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#66 - Lawsuit Charges Nation's Largest Waste Firms Conspire Nationwide To Fix Prices And Rig Contrac, 28-Feb-1988

The nation's two largest waste haulers, BFI and Waste Management, Inc.,
have been sued in federal court by a group of businesses charging the
haulers with conspiring nationwide to fix prices and rig bids on waste
hauling contracts. The suit was filed last October but was revealed
only recently by BFI (Browning-Ferris Industries) in papers filed with
the federal Securities and Exchange Commission.

This lawsuit represents the first time the two firms have been accused
of conspiring on a nationwide basis to violate antitrust laws,
according to Bill Richards, writing in the WALL STREET JOURNAL Feb. 17,
1988. In earlier antitrust cases involving the companies, both have
insisted that senior management wasn't aware of any wrongdoing. The two
haulers each operate in 40 states and abroad.

Last October both firms pleaded guilty and paid $1 million fines to
federal charges that they conspired to fix prices and allocate
customers in the Toledo, OH, area. Allocating customers means to divvy
up customers, agreeing not to compete against each other for a
customer's contract. In 1984 both firms were convicted of price fixing
by a federal court in Atlanta, GA. Both companies are currently under
investigation for price fixing by five grand juries in various states.

The most recent suit was brought by six businesses, the largest being
Cumberland Farms, which operates a chain of convenience stores;
Cumberland is no mom and pop outfit--they operate stores in 21 states
and they own Gulf Oil, among other things. Other plaintiffs include
Kirschner Brothers Oil in Haverford, NJ; Perry Corp. of New Jersey;
Animal Hospital of Chester County, PA; Uncle Donald's, Inc. of Memphis,
TN; Overton Pub, Inc., of Memphis; and George Gusses, a Toledo, OH,

The lawsuit charges that since 1978 the two waste-hauling giants--one
of whom (BFI) has been linked to organized crime by a New York
legislative investigation (see HWN #40)--have conspired together to
allocate customers, rig bids, and fix prices.

The attorney for Cumberland is Dianne M. Nast in Philadelphia; phone
(215) 2381700.

--Peter Montague



Garbage used to be a strictly local problem. No more. New Jersey is now
hauling garbage to landfills as far away as Kentucky--at least 550
miles from central Jersey. It's part of a plan by New Jersey Governor
Tom Kean to solve his state's garbage crisis by sharing the wealth with
distant neighbors. It's also clearly part of a national pattern--
wealthy, urban areas are exporting their garbage (and their hazardous
waste) to poorer, rural areas. Los Angeles is dumping in Arizona. New
York is dumping in Vermont. But the most aggressive exporter of garbage
is NJ.

States like Pennsylvania, Ohio, West Virginia, and Kentucky are now
trying to pass laws to keep out New Jersey's trash. Maine, New
Hampshire, Vermont, Delaware, Maryland, Indiana, Virginia and even
North Carolina must take similar steps, unless they want to become
garbage dumps for New Jersey. But it's a tricky business, legally,
because of the "commerce clause" of the Constitution which says states
cannot restrict interstate commerce.

It all started in 1978 when the U.S. Supreme Court ruled that New
Jersey could not ban importation of trash from Philadelphia. The
decision was based on the commerce clause. This meant New Jersey could
not simply refuse to take trash from another state.

When Governor Kean came to power in NJ, he faced a choice: either solve
the state's garbage crisis by innovative means (recycling, composting,
and other fundamental, sensible measures), which might require the
electorate to modify their lifestyles slightly (curbside separation of
waste, for example)--or figure out how to ship the stuff out of state.
Mr. Kean chose to ship garbage out of state and to begin to build mass
burn incinerators in low-income neighborhoods in every county (thus
minimizing opposition while pleasing the banks and the construction
trades). It's a very expensive, polluting solution but it will make the
problem go away until he's out of office and that's all he really
needs. He can now declare on national TV that he "solved" the NJ solid
waste crisis, and he hopes this will sweep him into the vicepresidency
with Mr. Bush-Dole. Mr. Kean is desperately trying to project an image
as "Mr. Environment" despite his nickname among environmentalists in
New Jersey, which is "Toxic Tommy." Environmental enforcement in New
Jersey has all but disappeared under Mr. Kean's brand of leadership.

New Jersey's neighbors have finally caught on to the Kean strategy and
have begun to try to protect themselves:

Ohio has two bills pending now; one would prohibit a landfill from
accepting waste from a "service area" beyond a radius of 100 miles. The
second measure would require landfills to charge $3 per ton on wastes
that originate beyond the 100-mile service area.

In August, 1987, Kentucky's governor signed "emergency regulations"
forcing landfills to meet strict daily trash limits and allowing
counties to impose "reasonable fees" on haulers who bring garbage from
out of state.

West Virginia is requiring all landfills to apply for new permits and
the new permits will impose monthly limits on the amount of waste a
landfill can accept.

For its part, New Jersey has learned to protect itself from
Philadelphia (and from New York City) trash by a state-wide planning
process. Every NJ county must draw up a solid waste management plan,
and each is free to exclude wastes from other counties. Because it is a
"reasonable" exercise of the state's planning powers, and because it is
not a blanket ban on importation of out-of-state trash, it does not
conflict with the commerce clause. It is a New Jersey-invented solution
to the out-ofstate trash problem.

Pennsylvania, currently the biggest receptacle for NJ garbage, is
considering passage of such a statewide planning law. New Jersey
desperately hopes they can't succeed before 1992 when New Jersey's
"mass burn" solution is supposed to be inplace. Without poorer, rural
neighbors to take its garbage, New Jersey would have to face up to the
realities of a modern lifestyle that is not sustainable because it is
destroying the earth.

--Peter Montague


Descriptor terms: msw; landfilling; nj; ky; thomas kean; waste hauling
industry; transportation; az; ny; vt; legislation; pa; oh; wv; me; nh;
de; md; in; va; recycling; composting; incineration; george bush; dole;
enforcement; oh; regulations; lawsuits; price fixing; corruption;
lawyers; bfi; wmi; organized crime; haulers; antitrust; ga;
investigations; cumberland farms;

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