ELLSWORTH — The Municipal Review Committee (MRC) does not expect Coastal Resources of Maine, which operates the waste and recycling plant in Hampden, to be able to secure financing and get the plant back up and running within a 30–day window.
The MRC is casting a “wide net” in search of another operator, board members said in a virtual town hall meeting last Wednesday morning, but doesn’t plan on terminating its contracts at the end of that 30-day period.
“We believe this plant is the solution to that and we’re doing everything we can to make it work, but that said, we will not let this go on forever,” said Karen Fussell, MRC board president.
The plant shut down on May 28 after a $14.7–million loan that was anticipated fell through days before closing. Coastal Resources also faces a lawsuit from NAES Corp., a company that staffs the plant, alleging it is owed $1.2 million.
“We’re anticipating a resolution, or at least an understanding of whether there is a path to success with the plant, within the next 30 to 60 days,” said Fussell.
Fussell said the board is “not interested in propping up” Coastal Resources and that the committee’s “sole focus is to get a new operator into the plant.”
“We lack confidence in the ability of the partners of the Coastal arrangement to manage the plant adequately,” said Fussell.
“There may be places for some of the current players involved,” said Mike Carroll, executive director of the MRC. “But when it comes to running this plant the MRC is definitely looking for boots on the ground, local management.”
A confluence of events led to Coastal Resources’ troubles, said Fussell.
Construction and operating costs were more than anticipated when plans were drawn up in 2015. An eight-month delay due in part to a lawsuit filed by the Penobscot Energy Recovery Co. (PERC), said Fussell, also contributed to the cost, as did changes that had to be made to the plant when roughly one-third of the MRC’s former members left the organization.
“Fiberight did not manage the construction optimally,” said Fussell, needing to change general contractors midstream, and then the worldwide collapse of recycling markets added to the plant’s troubles. There was also the “extreme length of time” it took to get permits from the Maine Department of Environmental Protection, said Fussell, to sell briquettes and pulp.
“Without the permit, the products could not be sold in-state, so what they anticipated to be a revenue stream turned out to be a not-insubstantial cost,” said Fussell.
Finally, just before the COVID-19 pandemic hit, Coastal Resources had been closing in on a long-term contract with a company in Canada for the sale of pulp when the border was closed and the company’s lab shut down.
A $14.7–million loan fell through just days before closing, and the plant “just did not have the cash to continue operating,” said Fussell, suspending operations on May 28.
George Aronson, technical advisor to the MRC, said the board can only speculate on why the bondholders decided not to close on the loan.
The pandemic and its effect on global markets could have been one reason, said Aronson. “The bondholders were looking at the facility and were very concerned about ongoing cash losses.”
They appreciated plans that had been put in place to make the plant more profitable, said Aronson, “but ultimately lacked confidence in the ability of the proposers to implement those plans.”
The committee can terminate its contract with Coastal if it doesn’t get the plant running within 30 days, said Fussell, but the board has no plans to do so.
“We’re anticipating taking no action,” said Fussell, in part because the MRC’s legal counsel has advised that “It would not be wise to terminate those contracts because those contracts are actually a key element of the value of the facility.”
“But that doesn’t prevent us from at some point acting on that default,” said Fussell.
The MRC is in compliance with DEP rules and regulations, said Fussell, even though the waste is being landfilled, which is the lowest priority on the list of the state’s waste management options.
At this point, because the MRC is not in breach of contract with its member towns, those who want to leave the MRC would pay a penalty for doing so and would likely make it even more difficult for the plant to find financing and get up and running.
“The value of the organization, the cooperative,” said Catherine Conlow, a member of the board’s finance committee, “wouldn’t exist without the strength of the 115 municipalities.”
“I know the temptation is to say this isn’t working — recycling across the board isn’t working,” said Conlow, but “Our strength remains as a cooperative looking for a regional solution.”