As Olathe changes landfill operators, some worry about the threat of monopoly

Olathe residents should barely notice a change in October when the trash they put out is hauled to a different landfill. No changes are planned in service, and their bills will remain the same.

But a recent decision by the city council to end a 20-year relationship with Hamm Waste Management near Lawrence in favor of the Deffenbaugh landfill in Shawnee has some people wondering if a local monopoly is inevitable.

“Look at what’s happening. They put Hamm out of business in Johnson County. They’re using government regulation to do it,” said Dennis Batliner of Overland Park, an outspoken skeptic of the county’s regulations on recycling.

The Hamm management also is disappointed with the decision and has called the bidding procedure into question.

But Olathe solid waste manager Kent Seyfried said Deffenbaugh’s low bid of $27.43 per ton was the deciding factor. Hamm bid $29.50 per ton.

“Hamm has been good to work with. I can’t say enough about them. Hamm was a good partner,” he said.

The decision revolves around who would get the contract to run Olathe’s waste transfer station. Olathe’s trash is collected by the city, rather than private hauler. For 20 years, the city trucks have brought that trash to the transfer station, where it is loaded onto more fuel-efficient trucks bound for the Hamm landfill.

Hamm built the transfer station, but the city has been gradually buying it since the beginning of the relationship, Seyfried said. This is the year the ownership will transfer to the city.

Recycling is not a part of the city’s new contract. Recycling is taken straight to Deffenbaugh without a stop at the transfer station, except for yard waste, which is processed in a city-run compost facility. The city then gets a payment from Deffenbaugh based on the market value of the recyclables.

Although recycling isn’t a part of the most recent agreement, it is related to some of the concerns about monopoly. A letter sent to the city by Lawrence attorney Dan Watkins on behalf of Hamm called the city’s decision “penny wise but probably pound foolish” because of the impact it may have on the recycling contract, which is up for consideration late this year.

The Lawrence waste processor recently built a recycling facility that will also accept glass. Had the city stayed with Hamm, the company could have submitted a competitive bid for the recycling to go to the Hamm facility, the letter said.

But with Deffenbaugh running the transfer station, that is now unlikely. The use of the transfer station by two companies for recycling and trash would not be practical, Seyfried said.

“You can’t get the floor clean enough,” he said.

The letter says Olathe may have boxed itself in on the recycling deal. Markets for recyclables have been lower, making it less likely the city will get a good price from Deffenbaugh, it said. It suggested the city could have saved money by bidding the two contracts together, in which case Hamm may have been able to offer a lower combined price.

Deffenbaugh officials did not respond to requests for comment.

In addition, the letter questioned the city’s bidding procedure. The city had set up a weighted scoring system that included price as well as experience, qualifications and method. Of the three bidders, Hamm’s average was highest with 96 points, Deffenbaugh’s was 91.4 and Waste Management was 82.4. The latter company recently bought Deffenbaugh.

“At the very least there should be an accounting as to why the council and public were misled by the Public Works staff about Deffenbaugh having the high score in the RFP process,” the letter said. “Based upon records provided by the City, staff’s assurance the transfer station contract was based on ‘the high score and low price’ is not true.”

But the city sees it differently.

“The City Manager weighed all the facts and information and ultimately made the recommendation to the City Council to award the contract to Deffenbaugh based largely on cost savings,” said city spokesperson Erin Vader in an emailed response. “Ultimately, we believe the recommendation is in our rate payers’ and taxpayers’ best interest. Our charge is to maintain an excellent service at a highly affordable level.”

Batliner said it’s all part of a pattern that will gradually support Deffenbaugh’s dominance while putting smaller waste companies out of business.

County leaders approved restrictions on recycling waste at the landfill because they had been told the landfill was quickly filling up, he said. Back in 2008, the public was told the landfill would be full no later than 2027 and possibly as early as 2017 if trash patterns didn’t change. Later, the estimate was revised, with the date now at 2043.

Batliner contends the people were misled and that recycling hasn’t had that great an impact. Instead, the recycling rules have served to make competition hard for smaller businesses. But he said it’s hard to get that point across because people support recycling without looking too closely at its impact and whether it’s effective.

The city of Shawnee website lists the recession and waste-saving diversions as the reason for the later date.

In any case, Seyfried said it would be unrealistic to stop using the Deffenbaugh landfill because of fears that it will soon be full. Federal regulations have favored larger regional landfills over small operations, he said, and those landfills need a waste stream to stay in business.

“It really just came down to price,” he said of the contract change. “My job is to protect the rates of the taxpayers of the city.”

This story was originally published June 23, 2015 at 5:51 PM with the headline "As Olathe changes landfill operators, some worry about the threat of monopoly."