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Corporate Profile: USA Waste Services Inc.
USA Waste was founded in 1985 by Donald F. Moorehead Jr. in Houston Texas. Moorehead, who also founded Mid-American Waste Systems, was following the model of BFI and Waste Management, two companies who redefined the waste industry by instituting a policy of rapid international expansion and consolidation of markets. Moorehead left the company soon after its inception to concentrate his efforts on Mid-American, but retained a controlling interest. He returned in 1994 as Chief Development Officer, bringing in John Drury, the former president of BFI, to run the company. USA, unlike BFI, has pursued an "old fashioned" method of waste management, "collecting it, hauling it and dumping it in the ground," with minimal investment in recycling programs and incinerators. (1)
Some of USA Waste's notable acquisitions include, Chambers Development Co in 1995, Sanifill Inc and Western Waste Industries in 1996; United Waste Systems, Mid American Waste Systems and the Canadian solid waste assets of Allied Waste Industries in 1997. Currently, USA Waste is the third largest garbage company in North America with operations in 42 states, the District of Columbia, Canada, Mexico and Puerto Rico. (2)
USA Waste has followed the industry model of expansion by using reverse stock swaps which allow them to take a controlling interest in companies and pay in shares of stock instead of cash. USA used this method in its acquisition of various companies, including United Waste Systems and Western Waste. Often executives at the company being bought are retained and given seats on USA's board of directors as was the case with John Rangos from Chambers, Kosti Shirvanian from Western Waste etc. (3)
Another USA Waste acquisition strategy has been aggressive pursuit of troubled companies. In 1996, USA announced that it had signed an agreement to purchase the New York based Barretti Group, whose founder had recently been indicted on charges of being a member of a cartel which was inflating prices and controlling the waste collection industry. (4)
USA Waste's acquisition of Chambers Development Company occurred after Chambers was forced to restate its earnings in 1992. The restated earnings showed that Chambers' profits since it became publicly traded were much lower then previously reported. This led to a large decline in the value of its stock and several shareholder lawsuits, after which, USA stepped in and bought the larger Chambers. (5) A similar situation occurred with Mid-American Waste Systems. Mid-American was reeling after losing $186.2 million in 1995 and co-founder Chris White was facing indictment on charges he bribed elected officials. (6) As with Chambers, Mid-American's poor situation made it a target for a takeover.
In what had become an industry pattern, the scandal of yet another set of waste industry cooked books proved an opportunity for USA Waste. As can be seen in our online corporate profile of Waste Management Inc., the world's leading waste trafficker fell prey to USA Waste in 1998 as a direct result of being forced to write off a decade's worth of inflated earnings reports. A staggering $3.54 billion worth!
Under the terms of the merger, John Drury and top USA Waste officers would retain their positions, but the board of directors would be split evenly between the companies. This assured that an estimated 20% of America's solid waste customers and the communities that host the mega-company's landfill sites would remain subject to the same flawed model of corporate waste management, one putting short term profits and private enrichment over waste reduction and the right of community's to say no. (7)
Senior Industry Players:
In order to understand USA Waste's policies and practices, several of the key people involved in the formation and operation of the company must be examined.
John Drury became CEO and Chairman of the Board of USA Waste in May of 1994. Drury had been president and Chief Operating Officer of Browning Ferris Industries (BFI) from 1982-1991 where he was in charge of all of BFI's solid waste operations. (8) Drury oversaw BFI during a period when the company was cited numerous times for both anti-trust and environmental violations. Some highlights include: A $3.25 million plea bargain agreement with the EPA and DOJ where BFI plead guilty to discharging hazardous waste into drinking water supplies in Williamsburg Ohio; (9) and a $3 million settlement with the state of New Jersey to avoid inclusion in a lawsuit brought by the state for price fixing and bribery of state officials. (10) BFI also was sued along with WMI in the largest private anti-trust case ever filed against the waste majors. The plaintiffs backed up their allegations of a national price fixing and customer allocation conspiracy with a July 27, 1990 court filing (Memorandum In Opposition To the Defendants' Motion For Summary Judgement) that could serve as a primer on the nature of the business. See a summary of this important case in Giants of Garbage, Harold Crooks' 1993 expose of the waste management industry. BFI eventually settled the class action for $30.5 million in 1990. (11)
Under Drury, officers with roots in the old style trash disposal industry --- with its history of treating customers like private property --- were often retained. The following excerpt is taken directly from the national class action (see above) and concerns former BFI employee John Pinto: "As set forth in testimony before the New York State Assembly Standing Committee, Pinto had clear ties to organized crime, and was personally appointed by BFI President John Drury:
The President of BFI came down there and appointed Johnny Pinto as Vice President. He has been associated with organized crime for twenty years and his father before him..
During the time he served as co-regional vice president, all district managers in the region reported to Pinto, and he reported directly to John Drury." (12)
BFI's alleged associations certainly raise interesting questions about the degree to which the pre-EPA Wall Street version of the industry differs from the original business which was often regulated by strong arm tactics.
Kosti Shirvanian founded Western Waste Industries, a solid waste management company started in Los Angeles in the 1950's and bought out by USA Waste in 1996. Shirvanian headed Western Waste during the period when its violations occurred (see below), he retained a position on USA's board of directors and, with a large ownership stake, retained considerable influence in USA Waste. According to Leslie Bittenson, USA Waste's regional vice president and Chief Operating Officer for the Western Waste subsidiary stated that: "(Shirvanian)'s made so may contacts over the years that I am constantly turning to him for advice." (13)
Louis Paolino was the founder and president of Soil Remediation Services. Paolino came to USA Waste after his company was bought out by USA. Paolino was part owner in Joseph Paolino and Sons Inc., the company which contracted the barge, Khian Sea. The Khian Sea famously left Philadelphia with a cargo of toxic incinerator ash and sailed for two years, during which it dumped 4,000 tons of the ash on a beach in Haiti. (14) Paolino had owned 6.9% of USA Waste, though it is theorized that he sold the majority of his stake inUSA due to the unfavorable publicity generated by the Khian Sea incident.(15)
Violations
The violations summarized below are categorized according to the company which committed them. It is important to note that some violations occurred before USA Waste bought out or merged with a particular company. It is crucial to examine them however, as officials in charge of acquired corporations often are retained following take-overs, as was the case with Kosti Shirvanian, Louis Paolino etc. The question becomes whether the corporate culture at USA Waste really represents meaningful change. You be the judge.
USA Waste
1997: 712 tons of soil contaminated with PCB's is disposed of at USA Waste's West Plains, WA. dump. The landfill is designated as "limited purpose" and was designed to hold tires, sterilized medical waste, construction materials and soils contaminated with petroleum. The landfill is prohibited from taking material contaminated with hazardous wastes such as PCB's. Ed Hares a hazardous waste inspector says of the landfill: "The Graham Road site shouldn't be used to dump PCB's and other industrial wastes. The Graham Road landfill is spooky as far as I'm concerned. I don't like where it's sited. People are still drinking water from that area. You can engineer things (to protect groundwater), but most of these landfills are going to fail sooner or later." (16) The EPA has determined that the soil was buried illegally, however the assignment of blame for the contaminated soils presence in the landfill is murky. USA Waste's involvement began when landfill manager Daryl Startin said that the landfill would accept the soil because the owner had told him it contained a very low level of PCB's. However, said Dan Duncan, the EPA's Regional PCB coordinator, "That was the wrong call." This issue raises serious questions about USA Waste's control and monitoring of hazardous substances coming into their landfills and whether or not there was a deliberate violation of state and federal regulations involved in USA accepting the waste in the first place. To this date, no fines or penalties have been levied against the various parties. (17)
1996: USA Waste agrees to a settlement with the federal government and state agencies in Illinois concerning the filling of wetlands by Countryside Landfill's previous owners. USA agrees to pay $3.6 million per year for ten years into the Illinois Wetlands Conservation Account; construct a 210 acre wetland adjacent to the property; set aside $400,000 for the maintenance of the constructed wetland and pay $10,000 to the U.S. Dept. of Justice. The settlement was reached because Army Corps of Engineers officials had refused to allow USA to fill other wetlands for expansion of the landfill until the previous violations were settled. (18)
1993: USA Waste faces stiff opposition in Gwinner, North Dakota concerning a proposed landfill expansion. The primary issue is the presence of an estimated 4000 barrels of industrial waste dumped at the landfill over a number of years. State health officials have refused to allow expansion of the landfill without cleanup of the waste and have levied a fine of $80,000 against USA Waste for failure to move the barrels despite a 1990 agreement. (19) State officials offered provisional expansion approval for the cleanup of the industrial waste, however, USA Waste said, "the $1 million-plus cost of the first phase is too risky without assurances from the state of approval for future expansion." USA Waste is also in violation of state regulations stemming from its disposal of three times the permitted amount of garbage. (20)
Western Waste
1996:. Louisiana State Rep. Michael Russo pleads guilty to extortion for pressuring Western Waste into buying property he owns in return for helping the company to obtain a landfill permit. Russo is paid $150,000 by Vern Hizel, manager of Western Waste's operations in Louisiana. Hizel pleads guilty to one count of failure to report a felony and receives probation in connection with the payment to Russo. (21)
1995: Western Waste in Texarkana, Arkansas is ordered to pay a $205,000 penalty for poor operation of a solid waste site and to hold $799,000 in escrow for future remediation. (22)
1989: Hacob (Jake) Shirvanian, Vice President and Manager of Western Waste is fined $125,000 after pleading no contest to charges of mixing illegal hazardous waste, (including heavy metals and dry cleaning wastes) with household garbage. USA Waste is fined $100,000 for the incidents which occurred between January of 1985-July 1986. (23)
1989: Western Waste agrees to pay $900,000 in fines after pleading no contest to charges that it "engaged in a plot to eliminate competition and artificially inflate commercial trash hauling prices." (24)
United Waste
1997: United Waste pays a $150,000 fine to the state of Mass. for environmental violations at landfills in Barre, Westminster and Chicopee. The violations included burying more trash than permitted, improperly using demolition and construction material to cover trash, and using cover material that contained asbestos. In addition, United Waste agrees to provide $250,000 in recycling and disposal services for communities statewide. (25)
The founder of United Waste was Bradley Jacobs, who achieved some notoriety for his plans to build a toxic waste incinerator and landfill in the poor West African nation of Benin. The facilities would have taken toxic waste from the U.S. and Europe. Jacobs said in an interview that he dropped the plan because of political opposition. Officials in the neighboring country of Nigeria were reported to have found the plan reprehensible. (26)
Sunray
1996: Sunray Inc. continued its bid to build a 16 acre landfill on Hobbes Mtn. near Fayetteville Arkansas. A permit for the operation was given to Sunray by the Arkansas Dept. of Pollution Control and Ecology despite the fact that the Arkansas Solid Waste Division had previously declared the site unsuitable. The issue at stake concerns the geology of the area. The Hobbs Mtn. Site is characterized by underground water pools and cracked limestone, suggesting that any leachate from the landfill is in danger of contaminating aquifers and nearby rivers. The site is also unstable, being located near an earthquake fault line. Despite these concerns and the question of whether Sunray's parent company USA Waste should be prohibited from activity in Arkansas for violating the state's "bad actor" law, the PC&E rules that citizens groups concerns were not valid, having been raised after the legal period of public discussion. (27)
Chambers
1994: Chambers pays $500,000 in fines to the SEC to settle charges that they had altered financial records to make the company appear more profitable. John Rangos, (Chambers chief exec. and member of USA's board of directors), and other officers sign a "cease and desist"order with the Securities and Exchange Commission, promising never to do it again. (28)
Empire Sanitary Landfill
1997: Empire Sanitary Landfill, a waste service company in Pennsylvania and subsidiary of USA Waste, pleads guilty to giving $129,000 in illegal campaign contributions to 10 political candidates. The company agrees to pay a record $8 million fine, the largest ever for a campaign finance violation.
Empire is alleged to have illegally funneled the money by having employees and business associates make donations and reimbursing them from company accounts. During the time of the illegal contributions, Empire was lobbying on a trash transportation bill pending in Congress. In addition to the company's fine, four former officials of Empire, a business associate and a Pa legislator face trial in a 140 count indictment alleging that they made the contributions and attempted to cover them up when prosecutors began an investigation. (29)
Grand Central Sanitary Landfill Inc.
1998: Grand Central, a subsidiary of USA Waste signs a Consent Order and Agreement with the Pennsylvania Dept. of Environmental Protection for violations at its landfill facility. The company agrees to pay $1.52 million for the violations. 30
Organizing Strategies
When organizing in opposition to a particular project by a company such as USA Waste several approaches may be taken. Many states have "bad actor" laws which prohibit a company from doing business or starting new projects based on past activities and/or majority owners that have track records of illegal activity including violations, convictions etc. Make state and local officials aware of the company's past and the fact that they may be in violation of such laws. Share USA's record of violations with friendly media sources to get stories in local papers questioning their projects and drumming up support for opposition to such projects.
1. USA Waste Inc. Fact Packet. Center For Health, Environment and Justice. 1998, pg. 2
2. USA Waste and United Waste Sign Merger Agreement. Industrial Environment, May 1, 1997.
3. Arkansas Democrat Gazette, 11/30/95.
4. Raab, Selwyn. Texas Company Seeks to Acquire Garbage Business Linked to Mafia. The New York Times, 1/23/96.
5. Wasted Success; Pittsburgh A Loser as Chambers Development Company Sold, Pittsburgh Post-Gazette, December 2, 1994.
6. Carter, Ron. Down in the Dumps. The Columbus Dispatch, May 12,1996.
7. Feder, Barnaby J. Waste-Hauling Companies Announce $13 Billion Merger. The New York Times, March 12, 1998.
8. Taken from USA Waste 1996 10-K Report Filed with SEC.
9. Form C Compliance History: Browning Ferris Industries and Subsidiaries, filed with the Commonwealth of Pennsylvania, Dept. of Environmental Resources, Bureau of Solid Waste Management. July 1, 1992. pp. 47 and 126.
10. Cumberland Farms et. al. vs. Browning Ferris Industries, Plantiff's Memorandum in Opposition to Defendant's Motion for Summary Judgement, United States District Court for the Eastern District of Pennsylvania No. 87-3717, p. 62.
11. Zuckerman, Laura, Trash Talk: BFI, The Hutchinson News, September 22, 1996, p.13.: Also see Harold Crooks, Giants of Garbage, (Toronto: James Lorimer, 1993)
12. Cumberland Farms et. al. vs. Browning Ferris Industries, Plantiff’s Memorandum in Opposition to Defendant’s Motion for Summary Judgement, United States District Court for the Eastern District of Pennsylvania No. 87-3717, p. 66.
13. Morgan, Skip. Dump Exec's Visit May Have Aided Cause; Supervisor Tom Mullen Says it's Now Possible He May Support Expansion of El Sobrante Landfill. The Press Enterprise, Riverside, California, 10/24/96.
14. Knight, Danielle, Environment: U.S. Waste in Haiti May be Returned To Sender, Inter Press Services, 2/5/98.
15. Lipsett, Brian and Chris Sevanick. The Wild, Wild Waste. Everyone's Backyard, Fall/Winter, Vol. 13, No. 4.
16. Steele, Karen Dorn. Soil Laced with PCB's at Landfill; Feds to Determine Whether Dirt Should Be Moved. The Spokesman-Review, 5/15/97.
17. Steele, Karen, Dorn EPA: Toxic Dirt Buried Illegally in Landfill; PCB Soaked Soil Should have Gone Out of State, Agency Says. The Spokesman-Review, 3/1/98.
18. Spencer, LeAnn and Matt O’Connor, Grayslake Landfill to Pay $4 Million. Chicago Tribune, 3/22/96.
19. Wheeler, Marilynn. Gwinner Landfill Proposal Gets Public Hearing. Aberdeen American News, April 20, 1993.
20. Springer, Patrick. USA Waste Waits for Gwinner's Reply. Forum, June 23, 1993.
21. Smith, Raymond. Supervisors Records Sought. The Press Enterprise, Riverside Ca. 10/20/96.
22. Waldon, George. Court Ruling Limits Suits; Regulators Retain Control. Arkansas Business, Vol. 12, No. 14 Sec 2, p. 5. 4/3/95.
23. Rabin, Jeffrey L. County's Largest Against an Individual; Hazardous Waste Case Brings Big Fine. Los Angeles Times, May 25, 1989.
24. Ibid
25. Guilfoy, Christine. Barre Waste Firm is Fined 150,000 for Dump Offenses. Telegram and Gazette, Worchester Mass. 2/11/97
26. Ellers, Fran. The State Struggles to Check FirmsVying for New Landfill Business. The Courier Journal, September 15, 1991.
27. Arkansas Democrat-Gazette. 3/7/96
28. Arkansas Democrat Gazette, Nov. 30, 1995
29. Marcus, Ruth. Firm to Pay $8 Million Fine for Illegal Campaign Gifts. The Washington Post, October 9, 1997.
30. Taken from Pennsylvania DEP's EPICS online violations tracking system: http://falcon.state.pa.us/epics2/web/Print_Inspection_Results?Site_ID_In=256036&Inspection_ID_In=54764