Archive for the ‘Environment’ Category

Paying for Protection from Protests

Thursday, September 25th, 2014

grasberg_mine_11Responding to pressure from groups such as the International Corporate Accountability Roundtable, the Obama Administration has just announced that the United States will finally adopt a national action plan on combating global corruption, especially when it involves questionable foreign payments by transnational corporations that serve to undermine human rights. The White House statement notes that “the extractives industry is especially susceptible to corruption.”

True that. In fact, U.S.-based mining giant Freeport-McMoRan is an egregious case of a company that is reported to have made extensive payments to officials in the Indonesian military and national police who have responded harshly to popular protests over the environmental, labor and human rights practices of the company, which operates one of the world’s largest gold and copper mines at the Grasberg site (photo) in West Papua. There have been reports over the years that the U.S. Justice Department and the Securities and Exchange Commission were investigating the company for violations of the Foreign Corrupt Practices Act, but no charges ever emerged.

Here is some background on the story: Freeport moved into Indonesia in 1967, only two years after Suharto’s military coup in which hundreds of thousands of opponents were killed. The company developed close ties with the regime and was able to structure its operations in a way that was unusually profitable. Benefits promised to local indigenous people never fully materialized, and the mining operation caused extensive downstream pollution in three rivers.

Until the mid-1990s these issues were not widely reported, but then Freeport’s practices started to attract more attention. In April 1995 the Australian Council for Overseas Aid issued a report describing the oppressive conditions faced by the Amungme people living near the mine. It also described a series of protests against Freeport that were met with a harsh response from the Indonesian military. A follow-up press release by the Council accused the army of killing unarmed civilians. An article in The Nation in the summer of 1995 provided additional details, including an allegation that Freeport was helping to pay the costs of the military force.

In November 1995, despite reported lobbying efforts on the part of Freeport director Henry Kissinger, the Clinton Administration took the unprecedented step of cancelling the company’s $100 million in insurance coverage through the Overseas Private Investment Corporation because of the damage its mining operation was doing to the tropical rain forest and rivers (the human rights issue was not mentioned).

The company responded with an aggressive public relations campaign in which it attacked its critics both in Indonesia and abroad. Freeport also negotiated a restoration of its OPIC insurance in exchange for a promise to create a trust fund to finance environmental initiatives at the Grasberg site. Within a few months, however, Freeport decided to give up its OPIC coverage and proceeded to increase its output, which meant higher levels of tailings and pollution.

The criticism of Freeport continued. It faced protests by students and faculty members at Loyola University in New Orleans (where the company’s headquarters were located at the time) who called attention both to the situation in Indonesia and to hazardous waste dumping into the Mississippi River by Freeport’s local phosphate processing plant. Another hotbed of protest was the University of Texas, the alma mater of Freeport’s chairman and CEO James (Jim Bob) Moffett and the recipient of substantial grants from the company and from Moffett personally, who had a building named after him in return.

After its ally Suharto resigned amid corruption charges in 1998, Freeport had to take a less combative position. The company brought in Gabrielle McDonald, the first African-American woman to serve as a U.S. District Court judge, as its special counsel on human rights and vowed to share more of the wealth from Grasberg with the people of West Papua. But little actually changed.

Freeport found itself at the center of a new controversy over worker safety. In October 2003 eight employees were killed in a massive landslide at Grasberg that an initial government investigation concluded was probably the result of management negligence. A few weeks later, the government reversed itself, attributing the landslide to a “natural occurrence” and allowing the company to resume normal operations.

In 2005 Global Witness published a report that elaborated on the accusations that Freeport was making direct payments to members of the Indonesian military, especially a general named Mahidin Simbolon. In an investigative report published on December 27, 2005, the New York Times said it had obtained evidence that Freeport had made payments totaling $20 million to members of the Indonesian military in the period from 1998 to 2004. (A 2011 estimate by Indonesia Corruption Watch put company payments to the national police at $79 million over the previous decade.)

Reports such as these raised concerns among some of Freeport’s institutional investors. The New York City Comptroller, who oversees the city’s public pension funds, charged that the company might have violated the Foreign Corrupt Practices Act.

Back in Indonesia, protests escalated. In 2006 the military responded to anti-Freeport student demonstrations by instituting what amounted to martial law in the city of Jayapura. Around the same time, the Indonesian government released the results of an investigation by independent experts concluding that the company was dumping nearly 700,000 tons of waste into waterways every day. In 2006 the Norwegian Ministry of Finance cited Freeport’s environmental record in Indonesia as the reason for excluding the company from its investment portfolio.

In 2007 workers at the Grasberg mine staged sit-down strikes to demand changes in management practices along with improved wages and benefits. More strikes occurred in 2011. Two years later, more than two dozen workers were killed in a tunnel collapse at Grasberg. Indonesia’s National Commission on Human Rights charged that the company could have prevented the conditions that caused the accident.

Freeport’s questionable labor, environmental and human rights practices continue, yet aside from that OPIC cancellation two decades ago it has faced little in the way of penalties. It remains to be seen whether the new Obama Administration policy changes this sorry state of affairs.

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Note: This piece draws from my new Corporate Rap Sheet on Freeport-McMoRan, which can be found here.

The Environmental Prosecution Gap

Thursday, August 21st, 2014

With reports of a $16 billion Justice Department settlement with Bank of America following on the heels of other big payouts by misbehaving banks, it may seem that corporate crime these days is mainly an issue for the financial sector. The big banks have plenty of blemishes on their record, but then again so do other large corporations when it comes to areas such as environmental compliance.

After all, it was only four months ago that Anadarko Petroleum had to pay $5.1 billion to resolve federal charges that had been brought in connection with the clean-up of thousands of toxic waste sites around the country resulting from decades of questionable practices by Kerr-McGee, now a subsidiary of Anadarko. This settlement set a record for an environmental case, surpassing the $4 billion in penalties BP had to pay in 2012 as part of its guilty plea on criminal charges relating to the Deepwater Horizon disaster in the Gulf of Mexico.

Despite high-profile cases such as these, environmental offenses are being prosecuted in a less than vigorous manner. This problem is brought home in a recent analysis by The Crime Report website produced at the Center on Media, Crime and Justice at the John Jay College of Criminal Justice in New York.

In a review of enforcement data in the EPA’s ECHO database, The Crime Report found that the agency has become increasingly disinclined to bring criminal rather than civil charges against violators. In recent years, the report notes, fewer than one-half of one percent of violations trigger criminal investigations, which require the involvement of the Justice Department to proceed in court.

Part of the problem is that criminal cases are much more difficult to pursue. The Crime Report quotes attorney Mark Roberts of the non-profit Environmental Investigation Agency as saying: “I think a criminal prosecution will be defended much harder … If you’re in that tiny percentage that gets charged criminally, you want to win.”

While delivering the bad news about weak prosecution, The Crime Report makes it easier for researchers and activists to access data about environmental violations. It took data from ECHO and created an interactive map that provides summaries by EPA region and by urban area, and also allows zooming in on specific facilities. When an urban area is chosen on the map, a table appears below showing the largest penalties overall, with breakdowns by categories such as Clean Air Act violations and Clean Water Act violations.

This is especially useful for clusters of heavily polluting facilities such as those in what is informally known as Cancer Alley between Baton Rouge and New Orleans. Yet a look at the data for this area shows the limitations not only of the EPA’s criminal prosecutions but its enforcement activity in general. Drilling down shows dozens of facilities that were often found to be in non-compliance yet were hit with little or nothing in the way of penalties during the past five years.

There are some fairly significant fines, such as the $198,000 paid by PCS Nitrogen in Geismar and the $84,000 paid by the Total Petroleum Styrene Monomer Plant in Carville. Yet, for the most part, the data paint a picture that is a far cry from the right’s depiction of the EPA as a tyrannical force preying on defenseless businesses.

Whether it is in banking or petrochemicals, aggressive prosecutions are the only way to get large corporations to clean up their act.

 

Targeting the Climate Culprits

Thursday, May 8th, 2014

CarbonMajorsImage1The new U.S. National Climate Assessment makes for sobering reading. In a document of more than 800 pages, it shows that climate change is not some possibility in the distant future but rather a crisis we are already beginning to experience. Extreme weather events linked to climate change, it states, are “disrupting people’s lives and damaging some sectors of our economy.”

Although it is forthright in stating the scientific evidence, the report, as an official government document, avoids assigning blame for the run-up in greenhouse gas emissions to specific parties, and it does not make specific proposals for mitigating the problem.

A very different approach is taken in research recently published by the Climate Accountability Institute, which as its name suggests is very much about naming names. The institute’s Carbon Majors project has accomplished the remarkable feat of estimating how much in the way of carbon and methane emissions can be linked to specific companies going back decades.

In a painstaking analysis, principal investigator Richard Heede has reconstructed the corporate lineage of the major fossil fuel and cement corporations,  assembled data on their historical output and estimated the greenhouse gas emissions caused by that output. In the case of Chevron, for example, the analysis goes back to 1912 and includes predecessor entities such as Standard Oil of California, Gulf Oil, Texaco, Getty and Unocal. The report also covers state-owned oil companies, which Heede notes have not done a good job of providing production statistics.

In all, Heede documents more than 900 billion metric tons of carbon dioxide equivalents and links them to 90 of the world’s largest oil, gas, coal and cement-producing entities. If contributing to the climate crisis can be considered an offense against the planet, these 90 entities are the biggest climate culprits.

So who are they? Table 11 of Heede’s report shows that the companies with the largest cumulative emissions are the following:

  1. Chevron: 51.1 billion metric tons
  2. Exxon Mobil: 46.7 billion metric tons
  3. Saudi Aramco: 46 billion metric tons
  4. BP: 35.8 billion metric tons
  5. Gazprom: 32.1 billion metric tons
  6. Royal Dutch Shell: 30.8 billion metric tons
  7. National Iranian Oil Company: 29.1 billion metric tons
  8. Pemex: 20 billion metric tons
  9. ConocoPhillips: 16.9 billion metric tons
  10. Petroleos de Venezuela: 16.2 billion metric tons

Pressuring these companies through a divestment campaign of the type that is beginning to take hold among U.S. universities (Stanford has just announced it will purge its portfolio of coal stocks) is a good start, but it will probably not be enough.

Other approaches are also being pursued. In an article in The Nation, Dan Zegart reports on efforts by environmental lawyers to mount a legal assault on fossil fuel companies like that used against Big Tobacco. It turns out that these lawyers are studying Heede’s research closely and are trying to figure out ways to use it in their suits.

Putting the industry on the defensive in the courts as well as in the streets is important, because the Carbon Majors will increasingly depict themselves as leaders of the effort to overcome the climate crisis rather than their true identity as key culprits in causing it to happen. I’m sure that Chevron is preparing a new version of its “Will You Join Us?” ad campaign of a few years ago, in which it painted a false picture of itself as part of the clean-energy vanguard.

The recent agreement by Exxon Mobil to insert warnings in its financial reports about the risks to its fossil fuel assets from possible stricter limits on carbon emissions is being hailed by environmentalists as a major transparency advance, but it could also be used by the company as a way of limiting future legal liability.

Another troubling sign of potential corporate maneuvering can be found in the National Climate Assessment itself. It is surprising to open Chapter 4 on Energy Supply and Use and find that one of the lead authors is Jan Dell of ConocoPhillips, one of Heede’s top-ten Carbon Majors. I, for one, would prefer not to see oil company representatives playing a role preparing key analyses of the climate crisis. The fossil fuel industry is a big part of that problem (to the tune of 900 million metric tons), not part of the solution.

Freedom to Pollute

Thursday, January 16th, 2014

freedomindustriesRecent news reports out of West Virginia sound like they were written as part of a parody of modern business: the company responsible for a chemical leak that contaminated the water supply of hundreds of thousands of people is named Freedom Industries and was cofounded by a two-time convicted felon.

The situation, however, is far from a joke. Freedom Industries spilled a substantial quantity of a substance called 4, methylcyclohexane methanol (MCHM) into the Elk River near the intake valve for a water treatment plant serving the Charleston area, sending more than 150 people to the hospital and forcing residents to use bottled water for drinking, cooking and bathing. The plume is now heading toward Cincinnati.

As is all too common in such incidents, it turns out that the 75-year-old facility where the rupture took place had not been visited by government inspectors for more than 20 years. In fact, as a storage rather than a production facility, it was subject to little in the way of federal or state oversight. So much for the idea of regulatory excess.

Given that MCHM is used to process coal, this accident adds to the heavy toll that mining has taken on West Virginia—from the Buffalo Creek flood in 1972 to the Upper Big Branch disaster in 2010 in which 29 miners were killed. It is also significant that Freedom Industries purchases MCHM, for which it serves as a distributor, from a subsidiary of Georgia-Pacific, which in turn is controlled by the rabidly anti-regulation Koch Brothers.

To all this can be added the fact that Freedom Industries was cofounded by an individual named Carl Lemley Kennedy II. As the Charleston Gazette has reported, Kennedy filed for personal bankruptcy in 2005 after he was hit with federal charges of tax evasion and failure to remit employee withholding taxes. He is reported to have admitted to diverting more than $1 million that should have gone to the Internal Revenue Service.

Kennedy’s involvement in Freedom Industries, the Gazette notes, does not seem to have been affected by the fact that he had once pleaded guilty to selling cocaine in connection with a scandal that involved the mayor of Charleston. The paper quotes the current mayor, who is said to have known Kennedy since the 1980s, as an “edgy guy.”

Another remarkable aspect of the story reported by the Gazette is that Freedom Industries was struggling in 2009, and its Elk River facility was able to go on functioning only after the Army Corps of Engineers dredged that portion of the river using federal stimulus funds.

To summarize: a tax evader and drug dealer helped to establish a largely unregulated chemical company that benefitted from the federal stimulus but apparently did little in the way of preventive maintenance and set the stage for large-scale drinking water contamination.

Large corporations such as Dow Chemical and Exxon Mobil have caused vast amounts of environmental damage, but it shouldn’t be forgotten that small-time operators such as Freedom Industries can also do substantial harm. And it is not just producers of hazardous materials but also distributors that can be the culprits. It was another small distributor, West Fertilizer, that was involved in the ammonium nitrate explosion in Texas last April that killed 15 people. Much of the reporting in the wake of that event, particularly with respect to holes in the regulatory system, could have been recycled for the new West Virginia accident.

As long as the illusion of regulation is perpetuated in place of the real thing, these accidents will continue to happen, and the right to pollute will trump the right to be safe from pollution.

GE Dumps Workers as It Dredges the Hudson

Thursday, October 17th, 2013

DUMP_YRD_SIGNFor 30 years, General Electric resisted calls to remove the toxic substances it had dumped into New York’s Hudson River over several decades. Now that the process is well under way, the company is striking back at the state by shutting its cleaned-up plant along the river and moving some 200 jobs to Florida. The workers slated to be laid off feel that they are now being dumped.

The site of the dispute is Fort Edward (about 200 miles north of New York City), where from the late 1940s to the mid-1970s GE produced electric capacitors using insulating material containing polychlorinated biphenyls (PCBs). Vast quantities of PCB-contaminated waste ended up in the river’s waters and riverbed.

By the 1970s PCBs were recognized to be a human carcinogen and their manufacture was banned in the United States.  In 1975 the New York State Department of Environmental Conservation ordered GE to cease its PCB dumping and negotiated a path-breaking settlement under which the company would help pay the cost of cleaning up the pollution that had closed the river to commercial fishing and become a national symbol of corporate irresponsibility.

As the projected cost of the clean-up escalated, GE resisted dredging the river’s sediment, which was estimated to contain more than 130 metric tons of PCBs, and instead proposed dubious alternatives such as using bacteria to try to break down the toxic wastes. The company continued this obstruction for years, even after the EPA ordered it in 2001 to pay an estimated $460 million to remove 2.65 million cubic yards of sediment. The legal battle finally ended in 2005, but it took until 2009 for GE to actually begin the dredging. The process is now in its fifth year.

The workers at the Fort Edward plant may not be around to celebrate the completion of the clean-up. A few weeks ago, GE announced that it planned to close the plant and move the operation to Clearwater, Florida. The Fort Edward workers have been represented by the United Electrical (UE) union for the past 70 years, while the Clearwater plant—as you might expect—is non-union.

The Fort Edward move is just the latest of a long series of actions by GE that have weakened the economy of upstate New York. The city of Schenectady, where Thomas Edison moved his electrical equipment operation in 1886, has alone lost tens of thousands of jobs through waves of GE downsizing.

GE also seems to feel no sense of obligation in connection with the economic development subsidies it has received from state and local government agencies in New York. The biggest giveaways have come downstate. In 1987, a year after it was acquired by GE, NBC pressured New York City to give it $98 million in tax breaks under the threat of moving its operations to New Jersey.  In 1999 investment house Kidder Peabody, then owned by GE, got its own $31 million package to stay in the city.

There have also been subsidies upstate. For example, in 2009 GE got a $5 million grant and a $2 million tax abatement for its operations in Schenectady. The company’s research center in Niskayuna, New York has received millions of dollars in local tax breaks.

When GE has not received enough subsidies for its satisfaction, the company sometimes tries to reduce its local tax bills by challenging the assessed value of its property. In 2002, for example, it sued to get the value of its turbine plant in Rotterdam, New York reduced from $159 million to $41 million. A compromise ruling gave GE some of what it wanted and forced the town to reimburse the company about $6 million. Not satisfied, the company later brought a new challenge and got the town to negotiate a payment-in-lieu-of-taxes deal.

And, of course, GE is notorious for its dodging in other states and at the federal level, where it also gets subsidized through agencies such as the Export-Import Bank and got TARP-related assistance for its GE Capital unit.

Members of UE Local 332 are vowing to fight the plant shutdown, but they are up against a company that has shown it is  willing to go to great lengths to get its way on environmental, labor and tax issues.

The Kochs’ Stake in Pollution

Thursday, May 30th, 2013

Accountability_LATimesPuppets_300x250_FINALREVISED050813_2Koch Industries and the billionaire brothers who run it are best known for their involvement in rightwing causes. The latest controversy is over the Kochs’ reported interest in purchasing the Los Angeles Times and other major newspapers owned by the Tribune Co. A campaign centered in L.A. is mobilizing opposition to such a deal among newspaper subscribers and Tribune shareholders, warning that a Koch takeover would create a new Fox News.

What often gets forgotten is that Koch Industries is not just part of the Koch ideological machine. It is a huge privately-held conglomerate with annual revenues of more than $100 billion and operations ranging from oil pipelines and refining to paper products (it owns Georgia-Pacific), synthetic fibers (it bought Lyrca and Stainmaster producer Invista from DuPont), chemicals, mining and cattle ranching.

I’ve just completed one of my Corporate Rap Sheets on Koch Industries, and it’s clear that the sins of the company go far beyond the political realm. The following is some of what I found.

In November 2011 the magazine Bloomberg Markets published a lengthy article entitled “The Secret Sins of Koch Industries” that made some explosive accusations against the company: “For six decades around the world, Koch Industries has blazed a path to riches—in part, by making illicit payments to win contracts, trading with a terrorist state, fixing prices, neglecting safety and ignoring environmental regulations. At the same time, Charles and David Koch have promoted a form of government that interferes less with company actions.”

What Bloomberg revealed for the first time were the allegations involving bribery and dealing with Iran. The article reported that the company’s subsidiary Koch-Glitsch paid bribes to secure contracts in six countries (Algeria, Egypt, India, Morocco, Nigeria and Saudi Arabia) and that it violated U.S. sanctions by doing business with Iran, including the sale of materials that helped the country build the world’s largest plant to convert natural gas to methanol used in plastics, paints and chemicals.

The environmental cases alluded to by Bloomberg had been previously reported and included the following.

In 1995 the U.S Justice Department, the Environmental Protection Agency and the United Stated Coast Guard filed a civil suit against Koch Industries and several of its affiliates for unlawfully discharging millions of gallons of oil into the waters of six states. In one of the largest Clean Water Act cased ever brought up to that time, the agencies accused Koch of being responsible for more than 300 separate spills in Alabama, Kansas, Louisiana, Missouri, Oklahoma and Texas.

In 1997 Tosco Corporation (now part of ConocoPhillips) sued Koch in a dispute over costs related to the clean-up of toxic waste at an oil refinery in Duncan, Oklahoma that used to be owned and operated by Koch. In 1998 a federal judge ordered Koch to contribute to those costs, and that ruling was upheld by an appeals court in 2000. The companies later settled the matter out of court.

In 1998 Koch agreed to pay $6.9 million to settle charges brought by state environmental regulators relating to large oil spills at the company’s Rosemount refinery in Minnesota. The following year it agreed to plead guilty to related federal criminal charges and pay $8 million in fines.

Also in 1998, the National Transportation Safety Board found that the failure of a Koch subsidiary to protect a liquid butane pipeline from corrosion was responsible for a 1996 rupture that released a butane vapor. When a pickup truck drove into the vapor it ignited an explosion that killed the driver and a passenger. In a wrongful death lawsuit a Texas jury awarded the father of one of the victims $296 million in damages.

In 2000 the U.S. Justice Department and the EPA announced that Koch Industries would pay what was then a record civil environmental fine of $30 million to settle the 1995 charges relating to more than 300 oil spills plus additional charges filed in 1997. Along with the penalty, Koch agreed to spend $5 million on environmental projects in Texas, Kansas and Oklahoma, the states where most of its spills had occurred. In announcing the settlement, EPA head Carol Browner said that Koch had quit inspecting its pipelines and instead found flaws by waiting for ruptures to happen.

Later in 2000, DOJ and the EPA announced that Koch Industries would pay a penalty of $4.5 million in connection with Clean Air Act violations at its refineries in Minnesota and Texas. The company also agreed to spend up to $80 million to install improved pollution-control equipment at the facilities.

In a third major environmental case against Koch that year, a federal grand jury in Texas returned a 97-count indictment against the company and four of its employees for violating federal air pollution and hazardous waste laws in connection with benzene emissions at the Koch refinery near Corpus Christi.

The Bloomberg Markets article reported that a former Koch employee said she was told to falsify data in a report to the state on the emissions.  The company was reportedly facing potential penalties of some $350 million, but in early 2001 the newly installed Bush Administration’s Justice Department negotiated a settlement in which many of the charges were dropped and the company pled guilty to concealing violations of air quality laws and paid just $10 million in criminal fines and $10 million for environmental projects in the Corpus Christi area.

With the purchase of Georgia-Pacific in 2005, Koch acquired a company with its own environmental and safety problems. For example, in 1984 a G-P plant in Columbus, Ohio had spilled 2,000 pounds of phenol and formaldehyde that reached a nearby community. Residents complained of health problems from that incident and from a huge industrial waste pond that the company continued to maintain at the plant.

In 2009 the U.S. Justice Department and the EPA announced that G-P would spend $13 million to perform clean-up activities at a Michigan Superfund site where it previously had a paper mill. In 2010 G-P was one of ten companies sued by the Justice Department over PCB contamination of the Fox River in Wisconsin. Unlike the other defendants, G-P had already settled with DOJ by agreeing to a $7 million penalty and to pay for the costs of a portion of the clean-up. One of the other defendants, Appleton Papers, called the settlement a “sweetheart deal.”

More recently, Koch Industries has been caught up in the controversy over the Keystone XL pipeline. In 2011 Inside Climate News reported that Koch already responsible for 25 percent of the tar sands oil being imported from Canada into the United States and stood to benefit greatly from the new pipeline. Koch denied its involvement, but Inside Climate News found documents filed with Canada’s Energy Board contradicting that statement.

An August 2012 report by the Political Economy Research Institute at the University of Massachusetts-Amherst identified Koch as being among the top five corporate air polluters in the United States.

The reason the Kochs rail against regulation is clear: they’ve got a big stake in pollution.

Note:  The full rap sheet on Koch Industries can be found here.

The Keystone Kop of Tar Sands Oil

Thursday, April 11th, 2013

KeystoneKopsEven if the Obama Administration decides against the Keystone XL pipeline, the rejection of that project would not put much of a dent in the output of environmentally destructive Alberta tar sands oil.  One reason is that tar sands producers are hedging their bets. They are also hoping to ship their product westward through another pipeline that will extend to the Pacific port of Kitimat in British Columbia.

What is particularly dismaying is that the company behind this Northern Gateway project is Canadian pipeline giant Enbridge, which has what is probably the worst safety record of any oil transportation company in the world. Among other things, it was responsible for the worst inland oil spill in U.S. history—the July 2010 accident that spewed more than 800,000 gallons of oil into Michigan’s Kalamazoo River, a major state waterway that flows into Lake Michigan.

The incident occurred only months after the company was warned that it was not properly monitoring corrosion on the pipeline.

The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) later imposed a record civil penalty of $3.7 million against Enbridge, which it said exhibited a “lack of a safety culture.”  This was echoed in the findings of the National Transportation Safety Board, which determined that it was not until 17 hours after the spill started that Enbridge began to take steps to address the problem. The safety board chair was quoted in an agency press release as saying: “This investigation identified a complete breakdown of safety at Enbridge. Their employees performed like Keystone Kops and failed to recognize their pipeline had ruptured and continued to pump crude into the environment.”

Enbridge’s lack of attention to safety can be seen in its record both before and after the Michigan spill.

For example, in 2001 a seam failure on a pipeline near Enbridge’s Hardisty Terminal in Alberta spilled more than 1 million gallons of oil. The following year, a 34-inch-diameter pipeline owned by its affiliate Enbridge Energy Partners ruptured in northern Minnesota, contaminating five acres of wetland with about 250,000 gallons of crude oil.

In 2003 about 189,000 gallons of crude oil spilled into the Nemadji River from the Enbridge Energy Terminal in Superior, Wisconsin. Fortunately, the river was frozen at the time, so damage to the waterway was limited.

In 2004 the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) proposed a fine of $11,500 against Enbridge for safety violations found during inspections of pipelines in Illinois, Indiana and Michigan. The penalty was later reduced to $5,000. In a parallel case involving Enbridge operations in Minnesota, an initial penalty of $30,000 was revised to $25,000.

In 2007 an Enbridge pipeline in Wisconsin spilled more than 50,000 gallons of crude oil onto a farmer’s field in Clark County. The following month another Enbridge spill in Wisconsin released 176,000 gallons of crude in Rusk County. That same year, two workers were killed in an explosion that occurred at an Enbridge pipeline in Clearbrook, Minnesota. The PHMSA later fined the company $2.4 million for safety violations connected to the incident.

In 2008 the Wisconsin Department of Natural Resources charged Enbridge with more than 100 environmental violations relating to the construction of a 320-mile pipeline across much of the state. The agency said that Enbridge workers illegally cleared and disrupted wooded wetlands and were responsible for other actions that resulted in discharging sediment into waterways. In January 2009 the company settled the charges by agreeing to pay $1.1 million in penalties.

In 2009 the PHMSA fined Enbridge $105,000 for a 2007 accident that released more than 9,000 gallons of crude oil. The following year, PHMSA proposed a fine of $28,800 against Enbridge for safety violations in Oklahoma.

Shortly after the Michigan accident, Enbridge experienced another spill at one of its pipelines in Romeoville, Illinois, a suburb of Chicago.

And in In July 2012, less than a month after the publication of the damning National Transportation Safety Board report on the Michigan accident, an Enbridge pipeline in Wisconsin ruptured and spilled some 50,000 gallons of oil. One member of the U.S. Congress responded by saying: “Enbridge is fast becoming to the Midwest what BP was to the Gulf of Mexico.”

These incidents are only the ones big enough to gain press attention and significant regulatory response. A profile of the company by the Polaris Institute put the number even higher—more than 800 spills between 1999 and 2010 in which some 6.8 million gallons of oil were spilled in the U.S. and Canada.

While Keystone XL and its sponsor TransCanada get the attention, Enbridge may be an even bigger threat.

Note: This piece draws from my new Corporate Rap Sheet on Enbridge, which can be found here.

Canada’s Other Tar Sands Villain

Thursday, April 4th, 2013

suncor_oil_sandsAs the Obama Administration nears its final decision on the Keystone XL pipeline, the oil industry should be on its best behavior. Yet the purveyors of petroleum can’t seem to help themselves. They keep having accidents that demonstrate the perils of Keystone.

Those perils are not limited to the disastrous contribution the pipeline would make to the climate crisis. Recent events show what a dangerous business it is to transport oil across vast distances, especially when that oil is of the exceedingly dirty variety produced in the tar sands of Canada.

Exxon Mobil has been the center of attention in recent days as the result of a leak of some 10,000 barrels of heavy Canadian crude in a residential area near Little Rock, Arkansas. The incident came only days after the federal Pipeline and Hazardous Materials Safety Administration proposed that the company be fined $1.7 million in connection with a 2011 pipeline rupture that spewed a large quantity of oil into the Yellowstone River in Montana.

The Arkansas spill came shortly after a Canadian Pacific freight train derailed, spilling some 30,000 barrels of tar sands oil in western Minnesota.

The U.S. press has paid less attention to yet another spill. This one took place right where tar sands oil is produced in Alberta, and the responsible party was Canadian oil giant Suncor Energy. And it turned out that the site of its toxic wastewater spill into the Athabasca River was the same place where a previously unreported spill occurred two years earlier.

Suncor, which is the subject of my latest Corporate Rap Sheet, tends to get less attention from U.S. tar sands activists than Transcanada, which is the company behind Keystone XL. Yet Suncor is one of a handful of operators that produce the tar sands oil that would flow through the pipeline.

It was Suncor, in its previous incarnation as a subsidiary of Sunoco, that pioneered tar sands production in the 1950s and went on to invest billions of dollars to develop the dirty business. Suncor has thus been a target of anti-tar sands protests by groups such as Greenpeace Canada.

The recent spill in Alberta and the belatedly reported 2011 incident are far from the only blemishes on the company’s safety and environmental record.

In 2008 there was a scandal over reports that a leak of nearly 1 million liters of waste water from a Suncor containment pond into the Athabasca River went unreported for up to eight months. Alberta Environment later charged the company with being out of compliance with its Water Act license but fined it only C$275,000.

In 2009 there was a bigger scandal over reports that a Suncor contractor, Compass Group Canada, had failed to properly treat human waste from a company work camp before dumping sewage into the same river. Suncor was fined C$175,000 for failing to properly supervise Compass, which was fined C$225,000 for failing to report the problem.

At the same time, Suncor was fined C$675,000 for failing to install pollution control equipment at its Firebag oil sands facility. In July 2009 Suncor was fined C$625,000 for excessive discharges of sulfur dioxide at its Sarnia oil refinery in Ontario.

In 2010 Environment Canada ordered Suncor to pay C$200,000 after it pleaded guilty to two violations of the Canadian Fisheries Act in connection with a 2008 incident in which wastewater overflowed from a containment pond into the Steepbank River in Alberta.

In December 2011 an accident at Suncor’s refinery in Commerce City, Colorado resulted in the seepage of hazardous waste into Sand Creek and the South Platte River. Tests by the U.S. Environmental Protection Agency found that the contamination included the carcinogenic substance benzene. The drinking water at the refinery was also found to contain high levels of benzene. Meanwhile, the refinery continued to spread contamination into surrounding groundwater sources. Six months after the spill, Colorado officials were saying that a complete clean-up could take years.

In April 2012 the Colorado Department of Public Health and Environment announced that Suncor would pay $2.2 million in negotiated fines in connection with airborne benzene releases at the Commerce City refinery unrelated to the accident.

In October 2012, the Canada-Newfoundland and Labrador Offshore Petroleum Board announced that Suncor had admitted to regulatory violations in connection with a spill of lubricating fluid at its drilling platform in the Jeanne d’Arc basin the year before; the company was ordered to pay C$130,000 in penalties.

Transcanada deserves all the criticism it gets for its Keystone plan, but companies like Suncor that actually produce the dirty oil that will travel through that system also need to feel the heat.

Read the full Corporate Rap Sheet on Suncor Energy here.

Corporate Power and the Second Obama Administration

Thursday, November 8th, 2012

The corporate lobby is dumbfounded. After spending billions of dollars to defeat President Obama and take Republican control of the Senate, business interests have nothing to show for their efforts.

By all rights, Thomas Donohue of the U.S. Chamber of Commerce, which went all-out for Republican candidates, should be handing in his resignation. The Big Business-loving editorial page of the Wall Street Journal should be exhibiting a bit of contrition.

Instead, Donohue issued a press release reiterating the Chamber’s laissez-faire position: “It is the private sector that drives economic growth and jobs, and it is the government’s responsibility to work on a bipartisan basis to pass policies that will unleash the private sector and help put Americans back to work.”  The Journal warns Obama not to “consider his reelection to be a mandate to repeat his first-term record of rejecting all GOP ideas and insisting on his priorities.” God forbid that a President returned to office with a resounding victory should seek to promote his own priorities.

Even with the election is over, conservatives cannot let go of their caricature of Obama as a radical leftist who refuses to compromise. This may have something to do with the fact that many of them are radical rightists who refuse to compromise.

After Obama was first elected in 2008, the Journal predicted that he would “seek middle ground with business on thorny issues.” You wouldn’t know it from the campaign, but that was often what happened during the past four years.  Far from being the Bolshevik envisioned in the fevered imagination of his critics, Obama led Democrats in pursuing an agenda that was solidly middle-of-the-road or, in some respects, conservative, by earlier standards. Let’s recall that Obama:

  • Promoted and got enacted a healthcare reform plan that preserves the private insurance industry;
  • Enacted a stimulus plan that, among other things, funneled billions into subsidies, grants and contracts for large corporations;
  • Helped rescue the auto industry through a plan that forced workers to make major contract concessions and that took a hands-off approach to the management of companies such as General Motors and Chrysler that received tens of billions in federal aid;
  • Occasionally talked tough but ultimately did little to prosecute the financial institutions that were responsible for the near meltdown of the economy through predatory lending and reckless speculation;
  • Enacted a financial reform bill that allowed venal megabanks such as Citigroup to remain in existence and then did little to challenge Republican efforts to stonewall implementation of its consumer protection provisions;
  • Abandoned, in the face of Republican opposition, the pro-union Employee Free Choice Act and cap-and-trade legislation;
  • Continued the practice of allowing corporate criminals to escape real punishment through deferred prosecution agreements;
  • Continued to promote the myth of “clean coal” and adopted a weak or inconsistent position on dangerous energy practices such as offshore drilling and fracking;
  • Went along with the wrong-headed notion that corporate income tax rates are too high;
  • Claimed to be reducing the influence of corporate lobbyists but chose as a senior advisor someone who also serves as a strategist for clients such as military contractor Pratt & Whitney and Keystone XL pipeline developer TransCanada;
  • Declined to directly criticize large profitable companies that have refused to rehire adequate numbers of U.S. workers; and
  • Chose executives from union-unfriendly offshore outsourcers such as General Electric to advise him on job creation.

The list could go on. By any reasonable assessment, this record could be considered business-friendly or at least not overly hostile. The problem is that business groups are comparing the reality of Obama to a fantasy of token regulation, minimal taxation, vanished unions—in other words, totally unfettered corporate power—and thus feel frustrated.

Unfortunately, left to its own devices, a second Obama Administration is likely to go on trying to placate corporate interests and the Right by promoting policies that will never satisfy them but will dilute critical progressive goals.  Wouldn’t it be great if the President felt he needed to try that hard to satisfy the other end of the political spectrum?

Wal-Mart’s Other Sins

Thursday, October 25th, 2012

The job actions taking place at many Wal-Mart locations around the United States have brought new attention to the abysmal labor practices of the country’s largest private employer. More than any other company, Wal-Mart depends on low wages, meager benefits, overtime abuses and gender discrimination to keep its labor costs artificially low while quashing any efforts by workers to rectify those conditions.

Two weeks ago, I used this blog to recount Wal-Mart’s labor and employment track record. Here I want to remind readers of some of the company’s many sins outside the workplace, using information I assembled for the new 5,000-word Wal-Mart entry in my Corporate Rap Sheets series.

Corruption. Wal-Mart doesn’t seem to mind its hardline reputation on personnel matters, but it has tried to otherwise paint itself as a squeaky-clean operation. That image was shattered last spring, when the New York Times published an 8,000-word front-page exposé about moves by top management to thwart and ultimately shelve an investigation of Foreign Corrupt Practices Act violations, focusing on extensive bribes paid by lower-level company officials as part of an effort to increase Wal-Mart’s market share in Mexico.

That story made a huge splash and reportedly undermined the company’s urban expansion efforts. A major public pension fund, the California State Teachers’ Retirement System, sued the company for breach of fiduciary duty in connection with the bribery scandal. It and other institutional investors showed their discontent with top management by opposing the official slate of directors at Wal-Mart’s annual meeting. About 12 percent of the shares outstanding were voted against the slate, an unprecedented level of dissent by the company’s previously quiescent shareholders. The company, apparently still trying to deal with the fallout, has just announced an overhaul of its compliance department.

State income tax avoidance. In 2007 the Wall Street Journal published a front-page story revealing that Wal-Mart was using a real estate gimmick to avoid paying many millions of dollars in state corporate income taxes each year. It was doing this by putting many of its stores under the ownership of a real estate investment trust (REIT) controlled by the company. The stores would pay rent to the captive REIT and deduct those payments as a business expense.

This trick, essentially paying rent to itself, reduced the company’s taxable income and thus lowered its state tax bill (the REIT was structured so its income wasn’t taxed by any state). A report by Citizens for Tax Justice estimated that Wal-Mart had thereby avoided some $2.3 billion in state income tax payments between 1999 and 2005–an average of more than $300 million a year.

Local property tax avoidance.  A 2007 report by my colleagues and me at Good Jobs First found that Wal-Mart has sought to reduce its property tax payments by frequently and aggressively challenging the assessed value attached to its U.S. stores and distribution centers by local officials.  The report examined a 10 percent random sample of the stores and found that such challenges had been filed for about one-third of them; an examination of all of the distribution centers found challenges at 40 percent, even though many of the latter had been granted property tax abatements when they were built.

Sales tax “skimming.” In a 2008 report by Good Jobs First entitled Skimming the Sales Tax, we found that Wal-Mart was receiving an estimated $60 million a year as a result of the little-known practice in some states of compensating retailers for collecting sales taxes and calculating the amount of that compensation based on total sales. This, in addition to the estimated $130 million in sales-tax-based economic development subsidies, means that Wal-Mart is depriving hard-pressed state and local governments of at least $73 million each year. This is just a small part of the more than $1.2 billion in state and local subsidies that Good Jobs First has documented on our website Wal-Mart Subsidy Watch.

Environmental violations. Wal-Mart has tried very hard in recent years to depict itself as a pioneer of sustainability by wide-ranging initiatives with regard to energy efficiency and the addition of organic foods and other green products to its shelves. Wal-Mart is largely silent about the environmental impact of the millions of customers who in most cases must still drive to the company’s retail outlets. It also wants us to forget that the company itself has had its share of environmental violations. For example, in 2004 the U.S. Department of Justice and the Environmental Protection Agency announced that Wal-Mart would pay a $3.1 million civil penalty and take remedial action to resolve alleged violations of the Clean Water Act in connection with storm water runoff from two dozen company construction sites in nine states. The following year, the company agreed to pay $1.15 million to the state of Connecticut to settle a suit alleging that it had allowed rain water to carry fertilizer, pesticides and other harmful substances stored outside its retail outlets into rivers and streams. It also signed a consent decree with the EPA to resolve charges relating to diesel truck idling at its facilities.

Undocumented Workers. When talking about Wal-Mart it is difficult to avoid the workplace entirely. Aside from its mistreatment of its own employees, the company takes advantage of exploited contract workers. For example, in 2003 a federal racketeering suit was filed against Wal-Mart by lawyers seeking to represent thousands of janitors who cleaned company stores and were reported to be working seven days a week and not receiving overtime pay. The filing took place 18 days after federal agents raided 60 Wal-Mart stores in 21 states to round up about 250 janitors described as undocumented aliens. In 2005 Wal-Mart agreed to pay $11 million to settle federal immigration charges. Documents later emerged suggesting that Wal-Mart executives knew that the company’s cleaning contractors were using undocumented immigrants.

“Dead Peasant” Insurance. Wal-Mart has not only worked people to death but also continued exploiting them after their demise. The mega-retailer is one of the large companies that engaged in the repugnant practice of secretly taking out life insurance on low-paid employees and making itself the beneficiary. The polite term for this is corporate-owned life insurance, though critics have labeled it “janitor’s insurance” or “dead peasant insurance.” In 2004 Wal-Mart settled one case brought in Houston for an undisclosed amount. Two years later it agreed to pay $5.1 million for a class action brought by the estates of former employees in Oklahoma, and in 2011 the company agreed to pay just over $2 million in a class-action suit filed in Florida.

The list could go on. In fact, it is difficult to find a form of corporate misconduct Wal-Mart has not exhibited. Yet it is probably the labor arena that counts the most in determining whether the company will be reined in. Support your local Wal-Mart “associates” in their efforts to stand up to the bully of Bentonville.