Arbitrator favors Waste Options in decision Town appeals $1.2 million in awards
BY MARY LANCASTER
Town Counsel's office filed an appeal in Nantucket Superior Court on Nov. 22 fighting approximately $1.2 million in awards to landfill operator Waste Options listed in an arbitrator's decision dated Nov. 20 and emailed to both parties just one day before the court filing.

"In our opinion, this judgement resolves all the outstanding issues and we would like to move forward with the town," said Waste Options president Whitney Hall on learning of the appeal.

But the town wants a jury trial. The civil complaint cites the terms of arbitration in Waste Options' contract which allows a court challenge for awards of $100,000 or more. "Because the arbitration award contains deci- sions adverse to the Town of Nantucket, Nantucket brings this action for a declaration that the arbitration award may not be enforced and that any claims to which the arbitrator awarded in excess of $100,000 against the Town of Nantucket must be adjudicated in this court," states the complaint.

The complaint further states that, "An actual controversy exists between the Town and Waste Options concerning the subject matter of the arbitration action as well as the enforceability of the arbitration award. Wherefore, the Town of Nantucket moves that this court enter an order declaring that...All claims which are part of the arbitration award which impose or purport to impose obligations on the Town of Nantucket in excess of $100,000 is void and unenforceable."

According to the arbitrator's decision, the total award of $1,197,567 was to be paid by the town within 30 days of the Nov. 20 determination. Interest on any amount not paid in 30 days will accrue at 12 percent. The arbitration administrative fees of $17,250 must be borne at 90 percent by the town, and the town and Waste Options were ordered to split the $22,928 cost of the arbitrator's compensation and expenses. By order, the town, therefore, must pay Waste Options $9,525 representing the portion of fees and expenses in excess of the apportioned costs the company previously incurred for administrative fees and filing the action.

On Feb. 1, Waste Options filed a 168-page arbitration demand against the town with the American Arbitration Association in Boston, as allowed for contractural disputes under its 25-year agreement now in the ninth year.

The demand, which cost more than $8,000 to file, sought more than $2.5 million from the town plus attorneys' fees, interest and arbitration costs. Waste Options was represented at arbitration hearings by the firm Bingham McCutchen with offices in Boston and several other cities.

Waste Options believed it was due $212,500 for the cost of approval from the Department of Environmental Protection (DEP) for permits to distribute without restriction the compost it produces from garbage and sludge. Arbitrator John W. Fieldsteel, an attorney well-versed in environmental regulations and issues, was chosen by consent between the town's and company's lawyers and determined the award in this category should be $125,679.

In his decision, Fieldsteel wrote that additional DEP requirements after the original permitting process began constitute a change in law for which Waste Options is entitled to recover reasonable costs for such things as risk assessment reporting, compost testing and legal expenses. In this instance, he ruled that the company is not entitled to recover internal costs for employees related to the change in law.

Waste Options also asked for $265,000 in reimbursement for expenses of shipping construction and demolition debris (c & d) off the island from August through Dec. 31, 2005. Waste Options further maintained that the town is responsible for providing $900,000 in fill material needed to build a second lined landfill cell, estimated costs of $750,000 for construction of a double-lined second cell with leak detection system, including labor and equipment, and $375,000 to cap and close the first cell that is nearly at capacity because of c & d materials.

Fieldsteel wrote that he finds the town responsible for capital costs to construct landfill cells, though Waste Options is responsible for the cell construction. Noting that the first cell filled with c & d faster than anticipated, and that Waste Options gave the town adequate notice of the problem and need for shipping, the town was found in breach of the contract by not agreeing to pay for sand fill needed to start another lined cell which left the company no option but to pay for shipping. Fieldsteel set the amount of reimbursement to Waste Options at $872,500, including interest at 12 percent through Nov. 20, 2006.

Other findings include Waste Options' obligation to mine the old landfill hill and use as much soil as possible to cap the first lined cell and/or construction of a second cell, noting that the town is responsible for paying for all sand or materials required to cap the first cell and build the second depository.

Regarding a contract matter whereby the town in May 2006 began applying a volume discount calculation differing from the company's billing practices, Fieldsteel determined that the town's deductions from Waste Options' invoices places the town at liability for reimbursement to the company at $199,388, including interest at 12 percent since April through November.

The town was favored in another issue regarding its alleged encouragement of a private transfer station for c & d proposed by Toscana Corporation. Fieldsteel found that Waste Options was not harmed by this stance and that the town has not violated a covenant of good faith or fair dealing. No money is involved with this decision.

Further, Fieldsteel did not find that Waste Options was entitled to recover its attorneys' fees in the case since it was not a court proceeding.

Town Administrator Libby Gibson issued a press release on Nov. 22 listing selectmen chair Whitey Willauer as contact person, simply stating that the town received the arbitrator's decision and was appealing. Willauer had little comment.

"It's a very unique thing that we've got the right to appeal," he said on Wednesday.

Selectman Mike Kopko did not have a lot to say on the matter, either.

"We all signed off on Libby's press release," he said. "There is not really much else to say at this point."

Prior to the arbitration filing, the town and Waste Options exchanged many letters, each challenging the other with failing to comply with obligations.

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