Page County Landfill Story

Recently, Ryan Grim’s article “Marvin’s Dirty Secret,” appeared in the October Rolling Stone Magazine exposing how the President’s brother’s waste company went bankrupt. This firm left behind Page County, Virginia citizens to pay a $8.5 million dollars environmental bill.

Page County has a population of 24,000 and is a hour-and-a-half drive west of Washington D.C next to the Blue Ridge Mountains. It is also home to a major Virginia tourist attraction, Luray Caverns.

Page County has been spent a lot of time dealing with landfill issues. There have been numerous questions of conflicts of interest. It’s as if a huge political football is being kicked around regarding what happened and why over the private operation of one unlined landfill and a mega-landfill recently closed by the Virginia Department of Environmental Quality (VADEQ) for ongoing violations and excessive trash intake.

There have been many anomalies in the operation of these Page County landfills and two grand jury investigations. One VADEQ employee was killed by a trash truck in 2003. Another VADEQ employee, who had previously ensured oversight of operations for the landfill on behalf of the Commonwealth, was hired by the landfill company. Marvin P. Bush, the brother of the president, and his partner A. Scott Andrews, one of the president’s biggest fund-raisers, were the managing partners with National Waste Services of Virginia, the company that went Chapter 11 in the operation of Page County’s landfill.

Page County demonstrates just why a small municipality must be wary of becoming a regional landfill and wary of the financial viability in importing lots of outside-county trash. Not only did the traffic of numerous garbage trucks also impact the quality of life and financial obligations of my county, which is just next door, but one truck accident (one of four in under a year) tragically took the life of a VADEQ employee I knew. Rural local governments must exercise extreme prudence if they hope to profit from the waste business.

When government is the regulator and also a market participant, conflicts must be quickly identified and resolved. This is especially true if a formerly small entity begins to operate as a huge enterprise. There are several Virginia counties that have imported trash to help fund local public schools. Trying to profit by importing huge amounts of waste to local county landfills may burden future residents tremendously, and the long-term impacts must be considered in any money-making venture.

Over ten years ago Page County greatly expanded their landfill business by importing lots of outside trash. Allegations have been raised as to whether all the money collected in disposal fees is accounted for by the county treasury[1]. The manner in which local governments enter into landfill agreements requires high-level management skills including a sound procurement process, adequate accounting, and proper oversight on the landfill’s business plan. Adequate measures to care for landfill operation failure must be developed. Without such safeguards taxpayers will have to shoulder these future costs. Also state regulators must provide greater scrutiny and enforcement to keep in check any questionable enterprises.

In the early 1990’s Page County first began to accept large amounts of waste from Tellurian Inc. at $15 per ton into their existing landfill in the Town of Stanley. Even the former county administer admitted under oath that thousands of truckloads of waste were dumped into this unlined landfill with no money in tip or disposal fees collected by the county from 1993-1995[2]. Page County was generating roughly 20 tons per day over ten years ago.

In the fall of 1999, Page County was losing $1500 to $2000 per day since they were not meeting their 250-ton per day guarantee. By January 2001, the local newspaper figured that losses averaged $70,000 per month.

In 1999, a new mega-landfill called Battle Creek was opened by Tellurian, the same company operating the Stanley Landfill that was closed because it was an unlined landfill. National Waste Service (NWS) bought Tellurian out in 2001. In the summer of 2001, Battle Creek increased their tonnage above 250 tons per day despite warnings from VADEQ officials. When Page County signed a contract with NWS it was taking in more than 500 tons per day.

Waste tonnage shortfalls resulted in the county having to raise several million dollars in taxes because of the 250-ton guarantee. Even lowering truckers’ dump fees did not ease this financial burden. While the county gets one dollar to $1.45 for each ton received, the county allowed their state permit disposal rate to be exceeded six fold per day so as to make more money in 2001.

County supervisors relied on the interpretation of their permit by a DEQ employee as allowing more waste than 250 tons per day. Later this same DEQ employee came to work at the Battle Creek Landfill. It is yet to be determined exactly how much this “put or pay” contract put the county into debt to make up for their trash shortfall.

Even though VADEQ notified the county of this violation in July 2001--that the county was taking in 371 tons per day--the Page County Board of Supervisors agreed to let a company dispose 1500 tons per day in December 2001. But on some specific days the intake rose well above the 1500 tons per day. The VADEQ then filed a formal notice in August 2002 against the county. In March of 2004, VADEQ closed this facility down by revoking Page County’s permit. Page County was earning several hundreds of thousands of dollars a year in host fees for accepting this trash, but it now has a major financial burden to manage or to close a mega-landfill.

In the spring of 2004, National Waste Services declared Chapter 11 Bankruptcy. Environmental Waste Services (EWS) is a subsidiary of NWS and is a privately owned company that purchased Tellurian Inc. EWS was formed solely to acquire the Battle Creek contract. They are also a subsidiary of the Winston Partners Capital group. NWS filed Chapter 11 bankruptcy just days before the landfill’s closing. It can be speculated that because the Battle Creek landfill closed, NWS, the company that A. Scott Andrews and Marvin Bush founded over ten years before, could have stood to lose millions of dollars. The two companies merged in January 1997, when Marvin Bush, formerly, president of Winston Capital Management LLC and Andrews, formerly president of Winston Capital Management Inc founded National Waste Services of Virginia. NWS is a limited-liability corporation where the Andrews-Bush Corporation privately distributed 1,000 shares of private stock.

All matters involving the company must receive approval from the court, including the county’s plans to build a temporary transfer station. Even though Page County owns the land, their contract allows that NWS through the bankruptcy court has some control over what Page County may presently do.

Today, Page County paid over $8.5 million to get this landfill back into operation. Be warned, if your county is entering into a “put or pay” contract to import trash, find out exactly just what your locality is getting into. It will be years before we will find out how serious the mismanagement of landfills may impact the citizens of Page County. Any local government must be cautious when attempting to profit from any waste management operation.

Landfills in Virginia

For the last several years, Virginia has been the second largest importer of trash in the United States with much of its waste coming from Maryland and New York. However, Virginia does not charge any per-ton tip fee or surcharge like other major waste importation states. Virginia has 320 landfills (open and closed) and 187 have evidence of groundwater contamination. There is a serious lack of good information as to what types of waste are entering Virginia. For example, tens of millions of tons of construction and demolition (C&D) waste comes into the Commonwealth, and as many of the unlined C&D landfills fill up, there is still little known about the impacts and the flow of this waste stream.

Who is Responsible?

As we continually witness in corporate America, good oversight is essential to protecting stockholder’s interest. For stakeholders, adequate neutral third-party oversight is essential to ensure responsible management and accounting in local government solid waste operations, especially if large amounts of outside trash are being brought in. When Page County first entered in to their waste guarantee, the ramifications of this agreement were not fully realized. This is particularly (and painfully) relevant when large amounts of money and economic development pressures can place environmental concerns on the back burner. When hundreds of thousands of tons of who-knows-what types of waste are disposed of there are many potential future concerns. There are also many difficult and costly engineering facets in closing and cleaning-up landfills, such as methane gas collection systems, slope design, and other technical remedial aspects.

Poor Accounting

The two Page County landfill operations will be scrutinized in years to come. Local jurisdictions may wish to employ good contracts, inspectors, and administrators. But first, local government officials must develop good negotiations and viable agreements so as not to endanger their future viability.

Another important cost is debt service, which represents the remaining debt for loans used to finance any landfill operation and its perpetual care.

Landfill tipping fees must be properly accounted for. Insuring sound landfill operations requires good bookkeeping, so that the generators, transporters, owners, and operators assume these costs as a factor of doing business. Notably, any governmental landfill operation should:

· Insure that there are sufficient reserves and a viable long-term business plan. When a local government enters into a “put or pay” contract they must fully understand their risks instead of just focusing on the benefits. Also, they must check the soundness of their financial viability through experts examining their fiscal validity.

· Promote cost accounting to assure their facility’s liabilities and assets are being addressed. How are these tipping fees being collected, and what obligation does the county have versus the landfill operator? Also, include costs for corrective actions and costs beyond the current 30-year conventional financial assurance period, and include them up front.

· Consider requiring independent third-party assessment and determination of the adequacy of current closure, post-closure, and corrective action financial assurance accounts by regulators, especially if they are directly or indirectly market participants.

Local government is ultimately responsible for any waste operations impact on public health and the environment. Privatization does not waive this obligation away from the public sector. Local governments are the last line of defense as advocates for their citizens. However, many rural counties see the host fees as a way to make up for many of their budget shortfalls in these lean times. Without developing good checks and balances, a locality can easily postpone this financial burden, and exacerbate a future mess for its citizens to clean-up. Page County, Virginia is one example how risky it can be for a rural county trying to profit by importing lots of the waste.

Battle Creek Landfill Time Line [3]

January 1999: Battle Creek Landfill opens. It is owned by Page County. Blacksburg-based Tellurian Inc. is contracted as operator. Landfill hailed as a lined, state-of-the-art facility.

November 1999: Losses at Battle Creek make headlines. Contract between Page County and Tellurian calls for at least 250 tons per day in trash — all coming from surrounding counties. Page County must pay the difference if trash does not reach 250-ton plateau. County pays between $1,500-$2,800 per day for "empty" tonnage.

January 2001: Intensity builds concerning county losses at Battle Creek. Page News and Courier begins running a "Battle Creek Bottom Line" graphic on front page. Graphic shows landfill regularly falls below the 250-ton per day mark. Losses average up to $70,000 a month.

March 2001: Tellurian brings "third party" to negotiating table. Three-way talks begin on a buyout of Tellurian, one that would bring in a new landfill operator. Buyout contingent on upping tonnage limit from 250 per day to 1,500 per day.

May 2001: Page County agrees to take in waste from West Virginia, Maryland, Delaware and the District of Columbia. Tonnage totals begin topping 250 tons per day.

July 2001: Concerns raised during negotiations for new landfill contract. Contract would up tonnage, allow for out-of-state waste and put landfill operator in charge of waste streams. First draft of contract includes clause for expansion. Citizens in Page and Shenandoah counties worry about increased truck traffic. Landfill opponents stage protest. Signs read "No Mega-Landfill."

July 2001: Third party in negotiations identified as Dover, Del.-based Environmental Waste Services Inc. (EWS). Company was formed solely to acquire Battle Creek contract. EWS is a subsidiary of National Waste Services Inc., also of Delaware. National Waste’s financial backer is McLean-based Winston Partners, an investment company started in 1994 by Marvin P. Bush, President George W. Bush’s youngest brother.

October 2001: In a 3-to-1 vote, with one abstention, the Page County Board of Supervisors approves new landfill contract. Tellurian sells operation to EWS. Deal calls for county to get a host fee of $1 to $1.50 per ton. Tonnage limit upped to 1,500 per day. EWS borrows $14 million from outside to finance the deal — $9 million for "acquisition."

December 2001: Landfill deal with EWS signed by county supervisors.

February 2002: New Battle Creek Landfill operators begin doing business as National Waste Services (NWS) of Virginia Inc.

August 2002: The Page County Farmers Association, along with other civic groups get more than 4,800 names, bypasses county officials and heads to Gov. Mark R. Warner and the DEQ in Richmond. It is the second of three anti-landfill petitions in the county.

September 2002: DEQ cites Battle Creek Landfill for exceeding its permitted tonnage. DEQ maintains current state permit, which is held by the county, limits tonnage to just 250 per day. Landfill taking in close to 1,200 per day.

April 2003: Page County supervisors approve NWS request to expand landfill’s capacity by building steeper and deeper cells for garbage. In exchange, NWS agrees to a profit-sharing arrangement with county. Request passed on to DEQ for state approval. DEQ shelves request.

July 2003: DEQ tells Page County that the state intends to revoke the county’s permit to operate Battle Creek. Permit revocation would shut down landfill.

August 2003: DEQ officials take Page County supervisors on a tour of Battle Creek Landfill to point out violations cited by state inspectors. Focus placed on inadequate drainage system and improperly separated trash.

October 2003: Page County supervisors vote 3-to-2 to transfer Battle Creek’s operating permit to NWS. County promised $1,000 up front plus a percentage of revenue. Transfer contingent on state approval of NWS expansion plan. DEQ will eventually deny the permit transfer request and never act on the expansion request.

November 2003: Page County citizens place four new supervisors in office during voting on Nov. 4. The only incumbent on the five-member board is long-standing landfill opponent. Four new supervisors oppose landfill to varying degrees. New board to take office in January 2004.

December 2003: Dwight Matthew Sours of Stanley is killed Dec. 3 when a trash truck headed to Battle Creek overturns and crushes Sours’ Ford Festiva. Sours was an engineer with DEQ, though he was not involved in solid waste monitoring or regulations. It was the fourth trash truck to crash near Massanutten Mountain since 2002.

February 2004: NWS files an injunction to stop the county from implementing stricter regulations on trash haulers. Injunction is heard in Page Circuit Court. It is not granted. Haulers required to follow new regulations.

February 2004: County fines NWS $70,000 for breaking new hauling regulations. Twenty-eight trucks without proper decals dump trash.

March 2004: DEQ’s hearing on revoking Battle Creek’s operating permit is canceled at Page County’s urging. Matter of permit revocation turned over solely to DEQ. Soon after, NWS files for bankruptcy, saying the move protects it from county efforts to void contract.

March 10, 2004: DEQ officially revokes Page County’s operating permit at Battle Creek Landfill. Incoming trash is stopped immediately. Facility is shut down.



[1] Edward, Kieloch,” The Corrupt County” Citizens for a Better Page County Government, 2003 pg 37

[2] Ibid, page 38

[3] Page News and Courier, March 18, 2004 and 6/9/04 e-mail with Jeb Caudill, Editor

Comments

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