Trash rehash: Give us money

By Tony Cook

Tuesday, May 15, 2007 | 7:30 a.m.

Republic Services has asked Clark County officials for a garbage collection rate increase to help pay for its closure of Sunrise Landfill, even though it received a 15-year contract extension worth hundreds of millions of dollars for agreeing to do just that.

Sunrise Landfill already was closed in 1998 when a rainstorm eroded its cap and sent trash into the Las Vegas Wash, prompting the Environmental Protection Agency to order the county and Republic to clean up the mess and properly close the dump.

That led the county and Republic to strike a 1999 deal that seemed simple enough at the time. Republic would take full responsibility for complying with the EPA's orders in exchange for the county extending the company's solid waste collection contract for 15 years, until 2035.

The deal - worth more than $100 million in annual revenue in unincorporated Clark County - was touted by both sides as a solution that wouldn't increase garbage collection rates for residents.

Eight years later, however, work on the dump is still not complete. After haggling with the EPA for much of that time, Republic says costs have been higher than expected and the company is asking for a 2.2 percent "environmental surcharge" to help pay for the rest of the work.

For an average homeowner in the Las Vegas Valley, the proposed increase would raise the current $11.82 monthly trash collection fee by 26 cents. Although that is a small amount, opponents say the principle involved is anything but insignificant.

Commissioners are to discuss the proposal at their meeting today.

Some residents wonder why the discussion is even taking place. To some, the company's request looks like a bait-and-switch tactic.

"Extending the contract for that amount of time and now asking for a rate increase - those two things don't jibe," said Bill Martin, a former Milwaukee sanitation supervisor who lives in Clark County.

Higher-than-expected costs are "just part of the ball game," Martin said.

Republic Services Area President Bob Coyle disagrees.

"As part of the contract extension, Republic agreed to pay $36 million in cost(s) associated with the closure of Sunrise Landfill," he said in an e-mail to the Sun.

Actually, that's not exactly what Republic agreed to in the 1999 deal.

The contract states that Republic "shall take all actions necessary to comply fully with all terms and conditions of the EPA orders."

The deal includes Republic's $36 million cost estimate and states that the company could seek a rate increase if costs exceeded that amount. But the agreement specifies that only county commissioners have the discretion to raise rates.

"No approval of any prospective rate increase ... can be inferred or implied," the agreement says.

In short, Republic can ask for a rate increase, but the county is under no obligation to grant one. Nor are Republic's costs capped by the 1999 deal, according to an internal memo from County Manager Virginia Valentine.

"The agreement does not 'cap' Republic Services' financial liability to comply with the orders," she wrote.

Exactly what the language of the 1999 deal means is likely to be part of commissioners' discussion today, along with why the costs have exceeded Republic's $36 million estimate.

So far, Republic has spent about $27 million on the project.

During the past eight years, Republic has haggled with the EPA about how the dump should be closed and secured to prevent another environmental nightmare.

The EPA deemed Republic's initial plan inadequate and took the case to the Justice Department. As part of that process, the EPA created its own plan and has been negotiating a settlement with Republic since. Still at issue are how to best cap the dump and channel rainwater to prevent erosion.

That work is expected to cost an additional $22 million to $31 million, bringing the project's total cost to $49 million to $58 million - $13 million to $22 million more than Republic initially estimated.

The wrangling with federal regulators has contributed to the delays and higher-than-expected costs. Of the $27 million Republic has spent, nearly $1.8 million went for legal fees, according to a cost analysis the company provided to the county.

If Republic would have submitted an adequate work plan to begin with, $36 million might have been accurate, EPA officials say.

But Coyle blames the EPA for the unanticipated costs.

"No one at the county or Republic could have known the full extent of the studies that the U.S. EPA would require in order to finalize the scope of work for the final closure of Sunrise Landfill," Coyle said.

In her memo, Valentine noted that a rate increase of 2.2 percent would generate $126 million over 20 years, far more than needed to close the landfill.

"A rate increase, if any, more closely geared to collecting these anticipated amounts may be more appropriate," she wrote.

Coyle said Republic also has submitted a proposed 1 percent increase for the County Commission's consideration.

For their part, commissioners are not saying much about the proposed fee hike in advance of the meeting.

"I think it deserves some discussion," Commission Chairman Rory Reid said. "I have a number of questions I want to ask before we formalize a position for the county."

Those questions include a district attorney's opinion about the 1999 agreement, he said.

"I want to make sure we understand what the potential liability is and what that liability would be if we did nothing," he said.

Coyle says Republic and the county bear liability.

"Republic, as the franchisee, and Clark County, as the lease holder, are both responsible for the landfill," he said. "If the surcharge is not an acceptable solution, we will go back to the county to discuss other options."

He didn't elaborate on those options.