Dump Plan for Irwindale Trash Plant, Panel Urges

A committee of the state Energy Commission Wednesday accused Pacific Waste Management Corp. of “misuse” of the regulatory process and recommended that the full commission terminate the company’s application to build a waste-to-energy plant in Irwindale.

In a strongly worded 100-page order prepared by hearing officer Garret Shean and signed by Barbara Crowley, vice chairman of the Energy Commission, the committee accused the company of withholding from the commission information that air pollution credits needed to build the plant were unavailable.

The Siting Committee said the application should be dismissed on two grounds: failure to file sufficient pollution credits and conduct “that is a serious misuse of the commission’s regulatory process.”

Shean said the five-member Energy Commission will hold a hearing on the recommendation, probably in four to six weeks.

Plant Foe Hails Order

Terry O. Kelly, an attorney for Miller Brewing Co., which has been fighting the proposed waste-to-energy plant for two years, hailed the committee’s order.

“I think this effectively terminates the project,” Kelly said.

But Mark White, senior vice president of Pacific Waste, said the company will pursue the issue before the full commission and take the matter to court if necessary.

He conceded, however, that the ruling is a major setback. “It’s serious,” he said. “It certainly deflated my sails.”

Meanwhile, the law firm of Richards, Watson and Gershon, which has represented Pacific Waste in the application process, disclosed that it had resigned as the company’s counsel on Feb. 28. White said that no other counsel has been hired and that Pacific Waste hopes to rehire Richards, Watson and Gershon once some disagreements have been resolved. He refused to describe the disagreements.

Major Stumbling Block

Finding ways to offset pollution has been the major stumbling block for Pacific Waste ever since it applied to the Energy Commission in October, 1984, for a permit to build a plant that would burn trash to create electrical energy.

Federal and state regulations allow construction of plants that emit large amounts of certain pollutants only if the developer obtains credits showing that pollution elsewhere has been reduced. These so-called offset credits can be obtained from plants that have shut down polluting equipment or installed more pollution control devices than legally required.

The committee noted that from the beginning Pacific Waste said it could obtain sufficient offset credits.

But, the committee said, a letter to Pacific Waste from the company’s engineering adviser, Woodward-Clyde Consultants, on Feb. 25, 1985, reported that “sufficient nitrogen dioxide and carbon monoxide offsets do not appear to be available at this time.”

Second Document Found

The committee said another document found in Pacific Waste’s files during discovery proceedings undertaken by Miller Brewing Co. made a similar point. The undated and unsigned Pacific Waste document said that because of the inability to obtain offsets, the company “will have to approach the offset problem by downsizing the plant to less than 50 megawatts, or with a technical solution” to cut back on pollutants.

Last April, the Energy Commission suspended Pacific Waste’s application to build the plant because of the company’s failure to produce the required offset credits. In September, Pacific Waste amended its application, reducing the size of the plant. The company, which had planned to build a plant that would burn 3,000 tons of trash a day, said it would construct the plant in stages, with an initial capacity of 2,250 tons. The one-fourth reduction in capacity reduced the required offset credits by one-fourth.

In its amended application, Pacific Waste also claimed that it had found a way to reduce the amount of nitrogen dioxide the trash incinerator would produce, further lowering the offset requirements.

But the South Coast Air Quality Management District, which analyzed the offset credits submitted by Pacific Waste, reported in January that the company was still short of credits, even with the reduced plant capacity and accepting the claim of reduced nitrogen dioxide emissions.

The air quality district’s report led to a hearing in February by the Siting Committee of the Energy Commission to determine whether the application should be terminated. Pacific Waste challenged the district’s analysis at the hearing, but the committee, in its ruling Wednesday, said “the weight of the evidence supports the district’s analysis.”

The committee noted that one of the issues raised by Pacific Waste was the amount of emission credit available from a glass company that had shut down. But the committee charged that Pacific Waste knowingly overstated the offsets available from the glass company.

The committee said Pacific Waste’s misrepresentation was “a serious misuse of the commission’s regulatory process, and is sufficient itself to terminate the proceedings.”

The committee said the Woodward-Clyde letter and the Pacific Waste internal document found by Miller Brewing Co. “appear to establish that the applicant knew, at the time it was urging the commission to accept its application, that its consultants had determined that sufficient offsets for (nitrogen dioxides and carbon monoxide) were not available.

‘Cannot Condone Failure’

“All applicants before the commission have a duty of full and truthful disclosure of information on all matters submitted for review,” the committee said. “Accurate and trustworthy information is essential to the commission’s decision-making process. The commission cannot condone the failure to disclose material information.

“Under these circumstances, the committee believes that the applicant’s failure to provide a complete offset package is linked to the applicant’s failure to disclose to the commission, prior to acceptance, the offset status information obtained from its consultants.

“Termination of the proceedings seems an appropriate remedy since the applicant apparently had information prior to the beginning of the proceedings that its search for complete offsets would be futile and has presented no cause to believe the situation is different today.”

The committee noted that Miller, the city of Duarte and the Citizens Assn. for a Safe Environment have all alleged that Pacific Waste never intended to build the Irwindale plant, but only to profit through a financing arrangement.

$13-Million Bond Profit

An agency of the City of Irwindale sold $395 million worth of bonds to finance construction of the trash incinerator in 1984 under an arrangement that has given Pacific Waste access to interest earned by reinvestment of the bond proceeds. This interest, called arbitrage, has amounted to about $13 million.

John McGrain, president of Pacific Waste’s parent company, Conversion Industries, said in a recent interview that about $5 million of the arbitrage went for bond issue expenses and the remainder has paid for legal fees, engineering studies and other work involved in applying for permits to build the plant.

The committee said it has looked into the claim that Pacific Waste has tried to keep the Irwindale project alive simply to enrich itself from the bond financing and to raise the value of shares in Conversion Industries. But, the committee said, determining the “veracity (of these accusations) is beyond the scope of these proceedings.”

Pacific Waste officials have denied the accusations.

White also denied the committee’s assertion that Pacific Waste has misled the commission on the offset issue.

80% of Offsets Found

White said the consulting firm of Woodward-Clyde, whose letter about the unavailability of carbon monoxide and nitrogen dioxide offsets was cited by the committee, left the project in its early stages. And, he said, Pacific Waste has been able to find about 80% of the nitrogen dioxide and carbon monoxide offset required for the smaller version of the plant, based on the air quality district’s analysis.

White said Pacific Waste is continuing to seek additional offsets and will urge the Energy Commission to keep the application alive.

The committee recommendation would terminate the application “without prejudice,” meaning that Pacific Waste could refile. But Pacific Waste would lose the offset credits obtained from plants that are already closed.

The committee said it considered and rejected Pacific Waste’s argument that it would be better to continue the suspension than to terminate the proceedings.

The committee said Pacific Waste has had ample opportunity to file the required offsets.

“Secondly and independently,” it said, “the committee believes that it is contrary to the public interest and the integrity of the commission’s regulatory process to continue the proceeding. The commission cannot maintain the appearance of a fair and evenhanded process for the society it serves if conduct such as the applicant’s . . . is rewarded by giving it an undeserved extension of time.”

The committee said an order will be issued later setting a time and place for a hearing on the committee recommendation.

Committee of One

The committee until recently consisted of Crowley and Arturo Gandara, but Gandara recently was replaced on the Energy Commission and no successor to the committee post was named. Therefore, the committee at the time of Wednesday’s decision consisted only of Crowley, with Shean acting as the hearing officer.

Rep. David Dreier (R-Covina), who has strongly fought the Irwindale project, hailed the committee’s recommendation and sent a letter to the commission Wednesday urging that it hold its hearing on the recommendation in Irwindale.

Dreier said the commission would benefit from seeing the strong community opposition to the project.