City, Covanta halt deal for recycling center opposed by environmentalists

The city of Indianapolis and Covanta have agreed to suspend a contract to build a $45 million commingled trash-recycling center, Mayor Joe Hogsett announced Wednesday.

The single-stream center, which would have allowed residents to throw recyclables into their city garbage bin along with their trash, had been bitterly opposed by environmental groups and Democrats since the Republican former Mayor Greg Ballard inked the deal in August 2014.

At the heart of the dispute is whether the convenience of commingled recycling is worth abandoning hopes for a more robust curbside recycling program that could have cleanly recycled more types of materials without risk of contamination.

And, in what became a recurring criticism of Ballard's last years in office, opponents bristled at a process that they felt circumvented the sort of public input that might be expected on an agreement of this magnitude. The deal, which extended Covanta's existing contract to incinerate the city's trash, locked Indianapolis into a $112 million commitment through 2028. And, to the chagrin of environmentalists, it arguably includes disincentives to conservation. The city would have incurred a $4 million annual penalty if it implemented a competing recycling program in order to recycle more goods.

James Regan, a spokesman for Covanta, said the penalty was necessary for the company to make money in the tenuous market for recyclables. "We would’ve built a $45 million facility and we need recyclables to make that investment worth it." Another company, Infinitus Energy LLC, recently suspended operations at a similar single-stream plant in Alabama due to a lack of volume.

"What I see in the announcement today is that there’s an opportunity to renegotiate how we handle waste and recycling in our city," said Carey Hamilton, executive director of the Indiana Recycling Coalition. "And that must include removing any financial penalties to recycle."

Covanta has set a goal of recycling 80 to 90 percent of recyclable materials put in with regular trash pick-ups. But the contract only guarantees 18 percent recovery of recyclable materials, providing fuel to skeptics who doubt that the company can cleanly separate a high rate of recyclables from the garbage. Covanta also wouldn't recycle glass, because company officials say there isn't enough of a market for it.

But supporters argued that the benefits outweigh the drawbacks in a city that currently lacks a recycling culture. Ballard said it would increase the city’s recycling from a dismal, single-digit participation rate to 100 percent. Regan said that's one of the reasons it remains a good project.

"It was ironic at the beginning ... the Republicans who are not the 'recycling kind,' put together this process, and it was the Democrats who were the ones opposing this deal," said Council Minority Leader Mike McQuillen, a Republican.

"On a positive note, I will say that if they (the Hogsett administration) saw a place where they could negotiate an even better deal for the taxpayers of Indianapolis, I would be supportive," he said. "I would hope it was an opportunity to save some money, rather than a 'let’s dismantle the Ballard legacy' type situation."

Hogsett inherits a number of disputed contracts from the Ballard era that were opposed primarily by his fellow Democrats, but he also has pledged not to dismantle any major Ballard initiatives. The Covanta discussions, at least, indicate he may look to restructure them to either be more amenable to his party or to better sell them to the public.

Hogsett said he would re-evaluate the contract over the next 90 days.

“Leadership begins with listening, and I believe Indianapolis deserves a true community conversation before we move forward with any waste and recycling plan,” Hogsett said in a release. “I appreciate Covanta’s willingness to agree to this effort as we work toward a long-term solution that best serves our neighborhoods and our environment.”

But even as Hogsett alluded to the need for more public input, the city is continuing to defend the Ballard administration's handling of the contract in court.

Hogsett's announcement came hours before the Indiana Court of Appeals heard arguments in a lawsuit challenging the way the contract was approved. The complaint, brought by two paper companies and a concerned citizen, alleged that the city didn't follow proper public hearing requirements. A lower court ruled in the city's favor.

It remains unclear what, if any, changes the Hogsett administration might seek. Taylor Schaffer, Hogsett's spokeswoman, said the agreement with Covanta allows everyone to hit the pause button and later decide between a number of options: Move forward with the Ballard deal, cancel plans for the new center or negotiate changes to the deal to appease environmental groups.

Council Vice President Zach Adamson called it a "very good sign" that both sides agreed to revisit the contract.

"People who know recycling all came out and said 'wait, wait, let’s have a conversation about this,' " Adamson said. "Instead, (Ballard) hit the accelerator and locked us into this contract."

So what's in it for Covanta, when it had a deal in hand? The company's reputation, for one.

"Covanta continues to have a successful partnership with the city of Indianapolis that began 25-plus years ago, and the relationship with our partner remains paramount," Regan said in a release.

Call IndyStar reporter Brian Eason at (317) 444-6129. Follow him on Twitter: @brianeason.

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