Proposed Modified Final Judgment and Memorandum In Support of Modification

DEPARTMENT OF JUSTICE

Antitrust Division

[Civil No. 96-2031]

Proposed Modified Final Judgment and Memorandum In Support of

Modification

Notice is hereby given that a Modified Final Judgment, Motion to

Modify Final Judgment, Memorandum in Support of the Modification of the

Final Judgment, Stipulation and Order, and Hold Separate Stipulation

and Order have been filed with the United States District Court in the

District of Columbia, in United States et al v. USA Waste Services,

Inc., et al., Civil No. 96-2031.

The existing Final Judgment stems from a 1996 acquisition of

Sanifill, Inc., by USA Waste. The Final Judgment was entered to resolve

competitive concerns that the Antitrust Division had about the impact

of the acquisition in Houston, Texas. Pursuant to the Final Judgment,

USA Waste divested Sanifill's small container commercial hauling assets

and a USA Waste disposal site in Houston and sold 2,000,000 tons of air

space rights for ten years at two USA Waste landfills in the Houston

area. The assets were purchased by TransAmerican Waste Industries, Inc.

On January 26, 1998, TransAmerican and USA Waste entered into an

agreement whereby TransAmerican would be merged into USA Waste, and the

Houston assets TransAmerican purchased from USA Waste would be owned by

USA Waste.

On May 5, 1998, the United States filed a proposed Modified Final

Judgment to modify the Final Judgment in this case. The United States

maintained that the proposed acquisition of TransAmerican's commercial

hauling and disposal assets in the Houston area would violate the

original Final Judgment. The proposed Modified Final Judgment requires

USA Waste to divest the TransAmerican commercial small container and

disposal assets in the Houston area and provide 2,000,000 tons of air

space rights for ten years at two USA Waste landfills in the Houston

area.

The Hold Separate Stipulation and Order and the Stipulation and

Order ensure that the provisions of the proposed Modified Final

Judgment will be observed and that the assets to be divested will be

held separate and maintained as a viable competitive entity until the

divestiture takes place.

Public comments on the proposed Modified Final Judgment should be

directed to J. Robert Kramer, Chief, Litigation II Section, Antitrust

Division, United States Department of Justice, 1401 H Street, NW, Suite

3000, Washington, DC 20530 (telephone: 202/307-0924). Such comments and

responses thereto will be filed with the Court.

Constance K. Robinson,

Director of Operations & Merger Enforcement.

Stipulation and Order

To further the objectives of the Modified Final Judgment filed with

the Court in this matter, it is stipulated by and between the United

States of America (``United States''), the State of Texas (``Texas''),

USA Waste Services, Inc. (``USA Waste''), and TransAmerican Waste

Industries, Inc. (``TransAmerican''), by their respective attorneys, as

follows:

1. The Court has jurisdiction over the subject matter of this

action and over the United States, Texas, USA Waste, and TransAmerican,

and venue of this action is proper in the United States District Court

for the District of Columbia.

2. The parties stipulate that a Modified Final Judgment in the form

hereto attached may be filed and entered by the Court, upon the motion

of any party or upon the Court's own motion, at any time after

completion of the procedures specified in the United States'

Explanation of Procedures filed herewith without further notice to any

party or other proceedings, provided that the United States and Texas

have not withdrawn their consent, which they may do at any time before

the entry of the proposed Modified Final Judgment by serving notice

thereof on USA Waste and TransAmerican and by filing that notice with

the Court.

3. USA Waste and TransAmerican shall abide by and comply with the

provisions of the proposed Modified Final Judgment pending entry of the

[[Page 33409]]

proposed Modified Final Judgment, or until expiration of time for all

appeals of any court ruling declining entry of the proposed Modified

Final Judgment, and shall, from the date of the signing of this

Stipulation, comply with all the terms and provisions of the proposed

Modified Final Judgment as though they were in full force and effect as

an order of the Court.

4. This Stipulation shall apply with equal force and effect to any

amended proposed Modified Final Judgment agreed upon in writing by the

parties and submitted to the Court.

5. In the event (a) the United States and Texas have withdrawn

their consent, as provided in paragraph 2 above, or (b) the proposed

Modified Final Judgment is not entered pursuant to this Stipulation,

the time has expired for all appeals of any Court ruling declining

entry of the proposed Modified Final Judgment, and the Court has not

otherwise ordered continued compliance with the terms and provisions of

the proposed Modified Final Judgment, then the United States, Texas,

USA Waste, and TransAmerican are released from all further obligations

under this Stipulation, and the making of this Stipulation shall be

without prejudice to any party in this or any other proceeding.

6. USA Waste and TransAmerican represent that the divestiture

ordered in the proposed Modified Final Judgment can and will be made,

and that USA Waste and TransAmerican will later raise no claim of

hardship or difficulty as grounds for asking the Court to modify any of

the divestiture provisions contained therein.

Dated: May 5, 1998.

For the United States:

Frederick H. Parmenter

Virginia Bar No.: 18184, U.S. Department of Justice, Antitrust

Division, 1401 H Street, N.W., Suite 3000, Washington, D.C. 20530,

(202) 307-0620.

For the State of Texas

Dan Morales

Texas Attorney General.

Mark Tobey

Assistant Attorney General, Chief, Antitrust Section, Texas Bar No.:

20082960.

Kim Van Winkle

Assistant Attorney General, Texas Bar No.: 24003104.

Office of the Attorney General of Texas, P.O. Box 12548, Austin,

Texas 78711-2546, (512) 463-2185.

For USA Waste Services, Inc.

James R. Weiss

District of Columbia Bar No.: 379798, Preston, Gates, Ellis &

Rouvelas Meeds, 1735 New York Avenue, N.W., Suite 500, Washington,

D.C. 20006-5209, (202) 662-8425.

For TransAmerican Waste Industries, Inc.

J. David Green

Sr. Vice President & General Counsel, TransAmerican Waste

Industries, Inc., 10554 Tanner Road, Houston, Texas 77041, (713)

956-1212.

Order

It is So Ordered, this 6th day of May, 1998.

Gladys Kessler,

United States District Judge.

Modified Final Judgment

Whereas, the United States of America (``United States''), the

State of Texas (``Texas''), and the Commonwealth of Pennsylvania

(``Pennsylvania'') filed a Complaint in this action on August 30, 1996

and a Final Judgment was entered on December 17, 1996.

And whereas, the United States, Texas, USA Waste Services, Inc.

(``USA Waste'') and TransAmerican Waste Industries, Inc.

(``TransAmerican''), by their respective attorneys have consented to

the entry of this Modified Final Judgment without trial or adjudication

of any issue of fact or law herein, and without this Modified Final

Judgment constituting any evidence against or an admission by the

United States, Texas, USA Waste, or TransAmerican with respect to any

issue of law or fact herein;

And whereas, USA Waste and TransAmerican have agreed to be bound by

the provisions of this Modified Final Judgment pending its approval by

the Court.

And whereas, prompt and certain divestiture of the Houston

Divestiture Assets to assure that competition is not substantially

lessened in the Houston Area is the essence of this agreement;

And whereas, USA Waste and TransAmerican have represented to the

United States and Texas that the divestiture required below can and

will be made and that they will later raise no claims of hardship or

difficulty as grounds for asking the Court to modify any of the

divestiture provisions contained below;

And whereas, the United States and Texas believe that entry of this

Modified Final Judgment is in the Public Interest;

Now, therefore, it is hereby Ordered, Adjudged, and Decreed that

this Modified Final Judgment, shall modify the provisions in the Final

Judgment relating to the Houston Divestiture Assets and the Houston

area in the following ways:

I. Definitions

As used in this Modified Final Judgment:

A. Solid waste hauling means the collection and transportation to a

disposal site of municipal solid waste (but not construction and

demolition waste; medical waste; organic waste; special waste, such as

contaminated soil; sludge; or recycled materials) from residential,

commercial and industrial customers.

B. Solid waste disposal means the disposal of Type 1 or 4 solid

waste into disposal sites approved by the Texas Natural Resources

Conservation Commission for Type 1 or Type 4 waste. Type 1 waste is

municipal solid waste and Type 4 waste is dry waste such as

construction and demolition waste.

C. USA Waste means USA Waste Services, Inc., a Delaware corporation

with its headquarters in Houston. Texas, and its successors and

assigns, their subsidiaries, affiliates, directors, officers, managers,

agents and employees.

D. TransAmerican means TransAmerican Waste Industries, Inc., A

Delaware corporation with its headquarters in Houston, Texas and its

successors, and assigns, their subsidiaries, affiliates, directors,

officers, managers, agents and employees.

E. Houston Area means Harris County, Texas; Chambers County, Texas;

Brazoria County, Texas; Fort Bend County, Texas; Montgomery County,

Texas; Walker County, Texas; and Galveston County, Texas.

F. Houston Hauling Assets means the front load commercial business

of TransAmerican that provides solid waste hauling services in the

Houston Area. These assets include all customer lists, contracts and

accounts, including

[[Page 33410]]

all contracts for disposal of solid waste at disposal facilities, all

trucks, containers, equipment, material, and supplies associated with

these assets, and the garages, including all associated equipment,

located at 10554 Tanner Road, Houston, Texas, 77041 and 999 Ashland,

Channelview, Texas 77530.

G. Sunray Assets means the operating, permitted Type 4 landfill

(also known as the North County Landfill) and other related assets of

TransAmerican with an office at 2015 Wyoming in League City, Texas.

These assets include the current permit Number 1849 and permit

application Number 1849A filed with the Texas Natural Resources

Conservation Commission, all customers lists, contracts and accounts,

including all equipment, material, and supplies associated with these

assets.

H. Airspace Assets means the right to dispose, over a ten-year

period of up to a total of 2,000,000 tons of municipal solid waste in

amounts of up to a total of 270,000 tons per year at the Hazelwood

Landfill located at 4971 Tri-City Beach Road in Baytown, Texas and the

Brazoria County Landfill located at 10310 FM 523 in Angleton, Texas.

I. Houston Divestiture Assets refers to the Houston Hauling assets,

Sunray Assets, and Airspace Assets.

J. Small Container means a 1 to 10 cubic yard container.

II. Jurisdiction

This Court has jurisdiction over the subject matter of this action

and over the United States, Texas, USA Waste, and TransAmerican and

venue of this action is proper in the United States District Court for

the District of Columbia.

III. Applicability

A. The provisions of this Modified Final Judgment apply to USA

Waste and TransAmerican, their successors and assignees, their

subsidiaries, affiliates, directors, officers, managers, agents, and

employees, and all other persons in active concert or participation

with any of them who shall have received actual notice of this Modified

Final Judgment by personal service or otherwise.

B. USA Waste and TransAmerican shall require, as a condition of the

sale or other disposition of all or substantially all of the Houston

Divestiture Assets, that the acquiring party or parties agree to be

bound by the provisions of this Modified Final Judgment.

IV. Divestiture of Assets

A. USA Waste and TransAmerican agree within 90 days from the filing

of this Modified Final Judgment to divest the Houston Divestiture

Assets, unless the United States, after consultation with Texas,

consents that only some portion of the Houston Divestiture Assets need

be divested. USA Waste and TransAmerican further agree to notify the

United States and Texas in writing immediately when they have completed

the divestitures.

B. Unless the United States, after consultation with Texas,

otherwise consents, divestiture under Section IV.A, or by the trustee

appointed pursuant to Section V, shall be accomplished in such a way as

to satisfy the United States, in its sole determination after

consultation with Texas, that the Houston Hauling Assets can and will

be operated by the purchaser as a viable, ongoing business engaged in

solid waste hauling, and that the Sunray Assets can and will be

operated by the purchases as a viable, ongoing business engaged in

solid waste disposal in the Houston Area. Divestiture under Section

IV.A or by the trustee, shall be made to a purchaser or purchasers for

whom it is demonstrated to the satisfaction of the United States, after

consultation with Texas, that (1) the purchase or purchases is or are

for the purpose of competing effectively in solid waste hauling, dry

waste disposal, or both, and (2) the purchaser or purchasers has or

have the managerial, operational, and financial capability to compete

effectively in solid waste hauling and/or disposal.

C. In accomplishing the divestitures ordered by this Modified Final

Judgment, USA Waste and TransAmerican promptly shall make known, by

usual and customary means, the availability of the Houston Divestiture

Assets described in this Modified Final Judgment. USA Waste and

TransAmerican shall inform any person making an inquiry regarding a

possible purchase that the sale is being made pursuant to this Modified

Final Judgment and provide such person with a copy of this Modified

Final Judgment. USA Waste and TransAmerican shall also offer to furnish

to all bona fide prospective purchasers, subject to customary

confidentiality assurances, all information regarding the Houston

Divestiture Assets customarily provided in a due diligence process

except such information subject to attorney-client or work-product

privileges. USA Waste and TransAmerican shall make available such

information to the United States and Texas at the same time such

information is made available to any other person. In giving notice of

the availability of the Houston Hauling Assets, defendants shall not

exclude any persons bound by any non-compete obligations to Sanifill,

Inc., or TransAmerican.

D. USA Waste and TransAmerican shall not require of the purchaser

or purchasers, as a condition of sale, that any current employee of the

Houston Divestiture Assets be offered or guaranteed continued

employment after the divestiture.

E. USA Waste and TransAmerican shall take all reasonable steps to

accomplish quickly the divestiture contemplated by this Modified Final

Judgment.

F. As part of the sale of the Airspace Assets, USA Waste and

TransAmerican will include an agreement to accept waste from the

purchaser or anyone designated by the purchaser to dispose of waste at

the landfills. As agents of the purchaser, USA Waste and TransAmerican

will operate the gate, scale house, and disposal area under terms and

conditions no less favorable than those provided to USA Waste's and

TransAmerican's vehicles or the vehicles of any municipality in the

Houston Area, except as to price and credit terms.

V. Appointment of Trustee

A. In the event that USA Waste and TransAmerican have not divested

all of their assets required by Section IV.A by the time set forth in

Section IV.A, the Court shall, on application of the United States,

after consultation with Texas, appoint a trustee selected by the United

States to effect the divestiture required by Section IV.A. After the

appointment of a trustee becomes effective, only the trustee shall have

the right to sell the assets required to be divested pursuant to

Section IV.A. The trustee shall have the power and authority to

accomplish the divestiture at the best price then obtainable upon a

reasonable effort by the trustee, subject to the provisions of Section

VI of this Final Judgment, and shall have such other powers as the

Court shall deem appropriate. USA Waste and TransAmerican shall not

object to a sale by the trustee on any grounds other than the trustee's

malfeasance, or on the grounds that the sale is contrary to the express

terms of this Modified Final Judgment. Any such objections by USA Waste

or TransAmerican must be conveyed in writing to the United States,

Texas, and the trustee within ten (10) days after the trustee has

provided the notice required under Section VI.

B. The trustee shall serve the cost and expense of USA Waste and

TransAmerican, on such terms and conditions as the Court may prescribe,

and shall account for all monies derived from the sale of the assets

sold by the

[[Page 33411]]

trustee and all costs and expenses so incurred. After approval by the

Court of the trustee's accounting, including fees for its services, all

remaining money shall be paid to USA Waste and TransAmerican and the

trust shall then be terminated. The compensation of such trustee shall

be reasonable and based on a fee arrangement providing the trustee with

an incentive based on the price and terms of the divestiture and the

speed with which it is accomplished.

C. USA Waste and TransAmerican shall use their best efforts to

assist the trustee in accomplishing the required divestiture. The

trustee and any consultants, accountants, attorneys, and other persons

retained by the trustee shall have full and complete access to the

personnel, books, records, and facilities of the Houston Divestiture

Assets, and USA Waste and TransAmerican shall develop financial or

other information relevant to such assets as the trustee may reasonably

request, subject to reasonable protection for trade secret or other

confidential research, development, or commercial information. USA

Waste and TransAmerican shall take no action to interfere with or to

impede the trustee's accomplishment of the divestiture.

D. After its appointment, the trustee shall file monthly reports

with the United States, Texas, USA Waste, TransAmerican, and the Court

setting forth the trustee's efforts to accomplish the divestiture

ordered under this Modified Final Judgment. If the trustee has not

accomplished such divestiture within six months after its appointment,

the trustee shall thereupon promptly file with the Court a report

setting forth (1) the trustee's efforts to accomplish the required

divestiture, (2) the reasons, in the trustee's judgment, why the

required divestiture has not been accomplished, and (3) the trustee's

recommendations. The trustee shall at the same time furnish such report

to the United States, Texas, USA Waste, and TransAmerican, who shall

each have the right to be heard and to make additional recommendations

consistent with the purpose of the trust. The Court shall thereafter

enter such orders as it shall deem appropriate in order to carry out

the purpose of the trust, which may, if necessary, include extending

the trust and the term of the trustee's appointment by a period

requested by the United States, after consultation with Texas.

E. USA Waste and TransAmerican shall give 30 days notice to the

United States and Texas prior to acquiring any interest that is not

otherwise reportable under the Hart-Scott-Rodino Act in any assets,

capital stock, or voting securities, other than in the ordinary course

of business, of any person that, at any time during the twelve months

immediately preceding the acquisition, was engaged in the solid waste

hauling industry in the Houston Area where the person had small

container revenues in excess of $500,000 per year or total revenues in

excess of $1 million per year. However, nothing herein shall preclude

USA Waste or TransAmerican from acquiring less than five (5) percent of

the stock of a publicly traded company.

F. USA Waste and TransAmerican shall give 30 days notice to the

United States and Texas prior to acquiring any interest that is not

otherwise reportable under the Hart-Scott-Rodino Act in any assets,

capital stock, or voting securities, other than in the ordinary course

of business, of any person that, at any time during the twelve months

immediately preceding the acquisition, was engaged in the municipal

solid waste or dry waste disposal industry in the Houston Area, where

the revenues of that person, when aggregated with the revenues of any

person or persons acquired in the previous six months, exceed the

revenue limits of paragraph E above. However, nothing herein shall

preclude USA Waste or TransAmerican from acquiring less than five (5)

percent of the stock of a publicly traded company.

G. The purchaser or purchasers of the Houston Divestiture Assets,

or any of them, shall not, without the prior written consent of the

United States, after consultation with Texas, sell any of those assets

to, or combine any of those assets with, those of USA Waste or

TransAmerican during the life of this Modified Final Judgment.

Furthermore, the purchaser or purchasers of the Houston Divestiture

Assets, or any of them, shall notify the United States and Texas 45

days in advance of any proposed sale of all or substantially all of the

assets, or change in control over those assets, acquired pursuant to

this Modified Final Judgment.

VI. Notification

A. USA Waste, TransAmerican, or the trustee, whichever is then

responsible for effecting the divestiture required herein, shall notify

the United States and Texas of any proposed divestiture required by

Section IV or V of this Modified Final Judgment. If the trustee is

responsible, it shall similarly notify USA Waste and TransAmerican. The

notice shall set forth the details of the proposed transaction and list

the name, address, and telephone number of each person not previously

identified who offered or expressed an interest or desire to acquire

any ownership interest in the Houston Divestiture Assets or any of

them, together with full details of the same. Within fifteen (15) days

after receipt of the notice, the United States and TransAmerican may

request additional information concerning the proposed divestiture, the

proposed purchaser and any other potential purchaser. USA Waste and

TransAmerican or the trustee shall furnish the additional information

within fifteen (15) days of the receipt of the request. Within thirty

(30) days after receipt of the notice or within fifteen (15) days after

receipt of the additional information, whichever is later, the United

States, after consultation with Texas, shall notify in writing USA

Waste and TransAmerican and the trustee, if there is one, if it objects

to the proposed divestiture. If the United States fails to object

within the period specified, or if the United States notifies in

writing USA Waste and TransAmerican and the trustee, if there is one,

that it does not object, then the divestiture may be consummated,

subject only to USA Waste's and TransAmerican's limited right to object

to the sale under Section V.A. Upon objection by the United States,

after consultation with Texas, or by USA Waste and TransAmerican under

Section V.A, the proposed divestiture shall not be accomplished unless

approved by the Court.

B. Thirty (30) days from the date when USA Waste and TransAmerican

consummate the acquisition, but in no event later than May 30, 1998,

and every thirty (30) days thereafter until the divestiture has been

completed, USA Waste and TransAmerican shall deliver to the United

States and Texas a written report as to the fact and manner of

compliance with Section IV of this Modified Final Judgment. Each such

report shall include, for each person who during the preceding thirty

(30) days made an offer, expressed an interest or desire to acquire,

entered into negotiations to acquire, or made an inquiry about

acquiring any ownership interest in the Houston Divestiture Assets or

any of them, the name, address, and telephone number of that person and

a detailed description of each contact with that person during that

period. USA Waste and TransAmerican shall maintain full records of all

efforts made to divest the Divestiture Assets or any of them.

VII. Financing

USA Waste and TransAmerican shall not finance all or any part of

any purchase made pursuant to Section IV or V of this Modified Final

Judgment without the prior written consent of the

[[Page 33412]]

United States, after consultation with Texas.

VIII. Preservation of Assets

Until the divestitures required by the Modified Final Judgment have

been accomplished:

A. USA Waste and TransAmerican shall take all steps necessary to

ensure that the Houston Hauling Assets will be maintained and operated

in the ordinary course of business and consistent with past practices,

and shall (1) maintain all insurance policies and all permits that are

required for the operation of the assets, and (2) maintain books of

account and records in the usual, regular, and ordinary manner and

consistent with past practices.

B. USA Waste and TransAmerican shall take all steps necessary to

ensure that the Sunray Assets will be maintained and operated as an

independent, ongoing, economically viable and active competitor in the

provision of dry waste disposal services in the Houston Area, with

management operations, books, records and competitively-sensitive

sales, marketing and pricing information and decision-making kept

separate and apart from, and not influenced by, that of TransAmerican's

solid waste hauling and disposal business.

C. USA Waste and TransAmerican shall use all reasonable efforts to

maintain and increase sales of solid waste hauling and disposal

services provided by the Houston Divestiture Assets, and they shall

maintain at 1997 or previously approved levels, whichever is higher,

promotional, advertising, sales, marketing and merchandising support

for such services.

D. USA Waste and TransAmerican shall take all steps necessary to

ensure that the Houston Divestiture Assets are fully maintained in

operable condition, and shall maintain and adhere to normal or

previously approved repair, improvement and maintenance schedules for

the Houston Divestiture Assets.

E. USA Waste and TransAmerican shall not, except as part of a

divestiture approved by the United States and Texas, remove, sell or

transfer any Houston Divestiture Assets, other than solid waste hauling

and disposal services provided in the ordinary course of business.

F. USA Waste and TransAmerican shall take no action that would

jeopardize the sale of the Houston Divestiture Assets.

G. USA Waste and TransAmerican shall appoint a person with

oversight responsibility for the Houston Divestiture Assets to insure

compliance with this section of the Modified Final Judgment.

IX. Compliance Inspection

For the purpose of determining or securing compliance with this

Modified Final Judgment, and subject to any legally recognized

privilege, from time to time.

A. Duly authorized representatives of the United States and Texas

including consultants and other persons retained by the plaintiffs,

shall, upon the written request of the Assistant Attorney General in

charge of the Antitrust Division or the Attorney General of the State

of Texas, respectively, and on reasonable notice to USA Waste and

TransAmerican made to its principal offices, be permitted:

1. Access during office hours to inspect and copy all books,

ledgers, accounts, correspondence, memoranda, and other records and

documents in the possession or under the control of USA Waste and

TransAmerican, which have counsel present, relating to any matters

contained in this Modified Final Judgment; and

2. Subject to the reasonable convenience of USA Waste and

TransAmerican and without restraint or interference from them, to

interview their directors, officers, employees, and agents who may have

counsel present, regarding any such matters.

B. Upon the written request of the Assistant Attorney General in

charge of the Antitrust Division or the Attorney General of the State

of Texas, respectively, made to USA Waste and TransAmerican at their

principal offices, USA Waste and TransAmerican shall submit such

written reports, under oath if requested, with respect to any of the

matters contained in this Modified Final Judgment as may be requested.

C. No information nor any documents obtained by the means provided

in this Section IX shall be divulged by any representative of the

United States or the Office of the Attorney General of Texas to any

person other than a duly authorized representative of the Executive

Branch of the United States or of the Office of the Attorney General of

Texas, except in the course of legal proceedings to which the United

States or Texas is a party (including grand jury proceedings), or for

the purpose of securing compliance with this Modified Final Judgment,

or as otherwise required by law.

D. If at the time information or documents are furnished by USA

Waste and TransAmerican to the United States and Texas, USA Waste and

TransAmerican represent and identify in writing the material in any

such information or documents for which a claim of protection may be

asserted under rule 26(c)(7) of the Federal Rules of Civil Procedure,

and USA Waste and TransAmerican mark each pertinent page of such

material, ``Subject to claim of protection under Rule 26(c)(7) of the

Federal Rules of Civil Procedure,'' then the United States and Texas

shall give ten (10) days notice to USA Waste and TransAmerican prior to

divulging such material in any legal proceeding (other than a grand

jury proceeding) to which USA Waste or TransAmerican is not a party.

X. Retention of Jurisdiction

Jurisdiction is retained by this Court for the purpose of enabling

any of the parties to this Modified Final Judgment to apply to this

Court at any time for such further orders and directions as may be

necessary or appropriate for the construction, implementation, or

modification of any of the provisions of this Modified Final Judgment,

for the enforcement of compliance herewith, and for the punishment of

any violations hereof.

XI. Termination

This Modification Final Judgment will expire on the tenth

anniversary of the date of its entry.

XII. Public Interest

Entry of this Modified Final Judgment is in the public interest.

Dated:-----------------------------------------------------------------

----------------------------------------------------------------------

United States District Judge

Certificate of Service

I hereby certify that copies of the Modified Final Judgment, Motion

of the United States and Texas for Modification of the Final Judgment,

United States' Explanation of Procedures, Hold Separate Stipulation and

Order, Stipulation and Order, and Memorandum of the United States in

Support of Modification of the Final Judgment have been served upon USA

Waste Services, Inc., TransAmerican Waste Industries, Inc., and the

Office of the Attorney General of Texas, by placing copies of the

foregoing documents in the U.S. Mail, directed to each of the foregoing

parties at the addresses given below, this 6th day of May, 1998.

USA Waste Services, Inc., c/o James R. Weiss, Esq., Preston, Gates,

Ellis & Rouvelas Meeds, Suite 500, 1735 New York Avenue, NW.,

Washington, DC 20006-5209.

TransAmerican Waste Industries, Inc., J. David Green, Esq., Sr. Vice

President

[[Page 33413]]

and General Counsel, 10554 Tanner Road, Houston, Texas 77041.

Mark Tobey, Assistant Attorney General, Chief, Antitrust Section,

Office of the Attorney General of Texas, P.O. Box 12548, Austin, Texas

78711-2546.

Frederick H. Parmenter,

U.S. Department of Justice, Antitrust Division, 1401 H Street, NW.,

Suite 3000, Washington, DC 20530.

Memorandum of the United States and Texas in Support of

Modification of the Final Judgment

The United States of America (``United States'') and the State of

Texas (`'Texas'') submit this memorandum in support of their motion to

modify the Final Judgment entered in the above-captioned matter. Filed

with the memorandum is a Stipulation and Order, a Hold Separate

Stipulation and Order, a Motion for Modification of the Final Judgment,

an Explanation of Procedures, and a proposed Modified Final Judgment.

In accordance with the provisions of the Stipulation and Order, USA

Waste Services, Inc. (``USA Waste'') and TransAmerican Waste

Industries, Inc. (``TransAmerican'') have agreed to be bound by the

Modified Final Judgment following consummation of the merge and pending

entry of the Modified Final Judgment. Similarly, in accordance with the

Hold Separate Stipulation and Order, USA Waste and TransAmerican have

agreed to hold the Houston Divestiture Assets separate and maintain

them as competitively viable entities after the consummation of the

merger and entry of the Modified Final Judgment. The proposed Modified

Final Judgment only modifies the provisions of the Final Judgment

relating to the Houston, Texas area. It does not have any impact, and

is not meant to have any impact, on the provisions relating to

Johnstown, Pennsylvania. The modifications are necessary to ensure that

the original intent of the Final Judgment, to prevent competition from

being lessened in the Houston refuse hauling and disposal markets, is

preserved. Consequently, the modifications are in the public interest.

I. Background

On August 30, 1996, the United States filed a civil antitrust

Complaint in the above-styled action alleging that the proposed

acquisition of the voting stock of Sanifill, Inc. (``Sanifill'') by USA

Waste would violate Section 7 of the Clayton Act, 15 U.S.C. 18. The

Complaint alleged that the combination of these competitors would

lessen competition substantially in the provision of small

containerized waste hauling services and landfill disposal services in

the Houston, area, among other geographic locations. The Houston area

encompasses Harris County, Texas; Chambers County, Texas; Brazoria

County, Texas; Fort Bend Count, Texas; Montgomery County, Texas; Walker

County, Texas; and Galveston County, Texas, including the

municipalities located, in whole or in part, in those counties

(``Houston market'').

When the Complaint was filed, the United States also filed a

proposed settlement that was set forth in a proposed Final Judgment

that permitted USA Waste to complete its acquisition of Sanifill, but

required certain divestitures that would preserve competition in the

Houston area. On December 17, 1996 after the comment period required by

the Antitrust Penalties & Procedures Act (``APPA''), 15 U.S.C. 16, had

passed, the Court entered the Final Judgment finding that it was in the

public interest. On January 31, 1997, various waste hauling and

disposal assets located in the Houston area where purchased by

TransAmerican from USA Waste. Section V.G. of the Final Judgment

required: (1) the purchaser of the divested hauling and disposal assets

(e.g., Trans-American) to give the United States and Texas 45 days

notice in advance of any sale of the assets, and (2) the purchaser

would not sell the divested assets to be defendants (e.g., USA Waste)

during the life of the decree.

On February 26, 1998, TransAmerican notified the United States and

Texas, as required by the Final Judgment, that TransAmerican had

undertake to merge itself with USA Waste. The proposed merger of

TransAmerican with USA Waste would permit USA Waste to acquire the

TransAmerican Houston assets that TransAmerican was prohibited from

selling to USA Waste by the Final Judgment. On April 9, 1998, the

United States sent a letter to USA Waste and TransAmerican notifying

them that based on its investigation and consultation with Texas, it

could not give its consent to USA Waste's proposed purchase of the

Houston assets. The United States and Texas were concerned that the

acquisition would substantially lessen competition in the provision of

small containerized waste hauling services and landfill disposal

services in the Houston area. USA Waste and TransAmerican were

substantially informed that the United States would undertake to

enforce the Final Judgment if concerns about small containerized

hauling and landfills in the Houston market were not resolved. The

assets in the Houston area which were of concern to the United States

that USA Waste would require through the merger were: (1) the

TransAmerican frontload commercial assets (``Houston Hauling Assets``).

(2) a TransAmerican Type 4 landfill and related assets (``the Sunray

Assets''), and (3) the rights TransAmerican had acquire to dispose of

2,000,000 tons of municipal solid waster (``MSW'') for ten years at a

maximum rate of 270,000 tons a year at the USA Waste Hazlewood Landfill

located at 4791 Tri-City Beach Road, Baytown, Texas 77520 and the USA

Waste Brazoria County Landfill located at 10310 FM 523, Angleton,

Texas. (``Airspace Assets''). Together the Houston Hauling Assets,

Sunray Assets, and Airspace Assets are known as the Houston Divestiture

Assets.

To prevent competition from being substantially lessened for small

containerized hauling and landfill disposal in the Houston area, and to

permit USA Waste to complete TransAmerican's merger with USA Waste, the

United States has filed with the Court a proposed settlement that

supplements the Final Judgment entered by the Court on December 17,

1996. It requires USA Waste to divest the Houston Divestiture Assets.

The proposed Modified Final Judgment orders USA Waste to divest the

Houston Divestiture Assets. In addition, USA Waste must complete the

divestiture of the Houston Divestiture Assets within ninety (90) days

after the date on which the proposed Modified Final Judgment was filed

(i.e., May 6, 1998), in accordance with the procedures specified

therein.

The Stipulation and Order, Hold Separate Stipulation and Order, and

proposed Modified Final Judgment require USA Waste to ensure that,

until the divestitures mandated by the proposed Modified Final Judgment

have been accomplished, the Houston Hauling Assets and the Sunray

Assets will be maintained and operated as an independent, ongoing,

economically viable and active competitor. USA Waste must preserve and

maintain the assets to be divested as salable, ongoing concerns, with

competitively sensitive business information and decision-making

divorced from that of USA Waste. USA Waste will appoint a person or

persons to monitor and ensure its compliance with these requirements of

the proposed Modified Final Judgment.

The United States, Texas, USA Waste, and TransAmerican have

stipulated that the proposed Modified Final Judgment may be entered

after compliance with the 60-day comment period provided for in the

United States' Explanation of

[[Page 33414]]

Procedures. Entry of the proposed Modified Final Judgment would

terminate any need for action regarding the proposed merger of

TransAmerican with USA Waste, except that the Court would retain

jurisdiction to construe, modify, or enforce the provisions of the

proposed Modified Final Judgment and to punish violations thereof.

II. Description of the Events Giving Rise to the Proposed Modified

Final Judgment

USA Waste is a Delaware corporation with its principal office in

Houston, Texas. USA Waste is engaged in providing nonhazardous solid

waste hauling and/or disposal in 49 states and the District of

Columbia. In 1997, USA Waste had total revenues of over $1.6 billion.

TransAmerican is a Delaware corporation with its principal office

in Houston, Texas. TransAmerican is engaged in providing nonhazardous

solid waste hauling and/or disposal in five states. In 1996

TransAmerican had total revenues of over $16 million.

On January 26, 1998, USA Waste entered into an agreement and plan

of merger whereby TransAmerican's stock would be acquired for

approximately $125,470,000. This transaction is of concern to the

United States and Texas because it would take place in the highly

concentrated Houston small container hauling and landfill disposal

industries and violate the December 17, 1996 Final Judgment entered in

this action.

The Transaction's Effects in the Houston Market

A. The Solid Waste Hauling Industry

The United States asserts that small containerized hauling services

and landfill disposal services constitute lines of commerce, or

relevant product markets, for antitrust purposes, and that the Houston

area constitutes an appropriate section of the country, or relevant

geographic market. The United States maintains that the effect of USA

Waste's acquisition may be to lessen competition substantially in the

provision of small containerized hauling services and landfill disposal

services in the Houston market. As a result, when USA Waste undertook

to acquire TransAmerican, the United States took the position that USA

Waste could not obtain the small containerized hauling and landfill

assets it divested to TransAmerican 18 months ago to resolve

anticompetitive concerns that arose in August 1996, when USA Waste

purchased Sanifill.

Solid waste hauling involves the collection of paper, food,

construction material and other solid waste from homes, businesses and

industries, and the transporting of that waste to a landfill or other

disposal site. These services may be provided by private haulers

directly to residential, commercial and industrial customers, or

indirectly through municipal contracts and franchises.

Service to commercial customers accounts for a large percentage of

total hauling revenues. Commercial customers include restaurants, large

apartment complexes, retail and wholesale stores, office buildings, and

industrial parks. These customers typically generate a substantially

larger volume of waste than that generated by residential customers.

Waste generated by commercial customers is generally placed in metal

containers of one to ten cubic yards provided by their hauling company.

One to ten cubic yard containers are called ``small containers.'' Small

containers are collected primarily by front-end load vehicles that lift

the containers over the front of the truck by means of a hydraulic

hoist and empty them into the storage section of the vehicle, where the

waste is compacted. Specially-rigged rear-end load vehicles can also be

used to service some small container customers, but these trucks

generally are not as efficient as front-end load vehicles and are

limited in the size of containers they can safely handle. Front-end

load vehicles can drive directly up to a container and hoist the

container in a manner similar to a forklift hoisting a pallet; the

containers do not need to be manually rolled into position by a truck

crew as with a rear-end load vehicle. Service to commercial customers

that use small containers is called ``small containerized hauling

service.''

Solid waste hauling firms also provide service to residential and

industrial (or ``roll-off'') customers. Residential customers,

typically households and small apartment complexes that generate small

amounts of waste, use noncontainerized solid waste hauling service,

normally placing their waste in plastic bags or trash cans at curbside.

Rear-end load vehicles are generally used to collect waste from

residential customers and from those commercial customers that generate

relatively small quantities of solid waste, similar in amount and kind

to those generated by residential customers. Generally, rear-end

loaders use a two or three person crew to manually load the waste into

the rear of the vehicle.

Industrial or roll-off customers include factories and construction

sites. These customers either generate non-compactible waste, such as

concrete or building debris, or very large quantities of compactible

waste. They deposit their waste into very large containers (usually 20

to 40 cubic yards) that are loaded onto a roll-off truck and

transported individually to the disposal site where they are emptied

before being returned to the customer's premises. Customers, like

shopping malls, use large, roll-off containers with compactors. This

type of customer generally generates compactible trash, like cardboard,

in very great quantities, it is more economical for this type of

customer to use roll-off service with a compactor than to use a number

of small containers picked up multiple times a week.

There are no practical substitutes for small containerized hauling

service. Small containerized hauling service customers will not

generally switch to noncontainerized service because it is too

impractical and costly for those customers to bag and carry their trash

to the curb for hand pick-up. Small containerized hauling service

customers also value the cleanliness and relative freedom from

scavengers afforded by that service. Similarly, roll-off service is

much too costly and takes up too much space for most small

containerized hauling service customers. Only customers that generate

the largest volumes of solid waste can economically consider roll-off

service, and for customers that do generate large volumes of waste,

roll-off service is usually the only viable option.

Solid waste hauling services are generally provided in very

localized areas. Route density (a large number of customers that are

close together) is necessary for small containerized solid waste

hauling firms to be profitable. In addition, it is not economically

efficient for trash hauling equipment to travel long distances without

collecting significant amounts of waste. Thus, it is not efficient for

a hauler to serve major metropolitan areas from a distant base.

Haulers, therefore, generally establish garages and related facilities

within each major local area served.

The United States asserts that USA Waste's acquisition of

TransAmerican would substantially lessen competition for the provisions

of small containerized hauling service in the Houston market. Actual

and potential competition between USA Waste and TransAmerican for the

provision of small containerized hauling service in the Houston market

will be eliminated.

USA Waste and TransAmerican are two of the largest providers of

small

[[Page 33415]]

containerized hauling service in the Houston market. In the Houston

market, USA Waste has 28 percent share and TransAmerican has a 7

percent share. The acquisition would give USA Waste a 35 percent share

of the market.

Solid waste hauling is an industry highly susceptible to tacit or

overt collusion among competing firms. Overt collusion has been

documented in more than a dozen criminal and civil antitrust cases

brought in the last decade and a half. Such collusion typically

involves customer allocation and price fixing, and where it has

occurred, has been shown to persist for many years.

The elimination of one of a small number of significant

competitors, such as would occur as a result of the proposed

transaction in the alleged market, significantly increases the

likelihood that consumers in these markets are likely to face higher

prices or poorer quality service. A new entrant cannot constrain the

prices of larger incumbents until it achieves minimum efficient scale

and operating efficiencies comparable to the incumbent firms. In small

containerized hauling service, achieving comparable operating

efficiencies requires achieving route density comparable to existing

firms, which typically takes a substantial period of time. A

substantial barrier to entry is created by the use of long-term

contracts coupled with selective pricing reductions to specific

customers to deter new entrants into small containerized hauling

service and to hinder them in winning enough customers to build

efficient routes. Further, even if a new entrant endures and grows to a

point near minimum efficient scale, the entrant will often be purchased

by an incumbent firm and will be removed as a competitive threat.

B. Landfill Disposal Services

Most commercial solid waste is taken by haulers to landfills for

disposal. Access to a suitable municipal solid waste (``MSW'') landfill

at a competitive price is essential to a hauling company performing

commercial containerized hauling service because disposal costs account

for approximately 30-50 percent of the revenues received for this

service. Suitable MSW landfills are difficult and time consuming to

obtain because of the scarcity of appropriate land, high capital cost,

local resident opposition, and government regulation. Several years are

required to process an application, with no guarantee of success.

In Texas, dry waste can be taken to what is referred to as a dry

waste (Type 4) landfill. Access to a suitable landfill at a competitive

price is essential to a hauling company collecting dry waste because

disposal costs can account for over 60% of the revenues for this

service. Dry waste landfills are difficult and time consuming to obtain

because to permit and build a Type 4 landfill in Texas, one must go

through a process similar to that for permitting a Type 1 landfill.

Several years are required to process an application, with no guarantee

of success.

TransAmerican's merger with USA Waste will substantially lessen

competition for landfill service in the Houston market. Actual and

potential competition between USA Waste and TransAmerican for the

provision of MSW and dry waste landfill service in the Houston market

will be eliminated. USA Waste is the largest owner of dry waste

landfill services in the Houston market. In the Houston area, there are

18 Type 4 landfills in the Houston area. USA Waste has eleven dry waste

landfills (four operating) and TransAmerican has one. Concerning Type 1

MSW landfills, there are nine in the Houston area that are owned by

three firms. Through the Final Judgment, TransAmerican obtained access

to the USA Waste Type 1 landfills for a period of ten years thereby

assuring it disposal access for the MSW it hauls.

As a result of the acquisition, the concentration of dry waste

landfill services in the Houston market will be substantially

increased, which is likely to result in price increases. Furthermore, a

small containerized hauling competitor with guaranteed access to Type 1

landfills will be removed from the Houston area. In the Houston market,

there are no alternative types of facilities available for the disposal

of either MSW waste or dry waste. Although dry waste can be taken to

either a MSW or a dry waste landfill, prices at the MSW landfill are

significantly higher than at the dry waste landfill, so that MSW

landfills are not normally used for dry waste. Accordingly, haulers are

not likely to switch to another disposal service despite an increased

concentration in the ownership of MSW or dry landfills and a likely

price increase resulting from the merger.

C. Harm to Competition as a Consequence of the Acquisition

The United States asserts that the transaction would have the

following effects, among others: competition for the provision of small

containerized hauling service and landfill disposal service in the

Houston market will be substantially lessened; actual and potential

competition between USA Waste and TransAmerican in the provision of

small containerized hauling service and landfill disposal service in

the Houston market will be eliminated; and prices for small

contianerized hauling service and landfill disposal service in the

Houston market are likely to increase above competitive levels.

III. Explanation of the Proposed Modified Final Judgment

The provisions of the proposed Modified Final Judgment are designed

to eliminate the anticompetitive effects of the acquisition in small

containerized hauling services in the Houston market by ensuring that

the intent of the provisions of the Final Judgment relating to the

Houston market and the Houston Divestiture Assets entered by the Court

on December 17, 1996 are enforced and a new, independent and

economically viable competitor is established in the Houston market.

The proposed Modified Final Judgment requires USA Waste and

TransAmerican, within 90 days of May 6, 1998, to divest, as viable

ongoing business, the Houston Hauling Assets, Sunray Assets and the

Airspace Assets. The divestitures would include the small containerized

hauling service assets, landfill disposal assets, and such other assets

as may be necessary to ensure the viability of the small container and

landfill businesses. If USA Waste and TransAmerican cannot accomplish

these divestitures within the above-described period, the proposed

Modified Final Judgment provides that, upon application (after

consultation with Texas) by the United States, the Court will appoint a

trustee to effect divestiture.

The proposed Modified Final Judgment provides that these assets

must be divested in such a way as to satisfy the United States (after

consultation with Texas) that the operations can and will be operated

by the purchaser or purchasers as viable, ongoing businesses that can

compete effectively in the relevant market. USA Waste and TransAmerican

must take all reasonable steps necessary to accomplish the

divestitures, shall cooperate with bona fide prospective purchasers

and, if one is appointed, with the trustee.

If a trustee is appointed, the proposed Modified Final Judgment

provides that USA Waste and TransAmerican will pay all costs and

expenses of the trustee. The trustee's commission will be structured so

as to provide an incentive for the trustee based on the price obtained

and the speed with which divestiture is accomplished. After his or her

appointment becomes effective, the

[[Page 33416]]

trustee will file monthly reports with the United States, Texas, USA

Waste, TransAmerican and the Court, setting forth the trustee's efforts

to accomplish divestiture. At the end of six months, if the divestiture

has not been accomplished, the trustee and the United States, Texas,

USA Waste, and TransAmerican will make recommendations to the Court

which shall enter such orders as appropriate in order to carry out the

purpose of the trust, including extending the trust or the term of the

trustee's appointment.

In addition, the proposed Modified Final Judgment intends to

eliminate the anticompetitive effects of the acquisition in the Houston

Area market for MSW disposal services by requiring USA Waste and

TransAmerican to sell the rights to dispose of 2 million tons of MSW

waste over ten years at USA Waste's only two MSW landfills in the area.

The proposed Modified Final Judgment limits the amount disposed of in

any one year to 270,000 tons and requires that USA Waste will provide

the necessary services to dispose of the waste to the purchaser or any

agents designated by the purchaser in a nondiscriminatory manner. The

availability of this landfill capacity helps to ensure the success of

any entity purchasing the Houston Hauling Assets in competing with

other haulers in the Houston market.

Pursuant to its terms, the proposed Modified Final Judgment

mandates that USA Waste and TransAmerican divest TransAmerican's sole

dry waste (Type 4) landfill (the North County Landfill) in the Houston

area market. The divestiture of the North County Landfill will help

moderate any possible anticompetitive effect related to the merger and

its impact on dry waste landfills in the Houston area market.

Finally, the requirement of the proposed Modified Final Judgment

that USA Waste and TransAmerican provide 30 days written notice of any

proposed purchase of significant waste hauling or disposal companies in

the Houston market ensures that the U.S. Department of Justice and the

State of Texas General's Office will be able to review, consider and

oppose if necessary any future consolidation in the market for a period

of ten years.

IV. Modification is in the Public Interest

Uncontested motions to modify the Final Judgment are granted if the

proposed modification is within the reaches of the public interest.

See, e.g., United States v. Western Electric Co., 993 F.2d 1572, 1576

(D.D.C. 1993) (Citing United States v. Western Electric Co., 900 F.2d

283, 307 (D.D.C. 1990) (hereinafter Triennial Review)). In the context

of an uncontested motion to modify an existing consent decree, the

``public interest'' standard ``directs the district court to approve an

uncontested modification so long as the resulting array of rights and

obligations is within the zone of settlements consonant with the public

interest today.'' United States v Western Electric 1993 F.2d at 1576

(quoting Triennial Review, 900 F.2d at 307) (emphasis in original).

Thus, ``it is not up to the court to reject an agreed-on change simply

because the proposal diverged from its view of the public interest.

Rather, the court [is] bound to accept any modification that the

Department (with the consent of third parties, we repeat) reasonably

regarded as advancing the public interest.'' United States v. Western

Electric Co., 993 F.2d at 1576. See also United States v. Microsoft

Corp., 56 F.3d 1448, 1461-62 (D.C. Cir. 1995); United States v. Bechtel

Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S.

1083 (1981); United States v. BNS. Inc., 858 F.2d 456, 462

(9th Cir. 1988). Precedent requires that the balancing of

competing social and political interests affected by a proposed

antitrust consent decree must be left, in the first instance, to the

discretion of the Attorney General. The court's role in protecting the

public interest is one of insuring that the government has not breached

its duty to the public in consenting to the decree. The court is

required to determine not whether a particular decree is one that will

best serve society, but whether the settlement is `within the reaches

of the public interest.' More elaborate requirements might undermine

the effectiveness of antitrust enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added); See BNS, 858 F.2d at 463;

United States v. National Broadcasting Co., 449 F. Supp. 1127, 1143

(C.D. Cal. 1978) See also Microsoft, 56 F.3d at 1461.

V. Conclusion

For all of the foregoing reasons, the proposed modification is in

the public interest, and the motion to enter the Modified Final

Judgment should be granted. Respectfully submitted.

Dated: May 5, 1998.

For the United States

Frederick H. Parmenter

Virginia Bar No.: 18184, Attorney, U.S. Department of Justice,

Antitrust Division, 1401 H Street, N.W., Washington, D.C. 20530, (202)

307-0620.

For the States of Texas

Dan Morales,

Texas Attorney General.

Mark Tobey,

Assistant Attorney General, Chief, Antitrust Section, Texas Bar No.:

20082960.

Kim Van Winkle,

Assistant Attorney General, Texas Bar No.: 24003104.

Office of the Attorney General of Texas, P.O. Box 12548, Austin, Texas

78711-2546, (512) 463-2185.

Motion of the United States and Texas for Modification of The Final

Judgment

The United States of America (``United States'') and the State of

Texas (``Texas'') move this Court to modify the Final Judgment in the

above-captioned matter as to the provisions relating to the Houston

Divestiture Assets and the Houston area. This motion is based on the

following grounds:

I. Definitions

1. USA Waste means USA Waste Services, Inc., a Delaware corporation

with its headquarters in Houston, Texas, and its successors and

assigns, their subsidiaries, affiliates directors, officers, managers,

agents and employees.

2. Houston Area means Harris County, Texas; Chambers County, Texas;

Brazoria County, Texas; Fort Bend County, Texas; Montgomery County,

Texas; Walker County, Texas; and Galveston County, Texas.

3. Houston Hauling Assets means the frontload commercial business

of TransAmerican that provides solid waste hauling services in the

Houston Area. These assets include all customer lists, contracts and

accounts, including all contracts for disposal of solid waste at

disposal facilities, all trucks, containers, equipment, material, and

supplies associated with these assets, and the garages, including all

associated equipment, located at 10554 Tanner Road, Houston, Texas

77041 and 999 Ashland, Channelview, Texas 77530.

4. Sunray Assets means the operating, permitted Type 4 landfill

(also known as the North County Landfill) and other related assets of

TransAmerican with an office at 2015 Wyoming in League City, Texas.

These assets include the current permit Number 1849 and permit

application Number 1849A filed with the Texas Natural Resource

Conservation Commission, all customer lists, contracts and accounts,

including

[[Page 33417]]

all equipment, material, and supplies associated with these assets.

5. Airspace Assets means the right to dispose, over a ten-year

period of up to a total of 2,000,000 tons of municipal solid waste in

amounts of up to a total of 270,000 tons per year at the Hazlewood

Landfill located at 4971 Tri-City Beach Road in Baytown, Texas and the

Brazoria County Landfill located at 10310 FM 523 in Angleton, Texas.

6. Houston Divestiture Assets means the Houston Hauling Assets,

Sunray Assets, and Airspace Assets.

II. Background and Objectives

1. On August 30, 1996, the United Texas, and Pennsylvania filed a

complaint in the above-cationed case alleging that USA Waste's

acquisition of Sanifill, Inc. (``Sanifill'') violated Section 7 of the

Clayton Act, 15 U.S.C. 18. The complaint alleged that the combination

of USA Waste and Sanifill would substantially lessen competition in

providing hauling and disposal services in the Houston Area and

Johnstown, Pennsylvania.

2. On December 17, 1996, the Court entered a Final Judgment which

directed the defendants to divest the Houston Divestiture Assets and

undertake certain measure in Johnstown to alleviate the competitive

harm of the acquisition.

3. The Houston Divestiture Assets were purchased by TransAmerican

on January 31, 1997.

4. On January 26, 1998, USA Waste entered into an agreement with

TransAmerican pursuant to which USA Waste proposed to merge

TransAmerican with USA Waste. The value of the proposed transaction is

approximately $125,470.000.

5. On February 26, 1998, TransAmerican notified the United States

and Texas as required by the Final Judgment that TransAmerican has

undertaken to merge itself with USA Waste. Section V.G. of the Final

Judgment requires the purchaser of the Houston Divestiture Assets

(e.g., TransAmerican) to give the United States and Texas 45 days

notice in advance of any sale of the Houston Divestiture assets and

that the purchaser shall not sell the Houston Divestiture Assets to the

defendants (e.g., USA Waste) during the life of the decree.

6. On April 9, 1998, the United States sent a letter to USA Waste

and TransAmerican notifying them that based on its investigation

consultations with Texas, it could not give its consent to USA Waste's

proposed purchase of the Houston assets.

7. USA Waste and TransAmerican have agreed to the prompt and

certain divestiture of the Houston Divestiture Assets as a viable

business operation to a third party or parties to assure that

competition is not substantially lessened in the Houston Area.

8. For the purpose of accomplishing the divestiture of the Houston

Divestiture Assets, USA Waste and TransAmerican authorize the United

and Texas to state that they concur in this motion.

9. The United States does not believe that that proposed Modified

Final Judgment is subject to the Antitrust Procedures and Penalties

Act, 15 U.S.C. 16. However, the United States intends to follow the

comment procedures outlined in the attached Explanation of Procedures.

After completion of the procedures, the United States will file another

motion requesting that the Court enter the attached Modified Final

Judgment.

Respectfully submitted.

Dated: May 5th, 1998

For the United States:

Frederick H. Parmenter,

Virginia Bar No.: 18184, U.S. Department of Justice, Antitrust

Division, 1401 H Street, N.W., Suite 3000, Washington, D.C. 20530,

(202) 307-0620.

For The State of Texas

Dan Morales,

Texas Attorney General.

Mark Tobey,

Assistant Attorney General, Chief, Antitrust Section, Texas Bar No.:

20082960.

Kim Van Winkle,

Assistant Attorney General, Texas Bar No.: 24003104.

Office of the Attorney General of Texas, P.O. Box 12548, Austin, Texas

78711-2546, (512) 463-2185.

Hold Separate Stipulation and Order

It is hereby stipulated and agreed by and between the United States

of America, the State of Texas, USA Waste Services, Inc., and

TransAmerican Waste Industries, Inc., subject to approval and entry by

the Court, that:

I. Definitions

As used in this Hold Separate Stipulation and Order:

A. Solid waste hauling means the collection and transportation to a

disposal site of municipal solid waste (but not construction and

demolition waste; medical waste; organic waste; special waste, such as

contaminated soil; sludge; or recycled materials) from residential,

commercial and industrial customers.

B. USA Waste means USA Waste Services, Inc., a Delaware corporation

with its headquarters in Houston, Texas, and its successors and

assigns, their subsidiaries, affiliates, directors, officers, managers,

agents and employees.

C. TransAmerican means TransAmerican Waste Industries, Inc., a

Delaware corporation with its headquarters in Houston, Texas and its

successors and assigns, their subsidiaries, affiliates, directors,

officers, managers, agents and employees.

F. Houston Area means Harris County, Texas; Chambers County, Texas;

Brazoria County, Texas; Fort Bend County, Texas; Montgomery County,

Texas; Walker County, Texas; and Galveston County, Texas.

G. Houston Hauling Assets means the frontload commercial business

of TransAmerican that provides solid waste hauling services in the

Houston Area. These assets include all customer lists, contracts and

accounts, including all contracts for disposal of solid waste at

disposal facilities, all trucks, and containers, equipment, material,

and supplies associated with these assets, and the garages, including

all associated equipment, located at 10554 Tanner Road, Houston, Texas

77041 and 999 Ashland, Channelview, Texas 77530.

H. Sunray Assets means the operating, permitted Type 4 landfill

(also known as the North County Landfill) and other related assets of

USA Waste with an office at 2015 Wyoming in League City, Texas. These

assets include the current permit Number 1849 and permit application

Number 1849A filed with the Texas Natural Resource Conservation

Commission, all customer lists, contracts and accounts, including all

equipment, material, and supplies associated with these assets.

I. Airspace Assets means the right to dispose, over a ten-year

period of up to a total of 2,000,000 tons of municipal solid waste in

amounts of up to a total of 270,000 tons per year at the Hazlewood

Landfill located at 4971 Tri-City Beach Road in Baytown, Texas and the

Brazoria County Landfill located at 10310 FM 523 in Angleton, Texas.

J. Houston Divestiture Assets means to the Houston Hauling Assets,

Sunray Assets, and Airspace Assets.

II. Objectives

The Modified Final Judgment filed in this case is meant to ensure

USA Waste's prompt divestiture of the Houston Divestiture Assets for

the purpose of maintaining a viable competitor in the waste disposal

and hauling business in the Houston area to remedy the effects that the

United States and Texas allege would otherwise result from USA Waste's

proposed acquisition of TransAmerican. This Hold Separate

[[Page 33418]]

Stipulation and Order ensures, prior to such divestiture, that the

Houston Hauling Assets and the Sunray Assets which are being divested

be maintained as independent, economically viable, ongoing business

concerns, and that competition is maintained during the pendency of the

divestiture.

III. Hold Separate Provisions

Until the divestiture required by the Modified Final Judgment has

been accomplished:

A. USA Waste shall preserve, maintain, and operate the Houston

Hauling Assets and the Sunray Assets as independent competitors with

management, sales, and operations held entirely separate, distinct and

apart from those of USA Waste. USA Waste shall not coordinate the

marketing or sale of its waste disposal and hauling business with the

waste disposal and hauling business at the Houston Hauling Assets and

the Sunray Assets. Within thirty (30) days of the entering of this

Order, USA Waste will inform the United States and Texas of the steps

taken to comply with this provision.

B. USA Waste shall take all steps necessary to ensure that the

Houston Hauling Assets and the Sunray Assets will be maintained and

operated as independent, ongoing, economically viable and active

competitors in the waste disposal and hauling business in the Houston

area; and that the management of the Houston Hauling Assets and the

Sunray Assets will not be influenced by USA Waste, and the books,

records, competitively sensitive sales, marketing and pricing

information, and decision-making associated with the Houston Hauling

Assets and the Sunray Assets will be kept separate and apart from the

operations of USA Waste. USA Waste's influence over the Houston Hauling

Assets and the Sunray Assets shall be limited to that necessary to

carry out USA Waste's obligations under this Order and the Modified

Final Judgment.

C. USA Waste shall use all reasonable efforts to maintain and

increase waste disposal and hauling sales at the Houston Hauling Assets

and the Sunray Assets, and shall maintain at 1997 or previously

approved levels, whichever are higher, promotional, advertising, sales,

technical assistance, marketing and merchandising support for the

disposal and hauling of waste associated with the Houston Hauling

Assets and the Sunray Assets.

D. USA Waste shall provide sufficient working capital to maintain

the Houston Hauling Assets and the Sunray Assets as economically

viable, ongoing businesses.

E. USA Waste shall take all steps necessary to ensure that the

Sunray Assets are fully maintained in operable condition at no lower

than its current rated capacity, and shall maintain and adhere to

normal repair and maintenance schedules for the Houston Hauling Assets

and the Sunray Assets.

F. USA Waste shall not, except as part of a divestiture approved by

the United States and Texas, remove, sell, lease, assign, transfer,

pledge or otherwise dispose of any assets of the Houston Hauling Assets

and the Sunray Assets, including intangible assets that relate to the

permits described in Section I of the Modified Final Judgment.

G. USA Waste shall maintain, in accordance with sound accounting

principles, separate, accurate and complete financial ledgers, books

and records that report on a periodic basis, such as the last business

day of every month, consistent with past practices, the assets,

liabilities, expenses, revenues and income of the Houston Hauling

Assets and the Sunray Assets.

H. Except in the ordinary course of business or as is otherwise

consistent with this Hold Separate Agreement, USA Waste and

TransAmerican shall not hire and USA Waste and TransAmerican shall not

transfer or terminate, or alter any current employment or salary

agreements for any USA Waste or TransAmerican employees who (I) on the

date of the signing of this Agreement, work at the Houston Hauling

Assets or the Sunray Assets or (ii) are members of management

referenced in Section III(I) of this Order.

I. Until such time as the Houston Hauling Assets and the Sunray

Assets are divested, the Assets to be Divested shall be managed by Ted

Meyer of TransAmerican. Ted Meyer shall have complete managerial

responsibility for the Houston Hauling Assets and the Sunray Assets,

subject to the provisions of this Order and the Modified Final

Judgment. In the event that Ted Meyer is unable to perform his duties,

USA Waste shall appoint, subject to the United States' and Texas'

approval, a replacement within ten (10) working days. Should USA Waste

fail to appoint a replacement acceptable to the United States and Texas

within ten (10) working days, the United States and Texas shall appoint

a replacement.

J. USA Waste shall take no action that would interfere with the

ability of any trustee appointed pursuant to the Modified Final

Judgment to complete the divestiture pursuant to the Modified Final

Judgment to a suitable purchaser.

K. this Hold Separate Stipulation and Order shall remain in effect

until consummation of the divestiture contemplated by the Modified

Final Judgment or until further Order of the Court.

Dated: May 5, 1998.

For the United States:

Frederick H. Parmenter,

Virginia Bar No.: 18184, U.S. Department of Justice, Antitrust

Division, 1401 H Street, N.W., Suite 3000, Washington, D.C. 20530,

(202) 307-0620.

For the State of Texas

Dan Morales,

Texas Attorney General.

Mark Tobey,

Assistant Attorney General, Chief, Antitrust Section, Texas Bar No.:

20082960.

For USA Waste Services, Inc.

James R. Weiss,

District of Columbia Bar No.: 379798, Preston, Gates, Ellis & Rouvelas

Meeds, 1735 New York Avenue, N.W., Suite 500, Washington, D.C. 20006-

5209, (202) 662-8425.

For TransAmerican Waste Industries, Inc.

J. David Green,

Sr. Vice President & General Counsel, TransAmerican Waste Industries,

Inc., 10554 Tanner Road, Houston, Texas 77041, (713) 956-1212.

Kim Van Winkle,

Assistant Attorney General, Texas Bar No.: 24003104, Office of the

Attorney General of Texas, P.O. Box 12548, Austin, Texas 78711-2546,

(512) 463-2185.

Order

It is so ordered, this 6th day of May, 1998.

Gladys Kessler,

United States District Judge.

[FR Doc. 98-16216 Filed 6-17-98; 8:45 am]

BILLING CODE 4410-11-M