Dive Brief:

• California hauler North Bay Corp., owned by The Ratto Group, has agreed to pay the city of Santa Rosa $2 million to settle alleged contract violations for operating faulty refuse trucks and "maintaining a record of poor customer service," as reported by The Press Democrat.
• The hauler originally faced nearly $18 million in fines, however the city agreed to a lower settlement figure to ensure North Bay Corp. properly complies with the remaining 10 months of its contract with the city.
• The settlement waives any future or additional fees relating to North Bay's fleet or any alleged failure to get approval from the city for use of alternative fuels, per the contract terms.

Dive Insight:

This settlement comes just two weeks after The Ratto Group agreed to sell all North Bay Corp. waste and recycling operations to Recology. Although North Bay's contract with Santa Rosa terminates in less than a year — and the company would not have been eligible to renew its contract due to the alleged violations — this deal will allow Recology to instead offer a bid for the new contract and continue operations in the area. 

A similar contract situation was seen in Michigan when Rizzo Environmental Services sold its operations to GFL Environmental just weeks before Rizzo found itself in hot water for involvement in an FBI corruption probe. This trend of quickly selling operations and exiting the market before company valuation potentially decreases is one that may be tricky to identify, however is important to indicate when pursuing deals. 

While the main crux of North Bay's settlement involved the company's "aging fleet of trucks," The Ratto Group recently showed promise in updating fleet equipment when it debuted a truck with a Wrightspeed electric powertrain system. The Ratto Group was expected to retrofit at least 14 more vehicles with the powertrain throughout 2017, however it is unclear if these plans will still be executed following Recology's acquisition of North Bay.