WMI: A CULTURE OF FRAUD AND DISHONESTY?
Waste Management, Inc. (WMI --formerly WMX Technologies), the largest waste hauler in America, has fallen on hard times. Lately the NEW YORK TIMES has taken to calling the company "troubled" and "beleaguered." In 1996, WMI reported profits of only $192.1 million on revenues of $9.19 billion; in 1995, the firm had reported profits of $603.9 million on revenues of $9.05 billion. WMI stock is selling for about the same price it brought in 1989 and stockholders are distinctly unhappy. For mismanaging the company, WMI's chief executive, Phil Rooney, was forced to resign in February, 1997, with severance pay of only $2.5 million per year until 2002.
Rooney had joined WMI in 1969 and had masterminded its public relations campaign to present the company as "environmentally responsible," even though WMI's core business is burying millions of tons of dangerous wastes in the ground year after year. For a time, Rooney even got himself appointed to the Board of Directors of the National Audubon Society, a mainstream environmental group, and Dean Buntrock, WMI's founder, joined the board of the National Wildlife Federation. Under Rooney's guidance, WMI even insinuated itself into the Environmental Grantmakers Association (EGA) --creating quite a flap among the funding community at the time --and now makes cash donations to environmental groups. Such grants serve WMI's business goals by creating chasms of mistrust within the environmental community.
In general, mainstream environmental groups like Audubon, National Wildlife Federation, and Environmental Defense Fund ignore --or openly cooperate with --WMI's environmentally destructive core business and its greenwashing tactics. On the other hand, local grass-roots groups are often engaged in a life-or-death struggle with WMI at the local level and they are not fooled in the least by WMI's greenwashing. They know that when all is said and done, WMI is a company that plays hardball. That is how, in the early 1960s, WMI entered an industry dominated by the Mafia and soon became king of the mountain.
According to the company's world wide web site, within the U.S., WMI owns 133 garbage dumps; seven hazardous waste dumps; two hazardous waste incinerators; one hazardous waste deepwell injection site; and one "low-level" radioactive waste dump. Wheelabrator Technologies, a subsidiary of WMI, owns 16 garbage incinerators and 3 sewage sludge processing facilities. Outside the U.S., Waste Management International, another subsidiary of WMI, operates eight incinerators and 56 solid and hazardous waste dumps.
Over the years WMI has developed several winning strategies for overcoming citizen opposition. Its earliest tactic was purchasing leaking dumps and promising to clean them up in return for permission to expand operations. The purchaser would often be a newly-created WMI subsidiary corporation with few or no assets of its own. The threat was clear: If the community refused to allow expanded operations, the corporation would have limited income and might have to declare bankruptcy, leaving the community saddled with leaking poisons threatening its groundwater. Under these circumstances, many communities allowed WMI to expand dumping operations --a Faustian bargain at best. Given that all landfills eventually leak (see REHW #37, #316) those communities were choosing to improve their lot today, passing the environmental health costs on to their children or grandchildren.
Another tactic that WMI pioneered was to offer communities a part of the profits --perhaps 1% of their revenues from a facility, which can add up to a substantial sum. Because landfills are often located in poor communities, such an offer would dazzle local politicians struggling to pay for public services. Furthermore, such an offer would gain the support of property owners in the community because it promised an alternative source of revenue besides the property tax.
After December, 1996, however, communities receiving an offer of profit-sharing from WMI have had reason to think carefully about the wisdom of making such a deal:
In December, 1996, a federal judge in Tennessee declared that "top corporate officers" of WMI had "decided upon and followed a well-defined plan to cheat Plaintiffs out of money rightfully due them under the terms of the purchase agreement for the Emelle hazardous waste disposal facility."[7,pg.54] WMI's hazardous chemical dump in Emelle, Alabama is the largest such facility in America.
In 1974, U.S. Environmental Protection Agency (EPA) identified Emelle as a good place for a big hazardous waste dump. Ten individuals then bought 340 acres in Emelle and sought a license from the state of Alabama to operate a dump. Among the 10 was James Parsons, the son-in-law of former Alabama governor George Wallace.[7,pg.10] The license was granted.
WMI purchased the Emelle dump site from the 10 individuals February 23, 1978, promising to pay them 12.5% of all the money made by the facility for 21 years. In 1992, a WMI employee --presumably by mistake --sent a secret document to one of the 10 sellers, showing that WMI had doctored its accounts to reduce its payments to the 10 individuals. The 10 individuals took WMI to court in 1993 and federal judge Odell Horton issued his opinion and order December 11, 1996.
The judge calculated that WMI had cheated the 10 individuals out of $76.5 million dollars between 1981 and 1993. He ordered WMI to pay that sum plus another $15 million in punitive damages. WMI denies any wrongdoing.
In his written opinion, Judge Horton went on to say that, "The Court finds Defendant [WMI], through its top corporate officers, consciously and deliberately engaged in fraud and misrepresentation towards Plaintiffs."[7,pg.55] Judge Horton did not mince words: "What is troubling about this case," he said, "is that fraud, misrepresentation and dishonesty apparently became part of the operating culture of the Defendant corporation."[7,pg.54]
Under a new kind of law in many U.S. states, a corporation's "culture" can become the basis for denying business opportunities. These new "bad boy" laws, or "good character" laws, give states the right to refuse licenses and permits to companies that have a history of violating the law. (And of course, all states have the right to revoke a corporation's charter, effectively ending their existence as a legal entity, if they choose to. See REHW #309, #449, #488, #489.)
The state of Indiana in June of this year denied WMI a license to expand its Adams Center Hazardous Waste Treatment and Disposal Facility near Fort Wayne. It was a stunning victory for Allen County Dumpstoppers, a group of citizens who had fought the Adams Center dump for about 10 years.
WMI had tried several legal maneuvers to get around the Indiana law, which says the state can deny a permit application if the applicant has not demonstrated good environmental stewardship. Indiana passed the law in 1990; WMI's wholly-owned subsidiary, Chemical Waste Management (CWM), challenged the constitutionality of the law, but in 1994 it was upheld by the Indiana Supreme Court.
After the law was declared valid, WMI created a new paper corporation, which they called Chemical Waste Management, L.L.C. (CWMLLC). CWMLLC then applied for a permit to expand the dump, claiming it had no environmental record and thus had a good character. CWMLLC said it was not associated in any way with Chemical Waste Management of Indiana (CWMI), which is a subsidiary of Chemical Waste Management (CWM), which is itself a wholly-owned subsidiary of WMI. Despite claims of independence by CWMLLC, the $34,000 application fee was paid by a check drawn on the account of CWMI, clearly linking CWMLLC to CWMI, CWM and WMI with their miserable environmental records.
It is interesting to note that CWM tried the same tactic in the case of the fraud and misrepresentation at Emelle. CWM currently owns Emelle, but in 1978 it was Alabama Solid Waste Systems (ASWS), a subsidiary of WMI, that bought the 340 acres from the 10 developers.[7,pg.11] ASWS later became Waste Management of Alabama (WMA), which later merged into CWM, a wholly-owned subsidiary of WMI. When the cheating was discovered, one of CWM's defenses was, "We never signed any contract with those 10 individuals. Somebody else did it." Judge Horton rejected that defense.[7,pg.34]
Indiana also rejected the claim that CWMLLC was distinct from CWM and WMI. Indiana said it denied CWMLLC the license to expand because:
** February 14, 1992, CWM buried waste illegally in an Illinois landfill and was fined $25,000.8
** In Alabama July 4, 1992, WMI paid a $25,000 fine for burying wastes illegally.
** In California July 29, 1992, WMI paid a $25,000 fine for spilling hazardous wastes from a leaking tank.
** In Pennsylvania August 9, 1992, CWM pleaded guil-ty to six felony violations of the federal Superfund law and was fined $3 million.
** In California November 13, 1992, WMI paid a $65,000 fine for various violations of law.
** In Illinois December 31, 1992, CWM paid a $275,000 fine for incinerator violations.
** In Louisiana July 7, 1993, WMI paid a $25,000 fine for various environmental violations.
** In Louisiana November 30, 1993, CWM paid a $261,918 fine after a judicial finding of environmental violations.
** In Texas April 8, 1994, CWM paid a $15,000 fine for faulty analytic methods at its Port Arthur incinerator.
** In Alabama June 24, 1994, CWM paid a $35,000 fine for illegally handling PCBs [polychlorinated biphenyls] at the Emelle dump.
** In Illinois June 1, 1995, CWM paid a $1.9 million fine for serious problems at its Chicago incinerator.
CWMLLC is now appealing the denial of the expansion permit in Indiana, claiming that the new paper corporation should not be penalized for the crimes and violations of others.
What all this really shows is that we have allowed corporations to escape sensible controls. Up until 1886, corporations were entirely defined by state legislatures. They could only do what their corporate charter said they could do. After 1886, corporations were defined as "persons" under the law, which allowed them to do anything that any other person could do. Recent history reveals that this was a serious mistake.
The solution to this problem is to go back to the way things used to be, to deny corporations the rights of persons under the Constitution, just as our grandparents did. Corporations bear no resemblance to persons, so why treat them as such?
DIOXIN IN CHICKENS AND EGGS
The federal government has found evidence of dioxin contamination in chickens, eggs, and farm-raised catfish, and has banned the shipment of chickens and eggs from hundreds of producers. The ban initially included farm-raised catfish as well, but the Mississippi Congressional delegation successfully lobbied the FDA (Food and Drug Administration) to exclude the catfish industry from the ban, according to the WALL STREET JOURNAL. However, today the FDA flip-flopped and now says catfish farmers have until Sunday (July 20) to prove their fish contain less than one part per trillion (ppt) of dioxin.
Dioxin was declared a Class 1 carcinogen, or "known human carcinogen," by the International Agency for Research on Cancer (IARC), an arm of the World Health Organization, in February, 1997. Furthermore, dioxin's non-cancer dangers loom larger each year. After studying dioxin intensely for a decade, U.S. Environmental Protection Agency said 5 years ago that dioxin is much more toxic than previously known. The agency said then, "Indeed, these [dioxin] compounds are extremely potent in producing a variety of effects in experimental animals based on traditional toxicology studies at levels hundreds or thousands of times lower than most chemicals of environmental interest." And: "There is adequate evidence from studies in human populations as well as in laboratory animals and from ancillary experimental data to support the inference that humans are likely to respond with a plethora [an abundance] of effects from exposure to dioxin and related compounds." (See REHW #390; see also #391 and #414.)
The chicken-and-egg ban was announced July 8 and went into effect July 13. As many as 350 chicken and egg producers may be affected, most of them in Arkansas and Texas but some as far flung as North Carolina, Indiana, and California. Companies can sell their chickens and eggs again as soon as they demonstrate that dioxin levels in their products are below one part per trillion (ppt). There are only about 20 laboratories in the U.S. that can test for dioxin at concentrations as low as one part per trillion. Dioxin testing often takes 30 days or longer under normal circumstances. With an entire industry clamoring for data, some test results may be delayed even longer.
Dioxin does not occur naturally; it is created as an unplanned and unwanted byproduct of metal smelting, pesticide manufacture, and all types of incineration (medical, solid waste, and hazardous waste).
The source of the dioxin in chickens, eggs, and catfish is reported to be a contaminated soybean-based feed produced by two companies --Riceland Foods, Inc., and Quincy Soybean Co. --both located in Arkansas. Between them, these two companies send feed to 350 customers, providing an estimated 1% of all animal feed in the U.S. The dioxin reportedly appeared when bentonite clay (sometimes called "ball clay") was added to the feed to prevent clumping and improve flow. Bentonite is familiar to most people as the main ingredient in kitty litter. The dioxin-contaminated bentonite has been traced to an open-pit bentonite mine near Sledge, Mississippi, operated by the Kentucky-Tennessee Ball Clay Company. The source of the dioxin in the ball clay is unknown. Bentonite deposits are a favorite place to bury hazardous wastes because the wastes tend to stick to the clay and move only slowly thereafter. There is no evidence that hazardous waste was buried in the Sledge mine.
Until now, the U.S. has never set standards for dioxin in food. The one-part-per-trillion standard was set last week by FDA as a "level of concern" for this single instance of dioxin contamination of animal feed; it is not to be taken as a "general action level for dioxin in foods," government officials emphasize. In essence, FDA has declared that chickens and eggs are contaminated and unfit for human consumption if they contain more than 1 ppt dioxin. Yet the agency initially, in a political compromise, exempted the most contaminated food: farm-raised catfish. A 1994 study found that farm-raised Mississippi catfish fillets contained dioxin at levels ranging from 10.2 to 27.8 ppt. The FDA's stance seems certain to create public confusion and deep anger among chicken and egg producers. Some 2000 workers in Arkansas were told to stay home earlier this week when the FDA ban on chickens and eggs went into effect. The ARKANSAS DEMOCRAT-GAZETTE reported today that half the eggs produced in Arkansas this week have failed the 1 ppt dioxin test and cannot be sold. Test data were not made public.
U.S. EPA began looking for dioxin in food in the early 1990s, as part of the agency's ongoing dioxin reassessment. (See REHW #390, #391.) In early drafts of its dioxin reassessment report, EPA said 95% of human exposure to dioxins occurs chiefly through eating red meat, fish, and dairy products (milk, cream, cheese, ice cream). This prompted more government studies of dioxin in cheese, fish, pork and chicken.
In September, 1996, U.S. EPA found that 2 of 80 samples of chicken had elevated levels of dioxin: 3.9 and 3.2 parts per trillion. Each sample was a composite of tissues taken from several birds. The other 78 samples reportedly averaged 0.09 ppt. The two unusual samples came from Tyson plants in Pine Bluff, Arkansas and Seguin, Texas. Those two samples gave rise to additional testing, which led to the present ban on chickens and eggs.
In announcing the ban, FDA emphasized again and again that there was no immediate health hazard from eating chicken, eggs, or catfish even if they are contaminated at 3 or 4 parts per trillion. "Consumers should not hesitate to consume eggs and catfish they have at home or purchase on the retail market," FDA officials said. "Dioxin is something where you care about your cumulative lifetime exposure," said FDA Deputy Commissioner Mary Pendergast. "This was an avoidable contamination, and we're basically turning off the faucet."
Pat Costner, a Greenpeace chemist, put the dioxin numbers into perspective this way: The U.S. EPA says one cancer in a million persons can be expected to occur with a daily intake of 0.01 picograms of dioxin per kilogram of body weight per day for a lifetime. (See REHW #390.) (A picogram is a trillionth of a gram; a trillion is a million million.) Therefore, a 70 kilogram (154 pound) person should not take in more than 0.7 picograms per day to keep the cancer danger below one-in-a-million. Five ounces of chicken meat contaminated with 3 ppt of dioxin would contain a total dioxin load of 420 picograms, or about 600 times what EPA might consider an adults's acceptable daily intake of 0.7 picograms per day.
Put another way: if an adult ate 43 5-ounce servings of chicken containing 3 ppt of dioxin, they would exceed the EPA's recommended LIFETIME dose of dioxin from those 43 meals alone. Many Americans eat far more than 43 servings of chicken every year.
In 1992 EPA said the average American is routinely taking in, from all sources of food and water, somewhere between 300 and 600 times the "acceptable" 0.7 picograms of dioxin each day. (See REHW #390.) Clearly, reducing our dioxin intake is good public health policy.
If the new 1 ppt "level of concern" were applied to foods in general, it might create serious problems for the food industry. For example, a 1994 study of foods purchased in an upstate New York supermarket found 1.5 ppt dioxin in ground beef.
In 1992, EPA analyzed 60 fish samples from 34 fresh and estuarine sites where there were no obvious industrial dioxin sources. They found that the average dioxin concentration in the 60 samples was 1.2 ppt. This represented the fillet (edible) portions of the fish.
Thus there is evidence that neither ground beef nor fish might be considered fit for human consumption in the U.S. if they were judged by the 1 ppt "level of concern" that FDA has recently adopted for chicken and eggs.
People in Arkansas are extremely angry at the federal government's seemingly-arbitrary imposition of the 1 part per trillion standard. The "no immediate health hazard" language and the flip-flopping on catfish has given people the impression that there is no good reason for the ban.
"This is obviously regulation overkill on the part of the FDA and the [Environmental Protection Agency]," said Arkansas Governor Mike Huckabee. "What they're going to end up doing, with no scientific data to support them, is put thousands of Arkansans out of work either permanently or temporarily and possibly go a long way toward destroying our economy."
In actual fact, the federal government has volumes of data showing that dioxin harms wildlife and humans at exceedingly low levels. (See REHW #390, #391.) Dioxin's most powerful effects are seen in the reproductive system, the endocrine (hormone) system, and the immune system. Most sensitive of all are newborn infants and fetuses exposed while in the womb. In 1992, EPA wrote, "In mammals, postnatal functional alterations involving learning behavior and the developing reproductive system appear to be the developmental events most sensitive to perinatal dioxin exposure. The developing immune system may also be highly sensitive." In other words, dioxin exposure of mammals (including humans) shortly before or shortly after birth ("perinatal") are most likely to impair intellectual development and the immune system. The immune system protects against bacterial and viral disease, and cancer, so damage to the immune system can invite other serious diseases. (See REHW #390.)
Some effects --such as degradation of the human immune system --seem to occur at dioxin levels that the average American is already carrying around in his or her body. However, because FDA has couched its ban in the language of "no immediate threat to health," and because catfish were initially exempted, then included, people naturally assume there really is no threat to health from dioxin and that the ban is somehow entirely political.
Thus FDA's ban on chickens and eggs seems likely to undermine the credibility of the federal government in general, and its emerging dioxin policies in particular. Inadvertently or not, government seems to be playing into the hands of the Chemical Manufacturers Association (CMA) and the Chlorine Chemistry Council (CCC). CMA and CCC say that the dangers of dioxin have been greatly exaggerated to suit the political purposes of environmental zealots who are really just interested in promoting Big Government.
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