Lake County dodging a legal bullet on trash disposal?

The Lake County Solid Waste Management District could avoid potential litigation — but invite other legal problems — if the trash-to-ethanol contract dies between now and April 2.

A canceled county contract with Powers Energy of America likely would void any potential lawsuit by waste-hauling company Republic Services against the solid waste district for alleged anti-trust and interstate commerce violations.

It also could remove the possibility that Don Bogner, a jilted former business partner of Earl Powers, the trash-to-ethanol firm's owner, would seek a legal stake in the deal.

But if the waste district votes to cancel the contract at the end of a 60-day period — which some district board members have said is likely — the possibility also exists for Powers to file a lawsuit of his own.

The solid waste district board began the 60-day clock earlier this month when it voted to find Powers in breach of contract for failing to secure financing, land and permits for the trash-to-ethanol facility to be built in south Lake County.

Board members expressed frustration that Powers has yet to deliver on the facility he contracted with the district to build more than three years ago.

It also remains to be seen if the district plans to sue Powers for failing to perform on the contract as a way to recoup more than $100,000 in legal fees and studies associated with the project.

The waste district is no stranger to litigation surrounding garbage contracts.

All of the current controversy follows a time when the county paid $9 million to settle a legal dispute involving the failed Hickory Hills Landfill back in the 1990s.

Dodging a bullet?

Proponents of the plan to build the trash-to-ethanol plant in the town of Schneider had said it would consolidate the county's trash collection and processing at a cost savings to residents while converting carbon-based garbage into the commodity ethanol.

But in spring 2010, an official with Republic Services said the company, which owns the Newton County landfill where much of Lake's trash ends up, would consider legal action, citing anti-trust laws pertaining to the control of garbage flow.

An attorney for the National Solid Wastes Management Association echoed those sentiments in 2010, saying the organization would consider a lawsuit if the county were to direct garbage to the future Powers facility.

In a 1993 ruling, the U.S. Supreme Court ruled the town of Clarkstown, N.Y., violated laws governing interstate commerce by adopting an ordinance that routed all municipal trash to a private processing facility within town limits, thus depriving out-of-state trash processors access to the local market.

Jim Metros, a Republic Services official based in Crown Point, acknowledged this month that should the Lake solid waste district cancel Powers' contract, his firm would have little reason to consider suing.

"Our goal is to work with communities, not sue them," said Metros, himself a former solid waste district board chairman. "There are laws in place that speak to flow control, and they're in place for a reason. We have to follow the law, and we expect others to do so as well."

Republic was among three firms that bid for the 2008 contract to consolidate the county's trash collections. It lost out to Powers Energy.

Jilted business partner

Ohio businessman Don Bogner said he has been closely watching Lake County's trash-to-ethanol developments as well.

Bogner was Powers' business partner when the two put together the bid proposal that won over the Lake County Solid Waste Management District board in 2007 and 2008.

But before the final contract was signed, Powers severed ties with Bogner and ditched the moniker of the company that was named in the original bid proposal, Genahol-Powers 1 LLC.

Powers has claimed he discovered during the bidding process that Bogner's technology for converting trash into ethanol didn't work. Powers has said he sought and purchased a license to legitimate technology, renamed his company Powers Energy and went on to ink the contract with the waste district.

But Bogner told The Times two weeks ago he still believes he has a stake in any contract with the waste district because he was a partner to the original bid. Waste district meeting minutes show Bogner made presentations to the board on behalf of Genahol-Powers during the bidding process.

Bogner has told The Times he would consider legal action to capture his share of profits gained by any future trash-to-ethanol facility.

And last week, he questioned the validity of the existing contract with Powers Energy, claiming his name should have been included in the final paperwork.

"They awarded the contract to a non-bidder," Bogner said. "Genahol-Powers should have been awarded the contract, and it wasn't."

That all could be moot if the waste district votes to cancel the Powers contract.

Legal history

If Powers fails to show proof of financing, a land deal and other progress toward constructing the plant within a 60-day period, the waste district board has said it reserves the right to cancel the Powers contract. But it remains to be seen if the board will do so.

It also is unknown whether Powers would try to sue the waste district board if it cancels the contract.

Powers has not responded to repeated requests from The Times for comment.

Solid waste district lawyer Clifford Duggan acknowledged last week several possible legal scenarios exist pertaining to the trash-to-ethanol issue. But he said he did not want to speculate on "what-if scenarios."

"Rather than considering what-if, I would prefer to wait and consider what-is," Duggan said.

Duggan also said the waste district was careful to include safeguards in the 2008 contract, given past litigation the district faced pertaining to an unrelated earlier garbage contract.

"Prior litigation goes into the crafting of current documents," Duggan said.

In the mid-1990s, the district began reviewing developers to establish a landfill on a 560-acre parcel of farmland in Eagle Creek Township.

The district signed a contract in 1996 with USA Waste Services-Hickory Hills Inc. Two years later, the district rescinded its contract, amid allegations from Hickory Hills that some county leaders had tried to scuttle the project.

The developer sued the district and county officials including current waste district Executive Director Jeffrey Langbehn, Lake County Commissioner Gerry Scheub and then-Crown Point Mayor Metros, for breach of contract, seeking $50 million in damages.

The district settled the suit three years later for $9 million.

Metros previously told The Times the district is "in the same boat again" with the trash-to-ethanol contract, leaving the county vulnerable to potential legal problems.