Waste Management Sues San Francisco to Stop Pact with Recology

A Waste Management Inc. unit is suing in California Superior Court to stop San Francisco from steering a $130 million waste disposal contract to Recology Inc., saying the Department of the Environment (DOE) has “betrayed the city’s obligation to the competitive procurement process.”

The suit, filed by Waste Management of Alameda County Inc. (WMAC), argues that the San Francisco Board of Supervisors must approve contracts with terms of 10 years or more and in excess of $10 million. The contract was first proposed in 2009 as consistently characterized as a 10-year deal until earlier this month, when the DOE altered the term of the contract to less than 10 years. “That’s a stunning move–six years later–to evade a board vote and avoid public scrutiny, a move that expedites the award to Recology,” said Barry Skolnick, WMAC president, in a news release.

“The city’s effort to whitewash its prior unauthorized conduct, its absolute abandonment of the required competitive process, its reneging on its commitment to a full environmental review of its landfill and transportation project, its back-door effort to now sole-source the contract … prove that the city has bound itself to a course of action that is beyond its legal authority,” according to the lawsuit.

At San Francisco-based Recology, Eric Potashner vice president of strategic affairs, says in an interview response to the suit: "We bid around $30 a ton, Waste Management bid $65. Largely based on that, the city chose us. Every step of this process Waste Management has tried to litigate themselves back into the bidding process. We stand by our numbers and we stand by the city’s process."

WMAC’s lawsuit contends that the city is ignoring the competitive bidding rules in order to sole-source the contract to Recology, and now must be compelled to follow the rules and negotiate a contract with bidder WMAC. WMAC has provided San Francisco with waste disposal at its Altamont Landfill in Alameda County since 1987. Or, if the city refuses to take that route, it must go back out to bid the contract in an open process.

The current contract with WMAC is set to expire in early 2016. WMAC has offered to continue receiving San Francisco’s waste at its Altamont Landfill at rates lower than what the DOE is proposing Recology be paid to dispose of the city’s waste at a landfill it owns outside Vacaville in Solano County.

The DOE also has not required an Environmental Impact Report (EIR) for Recology’s current plan to ship all of San Francisco’s waste by truck.

The contract has brought controversy before. In 2013 a citizen group in San Francisco argued that the city should reopen the bidding process on the contract. The Yuba Group Against Garbage claimed in California Superior Court that the city, by failing to conduct an environmental review prior to reaching an agreement on the pact, violated procedures defined by the California Environmental Quality Act (CEQA) and its own request for proposal and administrative code.

A year earlier voters in San Francisco turned down a proposal to open up waste and recycling collection to competitive bidding. The issue was rejected by about 77 percent of the electorate. For 80 years the city has operated a permitting system that is essentially capped.