The Ugly Mess At Waste Management

The folks at Waste Management Inc. used to love showing off their Chicago incinerator as a model for safe disposal of hazardous waste. Operated by WMI's Chemical Waste Management Inc. subsidiary, the nation's largest commercial incinerator was so technologically advanced that it was then one of only three facilities in the U.S. permitted to burn cancer-causing PCBs. Busloads of analysts, customers, and even schoolchildren regularly toured the plant, located just an hour away from WMI's Oak Brook (Ill.) headquarters.

That pride now seems badly misplaced. The past few years have brought a disturbing series of allegations and documented instances of management, environmental, and worker-safety problems at the Chicago incinerator (table). In January, state officials launched an investigation into possible criminal misconduct there. And a state grand jury has convened to hear evidence of deliberate mislabeling of up to 100 barrels of hazardous waste by a supervisor, according to lawyers involved in the case. In late March, Chemical Waste Management (CWM) said it would suspend operations at the incinerator and told most employees they would be laid off in May.

TELLING PATTERN? In the past, WMI Chairman Dean L. Buntrock--who until seven months ago was also chairman of CWM--has blamed WMI's many regulatory run-ins on managers left over from companies it acquired. WMI gained control of the Chicago plant in 1984, when it bought SCA Services Inc. But problems continued even after its old management was tossed out in 1988. Some local officials believe the trouble lies in WMI's executive suite. "When you see this kind of pattern of problems, it tells me that these kinds of things are approved by top-level management," says State Representative Clem Balanoff, a company opponent whose 35th District includes the plant. The plant's managers, as well as top CMW and WMI officials, declined to be interviewed. But WMI spokesman William J. Plunkett denies that company officials have ever approved any questionable or criminal activities.

How could things have come to this at Waste Management's showcase plant? Interviews with a dozen current and former incinerator employees and an extensive review of public records and private documents suggest some possible causes: The decentralized management style of the $7.5 billion parent company and its $1.4 billion subsidiary seems to have contributed to the troubles, as did the pressure that headquarters put on plant managers to achieve high profits.

Whatever the cause, the incinerator's problems were not isolated incidents. The company is also the target of an ongoing federal criminal investigation into alleged violations of procurement and environmental regulations at a U.S. Army Corps of Engineers site. Now, CWM's ability to expand its high-margin incinerator business will depend on whether it can assure customers that it will comply with environmental laws.

Concerns about the company's record could delay or block plans for new projects. Already, the issue has slowed WMI's attempt to build a nuclear-waste disposal plant in Martinsville, Ill., where officials have demanded all of WMI's internal memos on the Chicago problems. And as Indiana reviews CWM's application to expand a hazardous-waste site, the state is taking the extreme step of using its Good Character Requirements Act to make CWM list all major civil and administrative complaints, as well as any criminal complaints, over the past five years. Depending on what it finds, Indiana can deny the application based on CWM's "character." Since many other states have similar provisions, this could turn into a nettlesome issue for WMI.

There's little doubt that the Chicago incinerator's troubles have helped drag down profits at both CWM and its 76% owner, WMI. In 1991, CWM's profits plunged 42.6%, to $100.8 million. It was the first earnings decline since WMI spun it off to the public in 1986. The Chicago plant has generated no revenue since a major explosion 13 months ago, and it has spent several million dollars on test runs to meet regulatory requirements. Parent WMI's profits fell 11.5% last year, to $606.3 million.

The trouble in Chicago began in 1987, when shift supervisor Jack F. Tursman was fired for alleged mishandling of a spill. Tursman, who is pursuing a wrongful-discharge suit against the company, claims his dismissal was in retaliation for alerting the parent company to possible crimes at the plant.

Tursman says he began biweekly meetings in May, 1987, with David M. Blomberg to discuss problems at the plant. A member of his church and the retired assistant to Chairman Buntrock, Blomberg assured him that an internal investigation was under way, Tursman says. But it was only after he was fired and then threatened to go public that any changes were made, he alleges. Says Blomberg, who was then a consultant to the company: "I did meet with Jack at a local restaurant. That's true. But I just don't want to say any more."

Tursman's allegations are chilling. Under the direction of former operations manager Riad "Ray" Alkhatib, Tursman says he was ordered to "burn as much as possible." To avoid detection, Tursman says Alkhatib told control-room employees to disconnect pollution-monitoring devices. Gary Gregolini, the chief control-room operator during this period, agrees with Tursman's account. Alkhatib, whom CWM says it fired in 1988, could not be located for comment. In settling Environmental Protection Agency charges stemming from Tursman's allegations, CWM told regulators that pollution gauges had been turned off four times in 1986 and 1987 and that excess PCB waste was fed into the kiln at least once. But the company denied that the actions were condoned by managers.

According to some ex-employees, the pressure to produce profits was intense. Says one of the plant's former top managers: "The attitude was: `I don't want to know how you do it. Just keep turning in the results.' " CWM's fast growth throughout the 1980s and its decentralized management structure, with each facility operating as its own profit center, may have also contributed to a climate where such problems could occur. There was so much turnover at the plant and corporate level, for instance, that a common joke among employees went: "If the boss calls, get his name."

Saving money was paramount, say ex-employees. Sometimes they were even forced to skimp on such items as gloves and respirators. "It was a money factor," says Gregolini. "Corporate said we were using too much equipment." Akhil G. Desai, a former process-water technician at the plant, says he suffered severe reactions while raking chemical-laden sludge: "All of a sudden, my hands started bubbling." Desai says he suggested ways to avoid contact with the sludge, such as shaking it in a mechanical hopper, but plant managers rejected his ideas because of cost. Plunkett says the company never knowingly compromised safety for profits or cost savings.

TOXIC FUMES. CWM tried to clean house in the wake of Tursman's charges, bringing in new plant management and spending millions on safety features in 1988. It wasn't enough. Just after midnight on Feb. 13, 1991, an explosion rocked the incinerator, releasing toxic fumes. Workers, unsure of what they were handling, had fed a packet containing the explosive tetrazole into the kiln. Almost a year later, after agreeing to $3.5 million in fines over the incident without admitting any wrongdoing, CWM had more bad news: It revealed that an employee had placed phony labels on barrels of waste to keep regulators from discovering them. The employee, since dismissed, says that he mislabeled nothing and was fired for whistleblowing.

WMI's Plunkett denies that the mislabeling was directed or condoned by company officials. He adds that CWM told the state of the mislabeling, as required, and is cooperating with the investigation. "Any inquiry will show that the company acted responsibly," he says.

The state isn't so sure about that. "We have serious concerns about the ability of that facility with current personnel to operate in compliance with environmental laws," says Matthew J. Dunn, environmental control chief at the Illinois Attorney General's office. He adds: "We'll go as high as we can" to prosecute wrongdoers. For CWM and WMI managers, that is only the latest in a long string of very bad news.

      MARCH, 1988
      Chemical Waste Management concedes to regulators that pollution-monitoring 
      equipment was deliberately shut off at its Chicago incinerator by plant 
      operators at least four times since 1986. In addition, it acknowledges that 
      cancer-causing PCB wastes were fed into the incinerator at rates higher than 
      the plant's permit allowed
      FEBRUARY, 1991
      A container of chemicals explodes in the incinerator's kiln. CWM later agrees 
      to pay $3.5 million to settle EPA charges in connection with the explosion, 
      without admitting wrongdoing
      JANUARY, 1992
      CWM reveals that a key supervisor at the incinerator put phony labels on up to 
      100 barrels of toxic waste to evade safety requirements. The company also 
      acknowledges that two separate data files were kept on the inventory. The 
      Illinois state police and the state attorney general launch a criminal 
      investigation on behalf of the EPA
      MARCH, 1992
      CWM says it will suspend operations and tells most incinerator employees they 
      will be laid off in May
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