Dumping ground (continued) BY ALEX IRVINE

The state also grew impatient with the AG’s office. Assistant AG Bill Laubenstein wrote to Kurt Adams on June 9 that although he acknowledged that "the negotiations with G-P have been difficult," he had several concerns with the shape of the RFP. The long-term fixed disposal capacity "may have an adverse impact on the interest of other operators in submitting a bid," Laubenstein wrote, and G-P’s insistence that the operator provide below-market fuel for the biomass boiler "may be onerous for many potential bidders" and might also "affect the bidding on price."

Laubenstein was right on every count — the final price of $26 million prompted Tom Sawyer to joke that if he’d known the sole bid was going to be that low, he’d have put a bid in himself — but the state doesn’t appear to have been interested in "other operators." The provisions of concern to the AG’s office existed because the RFP was designed along the existing lines of negotiation between Casella and Georgia-Pacific. Adams responded to Laubenstein that the state didn’t "find it inappropriate, as you suggest, that [G-P’s] commercial interest be considered in awarding an operator agreement," even though Georgia-Pacific was to have no remaining interest in the landfill. Adams also wrote that he was "surprised" and "very disappointed" by Laubenstein’s input, going on to chide Laubenstein that "GP notified us this morning that the timing and content of the comments have cooled their enthusiasm for the transaction," creating the possibility that "they will terminate negotiations."

Adams says now that his annoyance stemmed mostly from what he saw as the AG’s office interrupting the "deal flow." He rejects any suggestion that the state accommodated G-P, countering that Casella’s operating-rights offer went up after the RFP. Which is true, but it went up to exactly G-P’s asking price for the landfill, causing more raised eyebrows. Tom Sawyer calls it a "bailout by Casella."

Baldacci advisor Alan Stearns had similar frustrations with the AG’s office, writing in a September 21 email that "the schedule and completion of this deal is a priority. Counsel’s decision to raise concerns and proposed delayed schedule should be undertaken with clear guidance form decisionmakers closely involved in the deal" — in other words, by people in Baldacci’s office and lawyers for G-P and Casella.

Interviewed by phone last week, Ackerman, who put Casella under a consent decree when the company bought Biddeford’s KTI in 1999 because of their reputation for anti-competitive behavior, said that the RFP process "is sort of a long story that I don’t think I’m at liberty to talk to you about." Casella is now "out from under that consent decree," but Ackerman makes it clear that he doesn’t consider them any kind of corporate angel:

"Let me be careful where I go here, because complaints that come to this office are confidential. What my comment would be is that our concerns with regard to market power in solid-waste markets around the state continue unabated."

For his part, Bill Laubenstein acknowledges that "the only way the state could be comfortable entering into an agreement with an operator was if they could get the deal done with G-P. Those things sort of dictated what went into the RFP."

Were unofficial feelers put out to other possible operators before the RFP? "I don’t recall any specific approach," Laubenstein says, although it was "common knowledge in the industry that this was going on."

Adams says that it was Georgia-Pacific who first contacted Casella, and Old Town state representative Matt Dunlap, who sponsored the legislative resolve authorizing the transaction, says that it’s his understanding that Casella was interested in G-P’s landfill even before the company announced the closing. From this perspective, it begins to appear that Casella and Georgia-Pacific went into the deal with specific objectives, and took the state along — RFP or no RFP — because that was the best way to get it done.

"In 30 years," says Joanne Twomey, "Casella’s going to leave, G-P will be long gone — they’re going to leave anyway because of GATT and NAFTA — and my great-grandchildren will have to clean up another toxic dump because we didn’t have the vision to deal with this."

Privately, state officials appear to fear exactly that. Writing to Jack Cashman on December 18 about the competition between Georgia-Pacific’s Old Town and Plattsburgh, New York, mills, Alan Stearns mulls other opportunities to help the company, including one that is deliciously ironic: "Antitrust arguments against four controlling landowners?"

"Honestly," Stearns writes at the end of the message, "[Old Town] and [Plattsburgh] could both die."

Jack Cashman’s deputy Jeff Sosnaud echoes this concern on December 22, suggesting that any commitment from Georgia-Pacific to stay in Old Town "is probably ephemeral unless the Plattsburgh to Old Town consolidation occurs."

The state’s solution? Shovel G-P millions more if G-P promises to do that consolidation and invest $35 million in Old Town. The state offered an incentive package of $16.5 million in business-equipment tax reimbursements (which often result in bigger rebates than the business was originally paying in property taxes — a "double dip"), employment tax-increment financing, and municipal tax-increment financing.

G-P’s response? A coy email from Controller Rick Douglas, calling the state’s offer "a good collection of ‘singles and doubles’ . . . no home runs . . . and is a bit ‘light’ in terms of getting people excited . . ."

Interviewed by the Phoenix last week, Douglas could barely contain his satisfaction with the Casella arrangement. "It’s a dynamite deal for us," he said. Asked about the company’s commitment to Maine, he said, "I’m not trying to be flip, but whether somebody picks blueberries in Ellsworth or drives a truck in Madawaska or works in a mill in Old Town, there’s no such thing as a guaranteed job."

Looking forward, the best-case scenario is that the state has preserved 150 or so politically popular mill jobs in Old Town by brokering an arrangement for Casella to subsidize Georgia-Pacific to the tune of millions of dollars; the worst case is that the mill will close anyway and the state will have let go a resource potentially worth many more millions of dollars for nothing. In that case, state officials from Representative Matt Dunlap to AAG Laubenstein to the Planning Office’s George MacDonald all have the same response: At least we’ll still have the landfill. Dunlap adds that the state "made sure that the money from the sale stayed in Old Town and didn’t go to Atlanta," where G-P is headquartered.

Now one might expect that in a business transaction, all parties would derive something approximating an equivalent benefit. Looking at the Old Town landfill deal, however, it becomes clear almost immediately that one of the three parties has gotten the short end of the stick. Georgia-Pacific gets out from under their liability for the landfill, plus $26 million, plus continued use of the landfill at tipping fees approximately 80 percent below market, plus supplies of C&D fuel and green wood chip fuel at approximately 50 percent below market.

Casella gets to operate the landfill and reap many millions of dollars over the life of the OSA, plus they get a market for the C&D fuel they’re making at BioFuels in Lewiston, plus they get a stranglehold on long-term disposal capacity in the state of Maine.

The state of Maine gets to say, presumably with a straight face, that they have done everything in their power to, in the words of Governor Baldacci, "make Maine a competitive place to do business, so we can retain good paying jobs and set the stage for growth."

It might not be clear right off the bat how a deal in which one powerful and politically connected corporation subsidizes another while enriching itself and creating a near-monopoly makes Maine more competitive, but that’s politics. Like Senator Sawyer said, "We should never bemoan when a lion eats a baby in the jungle because that’s what lions do. If corporate America took advantage of the state, who’s to blame — the corporation or the state for allowing itself to be victimized?"

Alex Irvine can be reached at airvine@phx.com