Exhibit 99.3

                                 Amendment No. 1
                                       to
                             Stock Option Agreement

         The Stock Option  Agreement  dated as of January 22, 1999 (Exhibit A to
the  Agreement  and Plan of Merger  dated as of  January  12,  1999 by and among
Casella Waste Systems,  Inc.,  Rutland  Acquisition Sub, Inc and KTI, Inc.) (the
"Agreement")  is hereby  amended as set forth  below as of this 12th day of May,
1999:

         1. Section 1 is hereby amended by deleting the second sentence  thereof
and inserting  the  following in lieu  thereof:  "Subject to the other terms and
conditions  set forth  herein,  the  Grantor  hereby  grants to the  Grantee  an
irrevocable  option (the "Option") to purchase up to 2,769,331  shares of Common
Stock (the  "Shares") at a cash  purchase  price per share equal to the lower of
(i) $10.40,  or (ii) the  average  closing  price of Common  Stock on the Nasdaq
National Market for the five consecutive trading days beginning on and including
the date that the Exchange  Ratio,  as amended by Amendment  No. 1 to the Merger
Agreement, is publicly announced (the "Purchase Price").

         2.  Capitalized  terms not  otherwise  defined  herein  shall  have the
meanings set forth in the Agreement.

         3. In all other  respects,  the Stock Option  Agreement shall remain in
full force and effect.





         IN WITNESS  WHEREOF,  the  Grantee  and the  Grantor  have  caused this
Amendment  No. 1 to be duly  executed  and  delivered  on the day and year first
above written.




                GRANTOR:                  KTI, Inc.


                                          By: /s/ ROSS PIRASTEH
                                             ----------------------------------
                                          Title: Chairman


                GRANTEE:                  CASELLA WASTE SYSTEMS, INC.



                                          By: /s/ JOHN W. CASELLA
                                             ----------------------------------
                                          Title: Chairman and Chief
                                                 Executive Officer


          [signature page to Amendment No. 1 to Stock Option Agreement]