BAR HARBOR — The towns of Bar Harbor and Mount Desert have joined a lawsuit against the principal owner of Penobscot Energy Recovery Company (PERC), which disposes of trash from 187 Maine communities by burning it to generate electricity.
The suit was filed in April 2014 against USA Energy Group by the Municipal Review Committee (MRC), the nonprofit corporation that represents the interests of the municipalities that have contracts with PERC.
PERC is a public-private partnership. The 86 original “equity charter” members of the MRC, which include all four Mount Desert Island towns, own 23 percent of PERC. The privately held USA Energy and PERC Holdings together own 77 percent.
The Municipal Review Committee alleges in its suit that USA Energy improperly used partnership money to pay the Augusta law firm Doyle & Nelson to lobby in support of a bill before the Maine Legislature in 2013-2014 that the MRC contends would have an adverse impact on its member cities and towns.
A 2013 report by Doyle & Nelson said the bill would “enhance the continued operation of the existing waste processing incineration facilities located in the state.” That includes the PERC facility in Orrington.
For several years, the committee has been exploring other options for waste disposal after the contracts that its member cities and towns have with PERC expire in 2018. Thus, the MRC objected to USA Energy’s support of the bill that would ensure the continued operation of existing waste disposal facilities and make it much more difficult to develop new ones.
The solid waste management bill did not pass, but USA Energy and its law firm have continued to press the issue with state legislators and the Department of Environmental Protection.
Bar Harbor Public Works Director Chip Reeves is president of the MRC board of directors. He said in a July 13 memo to Town Manager Cornell Knight that USA Energy did not consult with the MRC before hiring Doyle & Nelson to lobby for passage of the solid waste bill.
“USA Energy initially took the position that its support for [the bill] was for its own purposes, and that USA Energy would be responsible for the Doyle & Nelson fee,” Reeves said.
“Later, as the fee began to climb, USA Energy directed that money belonging to PERC be used to satisfy the costs of the … lobbying effort.”
Reeves said USA Energy has paid the law firm at least $1.2 million.
“The lobbying and spending practices continued through 2014 and continue unabated at the present time,” he said.
The damages sought in the lawsuit are “the amounts wrongfully allocated by USA Energy,” he said. “That money all belonged to the owners of PERC.”
He said that about 41 percent of the money spent on lobbying would have gone to the Municipal Review Committee’s equity charter members.
The MRC lawsuit against USA Energy has bounced around in the courts since being filed 15 months ago. It was initially filed in Hancock County Superior Court because the committee’s main office is in Ellsworth. USA Energy had the case moved to federal court, which decided it lacked jurisdiction and remanded it to Superior Court. Subsequently, the two parties agreed to transfer the suit to the Maine Business and Consumer Court.
Following a motion by USA Energy to dismiss the case, Reeves said the Business Court directed the MRC to file an amended complaint and gave it until Aug. 3 to do so. He said the court did not direct the committee to add an equity charter municipality as a party to the suit, but “it clearly signaled that such a course of action would be the prudent thing to do.”
“In the MRC’s view, there is enough at stake to justify the presence of an equity charter municipality, not only for the appearance of solidarity this would bring, but to avoid a negative outcome down the road,” Reeves said.
The Bar Harbor Town Council voted last week to become a party to the suit. The Mount Desert Board of Selectmen did the same in a special meeting Tuesday at the request of Public Works Director Tony Smith. Smith is a member of the MRC board.
Selectman Dennis Shubert said that, although the MRC brought the suit, it made sense for Mount Desert to officially become a party to it.
“This is our fight,” he said. “We have an organization [USA Energy] that is using our money against our best interest. They are trying to lobby state government to pass a law that would require us to give our trash to PERC.”
Reeves said that Southwest Harbor, Tremont and most of the other MRC equity charter municipalities have not been specifically asked to join the suit.
“We were just looking at getting communities with [MRC] board members to sign up, because the board members are going to be involved anyway,” he said.
Reeves said that, as parties to the suit, Bar Harbor and Mount Desert will not be liable for any additional expenses.
“All costs of the case, including lawyer fees, will continue to be borne by the MRC,” he said.
The suit is closely tied to the larger question of where the 187 MRC-member cities and towns will send their solid waste after their contracts with PERC expire in 2018.
The MRC board voted unanimously earlier this year to enter into a development agreement with a private company to build a plant in Hampden that would turn solid waste into biofuel.
Fiberight LLC, based in Maryland, has submitted permit applications to the town and the state for a $60 million, 90,000-square-foot facility. Fiberight uses a process that distills organic materials into ethanol or other bio-fuels. Most of the non-organic materials, such as metals and plastics, are separated out and sold for reprocessing.
Fiberight currently operates a demonstration facility in Virginia and is building a plant in Iowa.