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Tuesday, April 30, 2002 

Waste Management Shareholder Letter Urges Support For Resolution Accounting for Effects of Anti-Privatization Policies by Local Governments On Trash Hauling Business 

WASHINGTON, April 30 /PRNewswire/ -- The Employee Pension Plan of the American Federation of State, County and Municipal Employees sent the following letter to shareholders of Waste Management, Inc. (NYSE: WMI) today: 

Dear Fellow Waste Management Shareholder, 

We write to urge you to vote for our shareholder proposal (Item 4), which asks Waste Management, Inc. ("WMI" or the "Company") to report to shareholders on the effect on WMI's business strategy of measures to oppose privatization of waste collection, disposal, transfer and recycling services. We believe that such disclosure would enable shareholders to evaluate the long-term prospects of WMI's municipal solid waste business, whose profitability we believe
may be affected by initiatives to prohibit privatization or make the provision of WMI. 

AFSCME Employees' Pension Plan is the proponent of Item 4. This plan is maintained for the benefit of the employees of the American Federation of State, County and Municipal Employees ("AFSCME"). AFSCME is a 1.3 million-member labor union. Pension trusts maintained for the retirement benefits of its members' own approximately 14.4 million shares of WMI stock, or
about 2.3% of outstanding shares. Boards of Trustees and Investment Boards govern these plans which are operated autonomously of each other and AFSCME. 

In recent years, there has been significant opposition to privatization, and there are reports that such opposition has intensified since the September 11th terrorist attacks.(1) In some places, the privatization of certain kinds of services has been prohibited outright: for example, Illinois prohibits the privatization of correctional services. Measures that impede privatization or increase the costs borne by private companies include requirements that:

* A minimum level of cost savings be attained before services can be contracted out; 
* Contractors provide "prevailing" wages and benefits and assistance to displaced public employees; 
* Contract terms be limited; 
* Waste collected in a jurisdiction be disposed of at particular sites (so-called "flow 
   control" regulations); 
* Contractors satisfy a "fitness" standard that disqualifies from bidding on future contracts
   any contractor that has committed certain legal violations or fallen short of 
   specified performance standards; and 
* Contractors that accept service contracts, operating grants, or tax
   abatements from local governments pay a "living wage," which is
   higher than the federal minimum wage. Between 1994 and March 2001, 58 
   locations passed living wage laws. During 2001, there were 105 
   reported efforts to enact such laws, with 21 passing, bringing the 
   total number of such measures to 79. 

According to one Cornell University study, the increase in privatization has been modest from 1982 to 1997, rising from 22% of local government services in 1982 to 24% in 1997. The same study reported that from 1992 through 1997, 88% of local governments contracted back in at least one service, with 65% contracting back in more than three services.(2) In a number of 
municipalities, including Indianapolis, Indiana and Phoenix, Arizona, government entities are competing directly for privatized work. 

Municipal Trash Collection is a Low Margin Business and Living Wage
Laws Pose a Risk to Shareholder Value 

We believe that limitations on privatization or measures to make it more costly for service providers may negatively affect the profitability of WMI's municipal collection business, which competes to provide privatized services. According to a 2001 report by a Salomon Smith Barney analyst, the municipal collection business makes up 21% of WMI's core collection business and
accounts for $1.6 billion per year in revenues. 

Margins in the municipal collection business, which the Salomon Smith Barney analyst characterized as WMI's "most competitive" segment, have been estimated at about 5%.(3) According to the Employment Policy Foundation, "The high monetary and potential legal costs imposed by (living wage) ordinances serve to make municipal contracting more risky and less attractive." Measures other than the living wage may also increase costs or affect WMI's ability to
win contracts. 

Although WMI acknowledges that government entities are potential competitors and that fitness laws and flow control regulations may affect it, the Company has not provided shareholders with a single comprehensive report regarding the effect on WMI's business of measures whose purpose or effect is to prohibit privatization or make the provision of privatized services more expensive for private service providers. Our proposal asks for such a report. 

    Finally, we believe that WMI's settlement of two class action lawsuits alleging securities law violations arising out of improper accounting provides additional support for our proposal. Such actions may have the effect of disqualifying WMI under the fitness laws discussed above; the report requested in our proposal would help shareholders better understand this risk. 

We urge you to vote FOR our proposal, Item 4 on WMI's proxy card. If you have any questions, please contact me at 202-429-5024. 

On the behalf of the AFSCME Employees Pension Plan, 
Michael R. Zucker 
Director Office of Corporate Affairs and Strategic Research 


(1) See Yochi Dreazen & Andrew Caffrey, "Many Cities Rethink Privatization Plans: After September 11th, Public Works Seem too Precious for the Free Market," The Wall Street Journal, Nov. 20, 2001. 

(2) Mildred Warner & Amir Hefetz, "Privatization and Market Structuring Role 
of Local Government," Cornell University Department of City and Regional Planning Working Paper #197 (Dec. 2000). Available at http://www.cce.cornell.edu/restructuring 

(3) L.T. Young, "Pollution Control Monthly: Highlights from Waste Management" (Salomon Smith Barney, June 28, 2001). Permission to cite this report was neither sought nor obtained.