Casella Waste Systems Inc. – from bags to riches

It’s no surprise that many residents in west Old Town see Casella Waste Systems Inc. as an 800-pound gorilla. The sixth-largest solid waste hauler in the United States, with more than $400 million in annual revenue and operations spread from Maine to New York, it is by some measures a cage shaker.

But the Rutland, Vt.-based Casella fits well within the scope of big business in Maine. It employs 2,500 people nationwide, a few hundred more than Cianbro Corp. in Pittsfield, and not quite as many as Eastern Maine Medical Center. In Maine, Casella employs 430 workers.

Its revenue and earnings are a fraction of corporate neighbors such as MBNA Corp. and International Paper Co. And by industry standards, Casella is snack-sized alongside multibillion-dollar operators such as Waste Management Inc. of Houston and Allied Waste of Scottsdale, Ariz.

But when it comes to the trash business in Maine, Casella is clearly the big fish. The company stepped into the state’s waste stream in 1996, buying Sawyer Environmental Services in Bangor, which included the Sawyer Environmental Recovery Facility, now the Pine Tree Landfill, in Hampden.

The state Attorney General’s Office investigated Casella in 1999 to assess the competitive impact of its $340 million purchase of Guttenberg, N.J.-based KTI Inc. KTI’s 161 waste businesses and five landfills included a number of collection and recycling operations in Maine, as well as a majority interest in the Maine Energy Recovery Co. waste-to-energy plant in Biddeford and in Penobscot Energy Recovery Co. in Orrington.

A September 1999 consent order limited the scope of Casella’s containerized waste operations in nine northern and eastern counties of the state. It also set limits to ensure Casella could not turn its PERC interest to a competitive advantage. In 2001, Casella sold its interest in PERC to a Minnesota company but held onto its ownership of MERC in Biddeford.

The PERC sale fit into an industrywide sell-off of assets gathered during the vast consolidation through the 1990s. The consolidation came on the heels of more than a decade of new and redrafted federal, state and local regulations. Those regulations required an industry that had grown up around stuffing trash in unlined pits to reshape itself around lined and monitored landfills, separation of hazardous waste and more rigorous permitting.

Casella had its roots in a slightly more enlightened age. Founder Doug Casella had just graduated from high school in 1977 when he borrowed $10,000 to buy a single garbage truck to haul trash for ski areas near Rutland. Within a year, he bought a small established trash business. Older brother John came on board that same year, and the brothers drove trucks, ran trash balers and balanced books to launch the business. They also immediately started a company recycling operation, which now handles more than 1.5 million tons of recyclables each year. Total waste volume handled by the company is about 2.5 million tons per year.

The company bought up smaller haulers in and around Rutland, then expanded to other New England states. It had scaled up to $140 million in annual revenues by 1999, just as the industry began to totter.

In March of that year, just after Allied Waste bought Browning-Ferris Industries Inc. for $9.1 billion, what had been an extremely profitable run-up ended. Wall Street investors abandoned waste haulers as a group. Stock shares at Allied and Casella, which had just bought KTI, and others entered the U.S. recession at a fraction of their previous value.

Four years later, John Casella says the company has pared down to its core business: waste collection, recycling and disposal. It aims to double in size over the next three to five years while remaining within the Northeast. A crucial part of that strategy is the kind of public-private partnership being discussed for the West Old Town Landfill.

What’s Casella’s track record in local communities? It depends on whom you talk to.

In New York’s Clinton County, where Casella began operating its first public-private landfill in 1996, the county’s administrator, William Bingel, said the company has been an upstanding partner.

“We couldn’t be happier,” Bingel said. “[The landfill] was a large headache for us before we entered the deal, and Casella has been very solid.”

Representatives from Ontario County, New York, 300 miles to the south, entered a similar agreement with Casella in December last year. County Manager Geoffrey Astels said the county carefully investigated Casella and its history as an operator, including a visit to the Clinton County site, before choosing the company from a handful of competing bidders.

“[Casella] seemed to come up with some genuinely creative ideas on how to assist the local community and the county, other than just give us a lot of money,” Astles said, explaining concepts such as company-funded economic development zones around the landfill. “Other firms didn’t offer any of those kinds of ancillary benefits; they just offered money.”

In Biddeford, the reviews aren’t so rosy. Contention has revolved around the city’s downtown waste-to-energy recovery incinerator since Casella bought KTI in 1999. Biddeford officials have tried and failed to enact legislation limiting the plant’s emissions and now employ a full-time air toxics officer to document the airborne particulates created by the plant.

“I certainly wouldn’t consider Casella a good corporate citizen,” said James Grattelo, a Portland business owner and former mayor and city councilor in Biddeford. “They wait to get caught, then they argue that it’s not a problem. Only as a last resort and after constant, constant fighting will they even attempt to correct the problem.”

In Hampden, Town Manager Susan Lessard says the town largely has recovered from the failed two-year legal battle to prevent Casella from expanding that landfill. In 2000, the court approved the expansion, declaring the landfill critical to the state’s solid waste disposal infrastructure.

“The trust factor between the two entities at that point was pretty close to nonexistent,” she said.

But Lessard said the town realized its best option was to ensure the new permit contained as many protections for the community as possible.

Today, Lessard talks about Casella as a trainer would an 800-pound gorilla: something requiring relentless attention. She also says Casella showed genuine community interest in openly agreeing to disclosure and monitoring stipulations far beyond those required by state law.

“I get calls from all over, and I don’t mean from all over Maine, about the host community benefit agreement we have and how we got to this place,” she said. “Because the things included in it, 80 percent of them are not required by law to be included.”