“A Culture Of Privatization And Deregulation”: West Virginia Spill, Where “Regulation” Is A Dirty Word, Shady Businesses Flourish
Asked about the spill of thousands of gallons of toxic chemicals into a West Virginia river – a disaster that shut down schools and businesses, sent hundreds of residents seeking medical treatment and left an estimated 300,000 Mountain Staters without potable water – Speaker John Boehner (R-OH) told reporters that he is “entirely confident that there are ample regulations already on the books to protect the health and safety of the American people.”
Others weren’t as sanguine. “We have a culture of deregulation – regulation has been turned into a dirty word down here,” says Russell Mokhiber, the West Virginia-based editor of the Corporate Crime Reporter. “Both the Democratic and Republican parties are complicit,” he told Moyers & Company.“The chemical and coal industries have a stranglehold on most institutions in the state. The political situation is locked up.”
Jennifer Sass, a lecturer in environmental health at George Washington University told The New York Times, “West Virginia has a pattern of resisting federal oversight and what they consider EPA interference, and that really puts workers and the population at risk.”
A 2009 investigation by the Times found that “hundreds of workplaces in West Virginia had violated pollution laws without paying fines.”
Current and former West Virginia Department of Environmental Protection employees said their enforcement efforts had been undermined by bureaucratic disorganization; a departmental preference to let polluters escape punishment if they promised to try harder; and a revolving door of regulators who left for higher-paying jobs at the companies they once policed.
But this isn’t just a story of anti-regulatory zeal – and the price hundreds of thousands of West Virginians paid for it. As new details emerge about Freedom Industries, the company responsible for the leak, it’s becoming clear that it’s also a tale of how shady businesses can prosper in an environment where regulatory capture by an industry is so deeply entrenched.
Even the history of Freedom Industries is murky. It was co-founded in 1992 by Carl Kennedy and Gary Southern — who during a Friday press conference sipped bottled water and told reporters that he’d had a really trying day. Southern had been president but the firm’s website now lists Dennis Farrell, a college friend of Kennedy’s (with whom he also opened a sports bar in 2002), as president instead. As Businessweek put it, “That clearly needs sorting out.” According to The Charleston Gazette, Southern is also the president of Enviromine, “which makes products to help remediate environmental problems from mining.”
Kennedy may or may not remain with the company; according to The Gazette, he’s still listed on documents the firm filed with the Secretary of State’s office, but a woman who answered the phone at the company said he was no longer with Freedom Industries.
That may be a distinction without a difference. Only weeks ago, the firm merged with several others: Etowah River Terminal, Poca Blending and Crete Technologies. According to The Gazette, in 2007, Kennedy claimed to have stakes in both Etowah River Terminal and Poca Blending. Prior to the merger, these companies already had complementary operations in the Kanawha Valley, known as “Chemical Valley.”
Carl Kennedy’s history reads like that of a character in an Elmore Leonard or Carl Hiaasen novel. In 1987, he pleaded guilty to selling between 10 and 12 ounces of cocaine in a case that would lead to the federal prosecution of then-Charleston Mayor Mike Roark, a former prosecutor himself who, according to The New York Times, “was once nicknamed ‘Mad Dog’ for his zeal in fighting drug abuse.” He was charged with 30 counts of cocaine possession.
The Gazette’s David Gutman reports that in the early 2000s, when Kennedy was the accountant for Freedom Industries, Poca Blending and New River Chemical Co., he pled guilty to withholding $1 million in taxes from employees’ paychecks and pocketing it rather than sending it to Uncle Sam. He also owed $200,000 in unpaid state taxes. Sentenced to three years in prison, Kennedy got his time cut in half “after he cooperated with authorities by making controlled cocaine buys and wearing a wire in conversations with a former business associate.”
In 2005, Etowah River Terminal lost its license for failing to file an annual report. It was resurrected in 2011, according to The Gazette.
Despite Kennedy’s reluctance to send tax dollars to Washington, in 2009 Freedom Industries was happy to accept stimulus funds which helped the company stay afloat. David Gutman recalled that “sand, silt and mud had built up in the river, making it difficult for barges to travel the 2.5 miles from the company’s river terminal to the Elk’s confluence with the Kanawha.”
The company was in deep trouble until the Army Corps of Engineers dredged the waterway, thanks to a $400,000 grant from the American Recovery and Reinvestment Act. “It could’ve put us out of business,” Dennis Farrell told the Charleston Daily Mail. “At some point we wouldn’t have been economically fit to run the facility. That’s our claim to fame: the barges.”
Questionable Response
Last week, Gary Southern told reporters that Freedom Industries’ employees had discovered the spill, but that claim was contradicted by reports that officials from the state’s Environmental Protection Agency found it independently after nearby residents complained of a suspicious odor.
According to the Daily Mail, a team of inspectors visited the facility this week, and issued five violations for poor maintenance and operations, insufficient employee training and reporting, and storing chemicals in an above-ground tank without a secondary containment wall.
As The New York Times noted, “lawmakers have yet to explain why the storage facility was allowed to sit on the river and so close to a water treatment plant that is the largest in the state.” The facility hasn’t been inspected since 1991 because, unlike other states, West Virginia requires it only of chemical manufacturers and emitters, not storage facilities.
According to The Gazette, in 2010, experts from the US Chemical Safety Board asked the state to create a new program to prevent accidents and releases in Chemical Valley. Those recommendations followed a 2008 fatal explosion at a Bayer Chemicals plant. They were ignored.
The chemical released last week, 4-methylcyclohexane methane, isn’t classified as a hazardous material, which under state law would have required the leak to be reported within 15 minutes. The Daily Mail reported that “a different legislative rule states a facility must give ‘immediate’ notice of a spill, but leaves it up to the head of the [state’s Department of Environmental Protection] to determine what ‘immediate’ means in each case.”
The chemical’s classification as non-hazardous may also explain why state officials didn’t have an emergency response plan in place, despite the facility’s close proximity to a major water supply.
That 4-methylcyclohexane methane isn’t considered hazardous doesn’t mean it’s safe. Richard Denison, a senior scientist at the Environmental Defense Fund, told Mother Jones that little is known about its potential effects in humans. According to Denison, studies have found the substance to be lethal in rats at high doses, but it’s impossible to extrapolate from those data how humans might respond to smaller quantities of the chemical.
Today, many West Virginia residents are angry that they had no idea of the hazards posed by the storage facility. Angie Rosser, executive director of the West Virginia Rivers Coalition, told The Huffington Post, “No one seemed to be aware or care that this dangerous chemical was upstream from our largest drinking water intake in the state. It was a recipe for disaster.” The same chemicals are stored in above ground tanks across the state, but it’s difficult for public health and environmental activists to know where.
That’s why Russell Mokhiber cautions against focusing too much on Freedom Industries itself. “It’s really not about an individual corporation,” he said. “It’s a question of why the state has allowed the chemical and coal industry to get away with this. Because however you slice it, you see privatization and deregulation at the heart of these kinds of cases.”
By: James Holland, Bill Moyer’s Blog, January 16, 2014
“Achieving Conservative Objectives:” Behold The Paradigm, Roberts Court Cloaks Its Activism In Complexity
To understand the U.S. Supreme Court’s order on greenhouse-gas regulations, I had to read it three times — and I’m a law professor. The complication isn’t a coincidence. It’s the very essence of the imprint that Chief Justice John Roberts is putting on the court.
As its ninth term clicks into gear, the Roberts court has finally developed something like an identity of its own. It avoids highly activist conservative headlines that would drive Democrats to the polls. At the same time, behind a screen of legal complexity, it achieves significant conservative objectives.
The court’s health care decision is an obvious recent example: Roberts cast the deciding vote to uphold mandatory coverage, enraging conservatives and encouraging liberals. But by striking down the provision that pressured states to extend Medicaid, the court gutted the universal coverage that was the Affordable Care Act’s ethical ideal.
The regulation of greenhouse-gas emissions bids fair to produce a similarly confusing result. The court had been asked to review a decision of the U.S. Court of Appeals for the D.C. Circuit that upheld Environmental Protection Agency regulations on greenhouse gases that are the Barack Obama administration’s most significant accomplishments for environmental protection. The court declined to review — and thus left in place — the regulations on motor-vehicle emissions. It also chose not to review the basic question of the EPA’s authority to regulate greenhouse gases. Environmentalists cheered this result.
At the same time, however, the court agreed to review a single, wildly technical-sounding question: “Whether EPA permissibly determined that its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouse gases.” What this question asks in English, roughly speaking, is whether the EPA was allowed to issue emissions regulations governing factories and power plants under the authority of the law that lets it regulate cars and trucks. And what that means in practical terms is that the court could strike down the Obama EPA’s existing greenhouse-gas regulations for the nonmoving (“stationary”) polluters who create much of the pollution that drives global warming.
Behold the Roberts paradigm! Or don’t behold it: The hand is quicker than the eye. The headline allows environmental regulation to stand. The fine print suggests that the most important part of the existing regulations enacted by the Obama administration could be ditched.
And, remarkably enough, environmentalists are buying into the shell game as well. Some experts hastened to explain that, even if the Roberts court were to strike down the stationary-source regulations on the grounds that they were not authorized by laws permitting regulation of motor vehicles, there would still be other ways under the Clean Air Act to enact such rules. The court’s decision to hear the case, they implied, shouldn’t worry environmentalists too much.
The experts’ observation is technically correct but could prove too optimistic. The administration plans to enact different regulations covering coal-fired power plants, under different authority. But if the court were to strike down the existing stationary-source regulations in June 2014, significant uncertainty will result. The court’s reasoning, which cannot be foreseen, could potentially call into question other types of regulation. The litigation surrounding the planned regulations — and believe me, there’ll be litigation — will have to take into account the court’s reasoning, whatever it may be. The apparently narrow question to be addressed doesn’t guarantee a holding acoustically sealed off from regulations under different authority.
Coincidentally, the energy producers and manufacturers who make up the stationary-source polluters form a concentrated interest group. They will lobby to fight the new regulations, no doubt using the argument that greenhouse gases have already been significantly cut by regulating drivers. And, of course, drivers’ interests are more diffuse, so (surprise!) their lobbying power is weaker. They are, in short, perfect patsies to take the regulatory hit.
All this adds up to an extremely sophisticated strategy for the justices who agreed to take the case. Even if they strike down the regulations, they will be doing so on the highly technical basis that the EPA relied on the wrong source of authority. Environmentalists will focus the public’s attention on enacting new regulation, thereby distracting the public from blaming the court. The whole decision will look Solomonic — upholding a part of the regulations while striking down another part — rather than like pro-business activism. The court’s legitimacy will be preserved, even strengthened.
What makes this strategy hallmark John Roberts is how markedly it differs from the approaches of the court’s other conservatives. Justice Antonin Scalia, still the intellectual leader of the conservative wing into his increasingly cantankerous mid-70s, declares his broad principles of originalism and textualism and puts them into practice, most of the time consistently. His swashbuckling decisions and clever, incisive rhetoric leave you in no doubt where he stands. You can love him or hate him (I myself feel both emotions, usually simultaneously), but you always, always know where he stands. Justice Clarence Thomas is similarly out there, lauding the virtues of the 18th century. No one could call either of these justices crafty.
In their decades on the court — each having served with Chief Justice William Rehnquist — Scalia and Thomas never managed to achieve the conservative revolution that the Ronald Reagan era promised and the Federalist Society championed. Radical — and radically consistent — they couldn’t hold the center, frequently losing the votes of Justices Sandra Day O’Connor and Anthony Kennedy when the chips were down. Rehnquist, equally conservative but less openly ideological, couldn’t help. As men of principle, which judges are supposed to be, Scalia and Thomas might feel a perverse pride in never winning the big ones. As men of action, they have mostly failed.
Roberts is a horse of a different color. As a former law clerk to then-Justice Rehnquist, he decided to win, even at the cost of temporarily alienating his conservative elders. His legal craft is unmatched — because if you’re the Supreme Court, it’s much better to win while appearing to lose than to lose by insisting on looking as if you’ve won.
By: Noah Feldman, Bloomberg View, Published in The National Memo, October 17, 2013
“The GOP Has It Backwards”: Republicans Want To Tax Students And Not Polluters
A basic economic principle is government ought to tax what we want to discourage, and not tax what we want to encourage.
For example, if we want less carbon dioxide in the atmosphere, we should tax carbon polluters. On the other hand, if we want more students from lower-income families to be able to afford college, we shouldn’t put a tax on student loans.
Sounds pretty simple, doesn’t it? Unfortunately, congressional Republicans are intent on doing exactly the opposite.
Earlier this year the Republican-led House passed a bill pegging student-loan interest rates to the yield on the 10-year Treasury note, plus 2.5 percentage points. “I have very little tolerance for people who tell me that they graduate with $200,000 of debt or even $80,000 of debt because there’s no reason for that,” Rep. Virginia Foxx (R-NC), the co-sponsor of the GOP bill, said.
Republicans estimate this will bring in around $3.7 billion of extra revenue, which will help pay down the federal debt.
In other words, it’s a tax — and one that hits lower-income students and their families. Which is why several leading Democrats, including Senate Majority Whip Dick Durbin, oppose it. “Let’s make sure we don’t charge so much in interest that the students are actually paying a tax to reduce the deficit,” he argues.
(Republicans claim the President’s plan is almost the same as their own. Not true. Obama’s plan would lead to lower rates, limit repayments to 10 percent of a borrower’s discretionary income, and fix the rate for the life of the loan.)
Meanwhile, a growing number of Republicans have signed a pledge – sponsored by the multi-billionaire Koch brothers — to oppose any climate-change legislation that might raise government revenues by taxing polluters.
Officially known as the “No Climate Tax Pledge,” its signers promise to “oppose any legislation relating to climate change that includes a net increase in government revenue.”
By now 411 current office holders nationwide have signed on, including the entire GOP House leadership, a third of the members of the House as a whole, and a quarter of U.S. senators.
The New Yorker’s Jane Mayer reports that two successive efforts to control greenhouse-gas emissions by implementing cap-and-trade energy bills have died in the Senate, the latter specifically targeted by A.F.P.’s pledge
Why are Republicans willing to impose a tax on students and not on polluters? Don’t look for high principle.
Big private banks stand to make a bundle on student loans if rates on government loans are raised. They have thrown their money at both parties but been particularly generous to the GOP. A 2012 report by the nonpartisan Public Campaign shows that since 2000, the student loan industry has spent more than $50 million on lobbying.
Meanwhile, the Koch brothers – whose companies are among America’s 20 worst air-polluters –have long been intent on blocking a carbon tax or a cap-and-trade system. And they, too, have been donating generously to Republicans to do their bidding.
We should be taxing polluters and not taxing students. The GOP has it backwards because its patrons want it that way.
By: Robert Reich, Robert Reich Blog, July 6, 2013
“All Risk And No Reward”: Exxon Oil Spill In Arkansas Raises Concerns About Keystone XL Pipeline
Environmentalists and Nebraska farmers are upping the pressure on President Obama to reject the controversial Keystone XL pipeline following an oil spill that took place over the weekend.
The rupture occurred in central Arkansas, about 20 miles north of Little Rock, as Exxon’s Pegasus pipeline spilled thousands of barrels of Canadian tar sands oil — the same Alberta crude the Keystone pipeline would carry. The Environmental Protection Agency (EPA) is calling it a “major spill” as officials from the EPA and Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) are currently conducting an onsite investigation while ExxonMobil continues its cleanup efforts.
The company said more than 12,000 barrels of oil and water, or 185,000 gallons, had been recovered by Sunday. Reports say the line gushed for 45 minutes before being stopped and 22 homes were evacuated.
The Arkansas accident was the second Canadian crude oil spill in less than a week, as last Wednesday a train derailed and leaked 30,000 gallons of crude in western Minnesota.
The 20-inch Pegasus pipeline runs from Illinois to Texas and carries 90,000 barrels of crude per day. TransCanada’s 36-inch Keystone XL Pipeline would stretch 1,179 miles from Alberta, Canada to Nebraska, where it would connect with the pipeline system that would carry the tar sands oil to refineries in Texas along the U.S. Gulf Coast.
A Media Matters report states that “Keystone is all risk and no reward for America. The fact that Canadians don’t want Keystone built across their own country tells us everything we need to know about the risks.” The report cautions about TransCanada’s poor safety record, citing 12 oil spills in the first year of operation of another section of the Keystone pipeline. However, TransCanada promises that new technology from its Calgary control room can better monitor pipeline pressure and shut off a leak within 15 minutes. But environmentalists say the tar sands pipeline is more vulnerable to leaks because “the diluted bitumen, or dilbit, from the oil sands can separate under pressure or high temperature and create explosive natural gas, heavy compounds, and corrosive acids.”
In an interview about the Arkansas spill, Keystone XL opponent and founder of climate action group 350.org, Bill McKibben, said “the power of the fossil fuel industry in Washington is enormous. They have all the money. The only thing we can stack up on the other side is the power of movements. We’ve been building them as fast as we can. We’ve had the largest civil disobedience action in 30 years about anything, about this pipeline. We had 40,000 people on the Mall last month in D.C. in the largest climate rally ever. I don’t know if it’s going to be enough, but we’re fighting it as hard as we can.”
The president is expected to make a decision on the Keystone XL pipeline by this summer.
By: Josh Marks, The National Memo, April 1, 2013
“Murderers And Madmen”: The Heartland Institute Has A Message For You
As far-right groups go, the Heartland Institute hasn’t quite reached household-name status yet, but it’s working on it. The group’s strange new billboards, at a minimum, will probably help push the group’s notoriety.
The Heartland Institute is “a tax-exempt organization which promotes conspiracy theories about climate scientists, distorts climate science, and attacks regulation of air and water pollution.” Despite support from corporate allies, the group has become so extreme that high-profile supporters, including GM and AT&T, no longer want anything to do with the outfit.
Instead of moderating its views and aiming for the mainstream, the Heartland Institute is buying billboards along highways in Chicago. Joe Romm reported today:
The Heartland Institute has launched one of the most offensive billboard campaigns in U.S. history. The Chicago-based anti-science think tank is comparing all those who accept climate science — and the journalists who report on it accurately — to Charles Manson, the Unabomber, and Osama Bin Laden.
The Guardian described this as “possibly one of the most ill-judged poster campaigns in the history of ill-judged poster campaigns.”
Of course, the Heartland Institute doesn’t quite see it that way. In its defense of the group’s propaganda, the Heartland Institute says it’s eager to convince people that “believing in global warming” is not “sophisticated,” and to do so, it’s noting that “murderers and madmen” agree with those who accept climate science.
Perhaps the group can use some of its remaining funds to buy a textbook on Logical Fallacies 101?
Andrew Sullivan added, “In some ways, this is an almost perfect illustration of what has happened to the ‘right.’ A refusal to acknowledge scientific reality; and a brutalist style of public propaganda that focuses entirely on guilt by the most extreme association.”
By” Steve Benen, The Maddow Blog, May 4, 2012
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