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Money in Politics: Recology Spent Big on Lobbying to Beat Back Threat to Garbage Monopoly
Friday, May 20, 2022

Money in Politics: Recology Spent Big on Lobbying to Beat Back Threat to Garbage Monopoly

San Francisco trash-hauling giant Recology spent nearly $500,000 trying to influence City Hall officials last year after a corruption scandal forced the firm to admit it had massively overcharged customers, putting its decades-old monopoly on local garbage collection at risk.

City ethics records reviewed by The Standard reveal that Recology went into damage control mode shortly after it agreed last March to pay $95 million for over-billing customers. The company ramped up its lobbyist spending from $15,000 to $50,000 a month beginning in May, and paid a total of $460,000 last year—more than any other company spent on lobbying in San Francisco in 2021 and far more than it had spent on lobbyists in the previous five years combined.

“It makes me mad, because those are bills we are paying for,” Supervisor Hillary Ronen told The Standard. “Instead of wasting their time trying to convince the public that they aren’t crooks, why don’t they just stop being crooks?”

Hiring lobbyists to call and arrange meetings with City Hall officials wasn’t the only way Recology tried to buy itself out of trouble.

In just one week this January, campaign finance records show, the firm dropped more than $225,000 on an ill-fated ballot measure designed to shield Recology from facing outside competition. It wasn’t until Supervisor Aaron Peskin threatened to break up the firm’s trash monopoly with a more aggressive ballot measure that Recology dropped its own proposal.

Peskin and Mayor London Breed are now moving forward with an initiative that will reform the process for setting garbage rates but allow Recology to keep its monopoly—for now.

Altogether, city records show Recology spent nearly $687,000 on lobbying and campaign-related expenses from the beginning of 2021 through mid-January of this year. That figure is just a fraction of the money Recology brings in from San Francisco ratepayers, who are essentially required to pay the firm for trash pick-up.

Recology reported $336 million in revenue from residential and commercial properties in San Francisco during a one-year period ending in June 2020. Trash collection rates are at the higher end compared with neighboring cities.

Recology lobbyists’ top target was Supervisor Peskin, who called for changes to the garbage rate-setting process in response to the company being implicated in a pay-to-play scheme involving former Public Works head Mohammed Nuru. Records show the firm wanted to influence discussions between Peskin and the mayor’s office over any potential reforms.

“They have every legal right to do what they are doing,” Peskin said. “But given that they are under deep, hot running water, you would think that they would stop taking the political route and come in through the front door. But instead they chose to go down the same old path they have gone down for many years. And it’s mind-boggling.”

The nearly half-million dollars Recology dropped on influence-peddling is part of a longer pattern of spending by the company. The politically powerful firm, which built its monopoly on garbage collection in San Francisco over the last century, has protected its position by deploying lobbyists to maintain relationships at City Hall and funding campaigns to crush opponents. In 2012, Recology defeated an anti-monopoly ballot measure by dropping $1.7 million, which was 55 times more money than the initiative's backers spent.

The company has also been a go-to source for politicians looking to boost their favorite causes and events.

Many officials have spoken out against Recology over the last year. But aside from a brief public statement last spring in which the mayor called the case against Recology "appalling," Breed has remained silent.

A review of ethics filings shows the trash company regularly made large payments on her behalf.

The so-called behested payments are donations that officials can solicit from individuals and companies to fund charitable causes or for governmental purposes. They’re often directed to nonprofits and can be used for noble causes, like Covid relief. But behested payments are also regularly criticized as being a legal method for donors to curry favor with officials at the local and state level.

“It’s legal bribery,” said Larry Bush, a member of San Francisco’s Ethics Commission. “A payment made at the request of a city official, it’s not a payment made because of a relationship between the donor and the recipient, but because there is a city official who is in between.”

During her first two years in office, records show, Recology made $51,000 worth of payments on behalf of the mayor, beginning with a $10,000 check for her 2018 mayoral inauguration. The firm was among 39 different contributors who gave the $10,000 maximum payment for the event. The money rolled in with help from Breed’s mentor and the chair of her inaugural committee, former Mayor Willie Brown, who called on donors to contribute $500,000 total for the bash.

Recology also made donations on behalf of Breed for backpack and turkey giveaways, as well as a Black History Month ceremony in 2019. The last time the firm made a contribution on Breed’s behalf was a $5,000 check for her second inauguration ceremony in January 2020. Records show that payment came in on Feb. 20—a week after the City Attorney’s Office publicly subpoenaed Recology in connection with the Nuru scandal.

Nuru, who solicited payments from Recology for Public Works parties and admitted to using his official influence to benefit the firm’s business, pleaded guilty to fraud in federal court last month. Breed has not been accused of any crimes. She was, however, fined after admitting to accepting about $5,600 in car repairs from Nuru, and she had close relationships with many of the figures charged by the U.S. Attorney's Office.

Jeff Cretan, a spokesperson for Breed, said in an email that any behested payments Recology made on behalf of the mayor have not influenced her decisions. Cretan also noted that the payment request for Breed’s 2020 inauguration “occurred prior to the City Attorney’s announcement” that Recology was being subpoenaed.

The Standard could not find any record of Breed speaking publicly about the trash company since last March, when she issued a six-sentence statement about the $95 million settlement and never mentioned Recology by name. Cretan said the mayor has been concerned with fixing the rate-setting process and pointed to the reform measure she is bringing to voters this summer in collaboration with Supervisor Peskin.

“The Mayor has been focused on reforming our waste management ordinance to protect ratepayers and better serve San Francisco,” Cretan said. “These reforms are the result of investigations by the City Attorney and Controller’s Office, which the Mayor has called for and supported every step of the way, and she has strongly supported efforts to hold Recology accountable for their actions.”

Recology spokesperson Robert Reed declined to answer questions by email, but he issued a statement noting that “Recology has worked tirelessly and diligently to uphold its responsibilities” outlined in the $95 million settlement.

Recology is now barred from making behested payments to city officials until June 2025 as a provision of the settlement, which also prohibits the firm from giving them gifts.

Talking Trash

Recology’s monopoly on garbage in San Francisco dates back to an ordinance passed in 1932. The company used its foothold in the city to build a trash-hauling empire across the West Coast, with operations in Washington and Oregon. In order to protect its position in San Francisco, Recology deploys the powerful lobbying firm Noyola Piccini Group.

David Noyola is one of the city’s highest paid lobbyists. A former aide to Supervisor Aaron Peskin, one City Hall insider referred to Noyola as the “Aaron whisperer.” He has a roster of high-paying clients including Uber and Airbnb, and he works in tandem with longtime lobbyist Jacqueline Piccini.

Records show Recology’s monthly payments to Noyola tripled in December 2020 from $5,000 a month to $15,000. This came shortly after federal prosecutors charged former Recology executive Paul Giusti with fraud and money laundering.

Three months later, in March 2021, Piccini began reaching out to officials about Recology’s over-billing. Supervisor Ronen was among the four officials Piccini contacted, and Ronen recalled the interaction as a brief, informational phone call. By May, Recology’s lobbying payments surged to $50,000 a month.

“(Recology) wanted to participate in the task force, and I said, ‘No, you cannot,’” Peskin said.

And so the lobbying continued.

In September, Piccini reached out to several supervisors and other city officials about a deferred prosecution agreement that three local Recology companies had reached with the U.S. Attorney’s Office. Charged with fraud, the companies agreed to admit wrongdoing and pay $36 million in criminal penalties as part of a deal that allowed the firms to avoid a conviction.

Supervisor Rafael Mandelman was one official Piccini reported contacting, but he told The Standard he had no recollection of their interaction. Other supervisors, including Board President Shamann Walton, also had a hard time remembering details beyond informational phone calls from Recology lobbyists.

Mandelman called Recology’s political spending “unseemly” but didn’t take issue with the lobbying. He said it makes sense for the firm, given what’s at stake.

“They are a corporation trying to look after their interests,” Mandelman said. “They are clearly under intense scrutiny and at risk of losing their monopoly.”

‘Huge Mistake’

In early December, the relationship between Recology and City Hall began to disintegrate.

Supervisor Peskin and Andres Power, Breed’s policy advisor, met with Recology CEO Sal Coniglio to discuss a ballot measure the city's Refuse Working Group helped draft. The document proposed amending the 1932 ordinance to reform the process for setting garbage rates, rather than creating a municipal garbage collector or allowing other companies to bid to provide service.

The reforms included making San Francisco’s city controller the key figure overseeing trash-hauling prices instead of the Public Works director—a position previously held by Nuru. The reforms would also add a ratepayer advocate to the board that oversees proposed increases. Most significantly, the measure would give City Hall the power to amend the ordinance in the future should Recology find itself in trouble again.

The trash company and its CEO had concerns.

The 1932 ordinance is a holy grail of sorts for Recology, as it enshrines the company’s monopoly. The ordinance split San Francisco into 97 different garbage routes and created permits for each one. Recology acquired these permits over the years through a series of mergers and acquisitions, making the firm the only licensed refuse provider in the city.

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If City Hall had the power to change the ordinance without returning to voters, Recology’s monopoly might come under threat should officials decide to let other firms bid on permits.

Peskin left the Dec. 9 meeting with Coniglio expecting to resume negotiations in the New Year, but on Dec. 20—while on vacation in Oaxaca, Mexico—he woke up to an early morning voicemail from Recology’s CEO.

Coniglio reached out to tell Peskin that Recology would instead submit its own ballot measure—one that included some of the reforms but would not allow City Hall to make further changes to the ordinance without voter approval. The CEO shared the watered-down proposal with Peskin in an email later that day.

“In almost every other way it is identical to what has been proposed,” Coniglio wrote. 

Peskin took the move as an act of bad faith. “I then called him and let him have it,” he said.

But Recology—which did not disclose this contact with Peskin as required until contacted by The Standard—still moved forward with its own plan.

On Jan. 6, the firm spent $157,000 to begin printing and circulating its petition,  according to campaign finance records. Within five days, Recology had already dropped another $70,000 on consulting and polling.

An infuriated Peskin rallied support from the mayor’s office and his supervisor colleagues to place the original reform measure on the June ballot. For additional leverage, Peskin got four supervisors to express support for a nuclear option—a potential third ballot measure that would allow other companies to apply for Recology’s refuse permits.

On Jan. 20, less than a week later, Recology pulled the plug on its initiative and Peskin said he would scrap the nuclear option.

“As a sign of good faith and our desire to reach consensus, we have pulled our ballot measure and are focusing on discussions with the City,” Recology’s spokesperson said in a Jan. 21 statement.

John Bouchard, the secretary-treasurer for Teamsters Local 350, which represents Recology’s drivers and other refuse workers, said the company’s ballot initiative “was a huge mistake.” 

He added that the union would prefer to see the money Recology spent on lobbying go back toward community projects and supporting the company’s 1,000-plus local workers.

“I think this is indicative of Recology not doing a good job of reading the room,” he said.

Voters Up

In four months, San Francisco voters will be asked to weigh in on the reform measure to ensure Recology never overcharges ratepayers again. At the same time, the city Controller’s Office has launched another investigation into whether customers are currently being overcharged by Recology.

In an unexpected twist, all sides seem to be coming out of a chaotic year mostly getting what they wanted.

Recology agreed to pay a $95 million settlement to ratepayers and $36 million in criminal fines. It spent nearly half a million dollars on lobbying and dropped almost a quarter-million on a short-lived ballot measure campaign. But it still has its monopoly.

Supervisor Peskin played the role of reformer and took Recology to task in what became a deeply personal power struggle.

And Mayor Breed, having aligned herself with Peskin, continued to distance herself from a corruption scandal that netted some of her closest allies at City Hall.

The only group that has yet to have its voice heard in the process are San Francisco ratepayers, who still have just one garbage choice.

Michael Barba can be reached at [email protected].

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