Corporate Profile: Laidlaw Environmental Services

Introduction

Historically Laidlaw Waste and Laidlaw Environmental Services have been subsidiaries of Laidlaw, Inc., which in turn is a 47.5% owned subsidiary of Canadian Pacific. In 1997, Laidlaw sold both their hazardous waste and solid waste divisions. Rollins Environmental Services reportedly bought Laidlaw's hazardous waste business. The new company has retained the name Laidlaw Environmental, and Laidlaw recieved a 66.66% controlling interest in Rollins.¹ This "reverse acquisition" is similiar to how Laidlaw gained 40% of Allied Waste Industries' stock when Allied "bought" Laidlaw's solid waste business. Laidlaw then sold their 40% stake in Allied to a group of investors, one of them, Leon Black, a former ally and associate of convicted junk bond king, Mike Milken. Black was a managing director at Drexel when the company plead guilty to 6 felony charges and paid a $650 million fine for securities fraud in 1988.²

Laidlaw's Beginnings and Expansion

In 1959, at the age of 37, Michael DeGroote paid $75,000 for a small trucking firm named Laidlaw in Hagersville, Ontario. DeGroote's business grew the way many waste businesses do, by acquisition -- one small company at a time. DeGroote eventually sold his stake to Canadian Pacific in March 1988 for cash and Canadian Pacific shares valued at $499 million. He resigned as a Laildlaw director in December of 1990.

Troubles at Laidlaw, however, continued to dog DeGroote even after he left. In August 1992, Laidlaw denied all charges but agreed to pay US and Canadian shareholders $7.65 million in a class action settlement which claimed that the officers had "misrepresented the financial condition of Laidlaw."³ In 1993, DeGroote and associates paid $23 million to the Ontario Securities Commission in a settlement for insider trading involving Laidlaw stock. ⁴

In the meanwhile, Degroote busied himself building a new waste empire. In 1991, DeGroote took over Republic Waste from Browning Ferris Industries founder Tom Fatjo.⁵ In 1995 DeGroote gave up control of Republic to Waste Management Inc. founder Wayne Huizenga. However, DeGroote is still one of Republic's largest shareholders and is Vice-Chairman.⁶

Dealings and More Expansion

Laidlaw played a major role in helping BFI launch their hostile takeover of Attwoods in 1994. Laidlaw sold BFI their 29% stake in Attwoods to for $132.5 million. Laidlaw used these funds to buy up US Pollution Control Inc. (USPCI), a deal which, according to some accounts, made Laidlaw the largest hazardous waste manager in North America.⁷

Environmental Problems/Violations

Nashville, TN

• Fined $10,000 for lime blowing out of a storage vent in October 1995.
• Paid a fine of $80,000 in November, 1993 and agreed to $3.5 million in improvements to abate odors emanating from "bio-sludge."⁸
  

  Louisiana

• Fined $60,000 for air quality violations involving petroleum liquids stored in tanks at its storage and treatment facility near Silverwood.⁹
• Fined $1 million for violations including illegal handling and disposal of hazardous wastes at its commercial hazardous waste fuel blending facility in Crowley.¹⁰
  

  Roebuck, SC

• $500,000 civil penalty addressing hazardous waste burning violations.¹¹
• Settled for a $100,000 fine for more than four years of mercury discharge violations.¹²
• Fined $22,500 for hazardous waste burning violations discovered during a 1990 inspection.¹³
• Proposed stipulated penalty of $61,500 for violations of specified operating requirements in their hazardous waste storage facility.¹⁴
• Fined $106,000 for discharging mercury at higher than legally allowed rates into the North Tyger river in 1992.¹⁵
• Penalized $30,000 for unauthorized emissions from their incinerator's stacks.¹⁶
  

  Pinewood, SC

• Penalized $1.825 million, the state's largest penalty ever, for repeated violations including improper disposal of infectious waste and wastewater sludge (36 total).¹⁷
• Required to pay into a trust fund, to total $133 million cash in the year 2004, to cover any clean-up costs.¹⁸
• Fined $214,000 for four hazardous waste violations: improper disposal of infectious waste, inadequate treatment of sewer sludge, insufficient testing of debris and soil, and excessive contamination of waste at its landfill. As one top agency official put it, "Laidlaw must be more diligent in its operations."¹⁹
• Pushed for a bill that would make environmental audits priviledged information which is inadmissable as evidence.²⁰
  

  Canada

• Fined $80,000 for emitting odors and $14,000 for silt discharges in March 1993 in Storrington Township northeast of Kingston.²¹
• Became legally responsible for toxic emissions emanating from more than 800 barrels and PCB-contaminated electrical equipment illegally buried by the previous company, in Mercier. Laidlaw was fined only $10,000 due to the $9 million they had already spent cleaning up the site.²²
  

  Columbus, Ohio

• Forced to address complaints from the school next door of odors and noise In 1994, odors from Laidlaw's industrial wastewater treatment facility were so strong, children reported burning eyes and throats.²³
• Alleged in two lawsuits, one by city officials and another by two environmental groups, to have discharged illegal levels of heavy metals into the city sewer system.²⁴
  

  Cleveland, Ohio

• Signed a consent decree with the state to close and clean GSX toxic waste site- five years later, the soil is still contaminated. The site had problems before Laidlaw purchased GSX, but Ohio EPA Director Richard Shank later called Laidlaw's operation, "horrendous and shoddy...I never would have dreamed that (Laidlaw) would have gotten themselves into this kind of trouble...this is not some corner drug store, this is a hazardous waste facility."²⁵
  

  Elsewhere, USA

• Named a potentially responsible party (prp) in at least 6 Superfund sites. And they are also listed in EPA court data as defendents at several other Superfund sites, according to EPA data. The company has also been subject to several antitrust actions.

  Recent Developments

  As described earlier, Laidlaw has "sold" both their solid waste and hazardous waste divisions. So now the history of Rollins and Allied come into play. Both have interesting track records.

  Rollins Environmental Services
  Business Week ranked Rollins Environmental's board of directors as one of the worst. Business Week said of these companies. "The companies tended to fail the tests of independence or accountability."²⁶ Rollins has been cited for more than 100 violations, both state and federal, but has not paid any penalties.²⁷ And in 1989,"Rollins was fined $ 1.9 million for its involvement in illegal shipments of hazardous ash; this year, after running eighteen years on various temporary permits, it received a final operating license."²⁸

  Allied Waste Systems
  Allied's Chief Executive Officer, Roger Ramsey, was the Vice President and Chief Financial Officer for BFI from 1968 to 1976. In 1983, BFI pleaded no contest to charges of price-fixing and conspiracy in Atlanta from 1974 to 1979. Allied Waste Industry, Inc.'s Fort Mill transfer station was issued a consent order in response to charges of leakage and operational problems that affected the environment. Container Corp., a South Carolina subsidiary of Allied that was responsible for the Fort Mill transfer station, paid a $55,000 fine and the station was closed.

  Organizing Tip-For all intents and purposes, Laidlaw's track record is still relevant since the same management will be probably be operating the facilities. Ask them, in public, for the backrground and experience of the management for your local facility.

  References
  1 "Pricing Surfaces on Laidlaw Fund Tranches," Institutional Investor, Bank Letter, March 10, 1997.
  2 "Allied Waste Announces Completion of Shareholder Transactions Closes Senior Discount Note Offering," PR Newswire, May 15, 1997, "Drexel to Pay $650 million in Guity Plea," Chicago Tribune, December 22, 1988.
  3 "Class Action Suits Lure Shareholders: But Laidlaw case shows it's not easy money," Eric Reguly, Financial Post, September 30, 1993.
  4 "Cragnotti pays $ 2.67 million," Tony van Alphen, Toronto Star, April 29, 1993.
  5 "Fatjo and Hall Return to Waste Management Business with ENVIRx," Integrated Waste Management, July 22, 1992.
  6 "Odd Union Intrigues Wall St.; Waste Manager Joins with Insurer," Terrence L. Johnson; and Stephen Phillips, The Cleveland Plain Dealer, May 26, 1996.
  7 "Attwoods PLC - BFI Offer Extended, etc," Extel Financial Limited, Regulatory News Service, November 4, 1994, "Laidlaw expands hazardous waste business with purchase of Union Pacific [sic]" The Ottawa Citizen, December 7, 1994.
  8 "Waste Plant Fined $10,000 After Lime Leak," Rob Moritz; The Nashville Banner, October 31, 1995.
  9 "Law Laid Down for Laidlaw," Louisiana Industry Environmental Advisor April, 1994.
  10 "Laidlaw Hammered by DEQ," Louisiana Environmental Compliance Update, March, 1994.
  11 "EPA Targets Waste-Burning Violators For Penalties," Reuters, November 15, 1994; "EPA Cites Monsanto For Hazardous Waste Violation; Seeks $555,900 Fine," PR Newswire, November 16, 1994.
  12 "Laidlaw: No Collusion," AP Online, December 13, 1994.
  13 "EPA Fines Two South Carolina Incinerators," South Carolina Environmental Compliance Update, March, 1994.
  14 "EPA Announces Hazardous Waste Combustion Enforcement Iniative," Arnall Golden & Gregory; Georgia Environmental Law Letter, October, 1993.
  15 "Sewer District Annexes Laidlaw," Shelly Haskins; Spartanburg Herald-Journal, July 11, 1996.
  16 "SCDHEC Issues Twenty-Three Consent Orders," Haynsworth, Marion, McKay & Guerard, L.L.P.; South Carolina Environmental Compliance Update, April, 1993.
  17 South Carolina Environmental Compliance Update, November, 1993.
  18 "SCDHEC Board Order Requiring Trust Fund and Limiting Capacity Survives Two Preliminary Challenges," Haynsworth, Marion, McKay & Guerard, L.L.P.; South Carolina Environmental Compliance Update, August, 1994.
  19 "DHEC Levies $214,000 Landfill Fine," The Herald (Rock Hill, S.C.) August 21, 1996 Wednesday.
  20 "Don't Let Industry Hide Audits," William Want, Special to The Herald; The Herald (Rock Hill, S.C.) May 11, 1996 Saturday.
  21 "Laidlaw fined $94,000, " Financial Post, March 24, 1993.
  22"$10,000 Fine For Laidlaw Decried As 'Pro-Polluter'," Alexander Norris, The Gazette; CP The Gazette (Montreal), September 17, 1996.
  23 "Company Hired To Sniff Out Odors Near Hilliard School," Jeff Ortega; The Columbus Dispatch, December 21, 1996.
  24 "School Principal Hoping New Sewage Building Will Clear Air," Randall Edwards; The Columbus Dispatch, September 15, 1996"
  25 Laidlaw-A Corporate Profile, CCHW, 703-237-224.
  26 "Campbell Board Best, ADM Worst," Reuters, November 14, 1996.
  27 "Mrs. Robinson's neighborhood, environmental activist Florence Robinson;" The Sierra Club Bulletin, July, 1996.
  28 "Up in smoke; Clean Air Act amendments," The Nation, October 23, 1989.