Originally created 07/10/98

Merger will not close Chem-Nuclear



Chem-Nuclear employees, including 100 at the Barnwell, S.C., low-level nuclear waste site, were assured Thursday that their jobs are not in jeopardy and that the landfill for radioactive debris will not be dumped when its parent corporation merges with another company.

"We have rejected an option of shutting down Barnwell," Chem-Nuclear President Regan Voit, of Columbia, said in a notice to 300 employees nationwide. "Rather, we will work with our customers to develop a business plan for keeping the site open for many years to come."

The notice was distributed because of published reports that suggested the Barnwell site cannot meet its tax obligations to the state of South Carolina and probably will be closed after a merger is complete between Waste Management Inc., of Oak Brook, Ill., and USA Waste Services of Houston.

Waste Management is the parent company of Chem-Nuclear.

The new management team created by the merger has authorized substantial investments in the nuclear businesses operated by Waste Management although USA Waste Services does not have a nuclear component.

Tom Dabrowski of Lakewood, Colo., who oversees foreign and domestic nuclear-waste operations for Waste Management, including the landfill at Barnwell, will continue in that job in the merged company, representatives of both corporations confirmed Thursday. Both said the Barnwell site will not be closed and will play an important role in the new company's structure.

It is the likely disposal site for some 113 nuclear reactors on schedule for dismantling around the nation, Mr. Dabrowski said.

"It is true that waste volumes at Barnwell have dropped dramatically," he said. "The cost of disposal went up dramatically. When costs went up, our customers began looking at alternatives, including methods of generating less radioactive waste, and we have helped them in that effort.

"It reduces our profit when there is less waste to be disposed of, and it reduces tax revenue to the state of South Carolina, but it is the right thing to do for the environment and the right thing to do for our customers. We are changing our pricing structure to accommodate the change in circumstances, but we can and we will meet our tax obligation to the state of South Carolina."

Chem-Nuclear is required to pay the state $24 million a year for college scholarships whether or not that amount is generated by the state's tax on low-level nuclear waste buried at Barnwell -- $235 a cubic foot. The high tax has caused some customers to think twice about hauling their nuclear waste to Barnwell, and it has caused others to find methods of reducing the waste they generate, Mr. Dabrowski said.

Had volumes held stable despite the tax, as lawmakers hoped they would, Chem-Nuclear also was expected to contribute millions toward school construction. The tax alone has generated about half what was initially projected in 1995 when the landfill's life was extended.

But executives for Waste Management and USA Waste both disputed reports in South Carolina that the lower-than-expected revenues will spell doom for Barnwell.

Lew Nevins, a Houston executive with USA Waste, said the company has evaluated all the properties that will come into the merged corporation, provided shareholders approve the merger, and Barnwell is not in danger of being sold or shut down.

"We have no view toward closing the facility at Barnwell," he said. "None."

"Under the terms of the merger, nothing can be sold for 24 months that was not already for sale, and Barnwell is not for sale," said Allan Stalvey, Chem-Nuclear's vice president for government and public affairs, stationed in Washington.

The only other terms under which an existing asset could be disposed of would be under anti-trust regulations, and the Barnwell landfill does not fall into that category either, Mr. Stalvey said.

The reports that caused a stir among employees at Barnwell and other Chem-Nuclear installations apparently hinged on documents that Waste Management filed with the Securities Exchange Commission about the merger agreement, entered into in March, and the proposed stock transfers it will involve.

The SEC requires extensive information about merging companies and their holdings, including market situations that could affect future performance of stock.

The filing, which ran more than 400 pages, included a brief section on the Barnwell landfill, the effect of the state tax on its profits, and the statement, "If Chem-Nuclear decides to close the Barnwell site, the Company's earnings for one or more fiscal quarters or years could be adversely affected."

The statement was never meant to be construed as an intention or even a fleeting thought that the Barnwell site will be closed, Mr. Dabrowski said. In the message to employees, Mr. Voit said that SEC documents are required to show a number of possible scenarios, and that was one.

He told The Augusta Chronicle that the statement, considered in full and in context, clearly offers a reason the Barnwell site should stay open despite its reduced revenues.

The SEC documents also referred to a fund established to cover the decommissioning of the landfill. That fund, represented in some reports as an indicator that Chem-Nuclear is preparing to close the site, was established 27 years ago when the landfill opened.

Its purpose is to provide maintenance and oversight after the landfill is full because its contents are hazardous.

Mr. Voit urged employees to keep doing their jobs and not worry about the swirling news reports.

"Our employees at the Barnwell site have operated this facility for 27 years with zero serious safety accidents and zero regulatory shutdowns," he said in the memorandum headed "Barnwell's Status."

"We are proud of these employees and the record they have achieved. We will continue to focus on safe, compliant operations as our first priority (and) we will continue to keep you posted if there are new developments in our company's status."