MRC agrees to buyout, lawsuit settlement over PERC profits

By Nok-Noi Ricker
BDN Staff

ORONO — A group representing 187 municipalities — including most of the area’s towns — that send solid waste to an Orrington energy incinerator voted Sept. 30 to settle a lawsuit it filed against the Minnesota-based firm that owns a majority interest in the plant.

In the negotiations, the Municipal Review Committee agreed to accept $600,000 from USA Energy Group of Minneapolis to settle the lawsuit and also forged a plan to accept a $5.4 million buyout to exit a three-party partnership that owns the Penobscot Energy Recovery Co. (PERC) facility in Orrington on March 31, 2018.

“We have guaranteed a stream of payments over 19 months to get $5.4 million between [Sept. 21, 2016] and [March 31, 2018],” Greg Lounder, executive director for the MRC, said of the buyout.

USA Energy Group controls about 52.7 percent of the incineration plant, PERC Holdings owns 24.3 percent, and the other 23 percent is controlled by the original member towns and cities that became part of the MRC before 1998.

The member communities also will share $1.5 million, their portion of the assessed value of the Orrington incineration plant, by the conclusion of the contract.

“Each municipality will be given the option of either cashing in their share of the assessed value” or reinvesting it into the plant, Lounder said.

In a controversial move that split the membership, the MRC is working with Maryland-based Fiberight to open a new waste-to-energy plant in Hampden that is scheduled to start operations in early 2018. Fiberight is building the proposed $69 million facility in Hampden to turn trash into biofuel and recycle other materials and has contracts with about 100 towns for trash starting in 2018. Other MRC member towns have elected to stay with PERC for their trash disposal.

In April 2014, the MRC sued USA Energy Group claiming a breach of the plant’s partnership agreement that resulted in more than $1.2 million in profits being spent on lobbying fees.

The lawsuit settlement agreement, which still needs to be signed by USA Energy Group, provides a $600,000 payment to the MRC for the money spent on lobbying, Lounder announced shortly before the board voted to endorse the plan.

Robert Knudsen, vice president of USA Energy Group, said Friday that he could not comment until he heard from the company’s lawyers that both parties had signed the settlement agreement and partnership buyout.

Knudsen said USA Energy Group had signed off on the agreement last week.

With the buyout comes a constant revenue stream for the member towns that is not influenced by USA Energy Group’s spending, Lounder said.

Bangor City Manager Cathy Conlow said she was pleased with the lawsuit and buyout agreement, which includes the elimination of a guaranteed annual tonnage or GAT clause for member towns. Under the current contract, towns that don’t supply PERC with the amount of garbage promised annually are penalized financially. It was mentioned at the meeting that PERC has not been issuing the penalties in recent years.

“The $5.4 million is fixed, and so we can stop fighting over expenses,” she said. “I like the idea of settling [for $600,000]. … I like having that fixed amount. I like the idea of getting rid of the GAT and the idea of having [the buyout] sewed up.”

A settlement concession for USA Energy Group is that the MRC’s monthly payments to PERC through the end of the contract would increase to $30,000, which is about 20 percent more.

Meanwhile, other issues among the partners still need to be resolved.

PERC, USA Energy Group and Exeter Agri-Energy, filed an appeal in Kennebec County Superior Court in August saying that the Maine Department of Environmental Protection erred in giving three permits to Fiberight’s waste processing plant in Hampden, to be built in partnership with the MRC.

“This doesn’t effect that,” George Aronson, senior technical advisor for the MRC and head of its oversight committee, said of the agreements voted on Friday.

The Department of Environmental Protection on July 14 issued final Solid Waste, Air Emissions and Stormwater Management and Natural Resources Protection Act permits for the Fiberight waste-to-energy plant proposed for the “triangle” area between Ammo Industrial Park, Interstate 95 and Coldbrook Road in Hampden.

The MRC also agreed Friday to take money from the Tip Fee Stabilization Fund to purchase 90 acres of land in Hampden to build the waste-to-energy plant planned in partnership with Fiberight, and to construct the interim road and add utilities.

The agreement includes plans to begin building a road to the plant site, and the utility lines underneath it, over the next 10 weeks. Developers hope to finish that work next spring.

Board members agreed to the sitework to do what they could to keep the project on-schedule.

The facility will take 12 to 14 months to build. It must be in operation on April 1, 2018, or the municipalities will have to ship their trash to a landfill in Norridgewock at $62 per ton, Lounder said.

“It’s tight, yeah, no question,” Lounder said of the deadline. “We have evaluated that risk carefully. We concluded that the risk is minimal and with that, we have elected to proceed.”

Fiberight CEO Craig Stuart-Paul and COO Steven Davey said that the appeal has delayed construction of the plant, which was due to start late this month or next, but won’t ultimately derail their project.

There isn’t enough trash in Maine for both PERC and Fiberight to survive, they said.

“My opinion is that PERC’s only chance for survival is for us to fail. Anything they can do to get us to not do the project they are going to do,” Davey said.

PERC spokesman Ted O’Meara challenged that assertion Friday.

“The burden of proof is on them to have the wherewithal to build this [proposed plant] and make this work. This really isn’t about PERC,” he said.

“They have had to constantly revise their story. PERC is here, built and paid for, and it has plans to work well into the future regardless of what they do,” O’Meara said. “This is really about Fiberight doing what they say they can do, and so far, they haven’t.”

BDN writer Nick Sambides Jr. contributed to this report.