Wakefield Council was paid compensation by one of its contractors after an "asbestos incident", government papers have revealed.
Renewi, which runs recycling services in the area after signing a PFI deal in 2013, paid an undisclosed fee to the council after the hazardous substance was uncovered at a depot in Castleford.
Both parties say no staff were harmed, though documents said the company would cover any legal claims made by staff who "may have exposed to asbestos".
The incident took place in July 2017 when a jet wash disturbed some concrete panels within a wall, but it has only now been made public after a Freedom of Information (FOI) request to the Department for the Environment (Defra).
The facility, on Carrwood Road, had to be temporarily shut, resulting in both the taxpayer and Renewi, formerly known as Shanks, making a financial loss.
But despite the incident taking place two years ago, Defra's papers indicate that the matter was still not settled in June this year.
"The council continues to pursue the claim for losses resulting from asbestos incident at Carrwood Road Transfer Loading Station," they said.
However the document added that Renewi was set to enter an agreement on three conditions, one of which involved covering claims made against the council by any staff who "may have been exposed to asbestos".
Asked about the incident, Glynn Humphries, the council's service director for the environment, said: "During cleaning at the Renewi site at Carrwood Road in July 2017, a sub-contractor inadvertently washed part of a wall containing a cement bonded concrete panels.
"The facility was immediately closed and specialist contractors cleaned up the dust.
"Due to action taken immediately to protect staff, there was no risk to our members of staff.
"The council put in a claim to Renewi due to the loss of working time and the clean-up costs, and this has been agreed and concluded."
Renewi said: "In July 2017, Renewi UK undertook a clean of the Carrwood Road Depot, and appointed a sub-contractor to jet wash the facility. The cleaning resulted in the disturbance of cement bonded white asbestos. Immediate action was taken to protect the people working on site and to decontaminate the depot.
"Tests indicated asbestos levels were no greater than background levels and there was therefore no danger to health.
"As a result of this incident, the council and Renewi incurred losses and Renewi agreed to make certain payments to the council in the spirit of partnership."
The papers also revealed that neighbours of the Glass Houghton site complained about bad smells from the depot earlier this year, believed to originate from waste being left over the weekend.
This issue was later resolved.
Depot bosses also had to increase security after a series of intruder incidents at the depot. At one stage, the number of break-ins had "increased week-by-week", the papers said.
Local Democracy Reporting Service