Pennsylvania firm sues LI Compost, Brookhaven IDA over food scrap converter project

A Pennsylvania company that makes industrial equipment to convert food scraps into biofuels and fertilizers is suing Long Island Compost and the town of Brookhaven Industrial Development Agency, among others, in seeking payments of more $6 million it says it is owed since construction of the region’s first anaerobic digester project got underway in 2023.

Ground was broken in Yaphank for the $120 million-plus anaerobic digester project in 2022, but construction is only about half complete and the owners say they are seeking additional financing. The environmentally friendly digester is intended to convert up to 600 tons of food scraps daily to clean biogas and fertilizers in a closed facility, which would be the first in the region.

State, county and local officials have widely supported the facility, which was helped by a state law that requires restaurants and others to send it food scraps when it’s up and running.

The plaintiff in the state lawsuit, Veolia WTS Systems USA Inc., of Trevose, Pennsylvania, is asking a court to approve a sale of land at the Long Island Compost facility where the 9-acre project is located, and to have proceeds brought to court to pay off the outstanding $6.2 million bill for the equipment, design and other services it has already rendered.

Veolia filed for a mechanic’s lien on the property in January, according to a copy in the court record. The total price for the equipment and services was more than $10 million, Veolia said in its suit, and just over $3.7 million has been paid.

In addition to Long Island Compost and the Brookhaven IDA, the suit names Long Island Compost affiliates American Organic Energy, which proposed the facility, and Great Gardens LLC. The suit also names Venture Engineering and Construction, which is the general contractor building the facility and which arranged for purchase of the equipment, labor and design services from Veolia.

A lawyer for Venture said he believed the suit "can be resolved amicably."

"We understand the project has been paused for funding issues," Venture attorney Russell Mills said in an email. "We are hoping the ownership is able to rectify any issues and resume as soon as possible. If the project resumes, the lawsuit is moot."

Charles Vigliotti, chief executive of Long Island Compost and its American Organic Energy affiliate, acknowledged there has been "a pause in construction due to some delays and a major price increase" for materials and construction.

"We’ve had to go back to our lenders and are in the process of working out the details of extending the whole credit package," he said in a phone interview Wednesday. "We are very close to getting that done."

Vigliotti said he expects construction to restart in the spring, and for the facility to open by next year. "Everyone will be paid in full," he said, "contractors, subcontractors, everybody." He said the company has been "making certain progress payments as we’ve gone along."

Vigliotti said more than $120 million has been spent on the project, adding, "We just need an increase in our funding, and our lenders have assured us [that] will be coming."

Lawyers for Veolia didn’t respond to requests for comment.

Lisa Mulligan, chief executive of the Brookhaven IDA, also didn’t return a call seeking comment. The IDA has agreed to provide the facility with exemptions from mortgage recording taxes tied to financing the facility and property tax abatements.

American Organic Energy's application for IDA benefits shows the facility could receive a mortgage recording tax exemption of up to $723,750 and a sales tax exemption on facilities equipment and other materials of up to $5.7 million, while it would make payments in lieu of taxes from $12,280 to $14,670 over 10 years. The application also shows the New York State Energy Research and Development Authority and Empire State Development have granted $1.75 million for the project, Newsday reported.

In an answer and cross-claim filed Wednesday in response to the suit, Long Island Compost and Great Gardens denied the allegations or knowledge of them, and said any liability relating to the suit "would be due to the misconduct of Venture, over which Long Island Compost and Great Gardens had no influence, permission or control." It said Venture would indemnify the Long Island Compost affiliates, and demanded Venture "answer to the cross-claim."

It made the same statement in regard to its affiliate American Organic Energy and asked that the suit be dismissed against them.

Newsday first reported on the prospect of an anaerobic digester at the Long Island Compost facility in 2013.

The project has widespread support from public officials and environmental groups who see it as a viable alternative to sending food scraps from restaurants and grocery stores to landfills. The plant proposes to process 60 truckloads of food scraps a day from as far away as New York City to process some 600 tons of food waste daily, officials said.

On Wednesday, Vigliotti said raw material costs, tariffs and other factors drove up costs for the project, but said the project will still be built.

"This project is going forward and we fully expect to be taking food waste and putting gas into the pipeline" when construction is finished by 2027, he said.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.