The group Citizens for Water Accountability Trust and Reform filed a lawsuit Tuesday in Clackamas County alleging that the Metropolitan Service District is subsidizing commercial “dry” garbage services by overcharging haulers for residential garbage services.

“It appears that Metro has acted in a way that systematically causes residential garbage customers to be overcharged to subsidize demolition contractors,” John DiLorenzo, one of the attorneys for the plaintiffs in the case, Thomas Reilly and David Hoover, said in a press release Wednesday.

The group hopes the lawsuit will result in lower garbage costs for residential customers, DiLorenzo said.

Metro spokesperson Jim Middaugh said the agency did not have a comment on the lawsuit at this time.

According to the suit, Metro is undercharging for the disposal of “dry” waste, also known as “non-compacted waste” which consists mainly of “commercial drop boxes and loads hauled by small businesses or contractors."

Dry waste is more costly to dispose because, unlike residential waste or “wet” waste, it is separated and some components are recycled and reused. Wet waste, the kind of trash you put in your curbside black bin, is taken to a landfill as is.

According to the release, Metro’s own calculated the cost for the fiscal year of 2019-2020 for providing disposal services is $92.03 per ton for wet waste and $109.82 per ton for dry waste. It charges $97.45 per ton for both services.

These rates apply to the Portland metro area, including Clackamas, Multnomah and Washington counties.

The suit alleges that Metro is blending the rates and charging the same amount for both, ultimately using residential customers to subsidize undercharged commercial customers. The lawsuit contends this is against Metro’s own charter, which prohibits the agency from charging more than the cost of providing goods or services.

“Because haulers pass along their costs to their residential customers,” DiLorenzo said in the release, “Metro residents have for years been paying more than the actual cost of disposal of their waste to subsidize other Metro activities.”

“Very few residential customers are aware of the charges imposed by Metro on disposal services, nor do they have the wherewithal to assure they are not overcharged,” DiLorenzo said Thursday. “Unfortunately, there is no independent group to audit Metro. And so, my clients felt an obligation to do so.”

DiLorenzo said Citizens for Water Accountability Trust and Reform, also known as WATR, asked Metro to change this practice in March, and Metro said it would not change the way it sets rates.

This is not DiLorenzo and WATR’s first time suing a government agency on the behalf of ratepayers.

In 2017, the City of Portland agreed to pay $10 million to settle a six-year lawsuit brought by DiLorenzo and WATR alleging that the city had spent millions of dollars of water and sewer funds from ratepayers on programs that weren’t at all related to providing clean water. Thirty percent of the money -- $3 million -- went to DiLorenzo’s lawfirm.

WATR also filed a suit against Commissioner Nick Fish in July of 2019, saying a planned $12 million payment from the sewer utility that was part of an agreement with the federal government to speed up remediation of the Portland Harbor Superfund site was unlawful. Fish oversaw the sewer utility before his death.

-- Lizzy Acker

503-221-8052, lacker@oregonian.com, @lizzzyacker

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