Report: Ohio paid too much for salt

Staff/wire report

COLUMBUS

Anti-competitive practices by two road-salt companies and a misinterpretation of state law by the state highway department cost Ohio tens of millions of dollars over 10 years, the state watchdog concluded.

The investigation report, released Thursday by the state inspector general’s office, also determined that North Olmsted-based Cargill Inc. and Chicago-based Morton Salt Co. violated a commitment to use Ohio salt by substituting salt mined elsewhere.

Both companies mine salt under Lake Erie under 100-year lease agreements with Ohio.

Noted in the report were disparities in prices paid for salt between Northeast Ohio counties and their counterparts just over the border in Pennsylvania.

For the 2009-10 winter, the report said Morton successfully bid $60.49 per ton for 16,644 tons of salt for Columbiana County in the Ohio Department of Transportation’s cooperative purchasing program, winning the ODOT contract for that county for the eighth-consecutive year.

In neighboring Beaver County, Pa., however, Cargill successfully bid $58.92 a ton for 37,240 tons of salt, even though that county is farther away from the company’s Cleveland stockpile.

During that season in Mahoning County, Morton won with a $58.02 per ton bid, while Cargill won in neighboring Lawrence County, Pa., at $54.78 per ton.

This season, Cargill won ODOT’s Mahoning County contract at $55.27 per ton for 11,000 tons, said Marilyn Kenner, chief deputy Mahoning County engineer.

“We’re glad they’re investigating, and we hope that, if there is some restitution that comes back to the state of Ohio, that it’s also shared with the local governments that participate in the contracts” such as Mahoning County, Kenner said.

Kenner, who has been with the county engineer’s office since 1980, said, however, she would not recommend the county depart from the ODOT purchasing program, in which it has participated for 15 years and from which it has obtained “a stable supply of salt.”

When the county bought salt on its own, she noted that it had trouble getting adequate and timely supplies because salt companies would supply ODOT first because it is a larger customer.

ODOT may have overpaid the companies between $47 million and $59 million over the past decade, and may have communicated with each other, the IG’s report said.

Morton Salt said in a statement the report’s conclusions “are not supported by the facts” and that the company conducts business with integrity and within the law.

Cargill called the conclusions disappointing and pointed to the lack of a finding that the companies communicated with each other.

The company produced more than 50,000 documents regarding its Ohio business from 1999 to the present, cooperated during the 20-month investigation and provided witnesses to answer questions under oath, said Mark Klein, Cargill spokesman. It found just two cases in which it used salt from a Louisiana mine to ensure Ohio had adequate supplies, he said.

The inspector general “ignored the evidence we supplied, and we are disappointed with the report,” he said.

The report also said Ohio has wrongly interpreted the law giving companies that do business in the state preference in contract bidding.

The state is reviewing the IG report’s recommendations, highway department spokesman Scott Varner said.

The investigation stemmed from salt prices that soared two winters ago and sparked a call for an investigation by Gov. Ted Strickland.