Wasted revenue? Authority realized in 2005 station didn't track origins
As reported in a recent cover story ["What a Waste: Is the trash Authority going obsolete?"], there's a waste war raging with distrust, lawsuits, and even spying.
The Rivanna Solid Waste Authority is suing Peter Van der Linde, who recently opened a major recycling facility in Zion Crossroads (right next to the RSWA-sponsored facility), to retrieve millions in fees the outspoken hauler allegedly avoided paying by lying about the origins of his trash. However, Authority documents recently obtained by the Hook show that the Authority may have been fleeced by its own partner in trash.
In 2005, seven years after the RSWA inked a deal with a firm called Allied Waste (then BFI and now part of a publicly held company called Republic Services) to send area waste to Allied's waste station in Zion Crossroads, RSWA officials learned that Allied employees were "completely unaware" of their duty to collect a $16 "service contribution fee" for the Authority every time in-district (i.e. Charlottesville and Albemarle) waste crossed company scales.
"Proper charging and accounting of customers has been inaccurately managed," RSWA finance director Lonnie Wood told Allied officials in a November 2005 letter. "[T]here has been and continues to be a breach of contact."
Wood chafed that Allied kept customer accounts directly with area haulers, including Van der Linde, in violation of its RWSA contract, and he said the Authority was "prepared to take legal action."
But Allied wasn't the company the RSWA would eventually sue. RSWA would save its more extreme measures for Van der Linde.
In November 2005 letters to area trash haulers, RSWA director Tom Frederick explained that Allied employees had been failing to ascertain waste origins (the only way to determine when to levy the fee), and that Allied was finally setting up a new tracking system.
That meant the end of any special discounts haulers had been receiving– and the start of collecting the $16 fee. Haulers were livid.
"I find it totally outrageous that you send an invoice," wrote Robert Bobbit of Culpeper-based Efficient Roll-Off & Recycling, "that charges a 30 percent higher per ton rate and expect it to be processed without any notification."
But that wasn't the only source of outrage. Under the contract, Allied– which also hauls and rents containers– was exempt from the fee, effectively freeing it from a tax placed on its competition. So Bobbit fired off another letter.
Wood apologized for the time Bobbit was unaware of the service fee and issued his company a $5,208.29 credit. Such gestures would not be lavished upon Van der Linde who made no secret of his antipathy for deal.
"I was never against the RSWA fee so long as there was a level playing field," explains Van der Linde. "My only objection concerned the Allied exemption from the fee and the monopolistic advantage granted to Allied by the RSWA."
In October 2005, Van der Linde asked the RSWA's Frederick for written notice of the service fee to show his customers, so they'd have "no doubt about the legitimacy of this additional expense" and "slow the stampede" of his customers to haulers "willing to lie about where their trash originated."
Van der Linde even gave RSWA officials a tape recording of his secretary posing as a potential Allied customer.
Allied employee: "We're hauling it to our transfer station, so we set our own rate. And the [other haulers] pay more."
Van der Linde secretary: "Is there any difference for the rate per ton for waste coming from Albemarle?"
Allied employee: "Not through us. [The employee quotes a $43 per ton rate.] Everybody else is paying $62 a ton, so that's what they'll charge you."
Finally, after receiving no response, Van der Linde told Frederick in December that he really had no choice but to go to court. "I cannot exist much longer," he says he explained, "unless I press this thing legally."
In January 2006, he sued the Authority.
"I was definitely scared," says Van der Linde. "Haulers were trapped like rats."
Meanwhile, a waste station in Greene had begun accepting. "So we tried to divert some waste there, but it's a long way away," he says. "And with the Louisa County landfill closed to out-of-district waste, everyone was forced to use the Allied station."
Not wanting to lose customers, Van der Linde says he decided to "eat" the $16 instead of raising his rates, figuring this would be a "slower way to bleed."
At this point, the trash hauler figured he was finished. "I couldn't go on eating that $16 much longer," he says.
Then something peculiar began happening. Van der Linde claims that Allied suddenly stopped asking his drivers where their waste was coming from.
"It saved me," he says, "because when they didn't ask, I was charged the old Allied rate."
So why would Allied stop asking? At first, Van der Linde says, he didn't know why, but when Allied raised its own rates a short time later, adding various fees for out-of-district trash, he began to harbor suspicions.
Meanwhile, relying on Allied's numbers, RSWA officials began to notice a drop in Van der Linde's in-district tonnages at the station and suspected foul play– on Van der Linde's part.
"We are not convinced his business is actually moving to other counties," RSWA director Frederick wrote in a March 2006 email to board member Mark Graham. "But I need more evidence before making this an issue. Can you help?"
Indeed Graham could.
As the planning director for Albemarle County, Graham offered up County building inspectors to take on a new task. They would note whenever they spotted one of Van der Linde's distinctive orange containers.
Two months later, Frederick emailed finance director Wood for an update: "Are you getting any data from the County that can be used to find any 'smoking guns'?"
"Unfortunately," Wood replied, "no."
Wood did, however, note that the tonnages Van der Linde was reporting on his Rivanna account were "more than questionable," from between 539 and 324 tons in November and December 2005, to just 161 and 64 tons in January and February 2006.
In March 2007, Frederick noted, Van der Linde "is still bringing in a significant amount of waste into the [Allied] facility, and they are declaring it from Fluvanna or Louisa. We have not received a single ton of waste on that account for February. We have not received any since August."
Also in March, Wood learned that Van der Linde delivered 1.04 tons of in-district waste to the Allied station and quipped in an email to Frederick, "One must have slipped through their net... or it was a new driver... ha ha."
In November 2007, Frederick recruited his recycling manager as a private investigator as he asked Bruce Edmonds to photograph the location of dozens of Van der Linde trash containers to prove that waste in the RSWA district was not getting declared at the Allied transfer station.
While the RSWA embraced the theory that Van der Linde, and possibly other haulers, were lying about waste origins, there may have existed a strong disincentive for Allied to collect the service fee.
After Allied's rate increase, Van der Linde points out, Allied actually made far more money on waste received from outside the Rivanna district. With the additional "environmental" fees that Allied began charging, fees inapplicable to district haulers under the the 1998 agreement, it now costs haulers $80 per ton to dump out-of-district loads at the Allied station. And all of that goes to Allied. In-district trash brings just $62, and Allied gets to keep just $44 of that.
"At that time I started to wish they would ask," says Van der Linde, "because now it was costing me more to bring out-of-district trash."
But Van der Linde says he decided not to complain this time, as he feared getting in the middle of a RSWA fee collection system that appeared to have gone awry.
Van der Linde would eventually lose his lawsuit against the RSWA, as the judge ruled in November 2007 that the grievance should have been handled through the political process, not the court system.
In January 2008, the RSWA slapped Van der Linde with a $3.5 million lawsuit, based on its suspicions that Van der Linde's drivers were lying about the origins of their loads.
Now Van der Linde says he was really confused.
"It would have actually cost me $18 more per ton to lie and say my loads came from outside the Rivanna district," says Van der Linde. "Why would I ask my drivers to lie? And how on earth could I convince my 53 employees to go along with it?"
As for the drop in his Rivanna district tonnages, which prompted the RSWA's lawsuit, Van der Linde says that coincided with a construction business slowdown in 2006, as well as with his decision to divert some waste, but mainly, he claims, it was caused by Allied not asking his drivers.
Last July, believing this would be central to his defense, Van der Linde hired a private investigator to set up audio/video surveillance equipment on his land adjoining the Allied tipping station. From August to September, working every other day, his investigators recorded hundreds of transactions at the Allied tipping station. Only occasionally, and randomly, the tapes allegedly show, were drivers asked about the origin of their loads.
Van der Linde hand-delivered this evidence to RSWA officials, hoping they would drop the lawsuit, but officials never responded.
Allied transfer station manager David Outing returned the Hook's call, but said that any questions would have to be directed to the company's corporate office. Outing promised that someone from Allied's offices would be in touch. Allied officials, however, had not yet contacted the Hook by the time of this updated post.
Flash forward to 2009. Van der Linde has opened a recycling center next door to Allied and charges $18 per ton less– just $44 a ton. And builders and haulers have been flocking.
"I used to send the RSWA $10,000 to $15,000 a month," says Ken Bahr, owner of Cavalier Container. "Now I send them barely anything at all."
Most of the area's major construction debris haulers confirm that they've opted to skip Allied and use Van der Linde. But not all of them.
Gaffney Homes, owned by RSWA chair Mike Gaffney, closed its account with Van der Linde in late November 2005, shortly after the RSWA fee enforcement system went into effect. Prior to that, when Wood was seeking Gaffney's help in tracking the origins of Van der Linde's waste, Gaffney told Wood that Van der Linde took about 50 percent of his construction waste.
So where does Gaffney's debris go? He declined to answer that question in an email, as well as questions about the possible lost revenue caused by Allied's failed tracking system, and has not responded to phone calls.
The lawsuit waged on his board's behalf concedes that pressing the claim will cost about $350,000. In a March 2009 letter to Wood, Authority director Frederick– who did not respond to questions about Allied's tracking of area waste– describes how lawyer Kurt Krueger is "building a sufficient case based on circumstantial evidence to allow us to subpoena Van der Linde and his business records."
Indeed, Van der Linde says he's in the middle of supplying those business records right now as part of the $3.5 million lawsuit, 40,000 pages in all, which he thinks should be about 13-feet tall.
"I'm kind of forced to do this ridiculous thing, because if I don't, when we go to court, a judge and jury might think I'm trying to hide something," says Van der Linde, who thinks the lawsuit will cost him about $200,000. "But the RSWA doesn't understand. I'm not a Boy Scout. I'm an Eagle Scout."
Updated: 4/21/09 3:55pm