Casella Waste Comments on Lower Commodity Prices

Casella Waste Systems Inc., Rutland, Vt., has reported preliminary year-over-year revenue improvements for the first two months of its second quarter of fiscal year 2009.

The regional solid waste and recycling company has also emphasized that its “risk management programs are substantially mitigating commodity pricing impacts,” according to a Casella news release.

Regarding that the company terms “negative pressures from softer commodity pricing,” Casella Waste Systems’ news release says, “The company’s commodity risk mitigation programs are effectively managing the majority of commodity pricing exposure during this volatile period. The company seeks to limit its exposure to fluctuating commodity prices through the use of hedging agreements, floor price contracts, and long-term supply contracts with customers.”

Casella’s news release states, “Average commodity pricing is currently down 24 percent from our first quarter of fiscal year 2009, and based on our present knowledge of the commodity markets we expect November commodity pricing to be down approximately 54 percent from our first quarter of fiscal year 2009. Using these commodity pricing projections, the company estimates a $3 to $5 million negative impact to operating income for the last two quarters of our fiscal year 2009.”

The Casella release also notes that the company “derives its recycling revenues from tipping or processing fees and from the sale of recyclable materials. Tipping fees, which make up approximately 10 percent of total recycling revenues, are generally stable and do not vary with commodity pricing. The company sells over 90 percent of its commodities to the domestic markets, reducing exposure to international market volatility and currencies. By selling primarily to the domestic markets, the company has built solid long-term relationships with domestic mills and manufacturers.”

In breaking down the company’s commodity stream, the company cites the risk mitigation factors that it has pursued:

Fiber (newspapers, cardboard, and mixed papers) makes up approximately 66 to 68 percent of the company’s commodity revenue stream. Approximately 50 percent of these materials are exposed to minimal commodity volatility because Casella purchases the materials based off an index price less a processing fee, and then resells the materials off the same index within a short period of time. In addition, the company is party to 29 commodity hedge contracts that manage pricing fluctuations on approximately 80 percent of its remaining OCC and ONP volumes. These contracts expire between October 2008 and December 2011. The company does not use commodity hedges for trading purposes, it says.

Aluminum makes up approximately 8 to 10 percent of the company’s commodity revenue stream. The company sells the majority of its aluminum under fixed price contracts, with current contracts extending through April 2009.

Plastics (PET and HDPE) make up approximately 20 percent of the company’s commodity revenue stream. The company currently sells the majority of its plastics at spot market rates. It has floor prices in place on most PET contracts and is working to add fixed price contracts to help manage plastic pricing fluctuations in the future. There are no hedging instruments available for recovered plastics because, historically, recovered plastics are not highly correlated with market indices for virgin plastic resin sales prices, according to Casella.

Ferrous metals make up approximately 3 to 4 percent of the company’s commodity revenue stream. The company currently sells the majority of its ferrous metals at spot market rates.

For information on WIH Resource Group, visit their website at www.wihresourcegroup.com or contact them at admin@wihrg.com

Source Casella Waste Systems 10-31-08 News Release.

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One comment on “Casella Waste Comments on Lower Commodity Prices

  1. bethlehemsurvivor says:

    A permit for a one million ton expansion of a Casella Waste Systems landfill was denied by the State of NH today because of ground water pollution. A twenty million dollar Municipal Bond approval was conditional on this Permit approval

    Casella has hit a new all time low on trading at 3.29, the previous low was 3.70. This is a huge drop, 10% just for today.

    December 12, 2008
    SENT VIA E-MAIL AS A .PDF AND VIA FIRST CLASS MAIL
    John Gay, E.I.
    North Country Environmental Services, Inc.
    3 Pitkin Court
    Montpelier, Vermont 05602
    Subject: North Country Environmental Services (NCES) Applications to Modify Permit # DES-SW-SP-03-002 for Stage IV Phase II of the NCES Landfill, Trudeau Road, Bethlehem, New Hampshire
    Dear Mr. Gay:
    In accordance with the provisions of Env-Sw 304.07 of the NH Administrative Rules for Solid Waste Management (Rules), the New Hampshire Department of Environmental Services (DES) has completed its review of the above referenced applications to modify permit #DES-SW-SP-03-002. The review included information submitted in the permit application documents cited as items 1. – 10. below, as well as information provided by abutters, town officials, and persons participating in the public hearing process that commenced on September 16, 2008 and closed on October 16, 2008. Both applications are hereby denied for reasons explained in this letter. In addition, DES’s response to public comment and hearing testimony is attached to this letter as Appendix A.
    I. Background
    On November 30, 2007 NCES submitted the following applications for permit modification:
    1. Type 1B permit modification application seeking approval to redesign portions of the Stage IV Phase II solid waste landfill located on Trudeau Road in Bethlehem1; and
    2. Type II permit modification application seeking approval to construct the modified facility.2

    The State of New Hampshire
    DEPARTMENT OF ENVIRONMENTAL SERVICES
    ____________
    Thomas S. Burack, Commissioner
    1 WMD document log #200700211.
    2 WMD document log #200700211.
    DES Web Site: http://www.des.nh.gov P.O. Box 95, 29 Hazen Drive, Concord, New Hampshire 03302-0095 Telephone: (603) 271-3644 Fax: (603) 271-2181 TDD Access: Relay NH 1-800-735-2964 Letter to John Gay December 12, 2008 Page 2 of 9

    Those modifications propose to develop 1,300,000 cubic yards of permitted Stage IV capacity within the boundaries of a 51 acre area comprised of a 10 acre lot and a 41 acre lot. A permit for Stage IV of the landfill was previously granted by DES in 2003. Under the provisions of that permit, construction of Stage IV was to have occurred, in part, on land outside of the 51 acre area. The combined effect of the Town of Bethlehem’s 1992 ordinances prohibiting construction or expansion of a private landfill, a 2001 New Hampshire Supreme Court decision that those ordinances do not apply to the 51 acre area, and a 2004 New Hampshire Supreme Court ruling on the extent to which local approvals are necessary for landfill expansion effectively limited expansion activities to within the 51 acre area.
    The pending applications propose to modify the plan that was approved by DES in 2003 by shifting the Stage IV development to the 51 acre area. Under the revised plan, NCES would construct the Stage IV expansion on top of the existing landfill. The additional waste would be contained utilizing near-vertical mechanically stabilized earth (MSE) berms.
    Subsequent to submitting the applications described in paragraphs 1-2 above, NCES submitted the following additional permit application information:
    3. On February 25, 2008, additional information in response to a DES letter dated February 8, 2008 requesting certain information to complete the application.3
    4. On March 11, 2008, additional information in response to a DES letter dated March 3, 2008 requesting certain information to complete the application.4
    5. On April 7, 2008, additional information in response to a DES letter dated March 12, 2008 requesting certain information to complete the application.5
    6. On May 16, 2008, the “NCES Stage IV/Phase II Fill Area Characterization.”6
    By letter dated May 30, 2008, DES notified NCES that the application was complete and that DES was commencing a technical review of the proposal. The documents constituting the complete application were those enumerated above as items 1.- 6. Letter to John Gay December 12, 2008 Page 3 of 9

    On July 15, 2008, DES held a public information meeting in Bethlehem, providing an opportunity for interested persons to obtain information from both the applicant and DES concerning the applications, the application process, and the facility.
    By letter dated September 10, 2008, DES notified NCES that it had completed its technical review and determined there were certain issues of concern that warranted additional attention, including design drawing and specification inconsistencies, MSE berm design concerns, and groundwater contamination conditions indicating NCES’s mismanagement of the leachate collection system and/or a release through the existing landfill liner system.
    On September 16, 2008, DES held a public hearing in Bethlehem to receive public testimony on the application, and left the public hearing record open through October 16, 2008 for receipt of written testimony.
    In response to DES’s September 10, 2008 letter, NCES submitted the following additional information to supplement the application information previously submitted:
    7. A letter report dated September 29, 20087, providing information in response to items of concern listed as A, B and C in DES’s September 10, 2008 letter.
    8. A letter dated October 13, 2008 addressing groundwater contamination concerns listed under item D of DES’s September 10, 2008 letter, including as attachments a Liner Leakage Analysis dated October 14, 2008, prepared by CMA Engineers, Inc. and a Hydrogeologic Analysis dated October 17, 2008, prepared by Sanborn, Head & Associates, Inc.8
    9. Additional information to address item D of the September 10, 2008 letter, identified as “Analysis of Site Hydrogeologic Conditions Relative to Potential Leachate Leakage – Monitoring Well MW-402U/L Area” dated October 24, 2008, prepared by Sanborn, Head & Associates, Inc.9
    10. A letter dated November 7, 2008 with attached plans, providing a revised MSE berm and liner design between stations 0+00 to 12+25 and between 28+00 and 36+14.10 Letter to John Gay December 12, 2008 Page 4 of 9

    II. Reasons for Denial
    DES denies the requested permit modifications on the basis of two issues. First, for the reasons stated below, DES concludes that the MSE berm and liner design does not comply with the requirements of Env-Sw 1103.01(a), Env-Sw 1103.01(b) and Env-Sw 1004.01. Second, for the reasons stated below, DES can not conclude at this time that the proposed facility can comply with Env-Sw 1002.02(d). Both of these issues are discussed in detail below.

    B. Groundwater Contamination
    Beginning in 1996, DES required that NCES apply a tracer compound, sodium bromide, to the NCES Landfill, Stage II and Stage III. The NCES Landfill has been constructed, in part, on top of the footprint of the former unlined landfill (waste removal and relocation into Stage I of the lined landfill began in December 1991 and was completed in October 1993). The bromide tracer was required to be added to the landfill operations for the Stage II and Stage III lined portion of the landfill to aid in differentiation of groundwater quality impacts associated with the previous releases from the former unlined landfill from a failure of the existing double HDPE geomembrane leachate liner collection system. Because sodium bromide was not added to the unlined landfill, detection of bromide concentrations above background values in any monitoring wells downgradient of the landfill would indicate that there were liner leak issues.
    Volatile organic compounds or elevated concentrations of bromide have been detected in groundwater monitoring wells located downgradient from the landfill, including wells MW-402U, MW-403L, B-913M, B-919U, B-921M, B-921U and B-304UR. The detection of the VOC contaminants and elevated concentrations of bromide indicate that the operation of the existing landfill has resulted in releases of regulated contaminants in violation of condition #9 of Groundwater Management and Release Detection Permit #GWP-198704033-B-005 (Groundwater Permit), which was issued to the applicant in November 2007.
    The key issues of concern relative to these detections of VOCs and elevated concentrations of bromide were outlined in Section D of DES’s September 10, 2008 technical review letter. In that letter, DES requested that additional information be provided to further evaluate the source of the VOCs and the elevated concentrations of bromide detected in downgradient monitoring wells. In response to this request for additional information, the applicant provided the documents listed as application information items 8. and 9. above.
    These documents provide a detailed hydrogeological and engineering analysis of the situation to support NCES’s contention that the landfill liner system is not leaking and is not the source of the elevated concentrations of bromide and VOCs detected in several monitoring wells. In these documents, NCES concludes that the releases are not due to a leaking liner system and are most likely due to known leachate spills and an accidental discharge of leachate to stormwater systems during 2006 construction events. Letter to John Gay December 12, 2008 Page 8 of 9
    Because NCES’s hydrogeological and engineering analysis relies on a number of assumptions regarding aquifer properties, construction history, and the current condition of the existing landfill liner system that are not verified by independent field or environmental data, the analysis is not conclusive. DES does not agree that the analysis demonstrates that the liner system is not leaking. Until NCES completes the on-going corrective action plan and produces data to demonstrate that the work has resulted in achieving DES-approved performance standards for groundwater remediation, DES concludes that the landfill liner system is or may be a contributing factor to the contamination in the monitoring wells.
    There is uncertainty as to whether the VOCs and elevated concentrations of bromide detected in the downgradient wells are the result of NCES’s own mismanagement of the leachate collection system. By virtue of the past spills and releases from the leachate collection system (the occurrence of which NCES has acknowledged), NCES has raised doubt as to the source of the VOCs and elevated concentrations of bromide. The bromide tracer’s function is to detect the presence of leaks in the liner system. To the extent NCES is now unable to satisfy DES that the landfill liner is not the source of the groundwater contamination, it is due in large measure to NCES’s own operational failure at the facility.
    Env-Sw 1002.02(d) provides in pertinent part that “[f]acilities and practices shall not contaminate surface or groundwater in violation of…the conditions of any permit issued by DES…” Based upon the groundwater quality conditions, the analysis and data presented, and the status of the corrective action plan implementation, DES concludes that there have been releases that have in fact contaminated groundwater in violation of the conditions of the facility’s Groundwater Management and Release Detection Permit. Because the contamination detected at the site is consistent with what would be expected with a release from the liner system and because NCES has not demonstrated to the satisfaction of DES that there is no ongoing release from the facility, DES can not conclude at this time that the proposed facility can comply with Env-Sw 1002.02(d). Therefore, in accordance with Env-Sw 305.03(b)(2), DES can not approve the application.
    Until the remedial actions are fully implemented and soil and groundwater performance data are collected, DES will not have sufficient information to determine the source of the contaminated groundwater and to conclude that it has been remediated.
    In summary, and for the reasons outlined in this letter, DES hereby denies the requested applications for permit modification. Letter to John Gay December 12, 2008 Page 9 of 9
    III. Continuing Groundwater Management Obligations
    Irrespective of this permit decision, DES notes that the applicant remains responsible to continue and complete the ongoing remedial work as required by Groundwater Management and Release Detection Permit #GWP-198704033-B-005. Correspondence regarding the proposed groundwater performance standards, as contained in NCES’s October 13, 2008 response to the September 10, 2008 DES Comment Letter, will be issued by DES under separate cover.
    IV. Appeal
    In accordance with RSA 149-M:8 and Env-Sw 305.03(a)(3), this decision issued by DES may be appealed to the Waste Management Council as provided under RSA 21-O:9, V and Env-WMC 200.
    If you have any questions regarding this decision, please contact me at the letterhead address, via telephone at (603) 271-1997, or via e-mail at michael.wimsatt@des.nh.gov.
    Sincerely yours,
    Michael J. Wimsatt, P.G., Director
    Waste Management Division

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