This is the text of the comment letter sent to DEP by PPC on September 3, 2006 along with attachments. The attachments are PDF files and can be downloaded through these links or by clicking on the links within the letter itself.

Attachments:
1. RRLLC Permit Application Form GIF p.3
2. RRLLC Permit Application Table D-7
3. Centre County Planning Consistency Review, July 19, 2005
4. FHWA Policy: Additional Changes to the Interstate System
5. DEP Policy ID No. 012-0200-001, p.8
6. CCPCDO June 30, 2006 Letter
7. Results and Deficiencies
7a. Rush Township Host Municipality Agreement, p.9
8. MCWC Cooperation Agreement Draft
9. POA Study, Exhibit III-27
 

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September 3, 2006

David W. Garg, P.E., Permits Chief
Pennsylvania Department of Environmental Protection
Northcentral Regional Office
Waste Management Program
208 West Third Street, Street 101
Williamsport, PA 17701-6448

RE: Resource Recovery, LLC Permit Application

Dear Mr. Garg:

People Protecting Communities (PPC) identified several serious issues of concern upon our initial review of the Resource Recovery, LLC (RRLLC) permit application for a municipal waste landfill. Some of these issues should be addressed prior to the start of the Harms-Benefit review process for this application.

Please note the comments contained within this document will not be our only submission with regards to the review of the RRLLC permit application. PPC reserves the right to submit further public comment, testimony, criticisms, responses, make requests, initiate actions, and otherwise participate in this permitting review process. We do not want this document to be considered our only or final response.

In this correspondence we will address three issues of concern. They are:

1. Land use conflict
2. Exaggerated benefits claim
3. Request for 25-year permit
    

1. LAND USE CONFLICT

In Phase 1, Volume 1, of the RRLLC Permit Application dated April 2006, RRLLC states the proposed landfill project is consistent with the county comprehensive plan by answering "Yes" to question 4 in the Land Use Information section of Form GIF (Attachment 1). This is incorrect. The Centre County Planning and Community Development Office (CCPCDO) determined the proposed landfill and interchange is not consistent with Centre County's Comprehensive Plan. The CCPCDO's inconsistency determination is based on a formal review conducted in 2005 at the request of the Federal Highway Administration (FHWA). A copy of this document, entitled "Consistency Review with Local, Regional and County Land Use and Transportation Plans for the Rush Township Point of Access Study" dated July 19, 2005, is included for your reference (see Attachment 3).

This inconsistency determination not only creates a problem with regards to the permit application but also has significant bearing on the proposed haul route. This same inconsistency determination could prohibit the FHWA approval needed for the proposed I-80 Interchange designated as the haul route by RRLLC. Although Rush Township, on behalf of RRLLC, submitted a Point of Access study (POA) for the I-80 Interchange in 2004, they have been unable to have the POA forwarded to FHWA by the Pennsylvania Department of Transportation (PennDOT) to date because it is inconsistent with local land use and transportation plans. FHWA policy requires a proposal for a new interchange "considers and is consistent with local and regional land use and transportation plans." Please refer to Policy Item No. 5 in the FHWA document entitled "Additional Changes to the Interstate System" (Federal Register, 63(28), February 11, 1998; Attachment 4).

According to DEP Policy ID No. 012-0200-001, "Policy for Consideration of Local Comprehensive Plans and Zoning Ordinances in DEP's Review of Permits for Facilities and Infrastructure," page 8, Item B (Attachment 5), when a land use conflict occurs: "The DEP reviewer shall immediately notify the DEP Policy Office." The DEP has been notified by the CCPCDO in their June 30, 2006 letter (Attachment 6) that a land use conflict has occurred. In this letter the CCPCDO plainly states, "The Resource Recovery, LLC Landfill proposal is not consistent with County and local planning." (p. 1, para 4). This clearly indicates a land use conflict per DEP Policy ID No. 012-0200-001. We are requesting that the DEP reviewers notify the Policy Office about this problem so that further review of this application can be suspended until the issue is resolved.

In sum, there are serious, if not impossible, obstacles to overcome in order to resolve the land use conflict as defined in the results of the Centre County Consistency Review. Although RRLLC attempts to resolve the land use conflict with the recently developed Rush Township Comprehensive Plan, the CCPCDO identified this plan as inconsistent as well. In their June 30, 2006 letter, the CCPCDO proclaims, "Subsequently, Rush Township adopted a comprehensive plan in February that was reviewed by this office and identified as inconsistent with the County Comprehensive Plan." (p. 2, para. 1). Not only is this plan inconsistent with the County plan, PPC questions the process with which the Rush Township Comprehensive Plan was developed and adopted, and challenges its legitimacy. For a detailed discussion of these concerns, please see Attachment 7, Results and Deficiencies.
 

2. EXAGGERATED BENEFITS CLAIM

The financial benefits outlined by RRLLC in Table D-7 (Attachment 2) are not justified, documented nor defensible. This problem is fundamental and widespread throughout RRLLC's benefits claims portion of the permit application.

It is PPC's position that as the permit applicant and primary beneficiary, RRLLC must provide a serious, objective, and honest benefits assessment. It should be based on facts, evidence, and documentation that will withstand third-party scrutiny. This is RRLLC's responsibility and job as the applicant.

For this reason, we are directing our general criticisms to you at this early date for your consideration. We do not believe RRLLC's benefits analysis is acceptable by any reasonable standard and needs to be challenged now— It needs to be redone properly.

The main weaknesses referencing Table D-7 are as follows:

• RRLLC has no signed, enforceable delivery contracts with any credible, legitimate supplier of municipal wastes. The 5,000 tons per day (TPD) used by RRLLC to compute most all benefits, is a design criteria and planning figure, and has no factual business basis. The claimed Township fees, employee salaries, and taxes ranging from school districts to County to the Commonwealth depend on this waste tonnage (i.e., 5,000 TPD) being delivered to the RRLLC landfill for the next 28 years. No contracts equals no waste delivery which means no benefits generated. RRLLC must prove they can guarantee the benefits.
   
• RRLLC does not designate the origin of their claimed 5,000 TPD of waste. Wastes originating within Pennsylvania or redirected from other Pennsylvania landfill destinations or from other states, where already existing Pennsylvania landfills would be the most likely or obvious destination, are not claimable to the Commonwealth as benefits by RRLLC. These taxes, fees, operating costs, equipment, goods and services, in all cases, will be paid or are now being spent somewhere else in Pennsylvania. Benefits should only be allowed for contracts that bring new wastes in from out-of-state which are not, have not, and will not be otherwise landfilled in Pennsylvania. This eliminates up to $815 million of the $888 million claimed by RRLLC as benefits to Pennsylvania over the life of their landfill because nearly 90% of RRLLC's benefits claim total is to the Commonwealth of Pennsylvania. It is RRLLC's responsibility to isolate and prove there will be added benefits to Pennsylvania.
   
• RRLLC's claim of 5,000 TPD deliveries over the next 28 years is much too high because of existing landfill competition and rapidly rising fuel prices. Eastern Pennsylvania landfills, such as Waste Management's Tullytown, are operating at full capacity whereas the Shade Landfill, their Somerset, Pennsylvania facility, is operating at less than one-half capacity. Eastern U.S. cities (which RRLLC claims as their primary waste source) find the sum of the tipping plus transportation fee to be much less to Tullytown than to the Shade Landfill in Somerset.
   
  The proposed Resource Recovery Landfill will be much more like the Shade Landfill than Tullytown, and about equally distant from the eastern city sources. As fuel prices continue to rise, the transport costs portion on shipping waste to the Shade and the proposed Resource Recovery landfills will rapidly increase. These remote landfills will continue to do poorly, if not worse, while landfill capacity is available in eastern Pennsylvania. RRLLC's tipping fee used to compute their benefits ($60/ton) is much higher than the Shade Landfill ($30/ton). Both will have to reduce their tipping fees as fuel prices increase in order to be competitive. When RRLLC first proposed the landfill about two years ago fuel was $1.50 per gallon; now it is almost $3.00 per gallon. What happens when fuel reaches $5.00 per gallon? Will the remote landfills be able to compete or will the transport costs instead force more recycling and justify expansion of existing landfills or building of new landfills closer to the municipal waste sources?
   
  PPC can argue forcefully and logically for a much lower tipping rate (1,500 TPD) and fee ($30/ton) than RRLLC can argue for 5,000 TPD and $60/ton. At the lower tipping rate and fee, the host fees, earned income by new employees and many taxes, all the benefits claimed in Table D-7 could be reduced to one fourth or less. Also, high-end purchases by RRLLC such as the I-80 Interchange, become much less affordable and feasible. RRLLC needs to take a realistic and defensible, rather than sales-pitch approach, to making benefit projections for an industry that is such a high energy user, especially for remote landfills.
   
• RRLLC fails to properly debit the benefits they claim for waste disposal for Rush and Snow Shoe Townships. Free and bulky waste disposal for these townships causes a substantial financial loss to the Centre County Solid Waste Authority (CCSWA). The reduced tonnage to the CCSWA causes increased costs for other county municipalities as well as reduces the CCSWA bargaining power due to reduced volume. These costs need to be calculated and deducted from the $8,027,000 benefit claimed for waste disposal for Rush and Snow Shoe Townships for the 28-year life of the landfill.
   
• RRLLC fails to reduce the claimed tax benefits to the Philipsburg-Osceola School District and Centre County by the increased government budgets and services that they and their new resident employees and children will require. These include increased police, fire, social, government, and school personnel services and equipment. For example, both Rush and Snow Shoe Township now depend on State Police and conventionally trained volunteer fire departments and EMTs. Additional police, professionally trained firemen and EMTs, and specialized equipment will be needed to deal with added traffic, specialized fire hazards, and greatly increased industrial activity in a now largely passive recreational area. There is no mention of these costs which will be substantial over 28 years. These should be computed by RRLLC and subtracted from the benefits.
   
• RRLLC overestimates the real estate tax benefits. Several of PPC's realtor members have concluded the real estate taxes are exaggerated based on their knowledge of the local real estate market and tax rate computations using applicable millage rates and the Common Level Ratio value set by the State Tax Equalization Board. For example, to generate $1,000,000 in annual tax benefits to the Philipsburg-Osceola School District, the RRLLC landfill would have to have a current market value of $81,588,833. To put this market value into perspective, the Village of Penn State (a large, exclusive Penn State retirement apartment complex), the highest appraised property in Centre County, has a current market value of $37,913,496.
   
• RRLLC exaggerates the wage and wage tax benefits for the area and the jobs. The average annual salary benefit claimed by RRLLC is $36,200 for a total of $2,500,000 per year earned by 69 employees. RRLLC needs to compare this average salary and personnel numbers to those at other remote landfills and provide this information either as evidence or a correction. For example, the Shade Landfill in Somerset, Pennsylvania which currently receives about 70% of RRLLC's hoped for 5,000 TPD, has 11 employees, not 69.
   
• RRLLC's Cooperation Agreement with the Moshannon Creek Watershed Coalition (MCWC) is really a contract for expected and rendered public relations services and should not be considered as a benefit (Attachment 8). To get their "contribution," MCWC must publicly support the permitting, construction and operation of the landfill and must also "promptly and publicly repudiate" any opposition to the landfill by their membership, officers or directors. Failure to do so puts MCWC's funding in jeopardy and can make MCWC liable for any "damages caused by its failure to perform" and associated costs incurred. On page 3, Item 8 of this agreement RRLLC stipulates they may terminate the agreement at anytime by providing written notice of termination to MCWC. Inclusion of these contributions in Harms-Benefits analysis is legally questionable as this funding is not a contribution but more a payment for services rendered. This contract cannot be considered a long-term benefit because RRLLC can terminate the Cooperation Agreement at anytime.
   

In sum, RRLLC is a waste management company without a waste management track record. Nowhere have we found them to have been issued permits, or built or operated a landfill. As a result, we question their credibility and believability. Their benefits statement provides substance and evidence for this opinion. The people we consulted, including those in the waste industry, were amazed at the financial benefits claimed in Table D-7. You don't need to go any further than their summary where they claim a one billion dollar financial benefit and a 56:1 Benefits-to-Harms ratio. For those of us who have reviewed and written cost-benefits analyses for companies and agencies, we find RRLLC's benefits claim greatly exaggerated and indefensible. RRLLC should be required to re-perform the benefits analysis with realistic parameters.
 

3. REQUEST FOR 25-YEAR PERMIT

PPC is aware that under section 271.211(b) of the PA Municipal Waste Code (PMWC) the Department can grant a permit in excess of the standard 10-year fixed term if the applicant requests a longer term in order to obtain necessary financing for the facility. This section of the PMWC regulation seems to have been designed for incinerators because the high upfront investment required for this type facility is often secured by municipal bonds which require a long-term payback timeframe. To our knowledge, no company has ever applied for or been issued a 25-year permit for a landfill within the past 15 years. Landfills seem to be a very lucrative investment and a competent owner/operator should have no problem repaying a $73 million loan within the typical 10-year permit term limit. RRLLC projects to be operating at full capacity (5,000 TPD) within 5 years of receiving a permit so even if granted a 10-year permit they should generate a huge amount of income within the standard 10-year permit term. Basing our calculations on RRLLC's projection of 5,000 TPD at $60/ton and using a 310-day year for 5 years, RRLLC would generate a gross income of $460 million. This gross income is substantial and should be sufficient to repay a $73 million loan within a 10-year timeframe.

Another approach can be taken to RRLLC's financial needs argument. According to Exhibit III-27 of the Point of Access Study for the I-80/Gorton Road Interchange prepared by Rettew Associates, Inc. (Attachment 9) the Preliminary Construction Cost Estimate for the I-80 Interchange is $31,500,000. Therefore, almost half of RRLLC's financial need is for an item that is questionable in regards to being considered a facility cost, and is also questionable as to the possibility of being constructed since approval for the I-80 Interchange remains highly uncertain. Removing the proposed I-80 Interchange from the initial infrastructure costs equation reduces the financial needs considerably.

An additional point to consider is the fact that RRLLC is a new company. They have only been in existence since April 2004. Neither RRLLC nor its management has ever constructed or owned a landfill. They have no experience at operating a landfill, no compliance history, and no track record in the waste industry. It would seem unwise for the Department to set a precedent by granting a 25-year landfill permit for a new, inexperienced company.

In sum, given the fact that there have been no 25-year permits issued for landfills in the past 15 years, the company requesting an exception to the standard 10-year term is a new, inexperienced company, and the argument for financial need is weak and based in part on monies needed to finance an extremely tentative Interchange, the Department should reject RRLLC's request for a 25-year permit.
 

The comments contained in this letter and Attachment 7 were authored by Michele L. Barbin, Terri Burbidge, Ken Hall, JoAnn Gillette, Kathi Lewis, Harry Pionke, Michael Savage, and Jenn Shufran using their own and other PPC Application Review Committee members' input and analysis.

We would appreciate your careful consideration of these issues before starting the Harms-Benefits review phase of the Resource Recovery Landfill permit application.

Sincerely,

JoAnn Gillette, Coordinator
Application Review Committee
People Protecting Communities
P.O. Box 38
Clarence, PA 16829
joann.gillette@yahoo.com

Attachments:
1. RRLLC Permit Application Form GIF, p. 3
2. RRLLC Permit Application Table D-7
3. Centre County Planning Consistency Review, July 19, 2005
4. FHWA Policy, Additional Changes to the Interstate System
5. DEP Policy ID No. 012-0200-001, p. 8
6. CCPCDO June 30, 2006 Letter
7. Results and Deficiencies
7a. Rush Township Host Municipality Agreement, p. 9
8. MCWC Cooperation Agreement Draft
9. POA Study, Exhibit III-27

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