Probe of O.C. Landfill Fees Sought by Judge

An Orange County Superior Court judge has asked prosecutors to look into what he termed “troubling allegations” over the way the county has charged local trash haulers for use of its landfills.

In the course of a lawsuit against the county, South Coast Refuse Corp. of Irvine has alleged that the county charged some haulers lower fees for dumping construction and commercial trash--in violation of its own published policies.

The firm maintains that some of its competitors have been given financial breaks that could total millions of dollars, while the county charged South Coast and other companies at inflated rates. Those additional charges may, in turn, have been passed on to consumers.

But Assistant County Counsel Lon Watson said that while the county had once used differing standards to charge some trash haulers, “we are convinced that nobody’s done anything unlawful or corrupt or wrong in this case.”

The issue came up at a settlement conference held in the lawsuit earlier this month and drew sharp questioning from Superior Court Judge James P. Gray, who is handling the case, lawyers involved in the litigation said.

As a result, Gray suggested to Dist. Atty. Michael R. Capizzi in a Dec. 22 letter that the “troubling allegations” that have arisen in the case “may justify an inquiry either by your office or the Grand Jury.”

Gray said in the letter that he doubts county officials have broken any laws, but added that “since the allegations raise the concern that many hundreds of thousands of dollars could be at issue . . . I decided to refer them to you for whatever action your office deems to be appropriate.”

Capizzi has turned the matter over to Assistant Dist. Atty. Wallace J. Wade, in charge of special operations, officials said.

Wade was out of the office Monday. Deputy Dist. Atty. Guy R. Ormes, who works under him, said he had not yet seen the letter but added: “I can say we would certainly make an initial inquiry into something like that. . . . We would absolutely take an initial look at anything referred to us by a judge.”

Gray refused comment on the matter and declined to say how often he or other judges refer civil matters to criminal prosecutors for inquiry. But one legal official who asked not to be identified said: “That’s not something that’s normally done. It’s really pretty rare.”

Gray also sent a copy of his letter to Board of Supervisors Chairman Roger R. Stanton, but Stanton could not be reached for comment Monday, and an aide said the supervisor had not yet seen the judge’s letter.

South Coast Refuse, a relatively small, family-owned hauler, has been at odds with the county for the last dozen years, charging that county waste officials have effectively shut the firm out of some local markets through restrictive permit and contract-bidding procedures.

Company co-owner and operator Madeline Arakelian has become a regular at Board of Supervisors meetings, using the time reserved for public comment to complain about waste management policies. And the firm has brought several legal claims against the county over its practices.

In its lawsuit filed in February, South Coast Refuse centered its allegations on the way the county has charged haulers for dumping commercial and construction trash in the four county-operated landfills.

The county charges haulers a set rate--now $22.75--per ton of garbage brought to county landfills.

For years, the county used an inexact formula--known as the “K-factor”--to determine how much some large-volume haulers would be charged. The trash was not actually weighed, but rather the size and volume of the trash bins were used to estimate the weight of the load and the charges to be levied.

Last year, the county installed a more precise system, using scales to determine the actual weight of the individual loads of trash entering the county’s four landfills, totaling about 3 million tons a year.

But South Coast Refuse contends that even before the switch, the county allowed some haulers in 1990 and 1991 to use the scale system to determine their charges--resulting in smaller and more accurate weights and lower fees.

Arakelian of South Coast Refuse said that 20 local haulers were given this break in dumping commercial and construction trash, based on a May, 1991, memorandum she said she obtained from county landfill officials.

About 600 to 700 haulers regularly use the county’s landfills, but Integrated Waste Management Department spokeswoman Cymantha Atkinson said officials did not have a breakdown on how many of the haulers dump commercial or construction trash--the type in dispute in the South Coast lawsuit.

Nor could she discuss the case. “We’ve been told we have no comment on the K-factor issue . . . because it’s under litigation,” she said.

South Coast Refuse officials maintain that the “K-factor” system doubled their actual charges, and they claim the county owes them $281,000.

“Somebody goofed somewhere,” Arakelian said. “We were paying much more than these other companies were. The whole thing was a fraud.”

South Coast Refuse attorney Alan Bartz of Irvine estimated that from mid-1990 to mid-1991, the 20 firms charged by the scale method received discounts of millions of dollars over competitors--money that may now be owed to the county.

“It’s very disheartening as a taxpayer that the Board of Supervisors has not taken a more aggressive stance in going back and billing these other (firms) that got a discount or giving a rebate to people like my client,” he said.

During a Dec. 18 settlement conference in the South Coast Refuse lawsuit, Bartz said that Judge Gray appeared troubled by the issue and questioned Deputy County Counsel Nicholas S. Chrisos sharply about it.

Chrisos could not be reached for comment Monday. His boss, Watson, who supervises litigation in the county counsel’s office, said the county “tried to treat all haulers in fairness” and did not do anything wrong.

Watson said he was “dumbfounded” by Gray’s referral of the matter to the district attorney.

Based on his understanding of the conference from Chrisos, Watson said: “The judge just came on real strong, and all the sudden the county is being accused of bad things. . . . We tried to convince him to wait until after the Board of Supervisors came back into session” on Jan. 12 before referring the matter to prosecutors, “but he didn’t want to do that.”