One of four clarifiers at the Amherst Wastewater Treatment plant in 2008.
Amherst will pay $2.4 million to settle a lengthy billing dispute with the consultant hired to manage a flawed town program that tried to convert sewer sludge into market-ready fertilizer.
Micro-Link LLC had argued that the town owed the company hundreds of thousands of dollars, dating to 2006.
Town officials had refused to pay and, in fact, took Micro-Link to court after a state audit concluded the town had overpaid the company.
The litigation played out over the past 16 years, with both sides running up legal fees. After a jury decided in Micro-Link's favor in the summer, the company and town officials hashed out the deal.
"Everybody felt this was a fair resolution of the matter," Town Attorney Stan Sliwa said.
The lawsuit stemmed from Amherst's ambitious effort, started in 1996, to turn sewage into fertilizer pellets. Instead of landfilling this waste, the thinking went, the town would convert it to fertilizer and sell it to private companies – providing an environmental and financial payoff.
However, the program at the town's sewer treatment plant was hampered from the beginning by technical problems and never met initial expectations. It spurred a rash of legal claims spanning the terms of four town supervisors and forced Amherst to spend millions of dollars on settlements, lawyers' fees and related costs.
Now, the Micro-Link agreement wraps up the last remaining litigation over the town's troubled experiment.
"He believes justice finally was served in his case," said R. Anthony Rupp, the attorney for Micro-Link and company officer Thomas B. Watkins.
Federal and state governments long had encouraged communities to try greener methods for treating wastewater. After weighing its options, Amherst in the 1990s embraced the idea of taking sewer sludge, drying it and converting it into pellets to be sold regionally and nationally.
The town hoped to save money on waste disposal, which then cost $1.5 million annually.
The town spent about $8 million, most covered by borrowing, to upgrade equipment and install new machinery, but problems arose from the beginning.
"Some of them were mechanical. Some of them were design. Some of them were personnel," said Town Engineer Jeff Burroughs, who was working for the town at the time. "So there was a lot of ... controversy when the project started and the first few years of the project."
By late 1999, town officials sought outside help to oversee operations at the sewage treatment plant.
Town Board members in January 2000 voted 4-3 to hire Elma-based Micro-Link, run by Watkins, on a six-year performance contract, with proponents arguing Micro-Link would be paid only if the town saved money. Micro-Link received 25% of the value of that savings.
Councilman Dan Ward issued a warning that night. "This is going to be a colossal rip-off, and we're going to get nothing for it," he said.
Watkins and Micro-Link did not replace any town workers, but were expected to find ways to better run the plant. The hiring soon became mired in a political fight as the plant's unionized workers, and supporters, including Ward, feared an effort to privatize operations there.
By 2001, town spending on landfill disposal fell for the first time since pellet production began four years earlier, the state Comptroller's Office calculated.
By 2005, when Amherst began using a new pellet bagging facility, the town produced 2,400 tons of pellets each year.
But the town struggled to sell the pellets, which became known for their pungent smell. Instead of earning $150,000 per year selling the pellets, the town between 1997 and 2004 earned just $103,000 total, an audit found. At times, the town ended up giving the pellets away.
By 2004, The Buffalo News estimated the town had spent $16 million on the pellet project.
Burroughs, the town engineer, said the program did lower landfill costs. But, he added, the idea that the town would profit from selling its sludge wasn't realistic.
"The problem was, you know, wastewater treatment plant sludge pellets are a niche product. The market's not huge," he said.
Because of the way the Micro-Link contract was structured, the company continued to receive performance payments: $959,000 by August 2005.
Criticism of the contract grew following the release of the state audit requested by the town.
"The contract is severely weighted in favor of Micro-Link," the auditors concluded.
The state also raised doubts about the viability of the pellet program itself. It urged the town to stop selling the pellets because foul odors, the risk of fire from spontaneous combustion and other concerns could lead to an expensive lawsuit.
"It was a fiasco," Ward said this week.
The audit recommended letting the Micro-Link contract lapse upon its expiration in 2006. Auditors estimated the company was entitled to $341,510, but the town had overpaid $617,290.
Micro-Link disagreed and went to court to get $516,647 that, as of February 2007, it said it was owed after the town stopped paying the company's claims. Amherst later filed a counterclaim.
Procedural questions played out in trial and appellate courts over several years, but there was no interest on Micro-Link's part to settle the case, said E. Thomas Jones, then the Amherst town attorney.
Micro-Link was one of a half-dozen lawsuits involving the pelletizer program, including suits filed by fired employees or suits against equipment vendors.
Finally, in July, a jury found that Micro-Link and Watkins were entitled to $504,782 from Amherst.
The town also potentially owed another $1.5 million or so in interest and significantly more than that in attorneys' fees.
Settlement talks encouraged by State Supreme Court Justice Timothy J. Walker led to the deal reached in recent weeks. Rupp, Micro-Link's lawyer, praised the engagement of Supervisor Brian J. Kulpa in the talks.
"It was like a breath of fresh air that they wanted to resolve this," Rupp said.
The mood in court was jovial on Aug. 30 as representatives of both sides told the judge they were satisfied with the agreement, according to a transcript.
The Amherst Town Board on Oct. 3 voted to borrow $2.4 million to cover the settlement, which awaits the formality of court approval.
Sliwa said the town's position was hamstrung by the language in the original Micro-Link contract and that a lengthy town appeal of the jury verdict didn't make financial sense.
The town agreed to settle to, as Sliwa put it, "stop the bleeding."
As for the pellets, the town dismantled the system and sold the equipment for scrap about a decade ago, Burroughs said.
The town now dewaters its sludge and then trucks the cake away, a portion to Modern Disposal's landfill and a smaller portion to the Buffalo Sewer Authority's incinerator.
What's the legacy of the pellet project?
"I think that the government tries to do new things, especially in the environmental area, and it doesn't always work out," Jones said. "And they end up paying for it."
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I report on development, government, crime and schools in the northern Erie County suburbs. I grew up in the Town of Tonawanda and worked at the Post-Standard in Syracuse before joining The News in 2001. Email: swatson@buffnews.com
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One of four clarifiers at the Amherst Wastewater Treatment plant in 2008.
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