NDP questions optics, motivation after tire recycling contract awarded to U.S. company

The Saskatchewan NDP is questioning the optics and motivation behind a lucrative tire recycling contract being awarded to California based tire recycler Crumb Rubber Manufacturers in 2022, even as negotiations between the Tire Stewardship of Saskatchewan and Saskatoon’s Shercom Industries were still going on.

TSS is the organization responsible for overseeing all tire recycling in Saskatchewan. For decades before April 30, 2023, Saskatoon-based Shercom was the only company that recycled all scrap tires in Saskatchewan. The company also produces materials made from crumb rubber, created by grinding tires into varying sizes.

On Tuesday, NDP Leader Carla Beck said documents showed that former Saskatchewan Party finance minister Kevin Doherty was hired as a lobbyist by CRM in November of 2022, and that a short time later, CRM was awarded a contract to process up to 100 per cent of used tires in the province.

Opposition Critic Meara Conway peppered Environment Minister Christine Tell with questions about that during Question Period on Wednesday, saying people deserved answers.

“She should be able to answer questions about the changes made by this government to the rules that led to the contract going to this Newport Beach, California-based company which led to a net loss of Saskatchewan jobs,” said Conway.

Tell answered that CRM had been chosen through a “legitimate” Request for Proposals, and that TSS had actually awarded the contract to the company in early June 2022, months before Doherty was hired.

“It’s all hidden in an annual report. TSS board of directors approved a motion to proceed with negotiating a contract with CRM as southern processor for the province on June 6, 2022,” said Tell. “Mr. Doherty was not hired by CRM until November 2022.”

Tell said the U.S. company also had an “outstanding” reputation.

“And we appreciate the economic (impact) — over $10 million of investment by this particular company — and employment of dozens if not 15 or 20 employment benefits that they bring to the community of Moose Jaw,” she said.

In a media release issued Friday afternoon, Prairie Sky Strategy — which employs Doherty — said the former minister “has had no involvement whatsoever with the Tire Stewardship of Saskatchewan’s (TSS) decision to have a ‘southern tire processor.’ ”

“In addition, he did not have anything to do with the issuing of an RFP for the southern location, the awarding of the RFP to a company in June of 2022 or the negotiation and signing of a contract between the company and TSS,” continued the statement attributed to Prairie Sky Strategy president-CEO Jeff Sterzuk.

“Mr. Doherty was contacted by the company in November of 2022 — about five months after the awarding of the contract — and we signed a Letter of Engagement to work with the company in the latter part of November 2022 as they established their facility in Moose Jaw.”

The company said it wouldn’t allow any activities by any of its consultants if their actions didn’t follow applicable rules and laws.

Shercom Reaction

Shercom Industries president Shane Olson said negotiations with the TSS — the organization responsible for overseeing all tire recycling in Saskatchewan — began in 2020, with nine extensions between the parties signed to allow for “meaningful negotiations.”

Olson accused the non-profit of wooing CRM to the province during that time, and eventually signing a contract with that company, effectively replacing his 30-year-old Saskatoon company.

Shercom’s contract with the TSS officially ended on April 30, 2023. At this point, the company can no longer accept or process used Saskatchewan tires.

Olson had no idea that the contract for a southern Saskatchewan tire processor had even been awarded to CRM in June 2022.

“The TSS was supposedly negotiating with Shercom, but in fact, they were operating in bad faith. We found out well after the fact that they’d already signed a contract with the U.S. company,” he said.

The initial offer the TSS made to Shercom also never changed; there would be no inflationary increase from 2012, and the best offer was a 30 per cent cut in processing fees, when there was a more than 40 per cent increase in the environmental fees on tires.

During a telephone interview, Tell said that as environment minister, her role is simply approving and ensuring the TSS product stewardship program.

“I am not involved in the day-to-day oversight and activities of the TSS,” said Tell. “What Shercom is saying, I absolutely have nothing to do with that.”

Asked whether accusations of misleading or bad-faith contract negotiations mean that information should be relayed to her, Tell said: “No, it does not.”

“(TSS officials) are able to — if they looked at the province as a whole and wanted to delve into the possibility of dividing up the province between north and south, and having two processors in the province — that’s up to them to initiate that process and follow it through. I don’t know who they spoke to to figure that out,” Tell continued.

A Freedom of Information request filed by Shercom Industries to find how and why the TSS chose to divide scrap tire recycling into northern and southern regions was received with all 22 pages completely redacted.

Olson has also been unsuccessful finding out what CRM is earning in tipping fees. Both B.C. and Alberta tire processing webpages show what the provinces are paying for different levels of tire processing.

“Everything has been absolutely redacted or silenced, and they are not providing any information as to the contract they’ve received, or in fact where the tires are going. They’re certainly not being processed in Saskatchewan,” he said.

Tire Stewardship of Saskatchewan

TSS CEO Stevyn Arnt said the original RFP for a southern-based Saskatchewan tire processor was issued in 2021 and there was a preferred candidate at that time.

“We didn’t finalize negotiations with them on a contract with them until summer 2022,” he said. “There was no involvement by any lobbyist in any way, shape or form throughout the process.”

According to documents received by the NDP, the RFP was written specifically to exclude Shercom.

When asked what CRM is producing, whether the material stays in Saskatchewan and if there are any value-added products being made, Arnt refused to answer.

“I’m not going to get into what CRM is producing on the other end. I will say we’ve had a very good relationship so far with what they’ve accomplished out of Moose Jaw. We’re very happy with their performance,” he said

Arnt maintained that there is a big-enough market in Saskatchewan for more than one tire recycler, noting that another RFP has been issued for a northern processor as well, and that Shercom was welcome to bid on it.

Olson countered that there is no business model for two tire processors in the province.

“It’s interesting that the RFP was issued with a deadline of Jan. 15 of this year. That deadline was extended to Jan. 30 of this year. To date, it has still not been awarded,” he explained.

Arnt claimed that the northern contract would likely be awarded by the summertime.

650 CKOM has reached out to CRM multiple times and has yet to receive a response.