requirements to its customer cities will be met.”
The case, in which many documents are sealed, is pending before Broward Circuit Chief Judge Jack Tuter.
“According to Bergeron’s side they are ready to renew, but they don’t have a place to take anything. LGL and Waste Management are not cooperating,” said Sunrise’s Salamon. “In Broward there are two single stream recycling facilities, both owned by Waste Management.”
In its April 24 letter to Hillsboro Beach, LGL said Bergeron’s lawsuit “deterred” many of Sun Bergeron’s customer cities from seeking renewals of their waste processing and disposal agreements.
Waste Management’s if-you-can’t-beat-’em-buy-’em strategy seems to have passed muster with the Justice Department and Florida Attorney General Pam Bondi’s office, both of which reviewed Waste Management’s acquisition to determine whether it was anti-competitive, yet took no enforcement action. Neither Justice nor the Attorney General’s Office would discuss or provide documentation of their findings.
The substantial price hike is fueled by both its domination of the local single stream recycling market and by the worldwide market collapse for recycled materials triggered by China’s 2017 decision that it would no longer recycle much of the world’s trash. The U.S. had exported about a third of its recycling, much of it going to China.
State law gives Broward County the “responsibility and power” to operate solid waste disposal facilities to meet the needs of all county residents. Further, the law sets guidelines calling for at least 75 percent of municipal solid waste to be recycled by 2020.
In 2015, total county recycling – to include single stream, construction and demolition and bulk recycling – was at 43 percent. That includes credit for trash that’s burned at the Wheelabrator waste-to-energy plant at 4400 S. State Road 7 in Fort Lauderdale. (The same year, Waste Management closed a second trash-to-electricity plant adjacent to the company’s 21-story Monarch Hill landfill.)
Today, the Wheelabrator plant is at or near capacity. That status, plus the collapse of the market for recycled material, has caused more recyclables to be dumped at Monarch Hill.
While Waste Management clearly has the upper hand in the near term, local governments have begun the search for medium and long term solutions.
The county and the 18 cities it paid $32 million as part of a 2015 settlement related to the distribution of assets of the old resource recovery system recently chipped in to hire a consultant, Arcadis U.S., to study local solid waste and recycling issues. In addition to trying to determine how to reach the 75 percent countywide recycling goal, the study is looking at the cost and feasibility of developing a more regional approach that would include government-owned disposal facilities.
“We are a fragmented county,” said Salamon. “That approach means a lot of waste is going to landfills and not being processed in a beneficial manner. It also means that some of this stuff is being long-hauled which has its own environmental impact.”
A final report is due in August.
“I am very hopeful that once this solid waste study is concluded the county will put together a county recycling facility available for its residents, ” said Coconut Creek’s Blasi.