Dive Brief:

• LA Sanitation and Environment has ended contract amendment and extension negotiations with the haulers that provide service in its recycLA commercial waste zone system, according to a spokesperson. This includes Athens Services, WM, Republic Services and others.
• The current 10-year contracts expire in January 2027. The agency expects to release a new RFP by this fall, and execute the next contracts by “mid 2026” to allow time for a service transition in 2027.
• A Los Angeles City Council committee is also considering a motion Friday to create a “recycLA Incentive Program” for the estimated 60% of customers that don’t yet have organics service as required by state and city law. Councilors noted that $4 million in city funding is available to help offset the added cost for these customers.

Dive Insight:

The recycLA program, described by LASAN as “groundbreaking” for its time, has yielded a significant amount of investment from haulers and boosted areas such as edible food recovery. But city staff feel some aspects of the contract design haven’t aged well, leading to high costs for customers and limited progress on certain environmental metrics.

Last year, the council’s Energy and Environment Committee directed LASAN to pursue parallel paths of renegotiating contracts while also preparing for a potential RFP. Chair Katy Yaroslavsky, who directed LASAN to cease negotiations by the end of February unless there was a resolution, did not respond to a request for comment.

The recycLA program covers approximately 66,000 accounts, including commercial businesses and multifamily buildings with five or more units. It divided the city into 11 exclusive franchise zones and substantially narrowed the field of waste companies providing commercial service. That list includes Athens, WM, Republic, NASA Services, Universal Waste Systems and Ware Disposal.

The companies that won contracts in 2016 for the original program agreed to update their fleets, offer universal recycling and organics collection service, enhance worker safety protections and more. This led to 543 new compressed natural gas trucks and more than $175 million worth of investments in new or upgraded facilities. Companies reported an uptick in recycling activity, but many have not hit their contractually required disposal reduction targets.

Cost has also been an issue, with some customers reportedly seeing their bills double from the base rate due to added fees. A 2019 contract amendment ended access and distance fees for blue bins, but it came at an expense to the city.  Adoption of organics collection — which became a state and city requirement since the program began — has also been slow. This is in part because recycLA allows haulers to offer organics as an added service rather than part of a bundled rate.

LASAN sought to address these concerns in months of negotiations for five-year contract extensions; haulers wanted 10-year extensions. The companies said at a Feb. 23 council hearing they’d agreed to many changes, such as cutting some fees and investing in electric trucks. LASAN Director Barbara Romero said these offers “came with future impacts or additional costs to the customers.”

At the time, LASAN said it had already taken steps toward an RFP, such as submitting a notice of intent to contract to the city’s chief administrative officer for review.

According to a Feb. 20 report, the agency plans to make many updates in its new RFP, “including those based on new industry standards as well as all of the program changes and restructuring needed based on lessons learned to date from administering the recycLA program.”

One of the more notable changes could be a reduction in the number of haulers. The program started with seven (and shrank to six after an acquisition by Athens) but LASAN feels a smaller, unspecified number would be more efficient. The agency, which services residential customers, could also take on certain types of service for some recycLA customers.

Other changes include requiring a minimum level of blue and green bin service for each customer, with education and outreach led by the city instead of haulers, and factoring green bin organics service into a bundled maximum rate. LASAN also aims to eliminate access and distance fees on all bins. The RFP would also eliminate overweight and overfill fees, and limit the amount time of bins can be left on the street.

Collection fleets would have to be “all-electric, surpassing state requirements.” The new RFP would also update “uniformity in proof of provision of service requirements.”

During the hearing, multiple haulers asked for more time to negotiate and said that amending the current contract could bring the city’s desired changes sooner.

Athens declined to comment on LASAN’s decision to end negotiations. A WM spokesperson said via email that the company “greatly values and honors LASAN’s discussion and process, and we look forward to continuing our partnership in servicing commercial establishments in the city.”

Republic said via email that it looked forward to “a long-lasting partnership” and supported the city’s sustainability goals.

“We respect the bureau’s decision to improve the recycLA program through the development and release of a new RFP. Moving forward, we will continue to perform at our highest level to achieve the program goals and meet stringent new state organics law mandates,” said Melissa Quillard, senior manager of external communications.

Teamsters Local 396, which represents certain local employees and backed the program’s launch, declined to comment. In a September letter, the union said it supported possible options that included LASAN issuing a new RFP.

LASAN recognizes that many of the same companies would likely bid on a new RFP, but hopes that a reconfigured “recycLA 2.0” could yield new results and more competitive pricing.

Dan Meyers, division manager for the recycLA program, said at the hearing that the agency planned to study county and state rates to “begin to benchmark where we need to be, as well as benchmarking services and service rate models utilized by other jurisdictions." He said there was a sense of “urgency” to award contracts by 2026 so that haulers would be ready to start (or continue) service in 2027. 

“That leaves us with just less than two years to develop an RFP, release it, evaluate, negotiate and award."