Trash talking: RSWA breaks silence on lawsuit
After nearly two years of silence, the Rivanna Solid Waste Authority has finally responded in detail to public comments and media coverage of its $20 million RICO lawsuit against trash recycler Peter Van der Linde. Authority director Tom Frederick released a memo ahead of the RSWA Board’s October 27 meeting that includes some of the “substantial evidence” that Van der Linde “defrauded the RSWA in excess of a million dollars in tipping fees.”
According to Frederick, after the RSWA's "service contribution fee" was implemented in 2005, Authority officials began noticing sharp drops in the amount of area trash that Van der Linde was hauling, as reported to them by BFI, a development that Frederick characterizes as a smoking gun.
“During one twelve-month period from September 2006 through August 2007, Mr. Van der Linde’s companies declared zero tons from Albemarle/Charlottesville,” says Frederick, “a period within which there are multiple photographic records” of Van der Linde’s orange dumpsters in the area.
At the time, Frederick had his recycling manager, Bruce Edmonds, tracking and photographing Van der Linde’s containers. In the county, development director Mark Graham had instructed his building inspectors to keep track of the distinctive orange containers.
“They might think I’m a criminal, but do they think I’m stupid?” responds Van der Linde, who plans to issue his own memo to refute Frederick's comments, point by point, at the Authority's Tuesday meeting. “Do they really think I would declare zero trash for a whole year, with my glow-in-the-dark orange containers everywhere, and think I could get away with it? Yeah, that’s a brilliant plan.”
The recycler says the more likely scenario, and one that he claims he will prove in court, is that BFI was simply giving the Authority inaccurate information.
The Authority, along with elected officials in both governments, has been tight-lipped about the lawsuit since its December 2007 filing. Indeed, when the Hook first reported on the lawsuit in April, it was discovered that several elected officials, including Charlottesville mayor Dave Norris, knew nothing about it. Since then, the Authority has justified its secrecy by insisting, as Frederick reiterated in his memo, that the case be “fairly tried in the courtroom and not in the press.”
However, the public debate appears to have driven the Authority from its fox hole.
“When the public only hears one side of the issue," wrote Frederick, "they may not understand the purpose of the litigation."
In its complaint, the RSWA claims that Van der Linde and his employees conspired to evade paying the Authority’s the $16 "service contribution fee" by lying about where their loads of trash were coming from between 2006 and 2007. Under a 1997 contractual agreement between BFI and the RSWA, BFI was obligated to collect the fee every time trash from Charlottesville and Albemarle County crossed the scales at BFI's Zion Crossroads transfer station. Since the RSWA was forced to close the Ivy landfill, thereby eliminating the revenue from tipping fees it received, the fee system was a way for the public body to continue funding its services.
At the time, Van der Linde operated the area’s largest container rental business and brought most of his waste to BFI’s transfer station. He has since opened an $11 million Materials Recovery Facility right next to the BFI, an operation launched in December. In his memo, Frederick again insisted–- despite claims from talk-radio hosts and other critics–- that the lawsuit had nothing to do with Van der Linde opening a competing facility.
Van der Linde now claims that several area haulers will confirm that BFI never fully implemented the RSWA’s fee system.
"Substantial evidence?" scoffs Van der Linde. "They have no evidence. BFI is the one who defrauded the RSWA."
Officials at BFI, which was later purchased by Allied Waste, which later merged with Republic Services, have not responded to requests for comment.
Van der Linde also claims that BFI had been ignoring the fee system for years.
Indeed, according to documents obtained by the Hook, the Authority's own documents concede that they discovered in 2005 that BFI managers were “completely unaware” of their obligation to collect the fee, seven years after the deal was inked, prompting the Authority to threaten legal action against BFI if the company didn’t start asking haulers and correctly tallying where trash originated.
Van der Linde claims that BFI began enforcing the fee system shortly after the RSWA threatened legal action, which enraged area haulers and eventually prompted him to file his own lawsuit in 2006. Van der Linde argued that the Authority’s fee system was unfair; not because of the added cost, but because it exempted BFI, a competing trash hauler, from paying the fee because it owned and operated the transfer station.
Van der Linde lost the case, however, as the judge ruled that the issue should have been addressed through the political process, not in the courts. In their current lawsuit, the Authority suggests that it was Van der Linde’s failed lawsuit that motivated him to begin defrauding the RSWA.
But Van der Linde claims that BFI eventually resumed its old habit of not asking drivers where their trash was coming from.
Indeed, sensing early on that this might be used against him, Van der Linde hired a private investigator to spy on the BFI, positioning audio and video equipment on property he owned just yards away from their tipping station, and recording hundreds of drivers not getting asked about trash origins. Authority lawyers claim the recordings are inconclusive, as they are of poor quality and difficult to understand.
As Van der Linde explains, while the RSWA fee system was initially a boon for BFI, as it allowed the company to undercut its competitors because they were exempt from paying the fee, the contract also hindered it from freely raising rates and applying various surcharges, such as a fuel charge fee, which they were free to attach to billings for trash coming from outside the RSWA service area. Eventually, BFI found itself making far more per ton off waste coming from outside the RSWA service area.
“There was no incentive for BFI to enforce the fee,” says Van der Linde, “and they had a lot to gain financially by not asking.”
In his memo, Frederick disputes Van der Linde's previous claim that he actually had to pay more to BFI for trash from outside the RSWA serice area, giving him no incentive to evade the RSWA fee. Frederick points out that per ton costs for out of area waste were actually less at the time when his tonages began to drop in 2006. However, as Van der Linde counters, while he took a financial hit when the fee system was first enforced, eventually he found himself being charged more for trash he brought from outside the RSWA service area as BFI increased its rates and fees. Indeed, Frederick admits that BFI raised its tipping fee rates for out of area trash three times between July 2006 and November 2008, but says that the rate was never greater than the $62 per ton fee for RSWA service area trash. However, Van der Linde says that figure doesn't include the "environmental" and "fuel charge" fees BFI tacked on to their bills for out of area trash.
In the early enforcement period, however, Van der Linde has admitted he was “saved” financially by BFI not asking about the origins of his trash, as every time they didn’t he wasn’t charged the RSWA service fee.
But that’s one of Van der Linde’s crimes, according to Frederick, one the lawsuit refers to as “lies of omission.”
“This case is about right and wrong,” says Frederick. “Mr. Van der Linde knew the process of collecting the information. He said to Mr. McNair in the Hook article that he was “saved” when BFI stopped asking the question. Even if you believe that BFI stopped asking the question, what was he “saved” from? He was “saved” from paying a fee he knew he had to pay.”
Still confused about who's at fault here? You’re not alone. However, one long-time local hauler has a theory that the "illegal" fee system has made everyone guilty.
“Van der Linde lied, and BFI did too,” says Randy Layman, who says he started the county’s first “blue bag” recycling program over 20 years ago and served on the trash committee when the RSWA was created.
“BFI is going to say Van der Linde lied, and Van der Linde is going to say they didn’t ask," says Layman. "It was a don’t ask, don’t tell sort of thing.”
As for the RSWA, which he says he knew was going to “get out of hand” when it was created, he claims they entered into their agreement with BFI illegally.
“They didn’t put it up for open bid. That was illegal,” he says. “You’ve got to put it up for bid.”
Van der Linde doesn’t deny knowing how the collection process worked, but likens his situation to paying a restaurant tab when you know the waiter omitted the charge for an appetizer. BFI was under a contractual agreement to ask the question, he points out, whereas he was under no legal obligation to answer any questions if they weren’t asked.
“It might be a moral issue to deal with,” he says, “but it’s not a crime.”
Meanwhile, the RSWA appears to be getting closer to a decision to get out of the waste business by handing that responsibility over to a private company, as it is operating deeper into the red every month–thanks in large part to the expense of suing Van der Linde. Indeed, after spending $118,852 on legal fees in July, another $83,619 was spent in September, according to the Authority’s most recent financial report. Meanwhile, the Authority reports an operating loss of $228,439 for September, which follows a $214,911 operating loss for July and August.
“It is ironic that the lawsuit has been considered a waste of tax payer money,” says Frederick, defending the expenditure, “because collecting what RSWA feels is lawfully owed by Mr. Van der Linde would restore much more tax payer money than the cost of litigation.”
At the Authority Board’s September 22 meeting, at the which the possibility of adopting a flow control ordinance was discussed, Frederick was asked to fast track a Request for Proposals inviting companies to bid on building and operating a new Ivy transfer station. But in the agenda for Tuesday’s upcoming meeting, Frederick says the process has become “more complex” and will take more time to resolve.
Van der Linde predicts that in the meantime his facility, which will soon accept household waste for recycling, will reduce the Authority's revenue to zero. "“The Authority is like a chicken with their head cut off,” he says. "They’re dead, but they’re still running around the barnyard.”