Judge Orders CRRA To Set Aside $70 Million


NEW HARTFORD – The judge in the case between the Connecticut Resources Recovery Authority and the 70 towns in its Mid-Connecticut Project has issued a "pre-judgment remedy" statement ordering the trash-recovery agency to set aside $70 million to ensure funds are available should CRRA lose the case.

Waterbury Superior Court Judge Dennis G. Eveleigh ruled Feb. 22 that "there is probable cause for the court to find that CRRA has engaged in an illegal loan" and "that CRRA has been unjustly enriched to the detriment of the municipalities by its actions."

The judge, who issued the pre-judgment on the plaintiffs’ behest, made it clear that this ruling should not be "confused with a final judgment in the case."

He also issued a gag order to both sides, who are now working on preparing their final written briefs.

Mediation sessions held last month were largely unsuccessful. The dispute will have to be settled in court.

The issue centers on the CRRA’s ill-fated 2001 trash-for-energy deal with Enron. Following the Texas energy giant’s collapse, which cost the CRRA an estimated $220 million, the quasi-public waste-recovery authority raised tip fees for the 70 towns in its Mid-Connecticut Project.

The towns have argued that they have lost $63.3 million thus far as a result of the raised tip fees, and stand to lose another $6.6 million over the next five years if nothing is done to correct the imbalance.

Representatives for the 70 towns are suing the agency to recover the lost tip fees, and further charge that the CRRA has used funds recovered in other settlements to pay down its own debts instead of reimbursing the towns themselves.

In 2005, the CRRA was able to get back $111 million by selling off assets. Then, in December 2006, the New York law firm of Hawkins, Delafield & Wood LLP settled with the CRRA, agreeing to pay $21 million to help reimburse the 70 Mid-Connecticut Project towns. But New Hartford Selectman Bill Baxter said in January that, despite having a sizeable surplus, the CRRA failed to return any of those funds to the towns.

"There was admission in court that they didn’t return $25 million in surpluses," he said. "We also know that $38 million was taken out of reserves when the initial Enron deal went sour. What was taken from the towns in raised tip fees over the last four to five years should be returned."

It seems the final decision will have little or nothing to do with whether or not it is determined that the CRRA intentionally wronged its member towns.

"A lower court has held that the plaintiffs’ claims of breach of fiduciary duty and unjust treatment do not require any finding of intentional misconduct," Judge Eveleigh wrote Feb. 22. "The court finds that there is probable cause to find that the CRRA had a fiduciary relationship with the municipalities of the Mid-Connecticut Project."

Baxter said he expects a final decision to be rendered this spring.

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