Wagner's Penn Waste attempts to renegotiate contracts

Logan Hullinger
York Dispatch

Republican gubernatorial candidate Scott Wagner's York County-based waste management company is trying to renegotiate municipal contracts as a result of a policy change halfway around the world.

The move is raising eyebrows in political circles — and shrugs from others in the industry.

Penn Waste, which collects recycling from 70 municipalities in the region, implemented new recycling guidelines July 1 in response to changes in Chinese law that limited the recyclable material the country will accept.

Chinese policy change: "Back in the fall, the largest buyer of recyclable material in the world, China, set unachievable contamination limits on the recyclable material they receive resulting in the recycling markets crashing," according to a Penn Waste news release.

More:From tax returns to Penn Waste: Will Wagner's financial decisions affect race?

More:Chinese restrictions send some U.S. recycling to landfills

The country enacted an outright ban on some material and strictly limited the contamination allowed in the rest, from 5 percent to 0.5 percent — an "impossible" level to achieve, the release added.

In response, Penn Waste also is approaching municipalities to see if they can renegotiate waste contracts to add a sustainability fee to help reduce contamination, according to the company's website.

Penn Waste recycling center manager Steve Houser holds a clean needle, Friday, March 25, 2016, to illustrate what fills the plastic containers in the bin--dirty needles found on the sorters conveyors at the facility. Bill Kalina photo

Democratic Gov. Tom Wolf's campaign team took the opportunity to attack his opponent for the potential rate hikes and other aspects of his business and finances.

"Wagner is the first gubernatorial candidate in over 20 years not to release his tax returns while his company, Penn Waste, is raising rates on small business owners and consumers," read a Friday, July 27, Wolf campaign news release.

Wolf's campaign spokeswoman, Beth Melena, later elaborated.

"(Wagner's) company is trying to bail itself out on the backs of small business owners and consumers by raising rates while Scott Wagner is hiding his income and pouring his own money into his campaign coffers," Melena said. 

Penn Waste didn't respond to phone calls inquiring about the policy changes, but Wagner campaign manager Andrew Romeo offered a previous comment he made to PennLive.

In defense of Wagner: "Scott is trying to manage how the president's efforts to fix a trade war with China are impacting the day-to-day operating of the recycling business," Romeo said.

Other professionals in the field agree.

With rate hikes, Penn Waste is "doing what any other business would do and passing the cost on to customers," said Ellen O'Connor, spokeswoman for the York County Solid Waste Authority.

"When you've collected material and can't turn around and sell it, you're taking an economic hit from that," she said. "Penn Waste clearly had an economic hit from the change, and education is going to play a huge role going forward in addressing this issue."

A bulldozer moves piles of recyclables toward a conveyor, which starts the sorting process at Penn Waste recycling center Friday, March 25, 2016. Penn Waste is urging customers to contain medical waste, such as dirty needles, and dispose of it in their regular trash for the safety of their workers who sort by hand. Bill Kalina photo

Not everyone in the waste management business agreed with the claim that the new regulations are "impossible" to deal with, but they said they understand the concern.

John Hambrose, spokesman for Waste Management in Lackawanna County, said the company is confident it can address the new Chinese policies simply by educating customers, but company officials have contemplated hiking rates as well.

"It's absolutely a financial challenge," Hambrose said. "Sometimes we have to stop operations because of misplaced waste and have to stop the center for an hour or two. You end up idling people who work in the plant, and it drives up processing costs as well."

Criticism still unavoidable: However, reasonable business moves are still fair game in the rough-and-tumble campaign climate, as evidenced by the candidates' social media quarrels.

More:Wolf, Wagner relying on social media to reach voters directly

G. Terry Madonna, director of the Center of Politics and Public Affairs at Franklin & Marshall College, said Wagner's desire to maintain control of Penn Waste in the first place "makes no sense" politically.

While Wagner has stated he doesn't plan to place his business assets in a blind trust, he has said he does intend to distance himself and allow his family, the board of directors and the senior managers to handle operations.

However, even with limited input in the company, an apparent conflict of interest can be just as harmful as a real conflict of interest, leading to unavoidable criticism on the campaign trail.

That unavoidable criticism applies to the rate hikes as well, Madonna said.

"You can't separate your company and its operations from politics during a campaign, and that's what's going on right now," he said.