The Honorable Sharon Bulova
Fairfax County Board of Supervisors
12000 Government Center Pkwy., Suite 530
Fairfax, VA 22035
I enclose herein 2 articles from a waste industry trade publication (Waste Dive), and the Lexington, KY Herald-Leader, which report that ESI has agreed to stop hauling Municipal Solid Waste (MSW), from New York and New Jersey to Kentucky by the end of 2016. This will be 2 years before ESI/Furnace Associates closes the Lorton Landfill.
These articles reinforce my concerns about the risks to Fairfax County associated with the Lorton Landfill expressed in my last letter to you regarding ESI. The primary risk is that the parent company now has a potentially large regulatory and legal exposure as it deals with problems at its other major revenue stream in Kentucky. If one assumes that the Kentucky landfill was a profitable operation, the loss of this revenue stream will be a heavy blow to the company.
I have every reason to believe that the Lorton Landfill/Furnace Associates is quite profitable and capable of fulfilling its obligations related to the closure in 2018. However, in the public hearings last year, the company represented that it would build out the improvements required by the development conditions, but they did not intend to open the property for public access, based on an alleged breach of an agreement by the County. This was a big red flag that lacking adequate surety, the company could have a change of heart about fulfilling its development conditions as the scheduled closure draws near.
I believe that the management of Furnace Associates currently intends to meet its obligations, but as we saw in the financial markets this week, things can change quickly. The parent company is not obligated to the County on the proffers and development conditions, nor does it have an obligation to keep liquid assets inside Furnace Associates. So the County needs to make sure it is well secured with escrows and bonds to ensure completion of their work. Once Furnace Associates stops taking in CDD waste, the property becomes a liability to the company because there will be no more revenue.
The closure of a landfill is a unique project unlike any commercial or residential development which the County sees every day. Therefore, I would recommend that the County ask DPWES and its Solid Waste Division to seek pricing from qualified earthwork and pipe contractors for the scope of work required to cap and close the landfill, install the proper storm water and methane collection systems, and complete the proffered improvements. There would be a consulting fee expense associated with this pricing exercise, but the risk to the County is that the escrows and bonds could prove inadequate, and then the Public could be left holding the bag. And that could be a really big bag of liabilities.
Finally, I am concerned that a future ploy by ESI could be that they would come to the County and claim that they need a permit extension because there is unused capacity or “Air Space” and they need to top out the landfill in order to fully cover the costs of closure. So once again, they could try to threaten the County and the Lorton Community with a big liability in order to keep the landfill open. Bonding and escrows are the County’s best defense to discourage such a ploy.