A.J. and George meet up and discover that the Nuclear Regulatory Commission is directly involved in the slaughter that has been going on. Although the political bureaucracy has forbidden the NRC to transport the toxic wastes through New York because of the large-scale danger to the public, it has secretly been hiding the waste by-products, marked as "Contamination Hazard Urban Disposal", beneath Manhattan in the abandoned subway tunnels. The underground homeless population has been coming into contact with these by-products, turning them into the mutated creatures. To protect this secret, Wilson plans to seal the sewers, open up some gas lines and asphyxiate the C.H.U.D.s and any witnesses of their existence, despite the inherent danger to the city. In the meantime, Lauren is attacked by the mutants in her apartment and narrowly escapes them.