Sonoma County's dominant garbage hauler has paid more than $3.5 million to the operators of a Solano County landfill who accused it of breaching a contract between the two companies.

The Ratto Group of Companies was ordered to pay the sum to Potrero Hills Landfill Inc. by an arbitrator, who found the Santa Rosa company failed to live up to the terms of a 2009 contract, attorneys representing the landfill announced Thursday.

The Ratto Group had agreed to use Potrero Hills as the exclusive disposal site in any bid it submitted to Sonoma County for its garbage hauling contract, said Palo Alto attorney Jack Hursh, who represented the landfill.

The Ratto Group broke its obligation when it submitted a bid to transport the county's waste to a competing landfill operator, Hursh said.

Eric Koenigshofer, a spokesman for the Ratto Group, said the arbitrator made several mistakes in interpreting the several overlapping contract provisions that dealt with exclusivity.

A retired judge who oversaw the arbitration proceedings decided the award in August and the San Francisco Superior Court confirmed it in October.

The award includes $2.5 million in compensatory damages and more than $1 million in attorney fees and other costs to the Potrero Hills landfill and its parent company, Waste Connections Inc. The Ratto Group has already paid the award, Hursh said.

"This is an industry where long-term contracts like these are the rule not the exception," said Hursh. "This sends a message that these contracts will be enforced."

Koenigshofer said the Ratto Group would have appealed the ruling — and won — if the dispute had been in court instead of arbitration.

"We think that the arbitrator is just completely wrong," he said. "We also believe serious mistakes were made in the arbitrator's awarding of damages."

He said the costs of the award will not be borne by ratepayers and will have no effect on how the company's business is run throughout Sonoma County.

The company, based in Santa Rosa, has the contract for curbside garbage collection for unincorporated Sonoma County and eight of the county's nine cities. The garbage is brought to five transfer stations and then hauled by Ratto either to the county landfill on Meacham Road or another landfill outside Vacaville.

A little less than half of Sonoma County's garbage is dumped in Solano County at the Recology Hay Road landfill in Vacaville, according to the Sonoma County Waste Management Agency.

The outhauling is required as part of an interim re-opening of the county landfill, which was shut in 2005 over concerns that a damaged protective liner might lead to ground-water contamination. Sonoma County is working with water quality regulators to fully reopen the dump.

The Ratto Group is in negotiations with county officials on a 30-year agreement that would extend its operation of the transfer stations and cover other waste services. The same deal would lease operation of the county landfill to Republic Services, an Arizona-based refuse company.

The Board of Supervisors is set to consider the draft agreement in late February, with separate decisions thereafter by city councils.

(Staff Writers Lori A. Carter and Brett Wilkison contributed to this story.)