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Incinerator facility sues Baltimore Co. for breach of contract

Baltimore County is facing a breach of contract lawsuit filed by a major waste disposal provider, an incinerator in the city, after negotiations over decreasing delivery volume allegedly broke down.

Wheelabrator Baltimore L.P. filed suit in Baltimore County Circuit Court Thursday, alleging it would sustain more than $32 million in damages if the county’s current and anticipated failure to meet minimum volume requirements continued. The county announced Nov. 30 that it would no longer deliver waste to Wheelabrator’s facility.

Since 1985, Wheelabrator has run a Baltimore incinerator that accepted a significant portion of the solid waste generated in the county under several contracts, one of which is at issue in the lawsuit, according to the complaint. Wheelabrator says it requires a minimum volume of waste to generate energy and steam at a profitable level, as well as certainty about how much waste it can expect the county to deliver.

In December 2011, the parties amended the contract to require that a guaranteed annual minimum amount of waste — 215,000 tons — be delivered in exchange for a reduction in price and a one-time, upfront payment, according to the complaint. The contract was also extended to Dec. 31, 2021, as part of the agreement.

In January 2018, Wheelabrator alleges, the county solicited bids for disposal of its residential waste, including waste it was committed to delivering to Wheelabrator, and later that year began reducing the volume delivered to the city incinerator. On Nov. 30, the county stopped delivering to Wheelabrator and on Jan. 29 it reiterated that it did not intend to deliver waste for the remaining contract term.

The county’s 2018 deliveries were 65,000 tons below its guaranteed annual total and the county anticipates delivering only 4,600 tons between Jan. 1 and June 30 of this year, according to the complaint. The plaintiffs say the county’s position is that it is not in breach of the agreement so long as it refunds a portion of the incentive payment.

In a statement last week, Wheelabrator said multiple attempts to resolve the dispute “through good-faith negotiations” were unsuccessful, including a cost reduction that the company said would have saved the county more than $14 million over the remaining contract term.

“We continue to believe it is in both parties’ interest to resolve this matter amicably,” the company said. “The damages the County will incur for failure to deliver the waste guaranteed to be delivered by it in the contract are more than $32 million. We are confident the court will find in our favor, unnecessarily costing Baltimore County taxpayers as much as $46 million in total contract savings and damages.”

A spokesman for the county declined to comment Monday.

The complaint alleges breach of contract and seeks a declaratory judgment that the county’s failure to meet annual tonnage requirements constitutes a breach even if a portion of the incentive payment is returned.

Wheelabrator is represented by Nicole Kozlowski, Brett Ingerman and Ellen Dew of DLA Piper LLP in Baltimore and Shannon R. Selden and Zachary Saltzman of Debevoise & Plimpton LLP in New York.

The case is Wheelabrator Baltimore L.P. v. Baltimore County, Maryland, C-03-CV-19-000926.

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