Chemical Waste Management, Inc.

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Chemical Waste Management, Inc.

3001 Butterfield Road
Oak Brook, Illinois 60521
(708) 218-1500

Public Company (77 percent owned subsidiary of Waste Management, Inc.)
Incorporated: 1978 as a wholly owned subsidiary of Waste Management, Inc.
Employees: 6,800
Sales: $1.5 billion
Stock Exchanges: New York
SICs: 4953 Refuse Systems; 5093 Scrap & Waste Materials

Chemical Waste Management, Inc., (CWM) is Americas largest provider of hazardous waste removal services. The company provides transportation, recycling, treatment, and disposal services for chemical and low-level nuclear products of both government and industry at 40 facilities spread across the United States and Mexico.

CWM was first formed in 1975 as a subsidiary of a much larger waste-disposal firm, Waste Management, Inc. This company was created in 1956 when a number of small trash haulers in Illinois and Florida banded together to form one company; this new entity subsequently grew by acquiring other local operations. In 1971 this company went public as Waste Management, Incorporated.

At the start of 1971, Waste Management purchased the Calumet Industrial Development (CID) disposal facility, a landfill located south of Chicago in the Calumet City area. This marked the companys first foray into the handling of hazardous wastes. Three years later, Waste Management finished work on a 3,750-square-foot laboratory space at the CID site. This enabled the company to better analyze and track chemical wastes buried there.

In 1975 Waste Management separated its chemical waste management operations from the rest of its businesses, forming Chemical Waste Management as a separate division of the company. At the same time, it moved to consolidate all of its chemical waste disposal activities in the Chicago area. A further step in this direction was taken in March 1975, when the company began operation of an acid neutralization plant at its CID site. This allowed it to process wastes from the steel industry, as well as other waste materials, in liquid form.

In the following year, CWMs operations came under more comprehensive government regulation when the U.S. Congress passed the Resource Conservation and Recovery Act, the countrys first complete set of regulations detailing how hazardous wastes should be managed. With these national guidelines in place, CWM reorganized a year later to place its business on a national footing, expanding beyond its base in the Midwest.

In 1978 CWM was restructured once again, to be incorporated as a wholly owned subsidiary of Waste Management, Inc. The company began its nationwide expansion in earnest, buying up waste disposal facilities across the United States. Among CWMs acquisitions at this time were sites in Emelle, Alabama; Lake Charles, Louisiana; Vickery, Ohio; and Port Arthur and Corpus Christi, Texas. In addition, the company announced that it would invest $1.5 million in equipment to reclaim solvent and paint sludge.

The following year CWM bought a facility in Kettleman Hills, California, extending its reach to the West Coast. In its first twelve months of operations, the company reported revenues of $49.7 million. In 1980 the Federal Resource Conservation and Recovery Act took effect, and CWMs facilities received interim status under the new law, which allowed it to continue treating and disposing of chemical wastes. Among the jobs the company was selected to perform was the burial of all remaining chemical stocks of the Silvex Company. CWM was hired to complete this task by the federal governments Environmental Protection Agency (EPA). As a result of this and other contracts, CWMs revenues reached $84.9 million by the end of 1980.

In 1981 CWM diversified its activities, forming an Environmental Remedial Action division (abbreviated ENRAC), to clean up contamination at hazardous waste sites. This branch of CWM was designed to provide government and industry with specialists available around the clock to take care of spill emergencies and the renovation of abandoned chemical dumps. In addition, CWM made an agreement with the Ashland Chemical Company, a leading chemical distributor, to provide chemical waste collection and disposal services to companies that generated chemical wastes nationwide. The idea was to meet the needs of the many businesses that generated a relatively small quantity of hazardous substances, but were nonetheless obligated to comply with a welter of complicated federal, state, and local regulations governing the disposal of all such substances. Under the agreement with Ashland, that company would provide help with documentation, pick-up, and delivery of chemical wastes, and then CWM would provide verification of the nature and quantity of the wastes received, along with analysis, treatment, and disposal or reclamation of the substances. The company planned to undertake these activities at its 18 fully certified facilities throughout the country. This service was launched in October 1981.

In addition to this initiative, CWM opened its Technical Center in Riverdale, Illinois. This facility served CWM as a centralized laboratory for the analysis of chemical wastes. By the end of 1981, company revenues had risen to $119.1 million.

In the next year, CWM was selected for yet another EPA job, when its ENRAC unit was chosen to handle the cleanup of a contaminated site called MIDCO I, located near Gary, Indiana. This job was the first project of the Superfund program, which the government had set up to mitigate the worst cases of environmental pollution.

In December 1982 the companys ENRAC unit also began work on the Seymour Recycling Center, in Seymour, Indiana, another Superfund site, whose cleanup was privately funded. CWM moved men, materials, equipment, and mobile laboratories onto the site in preparation for the removal of 60,000 55-gallon drums holding both solid and liquid toxic and flammable substances, many of which were rusted, damaged, or leaking. In addition, the site contained 98 large storage silos and significant quantities of contaminated topsoil. The company expected the project to take about a year to complete, for which it would be paid $7.7 million.

In addition to these undertakings, CWM also made a number of improvements and acquisitions to increase its capabilities. In April 1982 the company brought on line its Consumer Aerosol Destruction plant, at its Calumet City site. The company bought Solvent Resource Recovery, Inc., in West Carrollton, Ohio, which enabled it to recycle chemical wastes for the first time. In addition, CWM purchased Chem-Nuclear Systems, Inc., operators of a hazardous waste management operation in Arlington, Oregon. This unit would later become a subsidiary of CWM.

In September 1982 CWM also announced that it had entered into a joint agreement with two other companies to form Environmental Systems Corporation, an entity created for the express purpose of cleaning up the chemical wastes left at a site previously owned by the Lakeway Chemical Company, near Muskegon, Michigan. The company planned to treat contaminated soils and water on the site as well as materials created by the continuing operation of the companies that had taken possession of the site. It planned to use five different techniques to dispose of the wastes, all certified by the EPA and Michigan Department of Natural Resources.

In 1983 CWM continued its string of acquisitions by buying Trade Waste Incineration, Inc., located in Sauget, Illinois. This gave the company the capability of burning hazardous waste for the first time. In addition to this land-based site, the company also purchased Ocean Combustion Services, which owned an ocean-going incinerator vessel. The Vulcanus /, bought in January 1983, was registered in Liberia. Originally built as a tanker, it had been converted for incineration purposes in 1972. In May 1983, after two test burns monitored by the EPA, the ship demonstrated that its destruction rate for PCBs and other contaminants was higher than 99 percent. It was subsequently sent to Singapore for re-fitting of some of its equipment.

CWMs other waste incinerator ship, the Vulcanus II, also managed by its Ocean Combustion Services unit, was built for incineration purposes in West Germany, and was completed in November 1982. It operated out of Antwerp, burning European wastes, by 1983. In July 1983 CWM applied for EPA permission to use its two ships to burn wastes generated in the United States.

This move came as CWM formulated an internal policy forbidding the burial of liquid wastes, two years before federal regulations made this illegal. In addition, in further efforts to enhance compliance with regulatory structures, the company formed its own Environmental Compliance program of internal auditors based at each of its waste disposal sites.

Despite these efforts, in July 1984 CWM found itself the object of an EPA order to accelerate its cleanup of a hazardous waste landfill in Lowry, Colorado, near Denver. The company was ordered to remove all hazardous substances in drums and ship them to a new and more appropriate site, rather than try to contain them at their old home.

Also in 1984, CWM bought SCA Services, Inc., and in doing so took over the management of four additional hazardous waste treatment sites in Chicago; Model City, New York; Newark, New Jersey; and Fort Wayne, Indiana. During this time, the federal government updated and tightened its regulations concerning the treatment and disposal of hazardous wastes. As a result of these new laws, a majority of the nations former waste handling facilities were forced to close, since they failed to comply with new standards. Since all of CWMs sites passed inspection, they were allowed to continue operation. CWM anticipated a much larger market, given the far smaller number of competitors left. Counteracting this boon, however, was a rash of fines assessed by the EPA for waste disposal violations at many of CWMs sites. The company was assessed a $600,000 fine for improper storage of PCBs in Emelle, Alabama. CWMs facility at this location, with 2,400 acres, was the nations largest toxic waste dump. The company was then hit with a $6.8 million penalty for violations at its Vickery, Ohio, facility, followed by another $2.5 million assessment for continued misconduct at the same site. In addition, the company paid $4 million as a result of problems at its Kettleman Hills center. CWM shuffled its management in an effort to improve its rate of compliance with EPA regulations.

In October 1986, CWM offered stock to the public for the first time, when Waste Management, Inc., its corporate parent, offered 19 percent of the companys worth on the New York Stock Exchange. Following this move, the company acquired the Oil and Solvent Process Company, which boasted facilities to recycle solvents in Azusa, California, and Henderson, Colorado. In addition, CWM entered the booming market for asbestos cleanup. To help clients reduce the amount of hazardous waste they produced, CWM also formed a division of consultants, available to advise industrial concerns on reduction of their waste stream.

In May 1986 CWM suffered a setback in its efforts to commence use of its ocean-going incinerator vessels, Vulcanus I and Vulcanus II. Although the EPA had six months earlier tentatively approved a test-burn of 700,000 gallons of PCB-contaminated oil off the coast of New Jersey, subsequent public hearings produced widespread objections and the tests were postponed indefinitely.

Despite this setback concerning ocean-going operations CWM continued to invest in other aspects of its technological capabilities. In 1987 the company purchased a 49 percent interest in TITISA, an operation located in Tijuana, Mexico, that recovered solvents and blended fuels. This was CWMs first move into international operations. In addition, the company moved into the field of wastewater treatment, introducing a prototype of PO*WW*ER, an on-site aqueous cleansing service, at its Lake Charles, Louisiana, center.

In 1988 CWM made a number of acquisitions that complemented its own operations and also moved aggressively into a number of areas new to the company. CWM bought a part of HAZCO International, Inc., a company that helped industries dispose of small quantities of hazardous waste. The company also purchased a part of Tracker Services, Inc., as well as Inland Pollution Control, of Rockland, Massachusetts, marking its first move into the New England market. In addition, the company bought 49 percent of Brand Companies, Inc., the countrys largest asbestos cleanup operator, for $50 million, and merged its operations in this field with those of its partner. In a more traditional vein, CWM began construction on a fourth hazardous waste incinerator at its Saugus, Illinois, center. This device, which doubled the plants incineration capabilities, was designed to burn contaminated soil, much of which was expected to come from EPA Superfund sites. The company also began to build a new incinerator in Fort Arthur, Texas.

Moving into a new area, CWM used X*TRAX, a patented solvent extraction system, to treat low level radioactive wastes, mixed with other hazardous substances, at the federal Energy Departments Oak Ridge National Laboratory in Tennessee. Later that year, the companys Chem-Nuclear Systems subsidiary won a contract to operate three facilities for refinement of low-level radioactive wastes from 14 states.

In 1989 CWM continued to win big contracts for its services. The company snagged a $48 million job cleaning up the 44 sites that made up the Denver Radium Superfund project. In addition, the company was assigned to oversee collection and disposal of waste from the Exxon Valdez oil spill.

In an effort to garner additional government contracts, CWM formed Chem-Nuclear Environmental Services, Inc., which focused on the cleanup tasks necessary at former Department of Energy and Department of Defense installations. In response to an EPA contract to dispose of dinoseb, a banned pesticide, CWM opened a Memphis transfer station, its fourth, to collect the substance before treatment.

In 1990 CWM diversified its activities further, purchasing two engineering and consulting firms, Sirrine Environmental Consultants and Enwright Environmental Consulting Laboratories, both based in Greensborough, South Carolina, to seek out clients in the private sector. In addition, it continued to buy companies whose activities meshed with its own, and it increased its stake in Brand Companies, Inc., its asbestos operation, to 55.9 percent.

CWM maintained its aggressive pace of acquisitions in 1991, adding four new operations, entering one joint venture, and buying out its Mexican partner. Despite these gains, however, the company suffered a series of setbacks. In February 1991 an explosion at its hazardous waste incinerator in Calumet City, south of Chicago, shut the plant down and eventually yielded a $3 million fine for falsifying records and sloppy practices.

On a broader level, the general recession in the American economy reduced the amount of waste produced by many industrial concerns, as they cut back on overall operations. In addition, tighter budgets caused some potential clients to postpone expensive cleanup jobs. In addition, CWM was assessed a $3.1 million penalty by the EPA in December 1991 because of the failure of its big No. 4 incinerator unit at its Sauget site in Southern Illinois to pass air quality emissions tests. Four months later, the EPA barred CWM from burning any more Superfund waste at Sauget because the air pollution problems had not been resolved. Between September 1990 and July 1991 CWM suffered a total of $7.8 million in federal and state fines for improper practices at its Calumet City facility alone. CWMs legal difficulties continued in 1992, as the company came under criminal investigation for possible violations of environmental laws on one of its cleanup jobs and faced another six government fines exceeding $100,000 each.

In addition to these regulatory ills, CWM was threatened by movements to limit or end interstate transfer of hazardous wastes. Efforts to limit such transfers were particularly strong in Alabama, where CWM operated the enormous Emelle hazardous material landfill and storage facility. The company received some relief from this threat in 1992, when the U.S. Supreme Court ruled in its favor and allowed interstate shipping of hazardous wastes under the Commerce Clause.

Also in that year, CWM increased its activities in Mexico and began work on another project at Oak Ridge, Tennessee. As part of a continuing reorganization involving its parent company, CWM consolidated its environmental restoration efforts into CWM Remedial Services, Inc., which was designed to provide services to both national and local customers, and also restructured itself to spin off its on-site hazardous waste disposal operations to a new company, of which it became part owner.

Despite these shifts, CWMs core activities of collecting and disposing of hazardous wastes remained secure and profitable. With ever-widening environmental awareness, and no end of chemical waste disposal needs in sight, the companys future appears secure.

Principal Subsidiaries

The Brand Companies, Inc. (56%); Rust International, Inc. (58%); Chem-Nuclear Systems, Inc.; SCA Services., Inc.; EWM Federal Environmental Services, Inc.

Further Reading

Bailey, Jeff, Waste Management Plans Public Offer of 20% Stake in Its Foreign Operations, Wall Street Journal, March 20, 1992.

____, Chemical Waste Is Investigated; Shares Decline, Wall Street Journal, April 2, 1992.

Fass, Susan, Ships to Burn Hazardous Waste, Journal of Commerce, August 5, 1983.

Hazardous Waste Cleanup Begins at Seymour Site, Journal of Commerce, December 15, 1982.

Richards, Bill, EPA Orders Unit of Waste Management To Begin Tests at Big Dump in Alabama, Wall Street Journal, April 5, 1988.

Taylor, Robert E. EPA Denies Waste Companys Request To Burn Toxic Wastes Off New Jersey, Wall Street Journal May 29, 1986, p. 10.

Three Companies Form $20 Million Waste Project, Journal of Commerce, September 29, 1982.

Elizabeth Rourke

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Chemical Waste Management, Inc.

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