Company seeking to build trash port is trying new type of venture

Covanta Energy Corp., part of a New Jersey-based conglomerate, wants to build a garbage port, shown in a rendering above, on the Portsmouth waterfront. (rendering courtesy of Covanta Energy Corp.)

By SCOTT HARPER and tim mcglone
The Virginian-Pilot

The company that wants to build a garbage port on the Portsmouth waterfront is part of a New Jersey-based conglomerate with an eccentric past.

Its history includes emergence from bankruptcy in 2004, investments in pro hockey arenas and an Argentinian casino, as well as the current operation of power plants in China, Costa Rica, India, Hawaii and Northern Virginia.

Covanta Holding Corp., the parent of Covanta Energy Corp., has become a popular stock play on Wall Street of late, but one well-known financial adviser this year labeled the company a bad risk.

Environmentalists in California have marched outside Covanta's gates because of proposed medical waste shipments there. Also, several of its power plants in other states, including Virginia, have been fined in recent years for air pollution violations or have been entangled in contract disputes and lawsuits.

Conversely, the company has won several environmental awards in the past year and has settled many of its legal disputes - proof, company officials say, that Covanta is back on its feet after the chaos of Chapter 11 bankruptcy.

For all of its business adventures through the years, one project that Covanta has never attempted is the kind envisioned in Portsmouth: a marine terminal, where barges ferrying 2,500 tons of household trash a day from New York City would be unloaded on the banks of the Elizabeth River.

As part of the deal, the Southeastern Public Service Authority, which handles most trash and recycling in eight local cities and counties, would be paid an unspecified fee - negotiations are ongoing - to truck the garbage in sealed containers to the agency's incinerator a quarter-mile away in Portsmouth.

There, the trash would be burned and the resulting steam and electricity sold to the neighboring Norfolk Naval Shipyard and Dominion Virginia Power.

SPSA has called the Covanta project a pivotal rainmaker. It could help pull SPSA out of years of indebtedness, officials have said, and quell agency struggles with private competitors.

Furthermore, the officials have warned that without the project, local trash-disposal rates likely would skyrocket, with SPSA forced to seek other means to repay nearly $250 million in unfunded debts and liabilities.

A recent audit by the city of Chesapeake, however, questions whether the deal is such a winner.

The Sept. 28 audit, distributed last week to the City Council and shared with SPSA, suggests the port could actually lose money when other costs and implications are factored into the equation. The report describes net losses of as much as $28 million through the proposed 20 years of the contract.

SPSA officials last week dismissed the conclusions outright. "They are absolutely wrong," said John Hadfield, SPSA's executive director.

Instead, SPSA estimates the project would generate about $9 million in revenues each year, or about $194 million through the life of the contract. Portsmouth, in a side agreement, could receive nearly $4 million a year for leasing the port site to Covanta.

Money aside, many residents, environmentalists and public officials view the planned TransRiver Portsmouth Marine Terminal as nothing but blight. They fear Hampton Roads will become known as the East Coast's dumping ground and will make Virginia the No. 1 state in the nation for disposing of imported trash. (Pennsylvania currently holds the top spot, with Virginia close behind at No. 2.)

The fate of the terminal could be decided by the end of the month, when key votes are anticipated before the Portsmouth City Council and SPSA's Board of Directors.

Covanta still needs permits from the Virginia Department of Environmental Quality and the Army Corps of Engineers, for the proposed dredging of the Elizabeth River so barges could reach the port site.

The site is a 10-acre parcel located just north of the Jordan Bridge known as the Allied tract, named after a fertilizer company that used to operate there. The city of Portsmouth now controls the land.

The property and the stretch of river in question have their own checkered environmental past. In soil and groundwater samples, high levels of toxic compounds have been detected.

In addition, the muddy bottom of the Southern Branch of the Elizabeth along the site, where dredging would occur, contains "some of the more severe contamination in the river," according to a summary by the Elizabeth River Project, an environmental group. The group has not taken a position on the port.

Covanta executives, meanwhile, seem to be growing weary of the often-fiery debate, ongoing for nearly two years now. They indicated last week that they are ready for the issue to be decided, up or down.

The Portsmouth port "is part of our overall package to New York City," said Derek Veenhof, manager of TransRiver Marketing Co. and the local point-man for Covanta, referring to the company's bid for handling the Big Apple's trash. "We didn't go to Portsmouth and say, 'This is where we're putting all our eggs.' We have alternatives," he said. He declined to elaborate.

Covanta needs to update its bid proposal for New York City waste by the first week in November, Veenhof said, so having a decision in hand about the port's option by then "certainly would help clarify things."

Covanta has much experience with garbage-fueled incinerators, also known as waste-to-energy power plants. Covanta Energy Corp. owns or operates 31 such plants in the United States, as well as one in Italy.

In Northern Virginia, the company runs one such incinerator for Alexandria and Arlington and owns another that serves Fairfax County.

In 2003, Covanta was fined $14,695 by state regulators for excessive emissions of carbon monoxide at the Alexandria plant and for failing to submit environmental reports in 2001 and 2002 - about the time the company was preparing to file for bankruptcy.

Dennis Best, an air-quality compliance manager for the Virginia Department of Environmental Quality, said the Alexandria plant also recorded violations in 2000 and 2002 that remain unresolved today.

"A lot of this stuff has been dragged out because of the bankruptcy," Best said. For the most part, he added, Covanta "has been fairly cooperative."

Environmentally, similar stories crop up in many of the cities and states where Covanta did business prior to its bankruptcy.