Disposal of Residual Solid Waste

CITY CLERK

Clause embodied in Report No. 16 of the Policy and Finance Committee, as adopted by the Council of the City of Toronto at its meeting held on December 4, 5 and 6, 2001.

(City Council on December 4, 5 and 6, 2001, amended this Clause by adding thereto following:

“It is further recommended that the Commissioner of Works and Emergency Services, in preparing reports on alternative waste disposal technologies, be requested to canvass Members of Council, in order to determine in which areas of the City there would be political support for incineration or thermal technology applications.”)

The Policy and Finance Committee recommends the adoption of the Recommendation of the Works Committee embodied in the following communication (November 14, 2001) from the City Clerk:

Recommendations:

The Works Committee recommends the adoption of the confidential report (November 9, 2001) from the Commissioner of Works and Emergency Services, subject to:

(1) amending Recommendation No. (2) by adding after the words “including the finalization of trailer residual value amounts to the satisfaction of the Commissioner of Works and Emergency Services” the words “and terms clearly limiting the City’s guarantee for delivery of all its waste under the agreement to 100,000 tonnes annually subject only to the payment of appropriate residual trailer and truck amounts”, so that such Recommendation reads as follows:

“(2) Recommendation No. (1) be subject to the City of Toronto entering into an amending agreement with the Republic Contractors based on the optional amending provisions proposed by the Republic Contractors and the provisions cited in the body of this report, including the finalization of trailer residual value amounts to the satisfaction of the Commissioner of Works and Emergency Services and terms clearly limiting the City’s guarantee for delivery of all its waste under the agreement to 100,000 tonnes annually subject only to the payment of appropriate residual trailer and truck amounts, and on terms and conditions satisfactory to the Commissioner and in a form satisfactory to the City Solicitor”;

and Toronto City Council 2 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

(2) amending Recommendation No. (3)(c)(iii) by adding after the words “failing agreement” the words “by December 31, 2001”, so that such Recommendation reads as follows:

“(iii) failing agreement by December 31, 2001, as set out in Recommendation No. 3(c)(ii), provide notice of early contract termination to all parties under the Arbor Hills Contract, prior to the expiry of the term on December 31, 2002, so as to ensure to the extent possible the transfer of trailers under the contract to the City of Toronto on January 1, 2003, upon payment of the required trailer residual value amounts.”

The Works Committee reports, for the information of the Policy and Finance Committee and Council, having:

(1) referred the following motion by Councillor Di Giorgio to the Commissioner of Works and Emergency Services for a report thereon directly to Council for its meeting on December 4, 2001:

“That the City of Toronto explore negotiating the following amendments to the waste disposal contract with the Republic Contractors that will apply to any increased tonnage shipped to Michigan:

(i) that new and emerging technologies include thermal processing of waste;

(ii) that an unforeseen cost increase not be deemed to be an unavoidable circumstance; and

(iii) that foreseeable or predictable law changes in Michigan not be deemed to be an unavoidable circumstance”; and

(2) requested that the City Solicitor and the Commissioner of Works and Emergency Services report directly to Council on what would be required to ensure that the risk provisions in the contract with the Republic Contractors are similar to the risk provisions that Council adopted for the Rail Cycle North proposal.

The Works Committee further reports that those Recommendations contained in the confidential report dated November 9, 2001, from the Commissioner of Works and Emergency Services, and listed herein, were made public on the advice of Legal Services, such report to remain confidential having regard that the subject matter relates to the security of the property of the municipality.

Background:

The Works Committee at its meeting on November 14, 2001, had before it a confidential report (November 9, 2001) from the Commissioner of Works and Emergency Services respecting the disposal of the City’s residual solid waste, which recommended, in part, that: Toronto City Council 3 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

(1) in accordance with the City of Toronto’s current waste disposal contract with Republic Services Inc., Republic Services of Canada Inc., Republic Services of Michigan I, LLC, doing business as Carleton Farms, and Wilson Logistics Inc. (collectively, the “Republic Contractors), the City include within the contract (“the Republic Contract”) the City’s residual municipal solid waste for the period commencing January 1, 2003, and ending December 31, 2005, which inclusion will have the effect of redirecting at an alternate price the 450,000 tonnes per year of residual solid waste, currently received and disposed of at the Arbor Hills Landfill after expiry of that disposal contract’s current term on December 31, 2002;

(2) Recommendation No. (1) be subject to the City of Toronto entering into an amending agreement with the Republic Contractors based on the optional amending provisions proposed by the Republic Contractors and the provisions cited in the body of this report, including the finalization of trailer residual value amounts to the satisfaction of the Commissioner of Works and Emergency Services, and on terms and conditions satisfactory to the Commissioner and in a form satisfactory to the City Solicitor:

(3) subject to the adoption of Recommendations Nos. (1) and (2), that:

(a) the City of Toronto retain the legal firm of Torys, to a maximum of $30,000.00, after municipal GST rebate, to assist in the preparation of an amending agreement to the Republic Contract (funds are available in the approved 2001 Capital Budget under Program C-SW168).

(b) the City of Toronto provide notice to the Republic Contractors under the notice provisions of the Republic Contract, to provide for the receipt and disposal at the Carleton Farms Landfill of the additional residual municipal solid waste following the closure of the Keele Valley Landfill Site based on tonnage estimates provided by the Commissioner of Works and Emergency Services and in a form satisfactory to the City Solicitor; and

(i) enter into the amending agreement with the Republic Contractors as set out in Recommendation No. (2);

(ii) enter into an agreement with Canadian Waste Services Inc. and any other relevant contractual parties under the City’s contract for the transportation and disposal of the City’s waste at the Arbor Hills Landfill (the “Arbor Hills Contract”), for the transfer of ownership to the City of Toronto of the transport trailers currently owned by Canadian Waste Services Inc. and used in transport of residual solid waste under that contract on terms and conditions satisfactory to the Commissioner of Works and Emergency Services and consistent with the provisions of this report, including the amount to be paid for transfer, and in a form satisfactory to the City Solicitor; and Toronto City Council 4 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

(iii) failing agreement as set out in Recommendation No. 3(c)(ii), provide notice of early contract termination to all parties under the Arbor Hills Contract, prior to the expiry of the term on December 31, 2002, so as to ensure to the extent possible the transfer of trailers under the contract to the City of Toronto on January 1, 2003, upon payment of the required trailer residual value amounts.

The Works Committee also had before it a report (November 9, 2001) from the Commissioner of Works and Emergency Services providing information regarding the City of Toronto’s requirement, despite the introduction of new diversion programs as recommended by the City’s Waste Diversion Task Force 2010, to secure additional disposal capacity to address the closure of the City of Toronto’s remaining landfill, the Keele Valley Landfill Site, located in the City of Vaughan, which is scheduled to take place in December 2002; and recommending that this report be received for information.

The Works Committee also had before it a report (November 1, 2001) from the Commissioner of Works and Emergency Services providing information regarding the potential of engaging rail haul as an alternative to the current truck haul of residual solid waste to landfills in the State of Michigan under contract to the City of Toronto; advising that Onyx North America Corp. are not supplying a rail haul option to their Arbor Hills Landfill, and that both of the integrated rail haul options developed by Republic Services Inc. would require long-term put-or-pay contracts and increased costs; further advising that staff are therefore not recommending that the City engage in rail haul to Michigan landfills, and maintain truck haul as the preferred method of transportation in order to maintain greater flexibility and not hinder the City’s ability to reach its diversion targets; also advising in response to a motion tabled by Councillor Frank Di Giorgio regarding the export of residual solid waste to Michigan that the engagement of outside legal review is not recommended at this time, and submitting related reports including an opinion from the legal firm of Torys; noting that staff concur with Councillor Di Giorgio that the current situation does pose risks to the City, and that the most productive means to address the risks is an increased capability on the part of the City to divert waste from disposal by achieving the diversion program set by the Waste Diversion Task Force 2010; and recommending that this report be received for information.

The Works Committee also had before it a report (November 14, 2001) from the City Solicitor providing additional comments to the Committee on the motion by Councillor Di Giorgio as set out in the report dated November 1, 2001, from the Commissioner of Works and Emergency Services; advising that, if requested, a legal opinion could be obtained updating and commenting on the status of current legislation, but that insofar as the motion refers to an outside legal opinion determining the contractual risks and cost implications of shipping waste to Michigan, the risks have already been the subject of prior reports, and further, that a legal opinion would not address all the matters addressed in the motion, in particular the cost implications of the shipment of waste; and recommending that this report be received for information.

The Works Committee also had before it the following communications:

(i) (September 11, 2001) from Governor John Engler, State of Michigan, expressing concern with respect to any increase in Toronto’s waste exports to the Republic Carleton Farms Toronto City Council 5 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

landfill site in Michigan; and requesting the opportunity to appear before the Committee with respect to the City of Toronto’s options for the disposal of municipal solid waste;

(ii) (November 9, 2001) from Mr. Elmer Parraghi, Supervisor, Sumpter Township, Michigan, in support of the Carleton Farms Landfill continuing to receive solid waste from Toronto; and advising that the community host agreement that is in place between Sumpter Township and the Carleton Farms Landfill guarantees that the facility will be operated within full compliance of all applicable laws and regulations;

(iii) (November 13, 2001) from The Honourable Dick Posthumus, Lieutenant Governor, State of Michigan, expressing concerns about an increase in the export of the City’s solid waste to Michigan; and outlining options for the City to dispose of its waste; and

(iv) communications from the following in opposition to any reconsideration of the Adams Mine site:

- (November 13, 2001) from Ms. Kathie Robinson, Kirkland Lake; - (November 13, 2001) from Emery McEwen, Kirkland Lake; - (November 13, 2001) from Mrs. Joyce McEwen, Kirkland Lake; and - (November 13, 2001) from Ms. Barbara Bukowski, Kirkland Lake.

The following persons appeared before the Works Committee in connection with the foregoing matter:

- Mr. William A. Wichers, Honigman Miller Schwartz and Cohn, Detroit, Michigan, and Mr. Bruce Davis, Executive Vice President, Urban Intelligence Inc., and submitted a communication with respect to municipal solid waste exportation/importation;

- Mayor Bill Enouy, Town of Kirkland Lake, and submitted a communication forwarding a legal opinion with respect to the use of the Adams Mine site;

- Mr. Gordon E. McGuinty, President, Notre Development Corporation, and submitted material with respect thereto;

- Mr. Don Ashley, representing Mr. Glenn King, Chairperson, Ontario Legislative Board, United Transportation Union, and submitted material with respect thereto;

- Mr. Dave Rettell, General Manager, Onyx Arbor Hills Landfill, and Mr. Angelo Caramagno, Area Manager; and

- Mr. Robert Webb, Vice-President, Republic Services of Canada Inc.; Mr. Jim Wilson, Wilson Logistics; and Mr. Matt Neely, Carleton Farms Landfill.

______Toronto City Council 6 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

(Report dated November 9, 2001, addressed to the Works Committee from the Commissioner of Works and Emergency Services)

Purpose:

The purpose of this report is to provide information regarding the City of Toronto’s requirement, despite the introduction of new diversion programs as recommended by the City’s Waste Diversion Task Force 2010, to secure additional disposal capacity to address the closure of the City of Toronto’s remaining landfill, the Keele Valley Landfill Site, located in the City of Vaughan, which is scheduled to take place in December 2002.

Financial Implications and Impact Statement:

There are no direct financial implications arising from the adoption of this report for information purposes.

Recommendation:

It is recommended that this report be received for information.

Background:

City Council at its meeting of March 6, 7, and 8, 2001, adopted with amendment Recommendation No. 3 of Clause No. 1 of Report No. 2 of the Works Committee. The adopted recommendation reads as follows:

“The Commissioner of Works and Emergency Services be requested to examine the CP Rail Expressway option for the shipment of all or part of the City’s waste, in consultation with neighbouring communities, the consultation process established, the contractors, Republic Services and Wilson Logistics, and CP Rail, and conduct a similar examination of a potential rail haul option with the City’s other supplier of landfill in Michigan, Superior Arbor Hills Landfill, Inc.”

A status report dated June 27, 2001, regarding the potential for rail haul of residual solid waste to Michigan, was submitted to the Works Committee by the Commissioner of Works and Emergency Services. That report advised that in response to the direction of City Council, Solid Waste Management Services staff had held initial meetings with representatives of the City’s two contracted suppliers of landfill disposal capacity: Republic Services Inc. (“Republic”), operating the Carleton Farms Landfill and their consortium partner Wilson Logistics Inc. (“Wilson”), which provides haulage; and Onyx North America Corp. (“Onyx”), operating the Superior Arbor Hills Landfill.

The status report also advised that in order to develop rail haul options with negotiated financial components it is necessary to estimate the tonnage requiring transport and disposal and contract duration. This step is required whether a rail haul option is adopted or not, because several key Toronto City Council 7 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18 factors or events are dove-tailing at the end of 2002 and require attention to ensure that the City has the residual solid waste disposal capacity that it requires. The key factors are as follows:

(i) the City’s Keele Valley Landfill is scheduled to close in December 2002.

(ii) the City’s contract with Onyx Waste Services expires on December 31, 2002. Onyx currently disposes of 450,000 tonnes of solid waste from the City per year at its Arbor Hills Landfill. A potential exists to renew this contract; and

(iii) the City’s contract with Republic provides a current commitment of 285,000 tonnes per year (for 2001 and 2002). In 2003, 2004, and 2005 the City is committed to ship all solid waste received by the private sector to Republic (with a guaranteed minimum of 100,000 tonnes per year). The City’s contract with Republic will require adjustment if the management of municipal solid waste is awarded to Republic.

Two additional related reports have been submitted to the November 14, 2001 meeting of Works Committee. The first report, dated November 1, 2001, under the subject heading “Transportation and Disposal of Residual Solid Waste – Rail Alternative”, provides information regarding the potential of engaging rail haul as an alternative to the current truck haul of residual solid waste to landfills in the State of Michigan under contract to the City.

A second report has been submitted to the Works Committee In Camera, because it contains confidential financial details of proposals submitted by Onyx and Republic. This report is designed to provide a summary of non-confidential information presented in the In Camera report.

Comments:

Despite moves to aggressively reduce residual solid waste under the City’s Waste Diversion Task Force 2010, the City of Toronto will still require external assistance to address its residual disposal needs until full implementation of the diversion program, that has as its goal 100 percent diversion from landfill by 2010.

In order to address the City’s residual disposal needs following the closure of the Keele Valley Landfill the City needs to adjust its existing disposal contracts to accommodate the waste that is currently disposed at that facility.

Onyx, which operates the Arbor Hills Landfill, has submitted a proposal to the City that would retain its current level of business with the City (450,000 tonnes per year). Republic has submitted a competing proposal for the 450,000 tonnes currently received and disposed by Onyx and is prepared to receive for disposal residual solid waste currently disposed at the Keele Valley Landfill at its Carleton Farms Landfill, after its closure. Republic has been previously contracted to receive and dispose all private sector waste received by the City at its waste transfer stations after the closure of the Keele Valley Landfill. Toronto City Council 8 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

We have provided a table in Appendix A to this report that summarises how the City’s residual solid waste is managed in 2001 and the estimated tonnages that will require disposal in 2003, after the closure of Keele Valley.

Diversion:

Our planning process for required residual disposal capacity is predicated on the provision of flexibility within our contracts to enable the City to re-direct waste from disposal to recycling and composting facilities, without or with a minimum, of financial penalty.

The City’s Waste Diversion Task Force 2010 has set a goal of 100 percent diversion from landfill by 2010. The diversion targets are:

- 30 percent by 2003;

- 60 percent by 2006; and

- 100 percent by 2010 .

Currently, the City has achieved a 27 percent residential diversion rate, which translates into 252,000 tonnes of material being diverted from landfill every year.

The next major program in the City’s diversion program is the introduction of a source separated organics (“SSO”) program, beginning in mid-2002. The SSO program will divert approximately 78,000 tonnes of organic-based kitchen and other household wastes, such as tissues and diapers, from landfill per year after complete implementation, scheduled for 2005. The overall impact of the Task Force’s recommendations by the end of 2005, including the SSO program, will result in the diversion of an additional 145,000 tonnes of solid waste from landfill, resulting in a municipal diversion rate of 43 percent.

The collected material will be processed through an anaerobic digestion facility that is currently under construction at the City’s Dufferin Yard. The process will produce compost suitable as a soil amendment and biogas that will be used to produce hydro-electricity. In addition, the City is pursuing additional waste reduction programs.

The closure of the Keele Valley Landfill will be a major financial impact on the City, resulting in a 300 percent plus increase in disposal costs. However, moving to marketplace costs for our disposal needs provides a strong financial stimulus for new and emerging diversion technologies that currently cannot compete on a cost basis with disposal.

Following the closure of the Keele Valley Landfill we have estimated that the City will receive approximately 400,000 tonnes a year of private sector waste at our transfer stations for disposal. If the City did not receive that waste it would be impacted by a revenue loss of approximately $6 million dollars per year. The loss of that revenue would impact the City’s ability to aggressively pursue its diversion objectives. Further, it cannot be concluded the waste would remain in Ontario. Because of very competitive pricing in the U.S. for landfill disposal we Toronto City Council 9 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18 forecast that approximately 90 percent of that waste would be hauled by truck and disposed in the U.S.

Truck Traffic:

On average, the City’s solid waste disposal contractors require 85 trucks per business day to haul the current annual volume of solid waste for disposal at Michigan-based landfills. Following the closure of Keele Valley, we have estimated that the total volume of residual solid waste will be 1.25 million tonnes a year, which will require an additional 52 trucks on average per business day to haul waste to Michigan, for a total of 137 trucks per business day.

Of the 137 trucks per day, 95 are for municipal material and 42 trucks are for the haulage of private waste. As our diversion programs are implemented the number of trucks will steadily be reduced. The attached chart in Appendix B shows the reduction in the number of trucks that will be taken off the road as diversion objectives are achieved.

In terms of the daily truck traffic on Highway 401 in the vicinity of the City of London, the trucks that will be used to haul Toronto’s municipal and private sector waste (received by the City) after the closure of the Keele Valley Landfill is the equivalent of 2 percent of the total truck traffic.

In addition, our haulers schedule pick-ups and deliveries to maximize the use of off-peak times on connecting highways between Toronto and the landfills.

Conclusions:

The City of Toronto will be facing a shortfall in residual disposal capacity at the end of 2002 when the City’s remaining public sector landfill, the Keele Valley Landfill Site, is closed. There is not sufficient available capacity at existing Ontario landfills to absorb Toronto’s disposal needs. The City will therefore be dependent on Michigan-based landfills currently under contract to the City to meet its residual disposal requirements at a 300 percent plus cost increase.

Despite action being taken to provide household organics recycling capability for every family in Toronto as recommended by the City’s Waste Diversion Task Force 2010, the City remains dependent on external assistance for its landfill needs to at least 2005.

The City’s recently approved Task Force 2010 diversion plan, including source-separated organics, will provide the means for every Toronto household to have their household organics composted and returned to the local economy. In addition, the increased cost of landfill disposal will provide a strong financial stimulus for new and emerging technologies to increase our diversion of solid waste from landfills and turn the material into a resource.

Contact:

Lawson Oates, B.A., M.E.S., Manager, Strategic Planning, Solid Waste Management Services, Works and Emergency Services, Metro Hall, 19th Floor, Phone: (416) 392-9744, Fax: (416) 392-4754; E-mail: [email protected] Toronto City Council 10 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

Appendix A Table 1.

The following table shows the sources of residual solid waste generated by the City of Toronto, including private sector waste received by the City for disposal in 2001 (estimated to year end) and the projected residual disposal needs in 2003. The table also shows the disposal locations in service to the City of Toronto in 2001. The City also receives residual solid waste from York and Durham Regions, however, the City will not be managing this waste after the closure of the City’s Keele Valley Landfill.

Source Estimated 2001 Disposal Location Estimated 2003 Tonnage Tonnage – to be disposed by private sector landfills under contract to the City

City of Toronto 877,000 tonnes 450,000 tonnes at 866,000 tonnes Municipal Solid Onyx’s Arbor Hills Waste Landfill

427,000 tonnes at Keele Valley Landfill

Private Sector Waste 600,000 tonnes 285,000 tonnes at 385,000 tonnes* Republic’s Carleton Farms Landfill

315,000 tonnes at Keele Valley Landfill

Total 1.47 million tonnes 1.25 million tonnes

* The reduction in private sector waste between 2001 and 2003 is due to re-direction of waste outside of the City’s infrastructure following the closure of the City’s Keele Valley Landfill Site, scheduled for December 2002.

______Toronto City Council 11 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

Insert Table/Map No. 1 appendix b - trucks required per biz day Toronto City Council 12 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

(Report dated November 1, 2001, addressed to the Works Committee from the Commissioner of Works and Emergency Services)

Purpose:

The purpose of this report is to provide information regarding the potential of engaging rail haul as an alternative to the current truck haul of residual solid waste to landfills in the State of Michigan under contract to the City of Toronto (the "City").

This report also provides a response to the motion tabled by Councillor Frank Di Giorgio on October 17, 2001, regarding the export of residual solid waste to Michigan, which has been referred by the Chair of Works Committee to the Commissioner of Works and Emergency Services for review and comment.

Financial Implications and Impact Statement:

There are no direct financial implications arising from this report

Recommendation:

It is recommended that this report be received for information.

Background:

City Council at its meeting of March 6, 7, and 8, 2001, adopted with amendment Recommendation No. 3 of Clause No. 1 of Report No. 2 of The Works Committee. The adopted recommendation reads as follows:

The status report also advised that in order to develop rail haul options with negotiated financial components it is necessary to estimate the tonnage requiring transport and disposal and contract Toronto City Council 13 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18 duration. This step is required whether a rail haul option is adopted or not, because several key factors or events are dove-tailing at the end of 2002 and require attention to ensure that the City has the residual solid waste disposal capacity that it requires. The key factors are as follows:

(i) the City’s remaining public-sector landfill, the Keele Valley Landfill (“Keele Valley”), located in the City of Vaughan, York Region, is scheduled to close in December 2002. Approximately 180,000 tonnes per year of municipal solid waste currently received by the City at Keele Valley will require a new disposal location following its closure;

(ii) the City’s contract with Onyx expires on December 31, 2002. Onyx currently disposes of 450,000 tonnes of solid waste from the City of Toronto per year at its Superior Arbor Hills Landfill. A potential exists to renew this contract; and

(iii) the City’s contract with Republic and Wilson provides a current commitment of 285,000 tonnes per year (for 2001 and 2002). In 2003, 2004, and 2005 the City is committed to ship all solid waste received by the private sector to Republic (or a minimum of 100,000 tonnes per year). The City’s contract with Republic and Wilson will require adjustment, via nine months written notice, if the management of municipal solid waste is awarded to Republic.

The June 27, 2001, report advised that contract discussions would be carried out over the summer of 2001 and a subsequent report would be submitted to Works Committee in the Fall of 2001 with the results of the contract discussions, including review of the rail haul potential. The report also advised that:

(i) if Works Committee elects to continue to pursue rail-based transport at that time, a consultation process regarding the rail haul option with stakeholders, including the South-western Ontario Trash Coalition would be subsequently carried out; and

(ii) the contract review process would factor in the Council adopted recommendations of the Waste Diversion Task Force 2010 (including Council’s diversion targets) to ensure that the City is not placed in a position of paying for disposal that is “locked in” through a put-or-pay contract, but is in fact no longer required due to increased diversion programs.

Comments:

This report provides a summary of the rail haul options available to the City. A second in-camera report, also listed on the Works Committee meeting agenda of November 14, 2001, carries a review of haulage and disposal options with associated financial costs. The specific financial components are being presented in-camera in order to maintain a competitive environment should the Works Committee or Council provide additional direction to the Commissioner of Works and Emergency Services.

Onyx

The Arbor Hills Landfill does not have a direct rail connection onto the landfill property. The site operator, Onyx has reviewed the potential to offer a rail haul option to their landfill, but after Toronto City Council 14 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18 analysis has advised staff that it will not submit a rail haul option for consideration. Their preferred method of transport is truck haul.

Republic and Wilson:

Republic and Wilson have worked with Canadian Pacific Expressway (“CP”) and Canadian National Railways (“CN”) to develop rail haul options to Republic’s Carleton Farms Landfill. However, the Carleton Farms Landfill does not have a direct rail connection. Therefore, under this option residual solid waste would have to be transported from our transfer stations to one or more rail yards in the Toronto or greater Toronto area, rail hauled to a yard outside of Detroit, Michigan, where it would then be transferred again onto a truck and hauled to the landfill.

Cost Analysis:

The rail haul proposals would increase Toronto’s cost of haulage to Michigan by a cost of approximately $1 million to $3 million per year (plus rate escalation), depending on the option chosen by the City. Expenditure of such funds reduces the available funds for diversion projects.

Put or Pay:

Both railways require substantive quantities of residual solid waste to be “locked-in” on a put-or-pay basis. CN requires a guaranteed tonnage of 900,000 tonnes per year for the first five years of a ten-year contract, and 700,000 tonnes for the last five years of the contract, or a $3.00 per tonne charge for any shortfall of guaranteed tonnages over the service life of the contract. CP requires a guaranteed tonnage of 400,000 tonnes per year under a five-year contract. These conditions work contrary to the diversion targets that City Council has officially set, in addition to the higher cost, noted above.

Operations:

Truck-based haulage has proved to be a responsive and flexible form of solid waste transport over long distances. By contrast, the rail haul option does not offer the same responsiveness and flexibility due to the limited number of trains that would be dedicated to the City.

Environmental Impact:

During the recent Toronto Integrated Solid Waste Resource Management (“TIRM”) Process, which concluded with the signing of a contract between the City and Republic and Wilson, our project consultant, Earth Tech Canada, was able to discern a more favourable environmental impact of rail haul over truck haul (measured in reduced carbon dioxide emissions) due to better efficiencies achieved by diesel locomotives travelling over steel rails, as opposed to diesel trucks travelling over asphalt roads.

However, in order to obtain an accurate comparison a comprehensive study would be required to accurately measure the relative environmental impacts of the two transportation modes, including energy consumption and the emissions resulting from the truck transfer of waste to and from the railhead. We are not recommending that such a study be undertaken, as the proposed Toronto City Council 15 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18 put-or-pay requirements of the railways and higher haulage costs will hinder the City’s ability to reach its diversion objectives. By maintaining an ability to achieve its diversion objectives the City can reduce its residual disposal needs and the associated impacts from the transport of solid waste to Michigan-based landfills under contract to the City.

GTA:

In order to address the quantities required under the rail haul options, Solid Waste Management Services staff met with staff of neighbouring GTA public works departments to discuss the potential of a combined GTA approach through the utilization of the rail haul option. Such an approach would help to facilitate rail haul by reducing the tonnage commitment Toronto would have to make. However, favourable feedback was not forthcoming.

Di Giorgio Motion:

Councillor Di Giorgio has tabled a motion, dated October 17, 2001, regarding the City’s export of residual solid waste to Michigan-based landfills under contract to the City of Toronto, in the aftermath of the September 11, 2001 terrorist attacks in the U.S. A copy of the motion is attached as Appendix A.

The motion concludes with the resolution that “the Works Commissioner provide a report outlining the cost for retaining an outside legal opinion to review and determine the contractual risks and costs [cost] implications of continuing to ship the City of Toronto garbage to Michigan”. The Chair of the Works Committee has referred the motion to the Commissioner of Works and Emergency Services for review and comment.

The issue of potential border closure to residual solid waste from the City to Michigan-based landfills has been a recognized concern throughout the recently completed TIRM Process and continues to be a matter of review with our disposal suppliers in Michigan.

Attached to this report are two staff reports that addressed: (i) the legal issues arising from solid waste disposal in the United States (Appendix B, dated July 18, 2000); and (ii) the impact of the Michigan Bill to Ban Bottles and Cans from Landfill Sites (Appendix C, dated April 20, 2001).

The report regarding legal issues was submitted by the City Solicitor. Attached to that report is an opinion provided by the law firm of Torys, that reviews the potential impact of “Superfund” legislation and the issue of the control of the flow of waste into Michigan and elsewhere in the United States. The opinion notes that states do not have the authority to restrict inter-state commerce with respect to waste, which has been affirmed by several decisions of the U.S. Supreme Court.

The report regarding Michigan’s Bottle Bill was submitted by the Commissioner of Works and Emergency Services and the City Solicitor. The report noted the responsibilities of our contractor (Republic) regarding the disposal of waste and the steps being taken to address the legislation. Toronto City Council 16 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

Immediately, following the terrorist attacks on September 11, 2001, shipments of waste to Michigan-based landfills were delayed at the border and some solid waste was diverted to Keele Valley for disposal. However, service disruption was significantly reduced two weeks after the attacks. Currently, shipments are crossing the border in an acceptable timeframe for our contractors and the City is not experiencing any service disruptions.

While we are on defensible legal grounds for the shipment of waste to Michigan, we should not assume that the current conditions will remain favourable over the long-term. To minimize the risk to the City it is imperative that the City meet its diversion objectives in order to continually reduce its reliance on disposal of solid waste by achieving greater locally-based diversion capability. The road map to achieve the City’s diversion objectives has been provided by the Waste Diversion Task Force 2010 and the adopted implementation plan prepared by staff.

Our contracts with Michigan-based landfills provide us with the flexibility to meet the City’s current disposal needs and increase our diversion rate. Those contracts are also required to address our disposal needs following the closure of Keele Valley, which is scheduled to take place in approximately 14 months. Based on the results of the City’s recent TIRM Process, there is no available disposal facility(ies) in Ontario to address the City’s current needs or a facility(ies) that will be capable of addressing them for the foreseeable future.

The City’s Legal Department has advised that it is not in a position to provide feedback on Councillor Di Giorgio’s motion, at the time of the submission of this report, due to time constraints.

Conclusions:

Staff has pursued the rail haul option to Michigan-based landfills under contract to the City of Toronto: Onyx’s Arbor Hills Landfill; and Republic’s Carleton Farms Landfill. Onyx has advised that they are not supplying a rail haul option to their landfill. Republic, in conjunction with their consortium partner, Wilson Logistics, has worked with CP and CN to develop integrated rail haul options. However, both of the options would require long-term put-or-pay contracts and increased costs, which will hinder the City’s ability to achieve its diversion targets.

We are therefore not recommending that the City engage in rail haul to Michigan landfills under contract to the City, and therefore maintain truck haul as the preferred method of transportation in order to maintain greater service flexibility and not hinder the City’s ability to reach its diversion targets.

This report has also addressed the motion tabled by Councillor Frank Di Giorgio (dated October 17, 2001) calling for an outside legal opinion to review and determine the contractual risks and cost implications of continuing to ship waste to the State of Michigan. Based on related reports that have been submitted by staff (including an opinion from the legal firm of Torys) we are not recommending the engagement of on outside legal review at this time.

We do concur with Councillor Di Giorgio that the current situation does pose risks to the City of Toronto. The most productive means to address the risks is an increased capability on the part of Toronto City Council 17 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18 the City to divert waste from disposal by achieving the diversion program set by the Waste Diversion Task Force 2010.

Contact:

______

(Report dated November 14, 2001, addressed to the Works Committee from the City Solicitor)

Purpose:

The purpose of this report is to provide additional comments to the Works Committee on the motion by Councillor Di Giorgio as set out in the report, dated November 1, 2001, from the Commissioner of Works and Emergency Services.

Financial Implications and Impact Statement:

There are no financial implications by the receipt of this report.

Recommendation:

It is recommended that this report be received for information.

Background:

The Works Committee will have before it a report, dated November 1, 2001, from the Commissioner of Works and Emergency Services on the subject of Transportation and Disposal of Residual Solid Waste- Rail Alternative. The report addresses, in part, a motion by Councillor Di Giorgio tabled on October 17, 2001 at the Works Committee on the export of residual solid waste to Michigan. As the report refers to advice sought from the Legal Services Division, this report is providing additional legal comments.

Comments:

The motion by Councillor Di Giorgio refers to possible and probable legislation that may be passed either at the state or congressional levels prior to December 2002 with the intent to block Toronto's waste going to Michigan. Presumably, the requested legal opinion, which is the subject of the motion, is intended to address the status of such legislative initiatives in the United States. The legal reports which are attached to the Commissioner's report address the issue of legislation as at those earlier dates. If requested, a legal opinion could be obtained updating and Toronto City Council 18 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18 commenting on the status of current legislation with some limited commentary on prospects for passage. The cost of such an update would range between $8,000.00 and $10,000.00.

The following should be noted, however:

(1) Insofar as the motion refers to an outside legal opinion determining the contractual risks and cost implications of shipping waste to Michigan, the risks have already been the subject of prior reports and it is doubtful that any additional report could expand on the nature of those risks; and

(2) A legal opinion by its nature would not address all the matters addressed in the motion. In particular, the cost implications of the shipment of waste. Such matters are for the Commissioner to address as part of the business decision in the shipment of waste.

Contact:

James Anderson, Director, Municipal Law, Tel. (416) 392-8059, Fax (416) 397-5624; email: [email protected]

______

The following material was forwarded to all Members of Council with the November 22, 2001, agenda of the Policy and Finance Committee and a copy thereof is also on file in the office of the City Clerk, City Hall:

- Confidential report dated November 9, 2001, addressed to the Works Committee from the Commissioner of Works and Emergency Services (distributed under separate cover);

- Appendix A dated October 17, 2001, embodying a motion from Councillor Frank Di Giorgio respecting this matter;

- Appendix B - Report dated July 18, 2000, from the City Solicitor respecting Legal Issues Arising from Solid Waste Disposal in the United States; and

- Appendix C - Report dated April 20, 2001, from the Commissioner of Works and Emergency Services and City Solicitor respecting the Impact of the State of Michigan Bill to Ban Bottles and Cans from Landfill Sites.

(City Council at its meeting on December 4, 5 and 6, 2001, had before it, during consideration of the foregoing Clause, a confidential report (November 9, 2001) from the Commissioner of Works and Emergency Services, such report to remain confidential, in accordance with the provisions of the Municipal Act, given that it concerns matters of the security of property of the municipality, save and except those recommendations previously released, at the Works Committee meeting held on November 14, 2001, as embodied in the Clause.) Toronto City Council 19 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

(City Council on December 4, 5 and 6, 2001, had before it, during consideration of the foregoing Clause, the following joint report (December 3, 2001) from the Commissioner of Works and Emergency Services and the City Solicitor:

Purpose:

The purpose of this report is to provide responses to information requested by Works Committee at its meeting of November 14, 2001 regarding the disposal of residual solid waste. The Commissioner of Works and Emergency Services and the City Solicitor were requested to report directly to City Council on December 4, 2001.

Financial Implications and Impact Statement:

There are no direct financial implications arising from the adoption of this report for information purposes.

Recommendations:

It is recommended that this report be received for information.

Background:

The Commissioner of Works and Emergency Services submitted three reports to the Works Committee meeting of November 14, 2001, regarding the disposal of residual solid waste:

(1) Transportation and Disposal of Residual Solid Waste – Rail Alternative (dated November 1, 2001;

(2) City of Toronto Residual Solid Waste Disposal Needs (dated November 9, 2001); and

(3) Disposal of Residual Solid Waste – In Camera (dated November 9, 2001).

The Works Committee adopted with amendment the recommendations contained in the Commissioner’s November 9, 2001 In Camera report. A number of information requests were also adopted at that time, with a request to the Commissioner of Works and Emergency Services and the City Solicitor to respond to those requests and report directly to City Council at its meeting of December 4, 2001.

On November 22, 2001, the Policy and Finance Committee reviewed the Commissioner’s In Camera report and subsequently adopted the report’s amended recommendations, as recommended by the Works Committee.

Presented in the next section of this report are the specific information requests from Works Committee and the accompanying staff responses. Toronto City Council 20 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

Comments:

On October 25, 2000, the City of Toronto signed a contract with Republic Services and Wilson Logistics (herein referred to as “Republic”) for the receipt and disposal of private sector solid waste received by the City. That contract also provides the City with the option of adding residual municipal solid waste following written notification nine months before the actual delivery date. Adjustments to the Republic Contract (i.e. price, term, and guaranteed minimum tonnages) will be facilitated through a formal “amending agreement” that all parties to the contract sign.

Therefore, what is required at this time is for the City to act on the option it has under the Republic Contract and confirm the quantity of municipal solid waste it will be delivering to Republic after the closure of the City’s Keele Valley Landfill, scheduled for December 2002, and sign an amending agreement to facilitate revised terms and conditions favourable to the City.

The term of the amended Republic Contract will end in 2005. There are additional renewal points after 2005 at the City’s sole option, to manage reduced residual quantities as required.

On the one hand the Republic Contract provides the City with the required residual solid waste disposal capacity it currently requires and, on the other hand, it provides the City with the flexibility to pursue and achieve its diversion objectives.

Information Requests and Responses

1. 100,000 Tonne Per Year Guaranteed Minimum

Recommendation No. 2, of the Commissioner’s In Camera report of November 9, 2001, as amended by the Works Committee, reads as follows:

“Recommendation No. (1) be subject to the City of Toronto entering into an amending agreement with the Republic Contractors based on the optional amending provisions proposed by the Republic Contractors and the provisions cited in the body of this report, including the finalization of trailer residual value amounts to the satisfaction of the Commissioner of Works and Emergency Services and terms clearly limiting the City’s guarantee for delivery of all its waste under the agreement to 100,000 tonnes annually subject only to the payment of appropriate residual trailer and truck amounts, and on terms and conditions satisfactory to the Commissioner and in a form satisfactory to the City Solicitor.” (emphasis added)

In response to above noted recommendation, Republic Services has confirmed its position to limit the guaranteed tonnage to 100,000 tonnes per year through a letter dated November 29, 2001 (please see Attachment A), which states:

“This is correct. Provided that the Amended Agreement clearly states that Toronto is committing to delivery of all residual Municipal Solid Waste and ICI solid waste, we would be willing to keep the minimum guaranteed tonnage at 100,000 tonnes, as stated in the current Agreement. The City of Toronto will continue to have its responsibilities for Toronto City Council 21 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

trailer residuals as per our current agreement and provisions to be finalized in our amending agreement.”

2. Motion from Councillor Di Giorgio

The Works Committee referred the following motion by Councillor Di Giorgio to the Commissioner of Works and Emergency Services for a report thereon directly to Council for its meeting on December 4, 2001:

“That the City of Toronto explore negotiating the following amendments to the waste disposal contract with the Republic Contractors that will apply to any increased tonnage shipped to Michigan:

“(i) that new and emerging technologies include thermal processing of waste;

“(ii) that an unforeseen cost increase not be deemed to be an unavoidable circumstance; and

“(iii) that foreseeable or predictable law changes in Michigan not be deemed to be an unavoidable circumstance.”

Republic Services has also provided to staff their input to the points contained in Councillor Di Giorgio’s motion. The specific responses can be found in the attached letter dated November 29, 2001. Summaries of Republic’s responses with staff comments are provided below.

Response:

(i) Republic has recognized that new and emerging technologies include thermal treatment processes. This would include technologies such as gasification (production of fuel gas) and pyrolysis (conversion of solid feedstocks into a mixture of solid, liquid, and gaseous products).

“Diversion and New and Emerging Technologies” are defined in the Republic Contract as “all technologies for the treatment, processing, recycling or disposal of waste other than landfill or Incineration.”

The City can therefore proceed with the recommendations of the Waste Diversion Task Force 2010 and achieve its diversion objectives by utilizing a range of technologies including anaerobic digestion of source separated organics and new and emerging technologies.

Republic does not recoginze incineration (i.e. “mass burn” incineration) as a new and emerging technology, as it is a recognized disposal technology that has been in use for decades and could directly compete with their commercial interests that they have attained through a contract with the City. The former Metro Toronto utilized incineration as a disposal technology until the late 1980’s. Toronto City Council 22 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

Should Council decide to pursue mass burn incineration it could be introduced after 2005 at the City’s next contract renewal option with Republic. We anticipate that the planning, permitting, and construction timeframe could be approximately four years in duration and therefore dovetail with the current contract timeframe.

(ii) As Republic has stated in their letter attached to this report, Republic bears the obligation of any cost increases under its contract with the City (including all taxes but with the exception of the Goods and Services Tax). They do not constitute an uncontrollable circumstance which would allow a contractor to be excused from its obligations under the contract, i.e. an increase in costs does not allow the contractors to avoid their obligations to transport and dispose of the residual waste.

The Republic Contract specifically addresses this matter. Section 12.1 of the contract addresses the components of the service fee to be paid by the City:

“The Service Fee shall compensate the Contractors for all costs incurred, services performed, and other obligations undertaken under this Agreement, whether or not anticipated, including but not limited to the cost of all applicable taxes, Permits, labour expenses, equipment, materials, supplies, utility expenses, environmental protection, landfill depletion and closure and post-closure expenses, if any, and any and all other costs associated with the services provided under this Agreement.”

(iii) In response to the proposed amendment that “foreseeable or predictable law changes in Michigan not be deemed to be unavoidable circumstances”, Republic has advised that the definition of uncontrollable circumstances in the Republic Contract addresses this matter and notes that from a commercial standpoint they cannot address changes in law that are beyond their ability to reasonably control.

The Republic Contract identifies (in part) uncontrollable circumstances as

“…the adoption or change, including a change in interpretation or enforcement that has the effect of a change of law of any provincial, federal, state, county or local law, rule, permit, regulation or ordinance, after the date of this Agreement, adversely affecting a party’s obligations hereunder; the institution of a legal or administrative action, or similar proceeding, by any Person; closure of any transportation route that materially restricts the Transport of Waste as required by the Agreement; U.S. federal law, Canadian federal law or Ontario law relating to Transport of Waste to the Disposal Site; border closure; or an inability to obtain sufficient fuel.”

This definition was formally adopted by City Council at its meeting in October 2000 by reason of it being contained in the agreement that was before Council for approval. We do not recommend seeking an amendment to the definition, because if flow control legislation was passed in the U.S. and Republic was subsequently unable to transport solid waste across the U.S.-Canada border then from an operational standpoint they Toronto City Council 23 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

could not fulfil their contracted responsibilities due to circumstances beyond their reasonable control.

Such a provision for suspension and ultimately (continuance for 90 days) the termination of obligations for matters beyond the reasonable control of the parties is commercially reasonable and a standard consideration in contracts. For example, the definition of “Uncontrollable Circumstances” in the Republic agreement includes a strike, work slowdown or labour disturbance adversely affecting the obligations of the parties. Such a provision would ensure that the City was not liable for breach of contract if in the event of such circumstances, Toronto was not able to deliver waste to the contractors.

3. Linkage to Rail Cycle North Proposal

Works Committee also requested that the City Solicitor and the Commissioner of Works and Emergency Services

“…report directly to Council on what would be required to ensure that the risk provisions in the contract with the Republic Contractors are similar to the risk provisions that Council adopted for the Rail Cycle North proposal.”

Response:

City Council at its regular meeting held on October 3, 4, and 5, 2000, and its Special Meetings held on October 6, 2000, October 10 and 11, 2000, and October 12, 2000 adopted an amended recommendation from the Commissioner of Works and Emergency Services and the City Solicitor (contained in a confidential report dated October 2, 2000) to execute a contract with Rail Cycle North subject to acceptance by Rail Cycle North of several amendments to the terms and conditions of the negotiated contract.

Those amendments to the negotiated contract’s terms and conditions are summarized as follows:

- termination of the contract if a Federal Environmental Assessment of the Adams Mine Landfill was ordered on or before February 15, 2001;

- adjustment of conditions related to purchase of surplus equipment from the Keele Valley Landfill by Rail Cycle North;

- that unavoidable cost provisions not be used to require a minimum tonnage;

- deletion of Section 10.6 of the contract concerning unavoidable cost increases;

- clarification of language related to potential environmental impacts; and

- provision for the City to consider all methods of diversion, including incineration without penalty. Toronto City Council 24 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

The majority of the above-noted amendments are related specifically to factors unique to the Rail Cycle North proposal or provided clarification to previously negotiated matters and, therefore, do not have a bearing in terms of an “apples-to-apples” comparison in terms of “risk provisions” between the two negotiated contracts. Council’s direction to delete section 10.6 (unavoidable cost increases) of the Rail Cycle North negotiated contract actually placed it on an equal footing as the negotiated Republic contract.

That section 10.6 had required that any increased costs incurred as a result of any change to statutes, rules, regulations, by-laws or ordinances that in any manner would apply to the landfill project would be the liability of Toronto (subject to a $1.00 per tonne deductible to be paid by Rail Cycle North). This would have meant that any increased costs resulting from a change to the construction or operation of the site required as a result of any approval or permit requirement, including a change to the certificate of approval, or as a result of any legislation imposing additional requirements on the project, including change to taxes, would pass through to the City.

As noted above, the City’s contract with Republic requires Republic to absorb any cost increases associated with the contractors’ transport and disposal of waste.

The remaining significant difference between the two contracts – in terms of “risk provisions” - is in regard to the ability to engage incineration. While Republic is not prepared to accept incineration as a diversion or new and emerging technology, Council is in a position to pursue this disposal technology (as noted above) because residual waste can be re-directed at the end of 2005, when the City is in a position to renew the Republic Contract at its sole option. Under the terms and conditions proposed by Rail Cycle North, the City could not engage incineration for the twenty-year duration of the contract, which was reflected in the direction provided by Council through its required amendment to the negotiated contract.

The potential for the State of Michigan to acquire flow control powers regarding solid waste coming into that state is of course a risk factor. However, that risk is fundamental to the nature of the contract with Republic and one that has was consciously considered by City Council when it adopted the negotiated Republic Contract in October 2000.

To address a short-term border closure or border crossing slow down, Republic is actively seeking short-term replacement disposal capacity in Ontario.

Conclusions:

This report has been submitted directly to City Council at the request of Works Committee. It provides responses to several information requests related to the terms and conditions of the City’s contract with Republic and addresses risk provisions in the negotiated contract with Rail Cycle North and the contract with Republic. Toronto City Council 25 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

In summary, Republic has:

- agreed to maintain a 100,000 tonne per year guaranteed minimum tonnage notwithstanding the increase in tonnage by adding municipal waste;

- agreed to clarify that “thermal processing” is included in the definition of new and emerging technologies, but not mass burn incineration of solid waste; and

- stated they are not in a position to include in the definition of “unavoidable circumstances” foreseeable or predictable law changes in Michigan as such matters, as well as others, are beyond their ability and that of Toronto to reasonably control and, reasonably, Republic should not be responsible for breach of contract in such circumstances.

Staff has also provided a review of the “risk provisions” in the negotiated contract with Rail Cycle North and the executed contract with Republic.

Contact:

Lawson Oates, B.A., M.E.S. James Anderson Manager, Strategic Planning Director, Municipal Law Solid Waste Management Services Legal Services Works and Emergency Services 26th Floor, Metro Hall Metro Hall, 19th Floor Phone: (416) 392-8059 Phone: (416) 392-9744 Fax: (416) 397-5624 Fax: (416) 392-4754 E-mail: [email protected] E-mail: [email protected]

Attachment:

Letter from Republic Services, dated November 29, 2001.

(A copy of a letter dated November 29, 2001 from the Vice President, Republic Services of Canada, Inc., referred to in the foregoing report, is on file in the office of the City Clerk.)

(City Council also had before it, during consideration of the foregoing Clause, the following communication (November 30, 2001) from the Manager, Strategic Planning, Solid Waste Management Services, Works and Emergency Services, submitted by Councillor Layton:

Listed below are responses to the five questions you have put forward regarding residual solid waste disposal in Michigan by the City of Toronto.

Question No. 1.

“The number of trucks per day and the tonnage per day of both the current contract and proposed contracts.” Toronto City Council 26 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

Response:

The Commissioner’s report of November 9, 2001 states:

“On average, the City’s solid waste contractors require 85 trucks per business day to haul the current annual volume of solid waste for disposal at Michigan-based landfills. Following the closure of Keele Valley, we have estimated that the total volume of residual solid waste will be 1.25 million tonnes a year, which will require an additional 52 trucks on average per business day to haul waste to Michigan, for a total of 137 trucks per business day.

“Of the 137 trucks per day, 95 are for municipal material and 42 trucks are for the haulage of private waste. As our diversion programs are implemented the number of trucks will steadily be reduced.”

The report also advises that in terms “of the daily truck traffic on Highway 401 in the vicinity of the City of London, the trucks that will be used to haul Toronto’s municipal and private sector waste (received by the City) after the closure of the Keele Valley Landfill is the equivalent of 2 percent of the total truck traffic.”

In terms of tonnes hauled per business day, our contractors haul an average of 2,827 tonnes per business day. Following the closure of the Keele Valley Landfill (scheduled for December 2002) our contractor will haul an average of 4,807 tonnes per business day.

Question No.2.

“The minimum and maximum tonnages in the proposed contracts and how do these compare with today’s volumes.”

Response:

The City of Toronto currently has contracts for the receipt and disposal of solid waste with two contractors: Onyx, operating the Arbor Hills Landfill; and Republic, operating the Carleton Farms Landfill. Both landfills are in Michigan.

Next week City Council will be considering recommendations to have Republic receive and dispose of all the City’s residual solid waste (municipal and private sector waste received at our transfer stations) following the closure of Keele Valley. By exercising an option in the contract with Republic the City can direct municipal solid waste in addition to the private sector waste that Republic is contracted to take.

The proposed guaranteed minimum tonnage under an amended contract with Republic commencing on January 1, 2003, following the closure of Keele Valley, is 100,000 tonnes per year. The remaining term of the amended contract at that point in time is three years (to the end of 2005). We anticipate a requirement to dispose of 1.25 million tonnes. in 2003, which Republic is licensed to receive and dispose. Toronto City Council 27 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

The current (2001) guaranteed minimum tonnage is 250,000 tonnes per year to Onyx, and 285,000 tonnes per year to Republic, for a total of 535,000 tonnes per year. These requirements will expire December 31, 2002.

Under the terms and conditions of the Republic Contract Toronto can re-direct solid waste from disposal to diversion without penalty, aside of paying the outstanding capital costs associated with haulage trailers (known as the “trailer residual value”) that are declared surplus as a result. Therefore, new and emerging technologies can be engaged prior to the contract’s 2005 renewal point, which is at the City’s sole option.

Question No. 3

“The implications (pro and con) of delaying the signing of the new contracts for six months so that the soon-to-be-created smart growth councils can have an opportunity to study the issue and develop solutions.”

Response:

The City’s contract with Republic calls for a 9-month notice period if municipal solid waste is to be added to the existing contract. This timeframe is required to allow Republic and its business partners to place orders for new equipment (tractors. and trailers) and hire new drivers.

With a scheduled closure of Keele Valley in December 2002, and in order to have a contract in place January 1, 2003, the City is required to provide notice to Republic no later than April 1, 2002 stating that the City will be delivering to them municipal solid waste.

A delay in the provision of this notice could lead to a situation where the City does not have disposal capacity for our municipal waste.

If a delay in the provision of notice to Republic were to occur, we would recommend that steps be taken concurrently to extend the service life of Keele Valley to ensure that required disposal capacity is in place for Toronto, and the Regions of York and Durham.

Question No. 4.

“A chart showing the city’s 4-year plan for 60% diversion, including the costs per year, in order to get a better picture of our current plans and the possibility of reducing the number of trucks sooner than our current target.”

Response:

The following chart is a summary of the information provided in the Commissioner’s report of August 29, 2001 regarding the “Implementation Plan for a Three-Stream System and Qther Recommendations of the Waste Diversion Task Force 2010.” Toronto City Council 28 Policy and Finance Committee December 4, 5 and 6, 2001 Report No. 16, Clause No. 18

Net Operating Expenditures ($Millions) (including capital debenturing)

2001 2002 2003 2004 2005 2006 Three-Stream System*with New $87.7 $100.6 $155.7 $165.0 $176.2 $191.0 and Emerging Technologies Diversion % 27% 30% 35% 37% 43% 61%

* Three-Stream refers to: dry recyclables (Blue and Grey Box programs); source separated organics (household organic waste); and residual solid waste.

In 2003, we have forecasted a requirement of 95 trucks per business day to haul Toronto’s municipal solid waste to Michigan. By 2006, we have forecasted a reduction to 54 trucks per business day due to the increase in our diversion rate to 60%. Additional funding would assist the City in engaging new and emerging technologies earlier in the current planning process and therefore accelerate the achievement of diversion objectives.

Question No. 5

“A copy of the report on rail transport that was before Works Committee on November 14, 2001.”

Response:

The requested report (dated November 1, 2001) is attached.

I can be reached at (416) 392-9744 if any additional information is required at this time.)

(A copy of the November 1, 2001 report, referred to above, is on file in the office of the City Clerk.)

(City Council also had before it, during consideration of the foregoing Clause, the following communications regarding issues of environmental risk and Toronto’s management of solid waste:

(a) (November 9, 2001) from Ms. Elmer Parraghi, Supervisor, Sumpter Township, submitted by Mayor Lastman; and

(b) (December 3, 2001) from Mr. Steven Dreany, President, North Bay and District Chamber of Commerce.)