A bill that would give Schnitzer Steel Hawaii Co. and other smaller recyclers a 25 percent discount on refuse disposal fees was vetoed Thursday by Mayor Kirk Caldwell, likely setting up an override vote by the Honolulu City Council.

Caldwell, in a letter explaining his veto of Bill 50 (2015), said “it is difficult to identify the public policy served” by offering the subsidy. Roughly $530,000 of the annual “windfall” would solely benefit Schnitzer, whose parent company is one of the nation’s largest scrap metal recycling companies, while $70,000 would go to “local recycling firms,” he said.

“If we believe there is a need to support our small, locally based recycling companies so that they remain sustainable, I am willing to work with the City Council on finding an appropriate approach to do so,” Caldwell said. “The city taxpayers should not be subsidizing large corporations that don’t need a subsidy, such as this one.”

The Council voted 7-1 on Feb. 17 to approve the bill, introduced by Council Chairman Ernie Martin, so a veto override appears likely. Six votes are needed to override the mayor’s veto.

Recycling residue, the nonrecyclable byproduct left after processing, is commonly disposed of by major recyclers at either Waimanalo Gulch Sanitary Landfill or the HPOWER waste-to-energy facility at Campbell Industrial Park.

Those recyclers pay the city $81 a ton plus $25.25 per cubic yard in tipping fees to dispose of recycling residue. The bill would allow them to pay $60.75 per ton, or 75 percent of the standard tonnage fee starting Jan. 1.

Citing a dramatic drop in recycled metal worldwide coupled with rising costs, Schnitzer Steel officials have repeatedly said that the subsidy would help not just them but other companies in the same or related businesses.

Jennifer Hudson, Schnitzer corporate assistant general counsel, told Council members in September that the company’s customer base is estimated at 800. About a half-dozen companies, besides Schnitzer, gave either oral or written testimony in support of the bill.

Martin said he was surprised to learn that Caldwell vetoed the bill, because there are more than enough votes to override.

Martin said the mayor’s concern that only one company would benefit from the bill is disingenuous and inconsistent considering that the city has allowed the same company, Covanta, to operate HPOWER without needing to go through the standard procurement process since the facility was opened in 1990.