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Waste Management Incorporated is in the midst of what can only be called a stinking mess. Normally, Austinites would have no reason to care about the ongoing turmoil within the world’s largest waste disposal company. But as the City of Austin prepares to enter into a 30-year contract with WMI for recycling and disposal services, the trash giant’s problems could become the city’s problems.
Later this month, the city’s Solid Waste Advisory Commission is expected to get the first look at a
30-year recycling contract between the city and WMI, a deal that could be worth an estimated $50 million. In addition, the city is negotiating a 30-year waste disposal contract, part of which will be awarded to WMI, that may be worth $100 million.
Those contracts would be welcome at WMI, which has had plenty of bad news lately. Four chief executive officers have come and gone at WMI over the past year, and the company is desperately trying to find another one. Last month, the company reported a $1.4 billion loss in the fourth quarter of 1997. It also announced that it would restate its earnings retroactive to 1992 – a move which reduces the company’s earnings for that period by $3.5 billion in pre-tax dollars. Several shareholders have filed class action lawsuits against the company, alleging that it improperly inflated its earnings through questionable accounting practices. Meanwhile, the San Bernadino County Sheriff’s Dept. is continuing a year-long criminal investigation into WMI’s efforts to permit a landfill in the southern California desert.
Closer to home, WMI is beginning a cleanup project at its Giles Road landfill off of Highway 290 East, in order to deal with 21,000 barrels of industrial hazardous waste – including toluene, acetone, sulfuric acid, and possibly the nerve agent phosgene. The barrels were dumped at the site in the early 1970s, before WMI bought the landfill in 1981. But as the current owner, WMI will have to deal with the problem, and it is planning to dig up the hazardous waste and dispose of it at a cost of some $10 million. “We have the option of just disposing additional waste over the top” of the industrial waste, says WMI’s Loren Alexander. “We are remediating it even though we aren’t required to, because it’s the best thing to do environmentally.” As for the company’s financial problems, Alexander says, WMI is “a strong company financially. We have the best assets in the industry, and the greatest number of customers, and strong, reliable cash flow. We are excited about the future” of WMI.
That’s what Alexander said on Monday. On Wednesday, The Wall Street Journal reported that WMI was planning to merge with USA Waste in a $13 billion deal.
The problems at WMI certainly don’t hurt Bob Gregory’s feelings. The president and principle owner of Texas Disposal Systems (TDS), the largest private trash hauler and landfill operation in the region, Gregory has been warring with WMI for years. Last October, TDS filed a business disparagement lawsuit against WMI and their local PR representative, Don Martin. The suit alleges that WMI and Martin “routinely and secretly attempted to disparage the reputation of Plaintiff and its waste management capabilities in an effort to eliminate competition and undermine Plaintiff’s existing and prospective business relationships.” Much of the suit revolves around a fax message created by Martin that was later sent out by environmentalist George Cofer to about five dozen community activists, journalists, and government officials in the Austin area. The fax implied that TDS was using inferior liner materials in its landfill near Creedmore. It also said that because TDS is bringing trash from San Antonio to its landfill, Austinites should be concerned about the air and traffic impacts of TDS’ operations.
Martin, who heads Don Martin Public Affairs, is being represented in the lawsuit by Austin’s lawyer to the stars, Roy Minton. Depositions in the case have not yet begun. Martin claims he gave Cofer the fax out of concern for Austin’s environment, a statement that enrages Gregory. “For them to use an environmental position and say ours is bad and theirs is good, is bogus,” says Gregory, who has launched his own investigation into WMI. Gregory calls the hazardous waste problems at the WMI landfill a “time bomb. And yet, they are throwing rocks at us.”
Controversy certainly seems to follow WMI. In 1992, after a lengthy investigation, San Diego District Attorney Edwin L. Miller, Jr., released a report excoriating WMI’s business practices. “The history of the company presents a combination of environmental and anti-trust violations and public corruption cases which must be viewed with considerable concern,” says the report. “The company’s history requires extreme caution by the San Diego County Board of Supervisors or any other governmental entity contemplating any contractual or business relationship with Waste Management.”
Investigators in San Bernardino County, a few miles north of San Diego, are investigating WMI’s efforts to permit a massive landfill near the desert town of Amboy. One WMI employee, Franklin Odell, was arrested on March 7 of last year under suspicion of conspiracy, wire-tapping, and unauthorized copying of computer data. A WMI consultant, Joseph Lauricella, was arrested on identical charges. Both men were allegedly involved in efforts to tap the phones of the Cadiz Land Company, which had been leading the fight against WMI’s proposed landfill. The men were released on bail shortly after their arrests and have not been indicted. The case against them has stalled because attorneys from the San Bernardino County District Attorney’s office cannot yet access 100 boxes of WMI files that were seized by county investigators after the arrest of Odell and Lauricella.
Despite the turmoil within WMI and the problems at the Giles Road landfill, Joe Word, assistant director for administration at the city’s Solid Waste Services office, says the city has no reason not to trust WMI. “All I can look at,” says Word, “is, are they qualified to do the work? What’s their history locally? Is there any reason to disqualify them? The answer to all of them is no.” Word believes the Solid Waste Advisory Commission should be able to view the recycling contract with WMI some time in the next two or three weeks. But members of the advisory commission continue to be less than pleased with the city staff’s approach to the contract talks.
J.D. Porter, a longtime proponent of recycling in Austin and the current owner of Computer Reuse and Recycling and the chair of the commission, advises Austin officials to proceed with caution when it comes to making a deal with WMI. “Citizens should be concerned about anything involving a 30-year contract,” said Porter.
Freeport Out of One Suit, Into Another
The federal human rights lawsuit filed by Amungme tribal leader Tom Beanal against Freeport-McMoRan Copper & Gold was dismissed for the third and apparently final time, on March 2. However, two days later, Louisiana’s Fourth Circuit Court of Appeals ruled that a similar lawsuit filed in state district court on behalf of Yosefa Alomang, an Amungme tribal member, could proceed. In 1994, Alomang was imprisoned and tortured for four weeks by Indonesian soldiers stationed at the Freeport mine.
The two rulings are the latest installments in the ongoing legal battles over human rights and environmental complaints lodged by indigenous people against Freeport, which operates the world’s richest gold mine in Irian Jaya, Indonesia. The Beanal suit, first filed two years ago, has been bouncing through federal court as Freeport has repeatedly sought to get it dismissed. The judge in the Beanal case, U.S. District Judge Stanwood Duval, wrote that “Beanal has failed to plead facts underlying his claims against Freeport. At this point, the court is convinced that Beanal cannot or will not comply with the court’s” earlier orders. In a press release, Freeport spokesman Garland Robinette said, “We hope that the time is now near when all genuinely concerned parties can work together on the important but difficult process of managing social change and development in Irian Jaya.”
The Beanal dismissal may be a win for Freeport, but the Alomang suit is clearly worrisome for the company. The rules of evidence in state district court are not as strict as those in federal court. And unless Freeport succeeds in getting the appeals court to reconsider its ruling, Alomang’s New Orleans-based lawyer, Martin Regan, should be able to begin discovery in the case, meaning he can begin deposing Freeport employees about their knowledge of the human rights problems and environmental problems at the mine. Regan’s associate, Robert Monahan, says that the Alomang ruling shows that “the indigenous people from Indonesia can challenge [Freeport CEO] Jim Bob [Moffett] in New Orleans parish court for decisions he made in New Orleans that affected the people over there.”
The Alomang suit is almost identical to the Beanal suit in its wording and scope, except that where the Beanal suit asked for $6 billion in damages, the Alomang case does not specify the dollar amount being sought. The best resource for info on the ongoing controversy over the Freeport mine is Robert S. Boyer’s webpage, at http://www.cs.utexas.edu/users/boyer/fp/. To read Freeport’s press release, access http://www.fcx.com.
This article appears in March 13 • 1998 and March 13 • 1998 (Cover).