by Edward Humes
4
THE LAST AND FUTURE KINGDOM
DAVID STEINER LOVES LANDFILLS. HE IS POSITIVELY poetic on the subject. “Landfills are amazing resources,” he says. “They’re not just holes filled with trash. They’re not the problem. They’re part of the solution.”
Okay, yes, he kind of has to say that. He is, after all, CEO of the world’s largest trash company, possessed of 22 million customers, fifty thousand employees, 273 active landfills, $12 billion in revenues and the most literal name in the garbage business: Waste Management, Inc. He is America’s king of trash. For him, trash is money, and buried trash really is buried treasure, and that’s the way he wants it to stay. When a consultant he hired a few years ago to help chart a future course for the business suggested times were changing, and maybe the company needed to start redefining itself not as a master of waste but as Materials Management, Inc., Steiner dismissed the notion as rank heresy. “There will always be waste,” he said confidently. “And we’ll always need landfills. That’s the core of our business.”
A few short years later the idea still makes him emit a reflexive, nervous laugh. But he concedes that the consultant was on to something after all, now that trash is no longer a growth business, now that these pesky green cities all over the map keep talking about “zero waste.” Some of his best customers, from the city of San Francisco to the mighty retailer Walmart, are clamoring to “recapture the value” of trash and “close the loop” on manufacturing and waste. These are code words for radically curtailing waste and, where that’s not possible, holding on to trash as a valuable resource rather than burying it in Steiner’s landfills. There is a growing sentiment that the future of waste just might mean a future freed from waste.
“Someday we might pay customers for their trash, rather than the other way around,” Steiner allows, reflecting on an everybody-wins future in which trash companies pay a bit for garbage as raw material, then make a fortune turning it into the building blocks of the consumer economy. “We’re not there yet, but it could happen. A few years ago, you’d never hear me say that.”
If trash really is treasure, the king of trash’s big challenge now is to figure out how to make this garbage-to-materials makeover work for his company, rather than bury it.
The irony behind this vision of sea change is that, a quarter century ago, it was Waste Management and its aggressive push to privatize the nation’s trash heaps that helped diffuse earlier attempts to move away from landfills and toward more sustainable choices. Momentum that had been gathering in the seventies and eighties for alternatives to burying the 102-ton legacy all but died then, which meant that profitable and increasingly privatized landfills remained the default choice for America’s trash strategy. Although Waste Management had no direct hand in determining the fate of such publicly operated locations as Puente Hills, the company’s success at keeping landfills center stage made the Garbage Mountain of Los Angeles all but inevitable. A shortage of suitable landfills had driven interest in alternatives, including serious discussions dating back to the seventies, of government mandates for new designs of products and packaging to reduce waste. One 1972 EPA report, entitled “Mission 5000,” took both government and the private sector to task for applying the world’s best technology to creating “an abundance of consumer goods” while failing to close the loop and reclaim the materials in those goods for new products once the old ones wore out.
“We failed to apply either modern technology or modern management to the ultimate disposition of this abundance … In the last few years, Americans have begun to recognize the enormity of the problems posed by our reckless generation and careless disposal of solid wastes. Now, at last, we are beginning to grapple with the difficult, long-range problems.”1
The report predicted not an end to landfills, but a greater emphasis on extracting value from materials before they ended up buried in garbage mountains as both an environmental and an economic boon. Four decades later, we’re still talking about doing that, rather than getting it done. One reason: The glut of landfill space Waste Management helped create in the last decades of the twentieth century shifted market forces back toward landfilling. Landfilling was comparatively cheap and easy, while switching to the close-the-loop system the EPA recommended so long ago would be risky and difficult, and involve unknown conversion costs. That’s why the transformation Steiner is now contemplating remains a distant possibility—although, to his credit, it is at least a subject of discussion again. For many years, it was out of the question.
Waste Management, Inc., was a very different company before Steiner took the throne. It went from a mom-and-pop operation in Chicago to the fastest-growing and hottest investment prospect in the country, only to have scandal morph it into the Enron of trash (before there was an Enron), and it almost went belly-up. Now reborn, it’s trying to achieve something that would once have been unimaginable: striking a balance between its lucrative landfill business and a new mandate from Steiner to go green.
The biggest garbage company in the world started with a Dutch immigrant named Harm Huizenga, who came to Chicago in 1893 during the busy—and trashy—time of the Chicago World’s Fair. (What is it with epic developments in the history of trash and world’s fairs?) Huizenga started hauling trash for $1.25 a wagonload. He gradually built a successful family business, Ace Scavenger Service, serving Chicago and its suburbs. In 1956, the company had fifteen trucks and revenues of $750,000 a year. When the head of the company—Harm’s son, Tom Huizenga—died, management duties passed to Tom’s son-in-law, Dean Buntrock, who began aggressively expanding the business by buying up other small trash haulers. Trouble started almost immediately, as the company’s tough tactics led to lawsuits and claims by the Wisconsin attorney general that Ace was threatening to destroy competitors’ trucks and harm family members unless they made room for Ace’s expansion. The Milwaukee courts imposed an injunction against the company for eight years.
But Buntrock, who was only twenty-four when he took over the business, was unfazed. He kept snapping up more companies, and in 1968 he merged Ace with another aggressively expanding garbage outfit based in Pompano Beach, Florida, Southern Sanitation Service. This scrappy garbage company was run by his father-in-law’s nephew, H. Wayne Huizenga, who would go on to make billions from building Blockbuster Video, Auto Nation and other business ventures. In 1971, the two men formed their companies into Waste Management, Inc., with $5.5 million in annual revenue. Buntrock was CEO and Huizenga was president. They took the company public and used the proceeds to buy ninety other garbage companies in nine months, rolling them into a rapidly growing WMI. The two budding trash magnates were banking (correctly) that new federal rules on garbage, landfills and the environment would create massive opportunities for large trash companies with expertise and resources that could take over landfills and collection for cash-strapped cities. WMI’s rapid expansion continued into toxic and hazardous wastes, trash-to-energy plants, recycling centers and international sanitation contracts with Saudi Arabia, Buenos Aires, Hong Kong, Caracas, Brisbane, Australia, and several cities in Europe. By the mid-eighties (when Huizenga retired from the company), revenue reached $2 billion; by the mid-nineties, it topped $10 billion, and WMI had become the undisputed waste and landfill leader of the world, the biggest trash company in history.
But during that time of rapid expansion, Waste Management was also accused of illegal toxic dumping, cited for violations in seven states, and was peppered with accusations of influence peddling and destroying evidence. The company paid out over $20 million in fines for environmental violations, plus a $30 million settlement for hazardous waste dumping in three states, followed by a $91 million judgment for a fraudulent landfill purchase in Alabama. A 1991 Greenpeace report said of WMI: “To create an empire, the company has mixed business acumen and foresight with strong doses of deception, corruption, and monopolism.” The San Diego district attorney issued its own report after WMI courted the city’s business
, finding that the trash company had a history of environmental problems, bribery and death threats. And in 1998, the company was nearly destroyed by one of the nation’s biggest accounting scandals ever, when Securities and Exchange Commission regulators indicted four top company officers, including Buntrock, for massive fraud and insider trading. The four eventually settled the charges for $25 million, most of which was paid by WMI, and without admitting guilt.
The scandal devastated the company, its stock value dropped $25 billion, and a smaller company, USA Waste Services, swept in and bought the crippled trash giant, though it retained the better-known WMI name. This was neither a smooth nor a successful transition; the company went through five CEOs in four years. Steiner joined the company as general counsel in 2001 under a new regime that set out to clean up the chaos left behind by the founders and the buyout.
By the time Steiner took over as CEO in 2004, the company’s reputation as a polluting, shady outlaw had been transformed, as the rampant environmental and safety violations of the old regime faded. And under Steiner’s reign, WMI has begun to refashion itself as the new darling of the sustainability movement, with more than one hundred power plants converting landfill gas to electricity—enough to power 1.1 million homes. That’s more output than the entire U.S. solar industry in 2011. WMI also has fielded one thousand clean garbage trucks that use landfill gas as fuel.
But those green technologies, beneficial as they are, don’t dispense with landfills—they rely on them. So they fit nicely inside WMI and Steiner’s wheelhouse. Things would get much dicier for Waste Management if the country made a serious shift away from managing waste and toward managing materials in some way that didn’t involve building garbage mountains with it. The most valuable thing Waste Management’s old leaders amassed wasn’t the fleets of trucks or the city contracts to pick up trash from the curb. It was the real estate—those 273 landfills, which can accommodate nearly 5 billion tons of future trash before they’re full. Waste Management currently is on track to bury 120 million tons of trash a year in those landfills, so there’s plenty of room for the future, which investors love, because that trash real estate will generate $1.3 billion in revenue just from letting people dump their garbage there.
So if landfills are the heart of the company’s business, how can Steiner shift that? How can the CEO of WMI say burying trash in a landfill is a big waste, that we ought to be doing something better with that material? How could he replace a business model as obsolete when that was his company’s entire business model? His question is one being repeated throughout the waste industry, just as it has been for decades. A less wasteful future in part will require successful, profitable companies such as WMI to cannibalize their own businesses, something few CEOs are willing to contemplate, much less undertake.
So Steiner is hedging his bets, gambling on evolution more than revolution. He has shifted his investment strategy from acquiring ever more landfill space to also buying up small companies that are developing new technologies and techniques for extracting valuable chemicals, minerals and products from trash. The goal is to make recycling more effective and profitable. Just finding more efficient ways to sort and separate recyclables that currently get landfilled would be a huge breakthrough for both the environment and the company’s bottom line. This may not sound all that radical, except this strategy, if it works, could make a majority of landfills obsolete over time. And remember, David Steiner really does love landfills. But he also loves the potential $10 billion in new revenues WMI could earn if it could capture the true value of the materials locked inside the trash his company collects and buries every year.
Steiner is one of the nice guys of the big-business world, a plain-talking country lawyer in his demeanor, who jokes that when he was (unexpectedly, he claims) handed the CEO job, he felt like going to the bookstore to see if someone had written CEO-ing for Dummies. His balancing act has turned into one of the trickiest high-wire performances in the business world, but the payoffs could be huge. Two of the companies now in the WMI stable are working on new processes that could turn trash into a gasoline substitute for cars and trucks far more efficiently and cheaply than existing methods of converting garbage to fuel. Assuming the new methods can be done on a large scale, it’s possible that WMI could pull more than $200 worth of synthetic gasoline from a ton of trash.
Steiner believes that would be a game changer for waste management. Or, he jokes, would it then be materials management? Of course, even if the fuel conversion succeeds wildly, there’s still not enough trash in the country to make the U.S. energy independent. “I see it as creating lemonade from lemons,” Steiner says.
For now, the big money remains invested in landfills, if for no other reason than the lessons of garbage history, which suggest that betting on trash revolutions doesn’t pay. Just ask the visionaries at Puente Hills, who are still smarting from their attempt three decades ago to reinvent Americans’ relationship with their garbage.
IN 1983, the trash agency known as the Los Angeles Sanitation Districts applied for permits under the California Environmental Quality Act to expand its small trash heap in the Valley of the Dumps into a modern waste and energy facility. It was envisioned as a new type of garbage solution that would combine a network of high-tech power plants to convert the daily flow of garbage into electricity with a sorting and recycling center and a landfill to contain what was left over once the reclamation and generation was done. The landfill was supposed to be the least of it—a hill, not a mountain. Similar plans were being considered throughout the country at the time. Had they moved forward, they would have transformed the business of trash in America, making management of materials rather than trash burial the main purpose. Public landfills like Puente Hills and private enterprises such as Waste Management would have evolved in a completely different way. Our trash—and the path to our current 102-ton legacy—would have taken a different direction as well. But it was not to be.
This vision arose originally from a general trash and energy panic in the U.S. that began in the seventies and continued into the eighties. First there were the oil embargoes, gas lines and overall energy crisis of the era. These events had sparked a brief, federally backed renaissance for renewable energy sources (begun by Jimmy Carter, killed by Ronald Reagan) intended to ease the national and economic security nightmare of foreign fossil fuel dependence. Trash seemed like a ready, plentiful and affordable alternative fuel supply to bolster the effort.
Then there were mounting worries over the safety of the nation’s aged, largely unregulated dumps—numbering about eight thousand active in the early eighties, with another twenty thousand closed landfills sitting and stewing. Many of the working dumps were rapidly reaching capacity and subject to toxic leaks, methane explosions, foul odors and contamination of drinking-water supplies as the chemical soup deep inside seeped into even deeper aquifers. Trash, sometimes with hazardous chemical waste mixed in, had been buried carelessly all over the country for decades without installing plastic barriers and other protections now deemed essential to containing landfill pollution. The result was a number of dire threats such as the Love Canal scandal in the 1970s, when a neighborhood near Niagara Falls, New York, was shown to have been built atop a toxic chemical disposal site from the 1950s, leading to a rash of birth defects, miscarriages, infections and other ailments. When Congress created the “Superfund” program in 1980 to clean up such toxic hazards nationwide, one hundred out of the first eight hundred most contaminated locations in the country were municipal landfills.
With such an array of fresh fears in the air, cities across America were having trouble finding suitable sites for new landfills. When they could find a good spot to bury garbage, community opposition got in the way—getting a new dump up and running was proving extremely tough. So why, the waste managers began to ask, should we endure so many problems burying garbage when much of it could be burned to make steam to drive generators that could power cities? We could k
ill, or at least blunt, two threats to our environment, security and prosperity with one elegant solution: waste-to-energy.
Those were different times marked by relative bipartisan environmental concern, an era in which the landmark Endangered Species Act passed unanimously in the U.S. Senate and the Environmental Protection Agency was signed into law by a conservative Republican president. The idea of burning massive amounts of garbage to generate a form of alternative (and somewhat greener) energy appealed to a broad cross-section of businessmen, politicians, activists and even some environmental groups. Industry leaders asserted that they could clean up the toxic and particulate emissions that bedeviled old-time, soot-spewing incinerators and still make it a profitable endeavor. Advocates asserted it would simplify the sorting necessary for recycling and so complement efforts to recycle more materials. (Others, however, feared it would do the opposite, since recyclable plastic is ideal, and therefore very tempting, fuel.) No one back then worried about the additional carbon emissions these plants would release. Global warming wasn’t on the radar, with public and scientific angst focused instead on the prospect of the Cold War becoming hot. An exchange of atomic weapons, scientists warned at the time, could initiate a worldwide “nuclear winter,” a dim, starved and frigid modern ice age triggered by immense amounts of sun-blocking dust propelled into the atmosphere by atomic explosions. In that reality, the threat of seeping landfills despoiling land and water was deemed a far greater threat than burning trash to keep it from the dump.