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After months of being told that the sale of NABORS landfill to Illinois-based Lakeshore Recycling Systems was a “done deal,” the Ozark Mountain Solid Waste District Board voted unanimously Tuesday afternoon to accept the company’s request to officially terminate the $500,000 sale contract over the scandal-ridden landfill.
The termination request, which was presented by district attorney, John Verkamp, came as a surprise to many of the board members during their monthly meeting in Harrison. Verkamp also notified the district’s board members that LRS’s earnest money had been returned to the company following their termination request.
Mountain Home Mayor Hillrey Adams, who has led the charge alongside Baxter County Judge Kevin Litty and the Friends of the Norfork & White Rivers to scuttle the deal, welcomed the news surrounding the termination of the agreement.
“We cleared a big hurdle today,” Adams said. “We’re not leaving until we sign it. I think this helps us a whole bunch right now.”
A never-ending tale of waste
The saga of the potential sale and reopening of the NABORS landfill has been a long one, spanning a full year from when it was first announced in Dec. 2022.
The original deal, which was set to be closed on Jan. 1 of this year, immediately met heavy resistance from the public, with both the City of Mountain Home and the Baxter County Quorum Court passing resolutions in opposition to the sale and reopening of the highly controversial landfill.
The Quorum Court would even take it a step further by passing an ordinance banning the opening and reopening of any landfill within the county limits.
Created in 1979 by RLH, the landfill immediately began to run into regulatory and environmental issues with state regulators.
Bob Cohee, a local realtor in Baxter County, formed the Citizens for Clean Water and began cataloging and monitoring the landfill area, while publicly arguing that it was built on KARST topography, which features multiple underground caves and streams.
These underground caves and streams drove concerns that the landfill would contaminate groundwater and the area lakes with leachate. Leachate is any liquid that, in the course of passing through matter, extracts soluble or suspended solids, or any other component of the material through which it has passed.
Leachate is a widely used term in the environmental sciences where it has the specific meaning of a liquid that has dissolved or entrained environmentally harmful substances that may then enter the environment. It is most commonly used in the context of landfilling of putrescible or industrial waste.
The group ultimately failed to block the creation of the landfill. But that didn’t matter much for RLH, which struggled with its ownership of the landfill as the years spanned on.
In 2003, OMSWD, which was then known as the Northwest Arkansas Regional Solid Waste District, began considering the purchase of NABORS Landfill from RLH, Inc. in Baxter County.
During this period, OMSWD’s day-to-day operations were handled by the Northwest Arkansas Economic Development District (NWAEDD), which consisted of county judges, mayors, and several private sector representatives.
NWAEDD encompassed the same six counties as OMSWD, as well as Benton, Washington, and Madison County.
After the waste district took an interest in NABORS Landfill, NWAEDD hired IESI Corporation as a consultant to analyze the potential purchase. Shortly before deciding to proceed with the purchase, IESI sent NWAEDD a warning letter stating that they could potentially find themselves in the exact predicament that would lead to the waste district filing for bankruptcy in 2011.
“The NWAEDD’s decision to acquire the RLH Landfill in Mountain Home, Arkansas, will expose your constituents to unnecessary financial risk by purchasing an asset that requires tremendous expertise to manage, bond, and fund…
… The District will pay $8 million for the landfill and collection company, pay all permitting costs, synthetic liner costs (District cost projections appear to be below current cost estimates) of the new cells, and also pay a contractor (potentially the current owner of the site) approximately $15 per ton to operate the landfill and construct new cells. This is an incredible financial windfall for the current owners of RLH, with financing and risk assumed by a publicly funded authority.
…. To our disappointment, the District is poised to move forward with this acquisition while most municipal authorities throughout the United States, including many in Arkansas, are doing just the opposite. It is an unfortunate decision for your constituents that will likely bring economic harm to them in the very near future.”
In 2005, despite all of the warnings, the district purchased the landfill for $12,340,000. At the time, the landfill was subject to multiple consent orders issued by ADEQ for violations. It was also filled past capacity in two of its three cells.
To fund the purchase, OMSWD issued revenue bonds through Crews & Associates, now a subsidiary of First Security Bank, which then marketed them to “sophisticated investors”. Purchasers included First Security Bank, Farmers & Merchant Bank of Magnolia, and clients of Crews & Associates.
The bond payments were managed for the bondholders by Bank OZK, who served as the bond trustee.
When marketing the bonds, Crews & Associates notified investors that the bonds could only be repaid from “revenues generated from the facility and the hauling company, the district has no taxing power.” Investors were told they should also “understand that investments pose a risk of loss of principal.”
The district was only able to cover its bond payments for five years before running into trouble.
In 2010, with mounting administrative orders from ADEQ over several violations, NABORS landfill and the investment the district hoped to cash in on began to falter. The district would stop making payments on its bonds the following year.
By 2012, all operations at NABORS had ceased.
In Feb. 2013, ADEQ filed suit against the district in Baxter County Circuit Court. The suit requested that OMSWD be compelled to comply with various environmental regulations and administrative orders. The district filed for bankruptcy in 2014.
The troubled landfill has been locked up in court ever since then.
The service fee scheme
In Oct. 2014, Bank OZK attorney Lance Miller contacted Geoffrey Treece about serving as the receiver when the district’s bondholders made their move to put their “service fee” plan into action.
Bank OZK would file a suit on behalf of bondholders on Dec. 2, 2014, requesting a receiver for OMSWD to be appointed. ADEQ was not named in the lawsuit, nor was it ever served with notice.
Despite this, ADEQ moved to intervene in Bank OZK’s suit before a receiver was appointed. In its motion to intervene, ADEQ sought no relief from OMSWD and specifically sought no reimbursement from the district for expenditures from the Landfill Post-Closure Trust Fund. Its motion was granted on May 8, 2015, and Geoffrey Treece was appointed receiver on May 15, 2015.
After Treece was appointed, ADEQ attorney Lorielle Gutting approached Treese about implementing a “service fee” charge to taxpayers to make up for the loss with the landfill’s closing and ADEQ’s costly takeover.
Treece would begin circulating drafts of the plan to Bank OZK attorneys, Michael Ptak and Lance Miller, as well as Butch Lomax of Crews & Associates. The handpicked receiver would then meet face-to-face with former ADEQ Director Becky Keogh, and ADEQ Managing Attorney Michael McAlister, in May of 2016.
Together, the two would begin pushing Treece to help recover every “thin dime” that ADEQ had spent on closing the landfill. By July 2016, the plan was in motion and an $18 service fee was applied to all property owners within the district’s limits, despite the district offering no services due to the closed landfill.
The money raised from the $18 tax was to be given to the district’s bondholders and ADEQ to the tune of $27 million over a 20-year period. The tax was immediately met with multiple lawsuits by district taxpayers, who, despite winning in their local circuit courts, found themselves being constantly overruled by Pulaski County Circuit Judge Tim Fox, who ruled in court that he, and he alone, had the right to rule over tax issues regarding the waste district.
Now, with a potential State Supreme Court battle on the horizon, Fox and his equal circuit court judges find themselves at a stalemate with each other as Fox’s rulings work their way through the appeal process.
At the same time, Bank OZK has found itself in contempt of court in its Caroll County case this past August, after refusing to return some $433,981 in collected tax money after Carroll County Circuit Court Judge Scott Jackson found the $18 tax to be unconstitutional.
The money had originally been a part of some $2.3 million in tax money that had been sitting in Fox’s court registry. Fox quietly released $2.3 million back to Bank OZK for distribution to NABORS bondholders prior to Jackson’s August ruling.
The appeal to Fox’s ruling over the $18 tax is expected to receive a ruling within a year or so.
HB1744 and LRS
While LRS didn’t have a hand in creating the mess surrounding the NABORS landfill, its plan to reopen the landfill caused quite a stir in Baxter County and Arkansas.
With the City of Mountain Home and the Baxter County Quorum Court openly rejecting their plans, the multi-million dollar waste company found itself with few allies it could turn to.
In Feb. representatives from the company joined the OMSWD board at the landfill in a public meeting in an attempt to win members of the public over. Prior to the meeting, Mountain Home Mayor Hillrey Adams convinced the waste district board in January to vote to suspend the sale of the landfill to LRS.
The meeting was a failure, with members of the Friends of the Norfork & White Rivers and LRS trading public jabs over the pending sale.
On one hand, LRS argued that their reopening of the site would make it safer thanks to their commitment to upgrade some of the landfill’s monitoring equipment. On the other, the Friends of the Norfork & White River argued that dumping thousands of tons of garbage into a previously closed landfill could not be considered a good thing for local residents who heavily rely on the county’s clean lakes and rivers for tourism income.
At the time, LRS was still conducting its due diligence on the landfill. Before the meeting, it had requested an additional water test with ADEQ that was still outstanding.
Rusty Janssen, regional SVP for Lakeshore Recycling Systems, told members of the public during that meeting that the sale would not go through if their testing determined that reopening the landfill would be unsafe for the region. The LRS official also claimed that the landfill had not been built on KARST topography, despite decades of scientific studies and lawsuits claiming otherwise.
District Board member Fred Woehl, who seemed eager to conclude the sale, said the district was legally required to sell the landfill thanks to an order from Judge Fox, before stating that the sale was a “done deal.”
Yet, the sale never happened, with LRS going silent while running over its due diligence window.
The “done deal” took another twist in April, with the Arkansas State Legislature passing HB1744, which would force LRS, or any other entity seeking to purchase a closed landfill in Arkansas, to reimburse the state to the tune of $13 million before being allowed to reopen the landfill after its purchase.
LRS’s CEO, Alan Handley, announced his departure from the company the next month in May, following a corporate restructuring.
All news of the deal went silent for much of the remaining year.
The next step for the landfill
With the sale of NABORS off the table, local activists now have some room to breathe as they seek to push the OMSWD to request that ADEQ issue a certificate of closure for the landfill.
While the landfill has been physically closed since 2012, its permit still remains active, leaving open the possibility that another company could come in and reopen the landfill.
Mayor Adams had planned on requesting that the district vote on the request during Tuesday’s meeting but decided to hold off after receiving pushback from the district’s attorney on the issue. Adams attempted the vote earlier in the year but failed to secure enough votes needed to pass it.
In the meeting, Verkamp said he was worried that the request could prompt ADEQ to completely turn over responsibility for the landfill back to the district, which currently does not have the funds needed to maintain the monitoring and maintenance of the closed landfill.
Sam Cooke of the Friends of the Norfork & White River pushed back against Verkamp’s claims stating that ADEQ was currently not complying with its own regulations surrounding landfill closures and that the district could apply to receive funds from the state’s Post-Closure Trust Fund under ADEQ Rule 22 to cover its costs.
Verkamp said going that route would take an option off the table and potentially put the district in financial jeopardy. The issue was sidelined for another meeting.
Mayor Adams said he would continue to work to get a certificate of closure from ADEQ for the landfill.