City accuses TDS, Greenstar of violating rules in MRF bid process

The City of Austin has accused two of the biggest local players in the single-stream, single-family recycling industry of violating the city’s anti-lobbying ordinance. If Texas Disposal Systems (TDS) and Mid-America Recycling – which operates as Greenstar – don’t win their appeals, they will be prohibited from participating in the bidding process for a new materials recycling facility (MRF).

 

Last year, the city issued a request for proposals (RFP) to build a new MRF for the city, with bids due on Feb. 9.  Controversy has been a feature of Austin’s recycling scenario for some time, with an earlier attempt by the city to build a MRF halted after a year and $1 million of design work.

 

Both Greenstar and TDS have filed appeals with the city Purchasing Office, and will continue to bid on the MRF as their protests are heard. Their appeals are set for next Friday, one day after the City Council is set to consider whether to extend is recycling contract with Greenstar.

 

That contract is at the center of the controversy.

 

In late 2008, the city began its single-stream recycling program, which began generating significantly more material than the previous program. But not having a sorting facility, the city contracted with Greenstar to haul its recycling to out-of-town MRFs, first in suburban Dallas, then to San Antonio.

 

That deal was supposed to generate a profit for the city. In fact, the city lost more than $2 million after the worldwide market in recycled materials hit the skids along with the rest of the global economy. (See In Fact Daily, Nov. 18, Dec 18 2009.)

 

TDS was notified of its alleged infraction in a Jan. 21 letter, which stated that company president and CEO Bob Gregory violated the Anti-lobbying and Procurement Ordinance when he sent an email to officials of Austin’s Solid Waste Advisory Committee. In the letter, Gregory urged them “to encourage the City Council to reject three Greenstar single stream recycling contract amendments.” Gregory, who acknowledges the content of the email, contends that because his communication was sent in reference to an item on the agenda of the Dec. 9, SWAC meeting, it didn’t violate the anti-lobbying ordinance.

 

In his appeal, TDS’ attorney Gary Newton specifically responds to the city’s allegations by echoing Gregory’s sentiments. “Since the TDS communication does not contain any of the prohibited representations about the RFP under the anti-lobbying ordinance,” he writes, “the disqualification letter should be withdrawn by the City immediately because it cannot be supported by factual evidence or the law itself.”

 

Newton proceeds to call law under which TDS may be penalized “a restriction on free speech and the right of TDS to address its government on matters which could affect its business operation.” Though he said that this wording wasn’t based specifically on this past week’s U.S. Supreme Court decision in Citizens United v. Federal Election Commission, Newton noted that there was plenty of other related case law that TDS could rely on to reinforce its position. He adds that he is “very confident” that the company should not have been disqualified.

 

Greenstar also received notice on Jan. 21. According to city officials, Greenstar’s violation occurred when one of the company’s attorneys, Neal Rackleff of Houston’s Locke, Lord, Bissell, and Lidell, copied Austin City Attorney David Smith on an email he’d sent to the purchasing officer notifying the city of Gregory’s email. “(This) correspondence is a communication related to a response…to a City Official…that both provides additional information about the response and advances the interests of the respondent Greenstar,” wrote Purchasing Office employee Roy Rivers.

 

The company responded on Jan. 25. “In copying the City Attorney on his letter, Mr. Rackleff, did nothing more than follow his legal and ethical obligation to comply with state law,” wrote Greenstar COO Dennis Soriano. “Disqualification of a bidder for complying with state law is not only unlawful, but Greenstar certainly does not anticipate that such is the result contemplated or desired by the City.”

 

Neither Greenstar’s lobbyist, Carole Keeton Strayhorn, nor Rackleff returned calls asking for comment.

 

SWAC Vice Chair Rick Cofer said that he was left largely in the dark about the decisions to cite TDS and Greenstar. Cofer – who said he has received only a one-page memo from Austin Purchasing Officer Byron Johnson informing the mayor, city manager, and Council about the disqualifications — says he’s frustrated.

 

“This puts a cloud over the entire bidding process for the MRF,” he said. “Nothing good is going to come out of this.”

 

Though Cofer thinks the city will receive numerous bids in addition to the ones from TDS and Greenstar, the two disqualified firms represent a veteran presence in Austin waste disposal. “Between these two companies, they handle almost all the waste that comes out of the single-family home” including single-stream recycling and solid waste,” he said.  One other major player in Austin recycling business, Balcones Recycling, could benefit from the disqualifications.

 

Though he admits that the intertwining particulars here represent “an unusual situation,” Smith—who says he was consulted by the city before they issued notification to TDS and Greenstar, declined to say how he advised his client. However, he noted, “There are two pertinent parts of the ordinance. One makes complaining about something someone has done in the process part of the definition of representation; the second…is you can make a representation only to the authorized contact…”

 

Johnson agreed. Calling the situation “very rare,” he noted that “the anti-lobbying ordinance has only been in effect since Dec. 2007” and that though “the contract and land management office had one (recently)” he hadn’t handled a violation of the ordinance “for over a year.”

 

Appeals for both TDS and Greenstar are scheduled for hearing on Feb 5.

 

TDS’ Gregory said he believes that a continuation of  the Greenstar contract will cost the city considerably more money than it should—especially since the Council will not have any information on what options it may have for a MRF until after they vote on the Greenstar contract next Thursday.

 

In addition, he and Cofer complain that the Council will not have input from SWAC before next week’s vote.

 

Gregory believes that the city is disqualifying Greenstar and TDS to make it easier for the department to tell Council they did not receive a MRF bid they can recommend.

 

Jennifer Herber, spokesperson for SWS, said, “(Acting Director Tammie Williamson) said we’re in the process of compiling information and we’re going to be looking at the proposals, which are due Feb. 9. The selection committee will look at all of those. We don’t know yet what that’s going to look like. Folks could propose a public/private or a private MRF …of course, the other option is, depending on what we see, it may become a city-owned MRF. It all depends on what we get.”

 

Asked when the public and the Council might get that recommendation, Herber said, “The last thing I heard is the selection committee would get all that information and then Council wouldn’t see all the committee’s recommendation until June.”