MIDDLEBURY — The Vermont Agency of Natural Resources reversed its decision to deny a local recycler a state contract, a move that triggered an automatic payment to a rival company.
Good Point Recycling of Middlebury, which partners with the Northeast Resource Recovery Association (NRRA), was initially denied an “independent plan” contract for the state electronic recycling program. The ANR approved a revised application for the contract this past Friday, Nov. 22.
Robin Ingenthron, the president of Good Point Recycling, said the reversal indicates that his company was right to question the ANR’s initial denial of its proposal.
“It means we have been vindicated,” Ingenthron said. “It should have been approved in the first place.”
As a result of the Good Point contract, Casella Waste Management of Rutland will receive nearly three-quarters of a million dollars because of a clause in its recycling contract with the ANR.
The ANR is required by law to provide a recycling program for certain electronic wastes — popularly called an e-cycling program — for Vermont households and businesses with fewer than 11 employees. Since the program began, the state has hired a waste hauler to collect e-waste — such as computer monitors, printers, hard drives and TVs — from scores of collection sites across the state.
The goal of the program is to keep landfills free of materials that are commonly found in electronics and are dangerous to the environment, such as lead, cadmium and beryllium.
The E-Cycles program does not draw any funds from public coffers. Rather, the state bills electronics manufacturers based on their national market share, proportioned for the size of Vermont, to fund the program. The ANR, which acts as an administrator of the program, uses these funds to pay recyclers to collect and process electronics from sites around the state.
In 2010, the state’s first contract for this program was awarded to NRRA, a nonprofit that serves communities in New England. For its Vermont business, NRRA subcontracted the work to Good Point Recycling.
In June of this year, Good Point/NRRA was conditionally selected by the ANR for the new recycling contract that was to begin Oct. 1. However, negotiations between the parties broke down during the summer, and ANR signed a contract with Casella Waste Management of Rutland. In the initial vetting process in which the ANR evaluated bids using a variety of criteria, Casella ranked one point lower than NRRA/Good Point.
Typically, while the ANR awards a contract to one company, other recyclers can apply for ANR recognition under what is called an “independent manufacturers plan.” In this instance, a recycling company would be permitted to be contracted by electronics manufacturers such as Sony, Canon or Apple to recycle e-waste (computer and electronic manufacturers ultimately pay the cost of the e-cycling program).
The same day the ANR inked the deal with Casella for the state standard plan, the ANR denied NRRA/Good Point’s independent plan. NRRA/Good Point had filed the independent plan proposal May 31, before being conditionally selected for the state standard plan.
Ingenthron said this proposal was nearly identical to the one preliminarily approved by the ANR in June. In its initial rejection, an ANR official said in an email to NRRA/Good Point that the proposal “failed to demonstrate that it met regulatory requirements.”
ANR attorney Matthew Chapman said Tuesday that the original independent plan that NRRA/Good Point submitted was incomplete in a number of areas, and failed to provide adequate information as to how the company would implement the plan. The revised application, submitted Oct. 7, corrected these problems, Chapman said.
“It addressed the areas we pointed out,” Chapman said. “There were substantial modifications.”
Ingenthron said that the two versions were the same, except for minor revisions to the language of some sections.
“It was the same as what we proposed in July and August — same company, same trucks, same processes,” Ingenthron said.
This decision to reverse course and grant NRRA/Good Point’s independent plan proposal changes how the holder of the state standard plan contract, Casella, is paid. The contract between the ANR and Casella includes a clause where the company would receive an automatic payment of $720,000 if an opt-out plan were to be approved by the state.
This fee replaces the original payment schedule plan in the contract, where Casella would be paid 30.1 cents per pound recycled for a total no greater than $2 million. Since the ANR originally rejected the Good Point/NRRA proposal, this payment was not triggered when Casella signed the contract Sept. 24.
The $720,000 is a flat fee designed to protect the contractor of the state standard plan against losing business to an independent plan contractor. Representatives from Casella said last month that the opt-out payment plan was created during negotiations between the company and the ANR this summer.
Ingenthron said he believes the change in payment structure to protect Casella hampers NRRA/Good Point’s ability to execute its independent plan.
“It gives Casella a huge head start,” Ingenthron said. “It makes it impossible for them to fail, but not us.”
Cathy Jamieson, program manager of the Solid Waste Management Program of the Department of Environmental Conservation (ANR is a part of the department), said that Casella is considering revising the $720,000 payment clause to a per-pound payment plan, instead of a $180,000 flat fee every quarter. In essence, this would allow Casella to be paid as they perform work, rather than wait three months between payments.
Jamieson said a similar pay-by-the-pound payment structure existed when NRRA/Good Point held the state standard plan contract.
GOOD POINT WITHDRAWS SUIT
Ingenthron and NRRA/Good Point, believing the state negotiated in bad faith during contract talks over the summer, filed suit at the end of September. NRRA/Good Point sought and was granted a preliminary injunction in Washington County Superior Court against the contract between ANR and Casella, preventing the contract from taking effect as scheduled. In response, the state petitioned the court to remove the injunction.
In an opinion issued Oct. 10, Judge Helen Toor granted the state’s motion for dismissal on technical grounds, agreeing with the state’s argument that the case belonged in the Environmental Court rather than superior court.
However, Toor admonished the ANR for failing to respond to inquiries in a timely fashion, and for not formally rejecting NRRA’s proposal. Ingenthron said he and other representatives from NRRA/Good Point mulled whether to re-file the suit in Environmental Court.
The same day Department of Environmental Conservation Commissioner David Mears approved NRRA/Good Point’s independent plan, NRRA/Good Point withdrew their suit against the ANR.
ANR attorney Chapman said that while withdrawing the suit was part of the agency’s negotiations with NRRA/Good Point, approval of the independent plan was not contingent upon such a withdrawal.
“Mr. Ingenthron made it clear that if the independent plan were to be approved, the basis for the lawsuit would go away,” Chapman said.
When asked if the ANR approved the independent plan because the agency feared it would lose in court, Chapman said he did not comment on internal legal matters.
Ingenthron said that NRRA/Good Point decided to drop the suit not because it lacked merit, but because it would have been too expensive to continue litigating. Asked if he thought the ANR feared it would lose the case on appeal, Ingenthron said, “I know that’s why — they would have lost the state and independent plan.”
“But it would have taken six to seven months, and in that time the company would have closed,” Ingenthron added.
Ingenthron said that between Sept. 30, when NRRA/Good Point’s state standard plan contract expired, and Nov. 22, when the independent plan was approved by the ANR, Good Point lost two months of business.
“We lost all our overtime, and the total payroll dropped from $25,000 per week to $15,000 per week,” Ingenthron said.
Rather than view Casella as a competitor, Ingenthron hopes to do business with the company. Now that all of the litigation is over, Ingenthron said he hopes Casella will consider hiring Good Point to transport recyclables for its standard plan.
The fact that NRRA/Good Point no longer has the state standard plan contract may be a good thing, Ingenthron said. Good Point can now do businesses as a subcontractor to Casella under the state standard plan, and work directly with manufacturers under the independent plan. Thirty-six manufacturers are listed on the independent plan contract. Ingenthron said NRRA/Good Point has completed negotiations with 15, and hopes to sign up the rest soon.
“The best case scenario for us is not to have all of our eggs in one basket,” Ingenthron said. “We hope to provide services for both the state and Casella, and have two clients rather than one. We’re better off than we were a year ago.”