Hempstead in legal battle with recycling vendor over contract

The Town of Hempstead is locked in litigation with its recycling vendor over the company’s effort to back out of its contract following a shake-up in the global recycling market.

Hempstead sued the company, Westbury Paper Stock Corp., in October 2019, around two years after China, historically a massive consumer of recycled goods, placed restrictions on the recovered materials it would buy from abroad. The change torpedoed the price of recyclables such as paper and plastic, upending the municipal waste business on Long Island and across the country.

That development is at the root of why Westbury Paper Stock informed Hempstead in February 2019 it wanted out of its town contract nine months later, court filings show. The company has processed the town's recycling since 2006. But the Chinese policy shift cut into earnings, making the allegedly high rates of "contamination" in Hempstead's deliveries all the harder to bear, the company has argued in legal filings.

Recycling is contaminated when it includes materials that cannot be reprocessed, such as a garden hose thrown away with plastics, or are tainted, such as a pizza box covered in grease.

Westbury has typically shouldered the costs of throwing away the contaminated materials, court records show.

"In the current market, however, Westbury is forced to absorb all of the losses associated with processing and disposing of the town's deliveries," attorneys for the company wrote in a court filing last year. “The acceptance of such materials has put tremendous financial strain on Westbury.”

Westbury argues that the town has not tried hard enough to mitigate the contamination, making the company's exit from the contract justified. It has asked for $1.84 million in compensation from Hempstead for the sullied recycling it has had to toss.

The town countered that it’s made “reasonable efforts” to reduce contamination, the level of which has remained within the bounds of the contract, and that Westbury did not work with Hempstead to fix the problem before seeking out of the deal.

“Should Westbury Paper be permitted to improperly terminate the agreement, the town will be irreparably harmed with no alternate for” the recycling it delivers to the company, Hempstead’s legal complaint reads. According to Hempstead Sanitation Commissioner John Conroy, that amounted to 19,000 tons of glass, bottles and cans and 10,000 tons of paper and cardboard last year.

The town in January asked a state Supreme Court judge in Nassau County to rule in its favor before a trial, but the judge denied the motion. The town appealed the ruling last month, and the two sides have since been in settlement discussions, court records show.

John Peters, Westbury’s general manager, referred questions to Anthony Core, the company’s general counsel, who did not respond to a request for comment.

Jack Martins, Hempstead’s outside counsel in the case, did not respond to requests for comment.

Hempstead is not the only town feeling the effects of the recycling market downturn. Several Suffolk County towns were forced to abandon a single-stream system — in which paper, plastics and metals are all disposed of together — in recent years after a company backed out of a 25-year deal to run Brookhaven's single-stream recycling plant.

“Communities, political institutions, towns are all having to rethink how are they going to handle their waste streams due to this crisis in the recycling market,” said Larry Swanson, director of the Waste Reduction and Management Institute at Stony Brook University.

For now, Westbury has continued to process Hempstead’s recycling, at rates locked in before the changes abroad. Westbury pays the town $16 per ton of paper, while the town pays Westbury $10 per ton of commingled materials, which includes bottles and cans, according to court records.

Those rates are more favorable to Hempstead than what other towns now pay. Oyster Bay, for example, pays Hempstead Sanitation District #1 $70 per ton to process its paper, plastic and metal. 

Conroy said he was not sure, however, whether Hempstead would have trouble finding good prices if it had to seek out a new recycling processor today.

“It’s such a volatile market,” he said. “That’s a big part of the problem.”

Westbury’s contract with the town runs through October 2021.