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EcoHub sues over OneBin failure

All right.

Continuing the saga that has unfolded at City Hall — in which City Council members have said a deal with one company “smelled,” and in which another company, EcoHub, claims Mayor Sylvester Turner snubbed him out of the whole process — EcoHub is now suing the city to find out what happened.

EcoHub had worked for years with former mayor Annise Parker’s administration to set up the One Bin for All Recycling paradigm, and CEO George Gitschel had said he secured millions of dollars in bond funding to build an $800 million facility that would recycle up to 95 percent of all our waste and repurpose it as fuel or other traditional recycling products. But when Turner took over, the deal with Gitschel fell apart — for largely unknown reasons. Turner has refused to provide an explanation beyond the fact that he is “not obligated” to continue with Parker’s vision. The city instead opened up a bidding process for more traditional single-stream recyclers in 2016.

The lawsuit, filed this week, is seeking clarity about how Turner made this decision. Gitschel had hired former KTRK reporter Wayne Dolcefino’s consulting firm to investigate, but in the lawsuit, Gitschel’s attorney says the city has not turned over documents, emails and phone calls that Dolcefino requested under the Texas Public Information Act. The lawsuit asks the court to compel the city to release the documents, and make sure officials are not hiding anything. Gitschel speculates that “improper influence by those who stand to financially benefit the most from the status quo” may have played in a role in why Turner cancelled the One Bin proposal and opened it up instead to traditional single-stream recyclers.

“What we’re hoping to uncover is at least emails between either Turner or folks in his administration and those with whom the city has been corresponding about bids on this contract, just to find out who the mayor’s been supporting and what’s going on at the Solid Waste Department,” said Gitschel’s attorney, Stewart Hoffer. “It just doesn’t make any sense why he would turn down a costless solution in favor of one that will cost a lot of money and has a greater environmental impact than what EcoHub had.”

I guess this is about the recycling contract that’s being rebid, which is whatever. What I’m wondering is how it is that EcoHub thought it had a deal with the city in the first place. As of the end of the Parker administration, there was nothing more than a progress report to show for the project. There was never a contract for City Council to approve. One Bin never came up when the current scaled back deal with Waste Managemend was ratified. One Bin For All was an idea, one that some people thought was great and others thought was ridiculous, it was never anything more than that. Maybe there’s more information to be uncovered in the deal that Mayor Turner tried to get approved. If there is, great, let’s hear it. But even if there is, I’m not sure what EcoHub will do with it.

Rebidding reycling

Do-over!

Mayor Sylvester Turner

Pummeled by procurement concerns on a 20-year curbside recycling contract, Mayor Sylvester Turner said Friday he will seek a new round of proposals from the four final bidders.

Turner had met with small groups of City Council members Thursday to get a better sense of the concerns they repeatedly have raised since the proposal first was rolled out in late June, and announced his decision early Friday.

“This action is designed to put to rest the concerns raised by members of council, which must approve the contract before it takes effect,” Turner said. “Whatever the result, my only allegiance is to this city and I will always seek what is in its best interest.”

[…]

The four firms that will be invited to submit a new round of final bids are FCC Environmental, Republic Services, Waste Management and Independent Texas Recyclers.

The mayor did not specify how much time the firms would have to submit their proposals or how quickly they would be evaluated.

See here and here for the background, and here for the Mayor’s statement. I don’t know what went wrong in this process, but clearly something had gone off the rails. I’m glad to see this happen, but let’s do review how we got here and figure out how to do it better next time, OK?

Meanwhile, Gray Matters returns to the One Bin For All question with a few words from Roseanne Barone, the Houston Program Director for Texas Campaign for the Environment.

The national Paper Recycling Coalition, Steel Recycling Institute, Institute for Scrap Recycling Industries and others knew that when used materials, food and pet waste are all combined together, it is also known as another name — “trash” — and so they wrote letters to then-Mayor Annise Parker advising her against this policy.

Thankfully, when Mayor Turner took office in 2016, he knew the best practice for Houston is to keep recyclable materials separate and clean so they can be sold to commodity markets and generate revenue for the City.

[…]

According to the Houston-Galveston Area Council, when we include composters, hard-plastics reclaimers, electronics processors, construction- and demolition-debris recyclers and manufacturers of goods made from recycled items, we have 21,550 recycling jobs in our region and an industrial output of $4.5 billion per year.

Who knew recycling was so vital for Houston’s economy? Additionally, throwing all discards into landfills supports a disposable, wasteful culture while doing real damage to our environment. There are 56 leaking landfills in the state of Texas, four in Harris County and one in Fort Bend County. Landfills are also more often than not located in low-income neighborhoods, so trashing valuable materials also perpetuates environmental injustice.

Barone, like her predecessor Melanie Scruggs, advocates for a zero waste policy. At the very least, bringing curbside recycling to apartments and businesses would make a difference. Let’s get the recycling deal done and go from there. The Press has more.

Mayor introduces new recycling deal

There’s some stuff to like in this, and there are also questions to be answered.

Mayor Sylvester Turner

The city would send all 65,000 tons of bottles, cans and boxes its citizens recycle each year to a new processing facility to be built in northeast Houston under a 20-year deal Mayor Sylvester Turner will present to City Council next month.

The contract with Spanish firm FCC Environmental, worth up to $57 million, would allow citizens to again put glass in their 96-gallon green bins, along with cardboard, newspaper, steel cans, aluminum and plastic.

Turner, faced with a poor commodities market and rising recycling costs upon entering office last year, negotiated away hard-to-process glass in hammering out a two-year stopgap deal with the city’s current contractor, Waste Management.

Council members raised enough concerns about the new contract’s length and cost and the speed at which it was being considered that Turner canceled a Tuesday committee hearing on the topic minutes before it was to begin and pulled it from Wednesday’s council agenda.

Turner stood firmly behind the deal at a Wednesday news conference, however, saying the proposal would not only return glass to the city’s recycling program but also would require FCC to share in the risk of a crash in the commodities market, ensuring the city never pays more to recycle than it would pay to throw the same materials in a landfill.

“When you take a look at what this offers, let me simply say: state-of-the-art technology, a brand-new facility, including glass, capping the floor of what the city would have to pay should the market turn down,” Turner said. “This is an excellent deal.”

Under the proposed deal, if the revenue generated by selling recycled materials is less than $87.05 per ton, the city would pay FCC the difference, up to a maximum of $25 per ton. If the materials sell for more than $87.05, the city would get a quarter of that excess revenue.

Under the current Waste Management contract, the city’s per-ton processing fee is $92, and there is no cap on the city’s costs. Houston’s per-ton costs have ranged between $20 and $53 per ton under that deal.

Prior to the commodities market crash, the city paid a $65-per-ton processing fee.

The FCC contract also would have the city borrow $2.4 million to add eight new trucks to its aging fleet and repay the loan at a 10 percent interest rate. That is significantly higher than what the city would pay if it borrowed the money itself.

[…]

Councilman Mike Laster, who was to chair the canceled committee hearing on the topic Tuesday, echoed his colleague [CM Jerry Davis].

“There’s still a lot of a lot of questions to be answered,” he said. “That gives me concern, and I look forward to doing all I can to get the best information.”

Texas Campaign for Environment’s Rosanne Barone said the contract’s processing fee and the interest rate on the $2.4 million loan are concerning. A broader worry, she said, is whether the contract leaves the city enough flexibility to capitalize on any improvements in its recycling policies in the future. Her group long has pushed the city to adopt a plan that would help it divert more waste from landfills.

“Using taxpayer money to take out a loan for $2.4 million on eight trucks is not a good use of taxpayers’ money at all,” she said. “But the more important message here is, is this a contract that is going to be functional in the long term?”

That processing fee, which was mentioned several paragraphs after the first section I quoted above and not in any of those paragraphs that discuss current and past processing fees, is $87 per ton. Which is a lot more than the previous deal we had with Waste Management, when they took glass and commodities prices were good, but a bit less than what we’re paying now. Like CM Laster, I’d like to know more before I make any evaluations of this. Having glass included in curbside pickup again is good, and having a price guarantee is good. I don’t quite understand the loan arrangement for buying more trucks, and the length of the contract could be a concern as well. Let’s learn more and see what if any options exist to make changes. The Press has more.

Hauling Glass

In times of change, there are always opportunities to do well.

Where some saw rubbish, 8-year-old Pan Berlanga saw opportunity.

He launched his first business after the city of Houston and Waste Management in March negotiated a new recycling contract that cut glass from the curbside pickup program.

To recycle their glass, Houstonians now must go to recycling centers to drop off their used bottles. “People have to drive all over,” Pan said.

Or they could call Berlanga.

Pan and his brother-in-law, David Krohn, 28, now run a company they call Hauling Glass. They go door-to-door collecting glass bottles that the city’s new curbside recycling agreement leaves behind.

[…]

They now serve more than 160 households in three inner-Loop 610 ZIP codes – 77007, 77008 and 77009. Requests from residents in those Heights-area neighborhoods in the three ZIP codes and inquiries from outside those areas are flooding the business email account and phone line, they said.

Subscribers, who pay $10 a month, can either purchase a $15 bin or use their own.

Pan and Krohn also are learning logistics lessons from their fledgling business. Once every two weeks, they rev up a white 1977 Jeep Wagoneer and roll through neighborhoods to clients’ yards, staggered by ZIP code and day of the week.

They leave their loads in an industrial-size bin and warehouse just east of downtown. They’re working with major glass-recycling businesses to take the glass from there.

By picking up glass only, Krohn said they’re adding convenience for households and eliminating any extra processing those companies would have to do.

Here’s their website. Going by the requests they say they have received for this service, the 77006 ZIP code would be next in line when and if they expand. We’re signed up for their service, with the first pickup scheduled for this Thursday. Yeah, it would be nice if we all still had curbside recycling for glass, but sacrificing that (at least for now) was the sensible thing to do to keep the rest of the service. I used to haul my own glass to the now-defunct recycling dropoff location on Center Street, and to Westpark before that. I can live with this until things change again. In the meantime, kudos to Pan Berlanga for seeing things as they could be rather than how they are. If young Mr. Berlanga doesn’t already have a personal theme song, I have a suggestion for him:

Live long and prosper, sir.

Recycling officially re-upped

That new recycling agreement with Waste Management was on Council’s agenda yesterday. Here’s a reminder of what it was about.

Originally, Houston was to ink a four-year deal with Waste Management, paying a $95-per-ton processing fee, a nearly 50 percent price hike. [Mayor] Turner, hoping the market would rebound quickly and strengthen the city’s negotiating position, countered with a one-year deal at a higher processing fee, but Waste Management rejected that.

The deal facing a vote Wednesday is a two-year agreement that omits glass, which is more costly to process and comparatively less valuable to resell, and carries a $90-per-ton processing fee.

Compared to what other Texas cities pay, that figure – and even the $65-per-ton processing fee Houston paid under its expiring contract – is an outlier.

San Antonio, Dallas and Fort Worth all pay their recycling contractors about $35 per ton to process recycled material; in the latter two cities, Waste Management is the vendor.

The other Texas cities’ contracts are much longer than any of the deals Houston was considering, however, and took effect when the market was stronger.

Dallas’ deal, inked in 2007, expires at the end of the year. Fort Worth’s current agreement began in 2013 and expires in 2018. San Antonio began its contract in August 2014, as commodities entered their current slide; that deal runs through 2024.

Only Austin pays rates similar to Houston’s, under 20-year deals with two contractors that began in 2012. Balcones Resources, which gets 60 percent of Austin’s recyclables, collects $79 per ton to process the first 2,000 tons of material every month and $75 for every ton after that. Texas Disposal Systems, which gets the remaining material, charges $90.50 per ton.

“We were in a really tough spot since we were negotiating the contract at a time when commodity prices are at one of their lowest points, and other cities had the advantage of negotiating during more favorable commodity markets,” said Melanie Scruggs of Texas Campaign for the Environment. “We’re also at a disadvantage because Waste Management has a monopoly and apparently there are no firms large enough that take residential recycling.”

[…]

Scruggs said a key difference between Houston and its peer cities is that Austin, Dallas and San Antonio have adopted waste diversion goals backed by investments in public education, recycling programs at apartment buildings or composting efforts. Those efforts have strengthened the cities’ recycling markets.

“It’s a signal the city is going to be providing, whether it’s ordinances or publicly funded incentives, things that would benefit their business,” Scruggs said. “Houston has no such environment for recycling as of yet, which is why we’ve been advocating that the city get a zero-waste goal and a plan.”

Turner on Tuesday said one of the options the city could consider at the expiration of the recycling contract in two years would be drafting a “recycling plan that is robust for Houston.”

In the end, the new contract was approved, with two No votes. The city and groups like TCE will get the word out to people about not putting glass in their bins. In a best-case scenario, people will bring glass to recycling centers and the city will make a few bucks from that to help offset these other costs. Most likely, the vast majority of that glass will wind up in trash bins, which will cost the city some money but not as much as it would for the glass to be in the recycling bins. A Zero Waste goal and plan would probably help with that – you can see the TCE make its case for that here – so I hope the city begins consideration of a “draft recycling plan” before this contract expires.

Recycling agreement reached

From the Mayor’s office:

Mayor Sylvester Turner

Mayor Sylvester Turner

Mayor Sylvester Turner announced that he has reached agreement with Waste Management (WM) on a proposed new contract that will allow the city to continue offering recycling services without any disruption. The proposal, expected to be presented to City Council for approval in two weeks, is a two-year contract with a $90 per ton processing fee and a guarantee to WM of at least 75 percent of the City’s recycling stream.

The only change in service that Houstonians will notice is the elimination of glass from the list of items that are acceptable for placement in the green curbside recycling bins. The exclusion of glass will lower processing costs for WM, as glass generally breaks during collection and transportation to the processing site. It is also unduly destructive to the processing equipment. Residents may continue to drop off glass for recycling at the City’s neighborhood depositories.

“I want to thank Waste Management for being willing to reconsider our arrangement and engage in shared sacrifice,” said Mayor Turner. “This agreement makes good economic sense for the city and for Waste Management. It reaffirms our commitment to recycling, doesn’t tie the City to a long-term contract, allows Waste Management to avoid the employee layoffs that would have likely resulted from cancellation of service in Houston and provides an opportunity for potential competitors to enter the market.”

The original negotiated agreement would have locked the city into a six-year contract with a cost of $95 per ton. Citing the need for a shorter contract in case market conditions improve, Mayor Turner countered with a two-year offer at $104 per ton. WM declined the mayor’s counter and submitted a three-year deal with costs of $7.6 million over two years and $11.5 million over three years. The new agreement saves the City more than $900 thousand per year and $2 million over the two year period.

“I want to applaud the mayor and staff for working hard to find creative solutions to reach a mutually-acceptable agreement,” said Waste Management TexOma Area Vice President Don Smith. “Removing glass from the recycle stream was a painful decision but allowed the City to keep the interests of the residents of the City of Houston front and center as they worked with us to find a solution to the City’s recycling needs.”

The City’s current contract with WM is set to expire on March 16, 2016, but WM has agreed to an extension until the new proposal is considered by City Council on March 23. City Council does not meet next week due to spring break.

Clearly, Mayor Turner and Waste Management got that idea for a two-year deal from me. It’s unfortunate that glass will no longer be accepted for curbside recycling – I get it, and I know that helped reduce the cost for the city – but given the closing of the Center Street recycling dropoff location, this is a pain for me. Looks like the North Main Repository is my new friend. I’ll take the trade if that’s what it took, but I hope some day we can get that restored. Kudos to all for getting this deal done with no disruption in service.

UPDATE: Here’s the Chron story, with reactions from various people, and a statement from Melanie Scruggs of the Texas Campaign for the Environment:

“Over the past several weeks, thousands of Houstonians have emailed, called, written letters or testified in favor of continuing curbside recycling. Many residents also called on Waste Management through social media, urging them to agree to a short-term, affordable deal with the city. We are tremendously grateful that Houstonians’ voices have been heard so clearly!”

“It is unfortunate that a lack of recycling competition, low commodity prices and strained city finances have resulted in shortened public services. It is a temporary step backward that curbside recycling will no longer accept glass, as this will eliminate the energy savings of recycling glass and send more material to landfills. We advise the public to reduce and reuse glass containers, especially while they are to be excluded from the big, green bins, and to use neighborhood drop-offs to recycle glass.”

“Now that curbside recycling is no longer in peril, we call on Mayor Turner to lead Houston in the next step toward ‘zero waste’ by establishing a zero waste goal and pursuing a long-term Zero Waste plan that will create new recycling businesses, generate more recycling jobs, and divert more materials, including glass, from landfills over time.”

For what it’s worth, in the early days of the small-bin recycling, neither glass nor cardboard were accepted, and I think only #1 and #2 plastics were taken. We’ve come a long way even with this step back, is what I’m saying.

Now what for recycling?

Sure hope there’s a plan.

Houston’s curbside recycling program is in limbo after Mayor Sylvester Turner and City Council rejected a new contract with Waste Management on Wednesday, prompting concern among residents and environmental activists about a potential lapse in service.

Such a lapse would come about a year after the city finally expanded its curbside program to all homeowners. It also would occur amid an ongoing City Hall push to close a budget gap of more than $126 million by July 1, an effort likely to result in layoffs of city workers.

Turner emphasized that he is committed to recycling but said he was uncomfortable entering into an agreement he viewed as working against the cash-strapped city’s best interests.

The city’s current contract with Houston-based Waste Management to process recyclables expires March 16.

“We will continue with recycling. We just have to put forth a strategic plan where it can continue, where it’s cost-efficient, and we’ll try to do it in such a way that’s the least disruptive,” Turner said. “Instead of it being like twice a month, it may have to be once a month for right now, but we are certainly talking to a number of other players out here in the marketplace.”

Turner plans to announce a new recycling plan Monday. He declined to offer details on the options available to the city but said he is looking to other bidders.

[…]

In an emailed statement, Waste Management said the firm remains open to working with the city and is prepared to accept recyclable materials without a contract.

“Amidst the unfortunate rhetoric coming from the city are very workable solutions,” the statement said. “Unfortunately, the potential – and last-minute – solutions floated by the mayor and city officials can’t be characterized as constructive because they’re economically unworkable. This can’t be a one-sided solution. Losing money on a recycling contract with the city isn’t a solution in our view.”

Waste Management’s current noncontract recycling rate is $104 per ton, the same amount Turner proposed paying under a one-year deal.

See here for the background. I don’t know what Mayor Turner has in mind, but I can’t wait to hear it. If I were the one who had to come up with something, I might suggest a two-year deal – Waste Management proposed four years, the city said one year – with the hope that commodity prices (largely a factor of China and its economy) might have crept back up by then. The city doesn’t want to get locked into a long-term deal where they have to pay a high price, while Waste Management wants some price certainty. Maybe that would work, and maybe there are some other players out there eager to jump in on this market. I sure hope so. In the meantime, we may wind up paying the rack rate for awhile. Tune in Monday to see what the Mayor has up his sleeve.

Recycling contract impasse

Uh, oh.

The city of Houston’s curbside recycling program could be put on hold after negotiations between Waste Management and Mayor Sylvester Turner’s office reached an apparent impasse over a new contract Tuesday.

Though Turner said he remains committed to recycling and his office said he will be “pursuing any and all available options” before the current contract expires March 16, the standoff could see Houstonians’ recyclables trucked to a landfill as early as next week.

The mayor acknowledged the breakdown Tuesday after Waste Management rejected Turner’s attempt to shorten a proposed four-year contract extension to one year.

“They control the market. It’s like a monopoly,” Turner said of the Houston-based Fortune 500 company that long has held the city’s recycling contract. “I support recycling. But asking people to accept a bad deal now and in the future is not good business, and I’m not prepared to allow the city to be hijacked by Waste Management or any one company. I want a good deal, but I also expect people to be good corporate citizens and not utilize their monopolistic status.”

[…]

Waste Management for years has been processing and reselling Houstonians’ recyclables, taking a $65-per-ton fee from those revenues and giving 70 percent of any money left over to the city. If the firm’s costs exceeded the fee the city paid, Waste Management swallowed the difference.

With plunging oil prices dragging commodities below $50 per ton, however, the firm has been renegotiating contracts. The deal before council, which was being negotiated before Turner took office, would see the city pay a processing fee of $95 per ton for at least four years. Turner’s office said he now agrees with council that such a term could trap the city in an unfavorable rate even after the market recovers.

Turner instead had sought to shorten the deal to one year in exchange for a higher, $104-per-ton fee.

Waste Management rejected that deal Tuesday, shortly before the mayor faced residents pleading with the council not to end the city’s recycling program only one year after it was expanded to give all homeowners the popular 96-gallon green bins.

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See here for the background. The Press has an explanation for why we are in this predicament.

Melanie Scruggs, program director for the Texas Campaign for the Environment, says a major pratfall with Houston recycling is Waste Management’s monopoly over the city.

“Dallas owns its own landfill and they have a recycling facility at the landfill, so it’s a win-win for them,” says Scruggs. “Austin, in addition to a citywide recycling ordinance, has two different companies: one on the north side of [the Colorado River], and the other on the south side.”

“There’s not a competitive market for recycling in Houston. Waste Management is the only one in town and it puts the city in a difficult decision,” adds Scruggs. “The city of Houston is trying to put as much pressure on Waste Management for a shorter and cheaper contract because they want to save money.”

I don’t know what the solution to this is if Waste Management won’t go for a shorter-term deal, which I think the city is correct to pursue. Not recycling isn’t an option, unless you really want to see Houston get another large round of negative national publicity. The timing of this just couldn’t be worse, and we’re a week away from the current contract expiring. It’s a mess. For those of you who want to do something that might help, the Texas Campaign for the Environment has a customizable email message you can send to the city. Calling your Council members (district and At Large) is never a bad idea, either.

RIP, One Bin For All

It had a good run, but at the very least the timing was all wrong.

The One Bin For All program would let Houstonians throw all trash in the same bin, to be separated for recycling later. The hope was to push up Houston’s low recycling rate. But now the city could end up with no recycling at all.

The city council on Wednesday delayed a vote on a new contract with Waste Management, which would cost the city about $3 million more per year because commodity prices for recyclables are low.

Several council members are calling for suspending recycling until that changes.

The One Bin program was not mentioned at all in the discussion.

It turns out Mayor Sylvester Turner is not a fan.

“I’ve looked at and read the paper that’s been presented from what was done,” he said. “I’m not convinced that that is something I want to move forward with right now, if at any time, but it’s not a part of this conversation.”

See here for the last update. Mayor Turner had spoken in generalities about One Bin before now – I’d have to go back and re-listen to the interview I did with him for the 2015 election, but that’s how I remember him speaking about it then as well – so this is a rhetorical shift for him. It’s not exactly a policy shift in the sense that he had never committed to doing anything with One Bin, so think of it more as a door being closed.

As for the Council action, the Chron story from Wednesday before the meeting suggested some pushback on continuing the recycling contract with Waste Management, but nothing more than that.

Until now, Waste Management would resell the recyclables, deduct a $65-per-ton processing fee and give 70 percent of the remaining revenue to the city. If the firm’s costs exceeded the fee the city paid, Waste Management ate the difference. Those terms meant the city could make $25 per ton two years ago, when recyclables were bringing $100 per ton.

Now, with commodities prices at lows not seen since the 2009 recession, Waste Management has been dropping or renegotiating its contracts with Houston and many other cities.

If City Council approves the new deal, the city next month will begin paying a $95-per-ton processing fee. With commodities now earning $48 a ton, that means each ton of material recycled will cost Houston almost $50, at least in the near term.

That’s nearly double what it would cost to truck the recycled items to the landfill, where the tipping fee is $27 per ton.

And, with Mayor Sylvester Turner warning that layoffs will be needed to close a projected $126 million budget gap by July, some council members are inclined to quit recycling until the market improves.

“As much as we are for recycling, I’m also against cutting people that are actually doing city services,” said Councilman Michael Kubosh. “It’s going to hurt to lay people off and then to tell them we laid them off because, ‘Well, we want to recycle.’ We’ve got to think it through.”

Councilman Jerry Davis, whose District B is home to landfill facilities, disagreed, citing studies showing negative health outcomes for those near dump sites.

“If we stop recycling, we’re going to have more crap taken to landfills in District B,” Davis said. “With the rate we’re growing, we have to find a way to get rid of our waste in an efficient manner. What are we going to do when all our landfills are full? I understand commodities are down, but it’s a cycle. I don’t think we need to steer away from sustainability because the market is somewhat volatile.”

See here for the background. The single-stream recycling program has been pretty popular, so I kind of doubt it’s in any danger, but I’m not surprised that there was some grumbling about possibly having to pay for something we used to make money off of. And if the words “garbage fee” are forming on your lips, you may want to bite your tongue.

If you were concerned Mayor Sylvester Turner could consider pushing a new garbage fee to cover that cost, however, think again.

As Turner put it, when asked at today’s post-City Council meeting press conference:

“No. I have never contemplated a garbage fee. When it’s come up, I’ve said to members of my own staff I’m not going to advocate a garbage fee and I’m not going to support a garbage fee. So, absolutely not, no.”

I don’t agree with that – at the very least, I think we ought to keep the option open – but that doesn’t appear to be the case. We’ll see what Council does with this next week.

It’s hard out here on a recycler, part 4

It was a bad year last year.

Recycling continues to hurt Waste Management’s bottom line, as low oil prices and low commodity prices have made that a challenging business for at least the past year.

The Houston company on Thursday reported a decline in revenue and earnings for its fourth quarter and full year in 2015, as it sheds some unprofitable recycling contracts and works to expand higher-margin business. Net income in the fourth quarter was $273 million, down from $590 million in 2014, and earnings per share dropped to 61 cents, from $1.29 a year earlier.

“The business is firing on all cylinders, save two areas: recycling and environmental services,” CEO David Steiner said during a call with investors.

[…]

Waste Management has been coping with tough times for residential recycling that spread across the industry. In many cases the company is no longer able to cover the costs of collecting and processing paper, cans and plastic bottles with the revenue it gets from selling them.

In paper, “if they can improve their processing costs per ton, you survive,” Hoffman said. But slower economic growth in China has contributed to lower prices for recycled metals, while the low price of oil makes virgin plastic cheaper to produce than using recycled plastic.

“It’s just very hard to cover your cost of processing,” Hoffman said.

Glass causes problems for waste companies by damaging sorting machines while it’s sold at very low prices, and consumer confusion over what to put in recycling bins makes recycling more expensive. Companies spend money removing non-recyclables from the stream, and contamination reduces the quality, and therefore price, of the recyclables they sell from collection.

Waste Management cut its recycling expenses by 15 percent from a year ago, Steiner said, and is working to renegotiate municipal contracts so that it doesn’t shoulder all of the costs of recycling when it’s operating at a loss. Already it has renegotiated 75 to 80 percent of its contracts, Steiner said.

See here, here, and here for the background. Waste Management of course also has a contract with Houston, one that has been pretty good to the city, allowing it to buy the equipment needed to bring curbside recycling everywhere at a faster-than-expected pace. City Council is scheduled to vote on whether to continue the single-stream recycling program today. I don’t know if the terms are the same as before or not, but I’m sure that will come up.

UPDATE: As predicted:

City Council this week will consider a four-year deal with Waste Management that will increase the fees the city pays the company to process its recyclables and will, for the first time, put Houston on the hook if the firm cannot cover its costs by reselling the recycled items.

If Houstonians keep rolling 5,400 tons of recycled material to the curb each month and current commodities prices hold, city officials project the cost to the city will be more than $3 million a year.

“Our contract expired in a bad market,” said Steve Francis, chief of staff in the Solid Waste Management Department. “If we were here last January at $107 a barrel (for oil), we’d have a significantly better contract in place. They’ve negotiated away their downside, which becomes a downside for us.”

It was nice while it lasted.

It’s hard out here on a recycler, part 3

A story in the WaPo about the ongoing struggles of the recycling business.

Once a profitable business for cities and private employers alike, recycling in recent years has become a money-sucking enterprise. The District, Baltimore and many counties in between are contributing millions annually to prop up one of the nation’s busiest facilities here in Elkridge, Md. — but it is still losing money. In fact, almost every facility like it in the country is running in the red. And Waste Management and other recyclers say that more than 2,000 municipalities are paying to dispose of their recyclables instead of the other way around.

In short, the business of American recycling has stalled. And industry leaders warn that the situation is worse than it appears.

“If people feel that recycling is important — and I think they do, increasingly — then we are talking about a nationwide crisis,” said David Steiner, chief executive of Waste Management, the nation’s largest recycler that owns the Elkridge plant and 50 others.

The Houston-based company’s recycling division posted a loss of nearly $16 million in the first quarter of the year. In recent months, it has shut nearly one in 10 of its biggest recycling facilities. An even larger percentage of its plants may go dark in the next 12 months, Steiner said.

The problems of recycling in America are both global and local. A storm of falling oil prices, a strong dollar and a weakened economy in China have sent prices for American recyclables plummeting worldwide.

Environmentalists and other die-hard conservation advocates question if the industry is overstating a cyclical slump.

“If you look at the long-term trends, there is no doubt that the markets for most recyclables have matured and that the economics of recycling, although it varies, has generally been moving in the right direction,” said Eric A. Goldstein, a lawyer with the Natural Resources Defense Council who tracks solid waste and recycling in New York.

“And that’s without factoring in the external impact of landfilling or anything else,” he added. “There aren’t a lot of people saying, ‘Send more material to landfills.’ ”

Still, the numbers speak for themselves: a three-year trend of shrinking profits and rising costs for U.S. municipalities — and little evidence that they are a blip.

Trying to encourage conservation, progressive lawmakers and environmentalists have made matters worse. By pushing to increase recycling rates with bigger and bigger bins — while demanding almost no sorting by consumers — the recycling stream has become increasingly polluted and less valuable, imperiling the economics of the whole system.

“We kind of got everyone thinking that recycling was free,” said Bill Moore, a leading industry consultant on paper recycling who is based in Atlanta. “It’s never really been free, and in fact, it’s getting more expensive.”

[…]

Clemm, the District’s recycling chief, said small efforts can begin to turn the tide. The District must begin by getting more garbage out of its recycling stream.

“Residents have a way to influence this by making sure they are recycling right,” she said.

Another possibility is to follow the urgings of the environmental community by expanding recycling programs to include composting — the banana peels and grass clippings degrading in landfills that by some estimates have become the nation’s third-biggest source of methane gas contributing to global warming. Composting is partly credited with the success of such cities as San Francisco, Portland and Seattle in increasing the share of the waste stream that is recycled each year.

See here and here for some background. The main thing I take away from this is that however intriguing the One Bin For All possibility may be, I just don’t see how it could be economically feasible at this time. Maybe in the future, and maybe never, but not now. It looks like that education/marketing blitz that opponents of One Bin like the Texas Campaign for the Environment have been advocating as the better alternative is the way we will have to go to ensure that our current recycling arrangements can be sustained. We need to do a better job of getting people to put only recyclables in their bins – and in the public receptacles that are often treated the same as garbage cans – and we need to seriously think about a separate collection process for compostable material, as a number of other cities have done. Needless to say, these are issues that the Mayoral candidates should be addressing, which means they need to be getting asked questions about them. I promise to do my part when it’s my turn to do so (and I have been doing so in many of the Council candidate interviews), but until then it would be nice if someone else thought to do it, too.

It’s hard out here on a recycler, part 2

As if they didn’t have enough to deal with.

As low commodity prices have left recyclers short on cash to invest in technological upgrades, product manufacturers are coming out with new types of packaging that make business even tougher.

These products include lighter-weight plastic bottles, resealable pouch containers and other items that are popular with consumers and often better for the environment because they require less energy to produce and transport. Water bottles are made with less plastic now, for example, and thin plastic film is replacing heavier packaging.

But poor consumer education means that items like trash, grocery and dry cleaning bags end up in recyclers’ sorting facilities where they don’t belong and can jam machines.

“Flexible packaging has a very positive environmental footprint,” said Chaz Miller, director of policy and advocacy at the National Waste & Recycling Association. “Very hard to recycle, however, so there’s a trade-off there.”

Clear plastic pouches also have become popular. In addition to their convenient zip-close tops, they use less material. But in sorting facilities, machines often mistake the flattened pouches for paper and end up placing them in the wrong place. Thinner plastic bottles are now more easily flattened, too.

[…]

For recyclers, the challenge remains in keeping consumers educated about film and other materials that don’t belong in recycling bins.

“With more complexity in materials that consumers are purchasing, it makes it a lot harder for customers to know what they can recycle and what they can’t, so I think it makes it harder to ensure that we get the right materials in the recycling stream,” Susan Robinson, directors of government affairs for Waste Management. “It used to be a lot more simple.”

See here for the background. I don’t have anything to add here, just to note that it’s another item on the “educate the public about how to recycle” to do list.

It’s hard out here on a recycler

Whole lot of not so good in there.

When Waste Management bought the plant in 2010 and converted it to handle single-bin recycling, commodity prices were high, the city was on board and Houstonians were eager to recycle. As the company introduced single-bin recycling, residents became ever more vigilant about keeping bottles, cans and newspapers out of local landfills. But they also started throwing in nonrecyclables, which gum up machines and drive up costs.

It’s a national problem that Waste Management, based in Houston and one of the largest trash and recycling companies in the country, and its competitors have been grappling with the past few years. Recently it’s gotten worse. Back when commodity prices were peaking in 2011, companies could absorb higher costs of weeding out trash. But prices have dived since, and Waste Management is finding it can cost more to sort and process material than what it can get for selling it.

The sorting process costs $75 to $150 per ton, depending on how contaminated a load is, vice president of recycling operations Brent Bell said. The company then sells recycled material for just $80 per ton on average.

“Unless we can work out a way where recycling is profitable over the long term, there’s not going to be recycling,” CEO David Steiner told investors during a downbeat conference call last week, noting that commodity prices have sunk to new lows.

“It’s as low as it’s ever been, but we haven’t seen any indication of a bottom,” he said.

[…]

But there’s so much confusion among consumers over what can go in their bin. Grocery bags, for example, are plastic and have a recycling symbol, but can’t be recycled curbside. (Many local grocery stores collect them.)

Now that profits have plummeted, companies have more incentive to communicate what is recyclable.

“You have this whole perfect storm of things that has put the MRFs (materials recovery facilities) in a very difficult position,” said Patty Moore, CEO of consulting firm Moore Recycling.

Most facilities are set up to handle more paper than other materials, Moore said, but as reading physical newspapers declined, along with other uses of paper products, many of those facilities now operate less efficiently.

[…]

Then there is the decline in commodity prices.

Not only has China, a major destination for recycled materials, tightened its standards on the materials it accepts based on contamination, known as China’s Green Fence, but the nation is paying less for recyclables. Growth there and in other developing countries has been lower than projected back in 2011, weakening demand. They’re also producing more of their own recycled materials.

“If you look at the whole economics of that industry, it’s not very favorable,” Bell said.

Cheap oil is also a culprit, as newly made plastic is no longer more expensive than recycled plastic. For better or worse, it’s a lot easier to be green when oil is up over $100 a barrel.

Something as simple as putting recycling in a garbage bag throws off the process because the bag can’t be recycled. Depending on the volume workers are dealing with on the conveyer belt, they may rip it open, or just throw out the whole bag and its contents.

In March, Houston’s contamination rate was 17.4 percent.

“A fifth or a sixth of the material that’s going in there is really of no value, and not only is it of no value in terms of the end product, it tremendously increases the processing cost,” said Puneet Bhasin, who now runs Waste Management’s recycling business.

Contamination is why most in the industry see one-bin policies, like that Houston is pursuing, as a step in the wrong direction. Once paper gets wet or gets food on it, it has pretty much lost all value for recyclers.

That was the first thing I thought about as I read this. Whatever you may think about the One Bin proposal, and whatever the state of the technology may be, the current level of recycled commodity prices may mean One Bin is economically unfeasible, at least for now. That’s why I keep harping on where the Mayoral candidates stand on stuff like this. As the story notes, Houston signed a sweetheart deal for the collection of its recyclables when commodity prices were good. The expansion of the single stream program was largely financed by the revenues this deal generated. What happens when that deal expires? How committed are the candidates to recycling if we can’t get paid, or only get paid a minimal amount, for it? This is a non-trivial amount of money we’re talking about. It sure would be nice to hear the Mayoral hopefuls talk about this.

As far as the existential question goes, times may be bad for recyclers, but they will get better. There’s no going back – we don’t have the landfill space, and even if we did too many people wouldn’t accept it. But maybe we need to start thinking about recycling more as a utility, like trash collection, and treat it more like that. If that means adopting trash fees to support it, then so be it. Again, though, that’s a question for the Mayoral candidates. See what I mean?

Finally, as far as the contamination issue goes, the story spends a fair amount of time on that and mentions an outreach program that Waste Management is doing to educate people about what should and should not be put into recycling bins. It was the first I’ve heard of it, but I’m glad someone is doing this. The folks who oppose One Bin advocate for more of this kind of public outreach to help boost Houston’s recycling rate to at least the national average. Putting aside the challenge that low prices for recycled materials creates for that, what does that kind of program look like? What is the time frame for it? Is there a city whose example we could follow? And again, what are the next Mayor’s priorities for this? The One Bin path and the Not One Bin path are very different, and each his its own risks and rewards. I’m not going to stop harping on this until the candidates give me a reason to stop.

“Environmental tort reform”

Oh, hell no.

After failing in their attempt to limit cities and counties’ ability to take industrial polluters to court, some Houston businesses and statewide lobbyists now want to limit how much local governments can collect in penalties, a sort of environmental tort reform effort aimed squarely at a Harris County Attorney’s office they say is seeking high-dollar payouts at the expense of cleanup efforts.

At a legislative committee hearing earlier this year, the powerful Texas Association of Business and attorneys for Waste Management Inc. and a wealthy Houston family being sued by Harris County told lawmakers that the County Attorney’s office has started seeking outrageous penalties unrelated to environmental clean-up costs from entities already cooperating with remediation requirements imposed by the state or federal government. If allowed to continue, they told members of the House Committee on Judiciary and Civil Jurisprudence, the lawsuits could have a “chilling effect” on development and erode property values.

“As a practicing lawyer who advises companies as to what liabilities they may face, like becoming involved with a contaminated property, I have to advise them – based on some of the recent cases – that there is a possibility, as remote as it might be … that you could be penalized for coming on to that site and seeking redevelopment because it is not precluded by the laws as they exist now,” said John Riley, a lawyer for Houston-based Waste Management.

The mega-company and two of its affiliates are facing nearly $2 billion in fines in a lawsuit brought by the county – set to go to trial next month – involving one of the state’s biggest pollution headaches: two industrial waste pits that leached paper mill sludge containing cancer-causing dioxins into the San Jacinto River for almost half a century.

McGinnes Industrial Maintenance Corp. owned and operated the pits – now a federal Superfund site – in the 1960s, filling a 20-acre tract with waste from a now-closed paper mill near the Washburn Tunnel. The company later became part of Houston-based Waste Management.

The County Attorney’s office sued Waste Management, and International Paper Co., in 2011, asking the companies be fined as much as the law allows – $25,000 a day – all the way back to the site’s 1965 opening.

Last year, the companies supported legislation that would have diminished the power Texas cities and counties have had for decades to file such environmental enforcement lawsuits. Two bills that died in a House committee after being fought by Harris County lobbyists would have required the Texas attorney general to settle all such litigation filed by local governments and barred them from hiring outside lawyers on a contingency fee basis.

[…]

At the May hearing, Harris County officials told committee members they were “not sure what the problem is,” emphasizing that the TCEQ typically is listed as a “necessary and indispensable party” in these cases and that they must be approved by Commissioners Court.

“These cases are not filed willy-nilly,” First Assistant County Attorney Robert Soard said.

Soard and other officials who testified, including a TCEQ employee, said such lawsuits are reserved only for the most egregious cases. The county, they said, simply is attempting to recuperate clean-up, legal and other costs associated with contaminated sites and has every legal right to do so.

“Every time we file a case against a large company now we now expect to see them run to Commissioners Court and the press screaming about how unfair we are,” said Rock Owens, who heads the County Attorney’s four-lawyer environmental division. “This never used to happen and now it’s par for the course. Maybe this is an indication that we are finally hitting where it hurts, even if it’s only a little ding.”

Hey, you know what these powerful business interests and wealthy families can do to stop getting sued over these ginormous environmental messes they’re responsible for? They can clean them up in a timely fashion, and they can take all necessary steps to ensure that they don’t create any more such toxic hazards. Until then, as far as I’m concerned, they can STFU.

CNG garbage trucks

You won’t hear them coming.

Waste Management [announced on Friday that] it is pushing forward on a nationwide plan to convert all of its 18,342 trucks from loud and smoky diesel engines to quieter and cleaner compressed natural gas-powered machines. The latest destination for the company’s CNG trucks will be the Houston area, starting at a facility in Conroe where 80 trucks will be able to refuel with gas overnight.

The Houston-based refuse collection giant is the latest in a line of major corporations, including UPS and AT&T, to expand their use of natural gas in fleet vehicles – convinced it is the cheapest and most environmentally friendly option to power their daily road operations.

“The economics and payback of natural gas are so strong that it dwarfs any other technology,” said Eric Woods, vice president of fleet and logistics for Waste Management.

The company saves $3 for each gallon-equivalent of CNG it uses instead of diesel, and recent changes in prices of heavy-duty trucks made the vehicles more viable, Woods said.

[…]

At least one resident in The Woodlands has had to chase after a garbage truck because she didn’t realize it was on her block until it already moved on, Waste Mangement driver Servando Rosales said.

“She said, ‘I didn’t even hear you,'” Rosales said of the resident, who had grown used to the noisy reminder of a rumbling diesel engine before moving her garbage outside.

The trucks are decidedly less noisy than their diesel-powered counterparts, quiet enough for Rosales to talk without yelling in the cab of the vehicle, which has monitors and alarms to warn of gas leaks.

Our dog Harry used to go ballistic whenever he heard the garbage truck, or any other vehicle with a rumbly diesel engine. The sound just drove him crazy, and he’d plaster himself up against the door or a window and bark his fool head off at the offending noisemaker. I suspect he wouldn’t be placated by these apparently quieter vehicles, but perhaps the duration of his frenzy would have been reduced.

The noise reduction resulting from this switch is unquestionable. The effect on climate change is less clear to me. Googling around I found this Clean Air Task Force post about whether public transit buses would do better to switch to CNG or newer diesel models. Both are better than the older diesel buses, but CNG buses aren’t clearly better than newer diesel buses. Since I assume Waste Management is replacing older vehicles that this is an overall win for the environment. I just don’t know how to quantify it, and I don’t know if this was the best possible option from that perspective that was available to them. But it is better than doing nothing, so that’s something.

Trash into treasure

Waste Management Inc. is looking at ways to turn trash into energy, which is the next best thing to actual treasure.

“In my mind, it’s pretty simple why we’re doing it: If we don’t figure it out, somebody is, and they’ll take the waste away from us. If we lose the waste, we’ve certainly lost the business,” said Carl Rush, vice president of the company’s organic growth group, the chief vehicle for its energy investments.

The shift in thinking comes at a time when U.S. landfill collections are hitting a plateau as Americans recycle more, consumer products makers reduce packaging and many large corporations adopt “zero waste” goals.

Demand for renewable energy and fuels also is increasing, in response both to regulations requiring them and to public concerns about the nation’s reliance on fossil fuels and their environmental impact.

The confluence of trends has pushed Waste Management’s leaders to take a hard look at where the company is headed, and has brought a slow and sometimes reluctant culture change to a business that had been set in its ways.

“Five years ago it would have been, ‘just put it in a hole and don’t worry about it,’ ” Rush said. Today, company officials try to avoid even using the term trash. Instead, it’s “materials” or “resources,” he said.

“It’s remarkable to me to see the change that’s taken place just in the mind-set of the people in this company.”

It’s amazing what a change in market conditions can do. Part of the issue is that there are fewer and fewer places to add landfill space that don’t run into stiff opposition from the locals, part of it is as mentioned the push everywhere to cut down on the amount of solid waste that gets generated. When faced with a declining revenue stream from an existing product line, what else is there to do but look for new ways to monetize assets? I commend Waste Management for seeking innovative solutions rather than trying to change the politics of it.