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Appeals court reverses Indy recycling contract decision

February 24, 2016

The Indiana Court of Appeals has reversed an April 2015 court decision that favored of the city of Indianapolis and the Board of Public Works regarding a controversial contract with Covanta to create a trash and recycling center.

The appeals court on Wednesday remanded the case to Marion Superior Court, instructing the court to grant summary judgment in favor of the plaintiffs, Graphic Packaging International, Rock-Tenn Converting Co. and Cathy Weinmann.

The plaintiffs filed a complaint in September 2014  that accused the city of not engaging in a public bidding process when changes were made in 2014 to the agreement between Covanta and then-Mayor Greg Ballard’s administration regarding waste disposal. The amendment to the original contract allowed Covanta to create and operate an advanced materials recovery center to sort recyclables from city trash.

Indianapolis Mayor Joe Hogsett announced earlier this month—the same day the Court of Appeals heard arguments in the case—that the contract was suspended for 90 days to reassess plans for the facility.

In granting summary judgment for the city in the original decision, the trial court said the plaintiffs did not have standing to sue and if they did, the Waste Disposal Statute governing the transaction did not require public bidding. Also, the court determined the contract did not exceed 40 years in contravention of the Waste Disposal Statute.

The Court of Appeals, however, said the plaintiffs did have a right to action and standing under the public standing doctrine.

The city argued that persons invoking public standing must have more than a generalized interest, but the court disagreed, citing a 2003 Indiana Supreme Court case involving the Indiana Department of Transportation.

The Court of Appeals also said the city violated Indiana Code 36-9-31-4 when it did not enter into public bidding, request for proposals and public notice/comment/hearing provisions. The city claimed its changes to the agreement with Covanta were governed under Indiana Code 36-9-31-3, which has much more general language and does not require a public bidding process.

Section 3 is for waste disposal contracts, but not design, construction and operation of a facility, which is included under Section 4. The appeals court said Section 4 is more applicable because the changes required Covanta to build a new facility. Also, the court said Section 4’s more specific language takes precedence over Section 3’s general language. Finally, the city said the changes to the agreement were covered under Section 3 because the city was merely granting Covanta permission as a landlord to build its own facility, but the appeals court said that didn’t matter, because any type of building at all is covered under Section 4.

In addition, the appeals court found the contract violates Indiana Code 36-9-31-3(5), which provides that contracts or agreements relating to the collection, disposal or recovery of byproducts from waste may not exceed 40 years. The city’s waste disposal agreement with Covanta and its predecessor was for a total period of 43 years.
 

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