Dive Brief:

• Republic Services has acquired Devens Recycling, a C&D recycling and waste transfer facility in northern Massachusetts, according to sources with direct knowledge. Republic declined to give a statement and Devens Recycling did not respond to requests for comment. State records filed Feb. 7 additionally confirmed the transaction.
• The 90,000-square-foot facility, once described as "the largest fully enclosed state-of-the-art construction and demolition transfer station" in the country by the MetroWest Daily News, has been open since 2007. It operates on 11 acres in the former Fort Devens military base, with direct access to a rail spur. The company also offers container rental services.
• The Massachusetts Department of Environmental Protection (MassDEP) verified to Waste Dive this site is currently permitted to accept up to 1,500 tons per day (TPD) of waste – specifically 1,000 tons of C&D and 500 tons of MSW – via truck and rail.

Dive Insight:

MassDEP added multiple C&D categories to its list of waste ban materials in 2006, prompting increased interest in processing capabilities. That same year, the MassDevelopment agency sold land to Devens Recycling and issued a $12 million tax-exempt bond to help it fund construction. Demand could be set to increase once again as MassDEP considers establishing a 15% process separation rate requirement for C&D facilities as soon as next year. Devens Recycling has already met that threshold, per the state's latest data, and could potentially handle more volume from operators that can't.

While those processing services are valuable, many in the local market view this deal as particularly notable because of the facility's transfer capabilities. According to a 2019 study conducted by MSW Consultants for MassDEP, overall waste exports are on the rise and C&D material makes up a notable portion of out-of-state shipments. Landfills run by Waste Connections in New York, as well as Tunnel Hill Partners and Lafarge in Ohio, are among the largest outside recipients for C&D material.

This makes C&D transfer capabilities particularly advantageous, but the same dynamics are also playing out for MSW. Republic currently operates two transfer stations in the region (one in Boston's Roxbury neighborhood and one to the north in Peabody), but neither have direct rail access. United Material Management is currently constructing its own 1,000 TPD C&D processing and rail transfer facility in neighboring Leominster – which may have put competitive pressure on Devens Recycling – but many see this as less of a concern for a national operator.

The broader benefit for Republic is being able to shift material from its local collection and transfer operations to the rail line and send it to one of many company-owned landfills in other states. This type of internalization can be preferable for landfill owners, especially in eastern Massachusetts where haulers are often subject to traffic on the way to capacity-constrained Covanta and Wheelabrator incinerators that sometimes have multi-hour wait times.

Depending on how Republic chooses to utilize the new site, it is possible the company could seek to handle more than 500 TPD of MSW within the 1,500 TPD limit, or pursue a higher overall capacity cap. Any such change would require a permit modification from MassDEP and also need approval from the Devens Enterprise Commission, a local planning authority.

The Devens Recycling operation attracted multiple interested parties that own landfills, given its status as the largest operational rail transfer facility in Massachusetts. The complexities of state permitting requirements for new facilities were also a factor, according to sources. Those sources said Republic's final offer was higher than many had anticipated. Casella Waste Systems already bought another prime rail transfer station in western Massachusetts in 2018, further limiting the list of similar acquisition targets within the state.

Republic has completed Massachusetts hauling tuck-ins in the past and the purchase of this site could position the company for further local M&A activity in the years ahead. According to the company's Q3 results released last October, Republic is prepared for "another strong year of acquisition investment" in the $200 million range for 2020.