April 18, 2008

Covanta, Florida: A Decade of Lawsuits.

Covanta, Florida: A Decade of Lawsuits. Recycling Undermined.

In Lake County, Florida, an incinerator contract with Covanta in 1991 has caused more than a decade of acrimony, lawsuits and political fallout.

In late 2000, Lake County, Florida commenced a lawsuit in Florida state court against Covanta-Lake, Inc. relating to the waste to energy facility operated by Covanta in Lake County, Florida.

In the lawsuit, the County sought to have its service agreement with Covanta-Lake declared void and in violation of the Florida Constitution.
  • That lawsuit was stayed by the commencement of the (Bankruptcy) Chapter 11 Cases.
  • Lake County subsequently filed a proof of claim seeking in excess of $80 million from Covanta-Lake and Covanta.

More at SEC website, 10-Q Filin
g: http://sec.edgar-online.com/2003/11/14/0000903423-03-000954/Section15.asp

Paying for pollution

Along with the environmental and health risks associated with incineration, taxpayers are forced to bear the considerable financial costs involved in building and operating Ogden facilities. The case of Lake County, Florida offers a dramatic example of the financial toll Ogden can exact from a community. The county's original 1984 incineration proposal called for General Electric (GE) to design, finance, build and operate a facility, at no cost to the community.

By the time construction began in 1990, however,
  • GE had pulled out of the deal,
  • Ogden was the builder, operator and owner of the incinerator and
  • construction costs had risen to $79 million.
  • In addition, the county is paying the plant's property taxes.

County Commissioner Richard Swartz says, "We went straight from a situation where Lake County had no financial obligation - zero, none - to a situation where Lake County ended up paying not only for the $79 million in construction costs, but to a total obligation for debt service and operating costs of nearly $300 million over the 22-year life of the Ogden contract."

Like many communities that have negotiated with Ogden, Lake County locked itself into a "put-or-pay" contract, which forces the county to provide the incinerator with a required tonnage of garbage, or else be charged a penalty. The county is also responsible for disposal of the incinerator ash.

  • Swartz says the Ogden contract has undermined the positive economic and environmental effects of the county's recycling program.

The city of Tulsa, Okla., had to divert its trash to a landfill in 2003 when Covanta briefly closed its incinerator there, citing financial problems.


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