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SF State's Hazardous Waste Cleanup Cost Millions More Than It Should Have 

Wednesday, Aug 17 2011
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According to a 2007 profile prepared by its news department, San Francisco State University's then-occupational safety department head Robert "Bud" Shearer is "no stranger to danger." His résumé teems with adventurous deeds. He served as Corte Madera fire chief; in Vietnam, he won a Purple Heart and Medal of Valor. He gushed that he had no plans to retire: "I like what I do, where I go, and the folks I work with."

But two years later, the sixtysomething Shearer did leave the university and his $91,000 salary. In 2010, his no-frills ranch house in Fremont was foreclosed upon. Worse, he is now the focus of a police investigation that raises questions about his management of hundreds of thousands of dollars of SFSU's money — at a time of record budget cuts. According to search warrants filed by California State University police Sgt. Michael Kinoshita, Shearer is suspected of having financial interests in a contract he oversaw, as well as possible document perjury and bribery.

Since last October, CSU police have been looking into a university employee whistleblower's accusations that Shearer colluded to inflate costs of work with SF State's hazardous waste disposal contractor, Chemical HazMat Technology (CHMT), and its vice president, Stephen Cheung. Police suspect Cheung provided Shearer with a car, personal loans, and several trips to China over a seven-year period — none of which Shearer disclosed in conflict-of-interest reports to the state. Citing DMV and Customs records, the warrants allege that Shearer received the car and went with Cheung to China two years before he recommended that SF State approve Cheung's company's bid.

CSU Police Chief Nathan Johnson tells SF Weekly that the police are in the "final stages" of the investigation, having executed search warrants for Shearer's credit reports and bank accounts. Cheung and Shearer did not respond to several requests seeking comment. Shearer's wife, Julie, a dispatcher with SF State's police, says she had "no idea" about the investigation, and refuses to comment further: "You're not getting squat for your story."

Invoices obtained by SF Weekly reveal that SF State shelled out what appears to be millions of dollars to CHMT over four years in what one hazardous waste industry expert calls "the worst bidded contract I've ever seen." In one instance, the company billed the university for one $161,510 "emergency" lead paint and asbestos abatement project — more than other CSU campuses pay for hazardous waste disposal in an entire year.

In the 1990s, Cheung won the CSU systemwide contract for hazardous waste disposal while working for North State Environmental, a South San Francisco chemical cleanup company, says former North State salesman Jeff Bowman. Universities are prized contracts because of their steady stream of lab chemicals and biohazardous waste.

According to search warrants, SF State decided to rebid the hazardous waste contract in 2004 because of "irregular billing practices" by North State. By then, Cheung had started accumulating staff and licenses for his own company. In the contract bid, he lists himself as the vice president of CHMT and the registered owner of its "doing business as" company, United Eagle Transportation.

Shearer wrote the request for bid proposals, according to search warrants; CHMT's bid came in at $168,000 on a contract whose annual budget was an estimated $300,000. In a January 2005 e-mail, Shearer recommended that the university give CHMT the one-year contract, with the option of renewing for four years afterward. The university did.

Bowman, who now handles hazardous waste disposal for a Bay Area pharmaceutical company, reviewed the contract at SF Weekly's request. He points out that Cheung's bid proposed seemingly arbitrary labor costs depending on when and what work was being performed. The company would charge SFSU extremely low rates if it responded to work requests on an "emergency" basis, getting to the scene within an hour. But if CHMT responded after an hour had passed but within 24 hours — a much more likely response time — some costs were much higher.

"By showing up later, [Cheung] can make more money," Bowman points out. On weekends, the company dropped the price of disposal, seemingly a good deal. Yet labor charges soared. "The bid structure makes no sense. If you look at it, [Cheung] can cherry-pick whatever he wants to charge doing clever and not so clever things," Bowman says.

Kevin Creed, a former director of environmental health and occupational safety at CSU Humboldt State, agrees that the prices "do not make good business sense from the customer perspective." He adds, "There's no rational reason why they'd have lower disposal costs if they do it on the weekend."

The price SF State was paying for hazardous waste disposal skyrocketed. In 2001-2002, it paid $375,000 to North State; by 2005-2006, it was paying CHMT $1.1 million, according to search warrants. As a comparison, North State owner Frank Balistreri says that the combined hazardous waste disposal for 18 campuses in the CSU system costs about the same — "over $1 million a year."

Invoices from CHMT to SF State were regularly $14,000 or more for an individual job. In one, "mildew preventative measures" and patch-up coating in the Main Gym cost $161,510. The contract administrator responsible for approving work orders? Robert Shearer, according to SF State correspondence viewed by SF Weekly.

Shearer departed in 2009. "That's when [his replacement] said, 'I think they're charging too much,'" says Haro Kagemoto, SF State's assistant director of procurement.

The university switched back to North State Environmental in 2010. Since then, invoices show that its payments for individual hazardous waste disposal jobs rarely break $1,000. In the dozens of CHMT invoices from four years viewed by SF Weekly, only three billed less than $1,000. Often the different prices seem to be for similar jobs. CHMT billed $38,500 to pack, transport, and dispose of hazardous waste in a storage shed in June 2009. By comparison, a year later North State charged $11,200 to handle a hazmat shed.

SF State employees have alleged that Shearer was getting favors in return. Daniel Ho, a hazardous waste and materials coordinator, worked under Shearer for years. He told cops that Shearer said he'd "borrow" money from Cheung. Ho also said Shearer complained that he was going to lose his house, saying "I have to go see that Chinaman" — meaning Cheung.

Police also contend in search warrants that state vehicle registration documents show Cheung and his father, Yat Sun Cheung, signed over a 1999 Volvo to Shearer as a "gift" for "business-related usage" in 2002, two years before Shearer would recommend that SF State accept CHMT as the contract winner.

Ho tells SF Weekly that he doesn't know whether Shearer was fired or resigned, and didn't know who the whistleblower was. "They're not telling us anything," he says.

Kagemoto says no one knows what happened to Shearer. "It's been a big mystery: What's going on with Bud?"

About The Author

Lauren Smiley

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