NEWS SOCIETY Tough times predicted for remediation industry Difficult times lie ahead for companies in the environmental remediation engineering and construction business, according to several industry experts speaking at an environmental business conference in April. The $8 billion remediation consulting and construction sector grew by a slim 2-3% in 1994, but even that level is unlikely to continue, according to Alan L. Farkas, a principal with Farkas Berkowitz & Co., an environmental management consulting firm. Farkas, speaking at the annual Environmental Business '95 Conference in Washington, said the industry is being drawn down by a combination of stagnant spending for Superfund and industrial cleanups plus a recent slowdown in cleanup spending by the departments of Defense (DOD) and Energy (DOE). Farkas said that the 1994 growth was fueled in large part by DOD spending that grew by 30%. Some 250 new contracts were released by DOD, he noted, but he warned that this will not continue because the new Congress appears more willing to spend funds for military readiness than for remediation. He singled out plans pending before Congress that would remove cleanup funds from the 1995
budget and cut remediation funds proposed in the 1996 budget. The Air Force, he noted, has already suspended the awarding of new contracts, and other branches are announcing procurement delays. DOD's reductions follow DOE's announcement that it will reduce its budget and extend cleanup schedules, Farkas said {ES&T, March 1995, p. 180A). Others at the conference noted the turmoil that lies ahead and predicted a growing trend toward consolidation within the remediation industry. Peter Arrowsmith, president of Brown & Root Environmental Inc., saw a dwindling cleanup market with enough work for only four or five major, integrated contractors—what he called "mega-firms," formed through consolidation of smaller firms. Many of these companies will be defense contractors that will leave defense for the perceived greener pastures of environmental cleanups. These firms have the assets to participate in what Arrowsmith predicted will boil down to a few very large contracts and many more turnkey contracts, such as $1 billion Army contracts or 20-year DOE cleanup agreements. On the other hand, James Edwards, chief executive officer of
ICF International Inc., also predicted consolidations but doubted the market would shrink to a few large projects. Instead, he said there will be ample room for small, niche companies that are developing cleanup technologies. Although he acknowledged that Congress has targeted DOD and DOE for remediation cuts, he doubted that in the aggregate there would be reductions in remediation spending. Edwards noted that many bills before Congress call for more risk assessment and that their passage will create a new market for firms that can perform such assessments. Also, new "takings" legislation will require new consulting work to help establish property values, he said. In the eyes of industry leaders, the future looks uncertain at best, according to a survey by Farkas' company, which looked at more than 40 CEOs in bellwether firms in the remediation and consulting industry. Of those surveyed, 77% expect to see declining markets in the next three years and 59% predict increased competition. More than half of the firms expect to merge or acquire other companies and are looking toward some diversification in the near future. —JEFF JOHNSON
ADVOCACY Sierra Club strikes back at Congress Displeased by what it sees as anti-environmental legislation, the Sierra Club is taking on members of the U.S. House of Representatives in their home districts. Most targets are first-term Republicans who voted for legislation requiring risk assessment and cost-benefit studies and compensating property owners for restrictions on the use of their land. Bob Bingaman, the Sierra Club's director of field operations, says the group is "targeting about 75 key districts, educating people on how their members are voting." Efforts will include radio advertisements, editorials, and attendance at representatives' town meetings, Bingaman says. During Congress' Easter recess, the Sierra Students Coalition, a student-led Sierra Club affiliate, sponsored Pinata Day in several U.S. cities. Students constructed
globe-shaped pifiatas, wore blindfolds identifying representatives they view as anti-environment, and swung at the globe with sticks. "It demonstrated in a very visual and humorous way... whether or not a member voted the wrong way," says coalition staffer Peter Schurman. The move to local action began because of dissatisfaction with the previous Congress, Bingaman says, which, even with environmentally friendly leadership, failed to pass or reauthorize environmental legislation. Rep. Rick White (R-WA), a self-proclaimed environmentalist yet one of the Sierra Club's targets, tells ES&T the group used similar tactics against him in his 1994 campaign. The risk and takings legislation that received the Sierra Club's negative ratings was meant to reform regulations and improve environmental quality, he says, "but the Sierra Club wants to maintain the status quo." —DANI SHANNON
VOL. 29, NO. 6, 1995 / ENVIRONMENTAL SCIENCE & TECHNOLOGY • 2 5 3 A
