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Detroit Resident Calls Bullshit on “Food Desert” Propaganda

February 4, 2011 by staff

Though not every neighborhood is served, Detroit has many local independent grocers, including ground-breaking models

By James Griffioen
Published by Sweet Juniper, January 24, 2011

I’m just one of about 800,000 people still living in the city of Detroit, Michigan, the nation’s 11th most-populated city. Because of the events of the last half century, this is a city that journalists and academics love to examine and study. In focusing on the sensational, they often concoct maddening generalizations about what they’ve found here. In the time I’ve lived in Detroit, I’ve come to realize that the most sensational claims and the public perception they create often have little to do with the day-to-day reality of being a Detroiter. This is a complicated city, and even in the most sincere efforts to cull some truth from it, visiting journalists often end up spreading damaging falsehoods.

One of the most annoying is that Detroit has no grocery stores.

This is something that I have been hearing about for many years. While attending law school in nearby Ann Arbor, I was told that everyone who lives in Detroit has to go to the suburbs to do their grocery shopping. With the recent spate of journalists visiting Detroit, this “fact” has gained even more traction. NBC’s Chris Hansen recently took some time away from his grueling schedule of catching predators to draw attention to how difficult it is to find groceries in Detroit: “ There are more than 400 liquor stores in Detroit. But if you want to buy food, good luck. In the entire 140 square miles of the city, there are no Krogers, no Safeways, only eight supermarkets, and they’re discount stores .” (Dateline NBC, April 20, 2010). Andrew Grossman of the Wall Street Journal emphasized that Detroit lacks “chain” grocers: “No national grocery chain operates a store here. A lack of outlets that sell fresh produce and meat has led the United Food and Commercial Workers union and a community group to think about building a grocery store of its own.” (WSJ, June 16, 2009) And most recently, Richard C. Longworth (senior fellow at the Chicago Council on Global Affairs and former Distinguished Visiting Scholar at DePaul University) writes in Good Magazine: “This seems incredible—a city of nearly 1 million people without a supermarket—but it’s true. No A&P. No Meijer’s. Not even a Wal-Mart. Any Detroiters who want fresh store-bought fruits and vegetables or wrapped meats have to get in their car and drive to the suburbs. That is, if they have a car.”

I’m tired of being nice about this. That is such utter and total bullshit.

I know the traditional media is suffering. Reporters are overworked and underpaid. Scholars like Mr. Longworth, too, might not have the research assistants they once enjoyed, but I would certainly expect anyone who makes an unequivocal statement like Detroit “is a city of nearly 1 million people without a supermarket” to at least have done a 4-second google search to confirm it (six seconds, I guess, if google isn’t your homepage). In four seconds, here’s what I found:

Each of those orange dots is a supermarket, not a liquor or discount store. A couple of them are even Aldi stores, a chain supermarket operated by the same company that owns Trader Joes. Many of those dots represent “ Spartan Stores,” associated with a regional food distributor that “supplies 40,000 private label and national brand products to nearly 400 independent grocery stores.” A quick search on the Spartan website shows how many affiliates exist within Detroit city limits:

While not the same as a national chain, an affiliation with Spartan Foods provides some uniformity among the products sold in these independently-owned Detroit stores. Many of these stores are operated by individuals and families from the large Chaldean (Iraqi Christian) community living in metro Detroit. The cleanliness and quality of merchandise and services provided by these stores definitely varies, and your average New York reporter might not be able to find his favorite lemon-infused chevre or organic arugula at all of them, but that doesn’t mean these supermarkets don’t exist, or that they somehow fail to serve the demands of their community. I went out looking for some of these mythical Detroit grocery stores, and while some aren’t particularly inviting, plenty of them are actually quite nice inside and out.

There is no question that many of the neighborhoods served by these independent stores are desperately poor. Sticking a pristine Whole Foods or even a Super Wal-Mart in these neighborhoods is not going to somehow solve the dietary issues poverty has created among their residents or provide jobs without displacing others. Those are incredibly complex problems and simply spreading hyperbole about a uniform lack of shopping options across a 138-square-mile city does nothing to solve it. Detroit does have individuals and organizations working hard to solve the problem of access to produce where it exists, and their efforts are often ignored by a media obsessed with the myth that Detroit has no grocery stores. A Detroit church recently opened a produce market called Peaches and Greens with an ice-cream truck that travels to the neighborhoods most in need of such options. The Eastern Market Corporation is working to create a CSA for seniors and others who cannot make it to the market but want fresh produce delivered. Several groups are also working diligently to put more fresh food options in the corner stores that may be the closest option for some neighborhoods. While a reality for some Detroiters, all this pervasive talk about the “food desert” is insulting to the large swath of the population that does have transportation and does make an effort to forgo fast food and cook with those healthier options that may be a few steps or blocks further down the road, but are nonetheless there.

What surprises most people who’ve heard that there are no grocery stores in Detroit is that there are actually independent stores far more appealing than any chain. One of the nicest grocery stores in Detroit is Honeybee La Colmena (I wrote an extensive profile about the store here). Honeybee is owned and operated by individuals who grew up and still live in the neighborhood where the store is located and they have created dozens of jobs for their neighbors. Honeybee has some of the best produce and prepared foods in the metro area, and it is actually a Detroit supermarket where people from the suburbs come into the city to shop.

In addition to Honeybee, Southwest Detroit is also served by several other excellent Supermercados, including E & L, La Fiesta Market, Gigante Prince, Ryan’s, and dozens of smaller mom-and-pop grocery stores. The far east side has Joe Randazzo’s Produce Market for extremely affordable produce, and the far westside has Metro Foodland, a fine independent supermarket serving Rosedale and Grandmont for more than 25 years. An individual recently purchased a vacant storefront in the middle class neighborhood of Lafayette Park (where I live) and plans to open a full-service supermarket there this Spring. He’s bullish on its prospects despite another supermarket operating three blocks down the road and the neighborhood’s close proximity to Eastern Market. A family that’s been in the Detroit grocery business since the 1950s is reopening their Ye Olde Butcher Shoppe on Woodward Avenue in a new Midtown location this year, complimenting the offerings at Kim’s Produce just down the road, as well as Goodwells Natural Foods a few blocks over.

No, none of these places are a Wal-Mart or a Kroger. They’re much better for our community. The money that thousands of Detroiters spend at these establishments every week doesn’t pay salaries of executives in Bentonville or Cincinnati. It pays to support families that still live in this community and pays to support the livelihoods of their employees. It pays to support reinvestment in the stores themselves and the surrounding community. Further, it pays to sustain a unique shopping opportunity that is quite unlike any other.

* * * * *

The myth of a city without supermarkets is hard to kill, even faced with the evidence above. Ultimately, that myth perseveres because the mainstream media and its audience is steeped in a suburban mentality where the only grocery stores that really seem to count are those large, big-box chain stores that are the only option in so many communities these days, largely because they have put locally-owned and independent stores like the ones you find in Detroit out of business. It is true that the big chain stores have forsaken or ignored Detroit, for any number of understandable (and sometimes despicable) reasons. But in their absence, a diverse system of food options has risen to take their place, and the tired old narrative that Detroit has nowhere to shop for groceries needs to be replaced by a more complex truth: with a diversity of options ranging from the dismal to the sublime, Detroit may be one of the most interesting places in America to shop for food .

Much has been written about urban farming in Detroit. No one really believes these tiny farms will ever sustain the produce needs of an entire city, but few doubt that they will continue to play an important role in the city’s transformation and they will only grow in importance as an integral part of the city’s food culture. The vegetables and fruits grown in Detroit’s gardens are so bountiful that neighborhood produce stands pop up; a coalition of inner-city gardeners sells thousands of pounds of affordable produce almost daily during the growing season at local farmer’s markets. Soup kitchens and schools supply their own produce from extensive and expertly farmed plots. In 2010, several Detroit farmers banded together to start the first CSA deliveries consisting entirely of produce grown in the city. Small-scale farming in Detroit has actually become a viable part of the urban food system and not just a novelty as it is in other cities.

Even if Detroit didn’t have these independent grocery stores or its hundreds of urban farms, it would still have Eastern Market. Covering 43-acres at the heart of downtown Detroit, with convenient access to freeways and major bus lines, Eastern Market is the largest historic public market district in the United States. And no one is in a better position to swat down the stories of Detroit’s lack of produce or the pervasive and patronizing myth of the food desert than Dan Carmody, the energetic President of the Eastern Market Corporation. “How can they call this city a food desert?” Dan asks me. “When Detroit sits right in the middle of the best local and regional foodshed in the United States after the central valley of California!” Dan points out that Michigan is second only to California in the diversity of crops grown, and besides it has immediate proximity to Canada’s “sun belt” in Southwest Ontario (where excellent hydroponic tomatoes and other fresh vegetables are grown year-round in nearby Leamington, home the largest number of commercial greenhouses in all of North America) as well as the Amish/Mennonite belt that stretches from Pennsylvania to Indiana. Metro Detroit, with a population of nearly 5.4 million people, provides a huge market for these local and regional farmers, and the nerve center for distribution of their products is in Eastern Market at the heart of Detroit city.

Most Detroiters are keenly aware of the Saturday public market in the newly renovated turn-of-the-century market sheds, where as many as 40,000 people come downtown to shop for fresh local produce every week, and many have been doing it for decades. “If all these reporters are right when they say Detroiters have to travel to the suburbs to buy fresh produce, why do 15,000 or more suburbanites drive down here every weekend to buy fresh produce?” asks Mr. Carmody. The Eastern Market Corporation has worked hard to make the produce sold by its vendors accessible to all Detroiters. Saturday vendors accept tokens created through a program in effect since 2007 where shoppers can use their Bridge card to buy fresh produce. It has created the innovative “ Double Up Food Bucks” program that “provides families receiving food assistance benefits with the means to purchase more fresh fruits and vegetables at farmers’ markets.” And the “ Michigan Mo’ Bucks” program aims to stretch the amount of money families receiving assistance get when that money is spent on fresh produce. Eastern Market is not just for the overpriced localvore yuppie/foodie crowd, but it succeeds in serving the needs of all Detroiters. And nowhere is this region’s diversity on better display than a Saturday morning at Eastern Market, when tens of thousands of people from all backgrounds converge to buy fresh and affordable local produce.

What many people don’t realize is that Eastern Market buzzes with activity Monday through Friday. The wholesale business of distributing fresh produce to groceries and supermarkets throughout the region gets underway well before most people wake up in the morning. Mr. Carmody tells me that some of fanciest independent grocery stores in the metro area (Papa Joe’s, Plum, Westborn, etc.) all send buyers down to Eastern Market before dawn to pick out the best local and regional produce for their stores. That means the expensive tomatoes and apples sitting on shelves in suburban Birmingham and St. Clair Shores likely came through the “food desert” of Detroit. These wholesale buyers come to Eastern Market for local products first, before they head to the Produce Terminal (also in Detroit) for produce trucked in from California or elsewhere. As “buying local” becomes more and more important to consumers, so will Eastern Market and its longstanding ties to local and regional farmers.

In addition to produce, Eastern Market is a center of meat processing and butchering in the region. Many of the wholesalers welcome the public during the week, so Eastern Market is not just a year-round weekly farmer’s market where you can buy pretty much anything that’s grown regionally, it is a daily shopping experience that one might liken to shopping in an ancient European capitol, where you can go from shop to shop to buy bread, wine, dry goods, produce, cheese, fish, and any kind of meat you could possibly want from rib-eyes to raccoon. It is close enough to downtown that Eastern Market is convenient for office workers to swing by on their lunch breaks to pick up some groceries while grabbing a slice of Detroit’s best pizza or a sandwich at one of the city’s best delis. I profiled one of my favorite Eastern Market merchants,. R. Hirt Jr. (a business that has been in the same location and family since 1890) here, and I also wrote about a hardware store that has been doing business on the same spot in Eastern Market since 1918. I consider Eastern Market my own “super center” and I walk there with my kids several times a week. Many of the shop owners and food sellers know me and my family by name, and shopping there is a unique experience that I treasure. Here is an excellent video that tells a bit more about Eastern Market, showing some of the farmers, wholesale buyers, and shoppers who make this Detroit institution such an incredible place even though it is always ignored by journalists eager to spread the shocking lie that Detroiters must leave their city to shop for groceries.

In addition to the Saturday market, there are also farmer’s markets in various neighborhoods around the city several other days a week, including a nice one on the campus of Wayne State University in Midtown (one of Detroit’s most walkable neighborhoods), one in Northwest Detroit, and one on Warren Avenue on the city’s east side.

In the end, I hope this tirade accomplishes my primary goal of eliminating the gross generalization that there are no grocery stores in the city of Detroit and that its citizens are forced to leave the city borders to buy fresh meats and produce. That myth is fueled by the unfair assumption that big-box chain stores are the best and only places to shop, which is particularly nefarious in my opinion because the model used by those stores is largely unsustainable for our cities’ futures. Chinese-manufactured goods shipped and trucked tens of thousands of miles and sold for razor-thin profit margins may seem convenient, but I truly believe we still haven’t learned their true cost. In my opinion, it is the exurban and small town shoppers who must choose between the uniform selections of a Wal-Mart, Kroger, or Meijer that truly have limited options. I prefer to celebrate the absence of these national retailers in this city rather than add it to the heap of things we already have to complain about here. Grocery shopping in Detroit may not be as convenient as it is in the suburbs, but the model we have here is more sustainable, more diverse in its options, and certainly more fun and interesting. I just wish more visiting journalists would take the time to see that.

© 2005 Sweet Juniper

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Filed Under: Food, Health & Environment, Walmart

Walmart Poised to Take Over South African Retail

January 22, 2011 by staff

By Tom Bawden
First published by The Guardian

Walmart, the world’s biggest retailer, is close to agreeing a deal marking its first foray into Africa after bidding 16.5bn rand (£1.5bn) for control of South Africa’s Massmart.

The deal, which has been agreed with Massmart’s board but needs shareholder approval, faces strong opposition from the South African retailer’s main union, which mounted a legal challenge to the takeover, threatened strike action and said it planned to participate in the competition review.

Walmart, which owns the Asda supermarket chain in the UK , hopes to acquire 51% of Massmart, which operates 288 low-cost stores in 14 African countries. These sell products through a handful of retail brands, spanning construction materials to home appliances, most of which are based in South Africa .

Andy Bond, chairman of Asda, who is responsible for operations in Africa, said acquiring Massmart would give Walmart a good platform to enter the continent and expand into some of its faster-growing, more politically stable countries.

However, he insisted that Massmart’s direction would be set by the South African retailer’s existing senior management, who would remain in place and that Walmart’s involvement would simply “accelerate the current strategy”.

“Massmart has historically grown through smaller scale acquisitions and may well continue to do so,” said Bond, adding that there could also be significant organic growth and, possibly, some larger acquisitions. Massmart expects to open up to 40 new outlets annually in the coming years, with an emphasis on countries such as Nigeria , Malawi and Zambia , where it already has a presence. Furthermore, Massmart is targeting new markets such as Senegal , Cameroon and Angola .

“Walmart likes emerging markets and South Africa in particular is a genuine emerging market,” said Bond. Walmart is expanding into emerging markets to make up for a slowdown in the US , where like-for-like sales have declined for six quarters in a row, amid strong competition and a prolonged economic downturn.

Bond said Walmart would help Massmart to significantly increase its food offering, which is presently largely confined to its wholesale operation, and will help expand the number of own-label products offered by the South African retailer.

“Our ambition is to reduce prices for our customers by buying better and operating better. We can help Massmart with its supply chain, distribution, IT, infrastructure and sourcing,” Bond said.

Walmart’s negotiations to buy Massmart have not run entirely smoothly. In September, the two groups announced they were in talks in a deal that would have handed 100% of Massmart’s shares to its American suitor.

However, Walmart has since scaled back its ambition after several Massmart investors said they wanted to retain their shares to tap into expected growth in South Africa and some of its key markets.

In its announcement of the deal, which would be Walmart’s largest since buying Asda in 1999, the US retailer said institutional shareholders representing 35% of its shares had given irrevocable undertakings to approve the deal. Shareholders representing a further 15% had given non-binding support, added Walmart, which needs three-quarters of the votes for the deal to go through.

Walmart, which has long battled with trade unions in the US , pledged today to “respect and honour all pre-existing contracts with organised labour bodies” and insisted it would continue to use local suppliers and manufacturers.

However, the South African Commercial, Catering and Allied Workers’ Union (Saccawu), which claims to represent about 70% of Massmart’s staff, said it opposed the deal as another step in the “Walmatisation” of the retail industry.

A union spokesman said: “We have instructed a firm of attorneys to represent us in the legal process. As for strike action, this will be determined by the unfolding of the campaign and it shouldn’t be excluded.”

Massmart’s retail brands include the discount chain Game, Builders Warehouse for construction and DIY, and DionWired, a home appliance retailer.

© Guardian News and Media Limited 2010

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Filed Under: Globalization, Walmart

Walmart Renews Push Into New York City with Smaller Scale Stores

December 23, 2010 by staff

By Daniel Massey
First published by Crains NY, Nov. 7, 2010

To close an analysts meeting last month, a choir of Walmart associates belted out “New York, New York.” A few days later, the Arkansas retail giant announced that it had hired Bradley Tusk, Mayor Michael Bloomberg’s former campaign manager, to bolster its efforts to open a store in the Big Apple.

Four years after failed attempts in Queens and Staten Island led former Chief Executive H. Lee Scott to write off New York City as not “worth the effort,” Walmart is indeed singing a different tune. Five straight quarters of same-store sales declines in the U.S., disappointing forays abroad and bold moves into the city by such competitors as Costco and Target have forced Walmart to push harder than ever for a foothold here and in other urban areas.To close an analysts meeting last month, a choir of Walmart associates belted out “New York, New York.” A few days later, the Arkansas retail giant announced that it had hired Bradley Tusk, Mayor Michael Bloomberg’s former campaign manager, to bolster its efforts to open a store in the Big Apple.

“They’re looking all over,” says Faith Hope Consolo, chairwoman of Prudential Douglas Elliman’s retail group. “This is aggressive now. This is not just thinking about it and dabbling. They’re dancing around the city.”

And the retailer might find a real estate partner this time.

Last month, Walmart announced that it would consider stores far smaller than its typical 150,000-square-foot supercenter. With no shortage of 30,000- to 60,000-square-foot spaces in the city, the “Smallmart” strategy could nullify longtime opponents’ most potent weapon—the City Council’s zoning hammer. No matter how loudly labor and political foes shout about Walmart’s potential impact on nearby small businesses, its antiunion policies or its alleged discrimination against women, the downsized approach makes for a smoother entry into New York.

Ms. Consolo says a team of at least a dozen Walmart real estate experts is looking at space all over Manhattan—from East Harlem to the Sixth Avenue Ladies’ Mile strip. And she says the company has not ruled out entering the local market via pop-up stores, as Target did. It could also purchase an existing big-box chain, such as Pathmark, whose parent, A&P, is choking on $1 billion in debt. Walmart is sitting on $10 billion in cash.

In a down economy, Walmart hopes to build community support by highlighting its potential economic impact. Last year, the company spent $5.7 billion with 835 New York City suppliers, and its foundation has given more than $9 million in grants to nonprofits here in the past three years.

Though smaller formats are likely, Walmart isn’t giving up on stores of 80,000 to 150,000 square feet, says Director of Community Affairs Steven Restivo. It’s looking “across the entire city,” he says, and will probably zero in on poor neighborhoods, where unemployment is high and fresh-food options are limited.

“We can be part of the solution in terms of addressing unemployment and improving access to affordable, healthy food,” Mr. Restivo adds.

Walmart has a stalwart local supporter in the mayor, who said last week through a spokesman that “we shouldn’t tell businesses that want to invest and create jobs in New York City that they can’t.”

Working the community angle

In Chicago, Walmart eventually won over ministers, community leaders and construction unions by focusing on jobs, and it will use the same strategy in New York.

Already, the Hip-Hop Summit Youth Council and community leaders have launched Walmart 2 New York City, arguing that the retailer would create jobs. Walmart officials say it has no ties to the group, but it has partnered with Russell Simmons’ Hip-Hop Summit Action Network, a sister organization of HHSYC.

Meanwhile, leaders of the city’s building trades are still irritated that the retail union engineered the defeat of a proposed mall at the Kingsbridge Armory last year, killing 1,000 construction jobs. With its members facing 30%-plus unemployment rates, the trades have little incentive to join the retail unions in fighting Walmart, which said it will build with union labor. The Building and Construction Trades Council declined comment.

Walmart’s competitors are thriving here. Costco has five stores in New York and wants additional locations in the outer boroughs. The stores averaged sales of $185 million in fiscal 2010, 35% more than the company average, Costco says.

Target has 10 stores in the city, and supermarket union officials say its growing food and beverage operations could make the company a focus of labor opposition. Each Target store here brings in an estimated $25 million a year in grocery sales alone, says Burt Flickinger, a retail analyst with Strategic Resource Group.

Brian Sozzi, a retail analyst at Wall Street Strategies, says, “Walmart’s desperately trying to ramp up growth, and urban areas [in the U.S.] are the next frontier.”

All eyes on East New York

But many labor leaders and their political allies, worried that the non-union retailer will erode the shrinking market share of unionized stores in New York, are equally desperate to stop Walmart.

“When you look at the places [it] has gone, they’re just pushing out the longtime mom-and-pop jobs and replacing them with their jobs in a cannibalistic way,” says City Council Speaker Christine Quinn.

The fight has begun in East New York, Brooklyn, where Walmart is eyeing 180,000 square feet at The Related Companies’ Gateway II complex. The City Council OK’d plans for a 630,000-square-foot shopping center there last year, but the vote didn’t take into account the “higher order of environmental impact” of a Walmart, says Richard Lipsky, a lobbyist for the Retail, Wholesale and Department Store Union. Mr. Lipsky is preparing a legal challenge to the initial approval.

Even if opponents prevail in East New York, it’s just a matter of time before Walmart secures an “as-of-right” site—one without zoning hurdles-—which will reduce union leverage. In the end, labor might have to settle for more modest concessions. One blueprint is a deal Walmart agreed to at its Pullman neighborhood location in Chicago to pay workers up to $9.35 an hour after their first year on the job. But the price of admission in New York will be a lot higher.

“Walmart can say, ‘We have an as-of-right site and want to sit at the table and talk about how we can go into a community without the tremendous backlash we know is coming,’ or it can fight,” says Pat Purcell, assistant to the president of United Food and Commercial Workers Local 1500. “They want to fight, we’ll fight. They want to talk, we’ll talk.”

© 2010 Crains

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Filed Under: Walmart

Wal-Mart vs. a Million Angry Women

December 23, 2010 by staff

By Greg Stohr 
First published by Bloomberg/Business Week, November, 2010

Chris Kwapnoski says she watched for 15 years as one male colleague after another leapfrogged over her into management jobs at the Sam’s Club in Concord , Calif. When Kwapnoski asked a supervisor what was holding her back, she recalls getting a curt reply: “Blow the cobwebs off your makeup and doll up.”

Kwapnoski’s lawyers say her experience is common—so common that they are seeking to sue Wal-Mart Stores, which owns the Sam’s Club chain, for discrimination on behalf of more than a million female employees. The suit would be the largest job-bias case ever against a U.S. employer. Wal-Mart is seeking a Supreme Court hearing , and the dispute could become the most important business case of the court’s nine-month term. It’s an “800-pound gorilla,” says Robin S. Conrad, who heads the U.S. Chamber of Commerce’s litigation unit.Chris Kwapnoski says she watched for 15 years as one male colleague after another leapfrogged over her into management jobs at the Sam’s Club in Concord , Calif. When Kwapnoski asked a supervisor what was holding her back, she recalls getting a curt reply: “Blow the cobwebs off your makeup and doll up.”

The high court will say as early as Nov. 29 whether it will review a ruling by a San Francisco-based federal appeals court , which in April let the case go forward as a class action for women working at the company. (The original lawsuit was filed nine years ago on behalf of six women.) The company, which has 4,400 Wal-Mart and Sam’s Club stores, says a case involving that many workers would be so unwieldy it would violate the Constitution’s due process protections, including the company’s right to defend itself against the charges. The plaintiffs’ legal fight has become a business unto itself, involving seven law firms and several million dollars in expenses. Lawyers built their case in part through online surveys that female workers submitted on a website devoted to the litigation.

The court, with a conservative majority led by Chief Justice John Roberts , has made little secret of its skepticism for what it views as lawyer-driven litigation. The court has already trimmed the federal securities fraud laws and required more specificity from plaintiffs when they file complaints. The Roberts court is “skeptical of litigation as a policy tool,” says Jonathan Adler, a business law professor at Case Western Reserve University .

As a testament to its significance, 19 companies, including Altria Group , Bank of America , General Electric, and Microsoft, are urging the court to take up the appeal. The companies say the lower court ruling makes it too easy for workers challenging employment practices to secure class-action status and then extract large settlements. Even with meritless claims, “class certification decisions are often tantamount to a decision on the merits,” the companies say in a court filing. Several companies have concrete stakes in the outcome. A suit on behalf of more than 700 women against Costco Wholesale is on hold until the Supreme Court resolves the Wal-Mart case. Altria and other tobacco companies say the Wal-Mart case may affect their challenge to a Louisiana court order requiring them to spend more than $270 million on a smoking cessation program.

For Wal-Mart, the case could mean billions in damages, though the lawyers for the women haven’t specified how much they are seeking. A multibillion-dollar award would be a blow, but one Wal-Mart could absorb. The world’s largest retailer had more than $400 billion in sales and $15 billion in profit over the past 12 months.

The complaint says women working for Wal-Mart have been paid less than men for the same jobs and received fewer promotions. Instead of posting management openings, Wal-Mart relied on a “tap on the shoulder” system that let managers steer jobs to male colleagues, says Joseph Sellers, a partner in the Washington-based law firm of Cohen, Milstein, Sellers & Toll who represents the women. “Wal-Mart’s promotion system departed very substantially from what virtually every other large company at this time was doing,” he says.

Wal-Mart, with 1.4 million U.S. employees, says any problem was isolated. Letting the case go forward would deprive the company of its right to contest the claims of each woman individually, says Theodore Boutrous, a partner with the Los Angeles law firm Gibson, Dunn & Crutcher who represents Wal-Mart before the Supreme Court. “To assume that every employee has been subject to discrimination flies in the face of the facts and really subjects the company to an extraordinarily unfair process,” Boutrous says. The company says it now posts management openings.

The women will press ahead, possibly in a series of smaller class actions , if the Supreme Court rules against them, Sellers says. Kwapnoski, for one, is eager to focus public attention on her employer’s treatment of female workers. Now an assistant manager, the 46-year-old says her $60,000 salary is less than half what she might be earning had she been promoted in step with her male peers. “I really, honestly would like to change the public’s view of Wal-Mart,” she says.

Stohr is a reporter for Bloomberg News.

© 2010 Bloomberg/Business Week

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Filed Under: Walmart

Walmart, Costco and Others Exploit State Energy Tax Credit Program

November 23, 2010 by staff

By Harry Esteve 
First published Dec 29, 2009 by The Oregonian

When Oregon started handing out jumbo tax subsidies for renewable energy projects two years ago, one of the biggest beneficiaries was also one of the world’s richest corporations — Walmart.

No, the retail giant hasn’t branched to solar panels or wind turbines.

Instead, Walmart took advantage of a provision in Oregon’s Business Energy Tax Credit that allows third parties with no ties to the green power industry to buy the credits at a discount and reduce their state income tax bills.

More Read The Oregonian’s earlier coverage of the Business Energy Tax Credit. State records show Walmart paid $22.6 million in cash last year for the right to claim $33.6 million in energy tax credits. The cash went to seven projects, including two eastern Oregon wind farms and SolarWorld’s manufacturing plant in Hillsboro. In return, Walmart profits $11 million on the deal because that’s the difference between what it paid for the tax credit and the amount of its tax reduction.

The loser in the transaction is Oregon’s general fund — which pays for public schools, prisons and health care programs — because the state is out the full $33.6 million in tax revenues.

Walmart isn’t alone. An analysis by The Oregonian shows Costco and U.S. Bank, which also rank among the nation’s top 200 wealthiest businesses, have made millions by buying up energy tax credits to cut their Oregon tax bills. Dozens of other companies and hundreds of individual Oregon taxpayers also have cut their tax bills by buying up the tax credits.

The practice, known as “pass-through,” has become a popular, nearly risk-free way for profitable corporations and high wage-earners to avoid paying taxes in Oregon. But it also has become one more target for critics of the green energy subsidies, which spend state tax dollars to attract low-carbon industry and jobs to Oregon.

“It’s so convoluted,” says Eric Fruits, an adjunct economics professor at Portland State University who has studied Oregon’s energy incentives. “You’ve got all these dollars swirling around. Everyone is trying to grab them as fast as they can.”

The pass-through option “turns what would otherwise be an incentive to make energy investments into a windfall that may not have anything to do with energy,” Fruits says.

Program under fire 
For years, Oregon has subsidized renewable energy and energy conservation projects by granting tax credits, which can be used as a dollar-for-dollar reduction on state income tax bills. The pass-through practice was put in place in 2001 as a way to allow government agencies and nonprofit organizations to take advantage of the subsidies. Since those groups don’t pay state taxes, the credits are worthless unless they can be sold to a third party.

The ability to sell the credits also allowed start-up companies with no Oregon tax liability to leverage upfront cash for their green energy projects.

The tax credits, known as BETC, or “Betsy,” have come under increasing fire this year because the cost to taxpayers skyrocketed. It went from about $10 million in 2007 to an estimated $167 million in the 2009-11 biennium at the same time the economic recession hammered other areas of the state budget.

A previous investigation by the newspaper showed state officials intentionally downplayed the estimated cost of the program before the 2007 Legislature voted for substantial increases to the maximum subsidies. The newspaper’s latest analysis also found:

Walmart, Costco and U.S. Bank, which top the list of energy credit buyers, shelled out a combined $67 million to avoid paying $97 million in Oregon income taxes.

Walmart and others are making money on projects that were closed, went belly up or never produced the energy or energy savings they initially claimed.

Out-of-state corporations and others looking for tax breaks are claiming an increasing share of the money that is supposed to pay for clean energy and conservation.

Weyerhaeuser/Walmart 
The head-scratching nature of the subsidy program perhaps is best illustrated by a case study of what happened at the former Weyerhaeuser Paper Mill in Albany.

Weyerhaeuser, based in Federal Way, Wash., received $3.3 million in Oregon energy tax credits in 2008 for rejuvenating a biomass plant that burned wood waste for heat and steam, and for capturing much of the heat to dry paper. The company, which apparently didn’t need the tax offset, turned around and sold the credits to Walmart for $2.3 million in cash.

Walmart then gets to deduct the full $3.3 million from its Oregon income tax bill over five years for a payback of $1 million. But there’s a twist.

Last year, International Paper bought a number of Weyerhaeuser mills, including the one in Albany. And last week, I-P shut down production at the Albany mill as part of a corporate cost-saving plan.

The end result: The mill no longer produces nor saves the energy for which it got the tax credits. Walmart, however, retains the full benefit of the subsidy.

Walmart, which ranked second to Exxon this year on the Fortune 500 list, shouldn’t be cast as the bad guy, says Karianne Fallow, a spokeswoman for the Arkansas-based company. Oregon officials asked Walmart to become a “pass-through partner,” Fallow says.

“The state approached us with this investment offer and we participated in the opportunity,” Fallow says. The tax benefits were clear, she says, but bringing green jobs and companies to Oregon “is very much a goal that we support.”

Legislative overhaul 

Similar examples abound. FUSP, a Portland wood recycling company, garnered $2.6 million in tax credits last year and sold them to 17 individual investors for $1.9 million in cash. The money, according to a company official, was used to buy grinding equipment and other machinery that turns old wood into new lumber and pallets.

Shortly after the credits were issued, the housing market crashed. The equipment now sits idle in a lumberyard in Turner, outside Salem. The 17 investors, however, continue to receive the tax break.

“The problem is, we’re taking taxpayer money that is supposed to be accomplishing energy efficiency or power generation and instead we’re putting it into the financial market,” says Jody Wiser, who leads a watchdog group that wants changes to the energy subsidies. A better way, Wiser suggests, would be to give clean energy or energy conservation companies outright grants, thereby saving millions that wind up in the hands of investors.

Corporations doing business in Oregon took a keener interest in the tax credits after the 2007 expansion of the program, which upped the maximum incentives to $20 million for solar facilities and $10 million for wind farms. State records show the amount of tax credits bought by third parties shot up to $152 million — more than triple the amount of the previous year.

Gov. Ted Kulongoski and state energy officials say they recognize problems with the energy tax credits and are working to overhaul the program when state lawmakers convene for a short session in February. Among the targets of the overhaul is the pass-through option.

“The governor believes there’s been a public value to the program,” says Anna Richter Taylor, Kulongoski’s spokeswoman. “That said, he also is very supportive of efforts to align the rate better with other public investment portfolios.”

The current rules allow third parties to buy the tax credits at about 67 cents on the dollar and take the tax breaks over five years. For most, that means an annualized rate of return of about 10 percent – a rate that far exceeds what most people are getting on short term investments, such as bank CDs. Acting state Energy Department director Mark Long is pushing for a rate that would be more in line with other types of market investments — about 3.5 percent a year.

“That means more money goes to the actual project,” rather than to the investors who buy the tax credits, Long says.

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Filed Under: Walmart

A Dirty Business

November 21, 2010 by staff

The Martin County Coal Mine slurry spill and the Bush cover-up of an environmental disaster

By Phillip Babich
First published by Salon.com, November 13, 2003

INEZ, Ky. — There aren’t many people in the United States who have as much experience with rock-and-earth dams and coal slurry impoundments as Jack Spadaro, a distinguished mining engineer who’s been working in federal regulatory agencies for almost 30 years. That’s why he was selected to be one of eight members of an accident investigation team to determine the causes of the nation’s largest coal slurry spill at the Martin County Coal Company in Inez, Kt., on Oct. 11, 2000 .

A coal slurry impoundment is a reservoir of thick liquid waste from coal processing that is constructed by damming the mouth of a valley with rock and earth. To residents living near these impoundments, they are disasters waiting to happen. The EPA called the Inez spill the worst environmental catastrophe in the history of the Eastern United States . Far more extensive in damage than the widely known 1989 Exxon Valdez oil spill off the coast of Alaska, the Martin County Coal slurry spill dumped an estimated 306 million gallons of toxic sludge down 100 miles of waterways.

Jack Spadaro has made it his life’s work to figure out why these spills happen and how to stop them. But right now he is awaiting final word from officials at the U.S. Mine Safety and Health Administration (MSHA), a wing of the U.S. Department of Labor that is a lead regulatory agency for the coal industry, as to whether he will retain his job as the superintendent of the National Mine Safety and Health Academy, MSHA’s training facility [editor’s note: he was fired]. His superiors are accusing him of a raft of misbehaviors — including “abusing his authority” and “failing to follow instructions.” But as far as he’s concerned, the reason he’s facing dismissal is very simple: He’s been in hot water since January 2001 — when Bush administration officials took control of the Martin County Coal investigation.

Before the change in political administration, Spadaro and his teammates had been uncovering information that had far-reaching implications for both Massey Energy (the parent company of Martin County Coal and a major contributor to the Republican Party) and the coal industry as a whole. Testimony and documents revealed that executives at Martin County Coal and federal regulators were aware that there was potential for a catastrophic failure at the slurry impoundment but didn’t take proper actions to avoid it. In particular, an MSHA engineer had made a list of specific safety recommendations to Martin County Coal and MSHA district officials following a 100-million gallon spill in May 1994. But MSHA and Martin not only largely ignored the recommendations, MSHA actually allowed Martin to add coal waste to its impoundment.

By the end of 2000, Spadaro and other investigation team members felt they were beginning to collect enough evidence to issue Massey Energy citations for willful and criminal negligence. In addition, it looked as though their own agency, MSHA, was going to be held accountable as well. But that all changed when George W. Bush moved into the White House. Within days of Bush’s inauguration a new team leader was brought in to head the Martin County Coal investigation. The scope of the investigation was dramatically narrowed — offering yet another dramatic example of how the wholesale takeover of the White House by the energy industry is having a real impact on real lives, not just on the whistle-blowers like Jack Spadaro but on the people he’s trying to protect.

On April 3, 2001, Spadaro tendered his resignation from the accident investigation team and filed a complaint with the Department of Labor’s Office of the Inspector General, alleging that Bush administration officials were obstructing the team’s work. Spadaro also spoke out publicly when MSHA released its final accident investigation report in October 2002, which cited Martin County Coal for two minor violations with fines totaling $110,000, and left MSHA district officials completely off the hook.

Spadaro was placed on administrative leave — often a bureaucratic precursor to job termination — on June 4, 2003 . He was called away on business to Washington, D.C., that day and federal officials took the opportunity to raid his Beckley, W.V. office. They searched through his personal belongings, dismantled the frame of a family portrait to look behind the photograph, and changed the locks. Officials in D.C. questioned him about providing free academy housing to an instructor who had multiple sclerosis. Spadaro says he was dumbfounded by the questions since MSHA officials, including some of his questioners, were aware of the arrangement, which was, in any case, within Spadaro’s authority to grant.

Spadaro could be terminated any day. The apparent vendetta against him, and a mass of other evidence including damning off-the-record comments by officials involved in the investigation and a heavily-redacted report, raise serious questions as to whether Bush administration officials, ranging from mining safety officials all the way to Labor Secretary Elaine Chao, orchestrated a coverup to whitewash Martin County Coal of any serious responsibility for the coal slurry disaster.

There are about 700 slurry impoundments in the United States . Nearly 200 of them are built over underground mines, as is the Martin County Coal impoundment. Plans for building one of the biggest slurry impoundments ever constructed are also under way.

These waste facilities, though little known, have one of the greatest potentials for catastrophic environmental disaster in the country.

On Feb. 26, 1972, a slurry dam gave way at the Buffalo Mining Company in Logan County, W.V., releasing a giant wave of thick, murky water, choked with chemicals, coal refuse, rocks and dirt. According to the official accident report, 132 million gallons of slurry suddenly flooded the Buffalo Creek Valley floor, destroying or partially destroying 17 communities. 125 people were killed. 4,000 people were left homeless.

Jack Spadaro was only 23 years old in 1972, but had already accumulated enough coal mining expertise that he was asked to be the staff engineer for the governor’s commission that investigated the Buffalo Creek disaster.

“That was a terrible tragedy that could have been avoided,” he says. “There had been plenty of warnings that something [of this nature] would occur. There were a series of dams at Buffalo Creek and there had been failures on all of them.”

The tragedy profoundly affected Spadaro. He spent the next 30 years studying rock and earth structures and working as a government regulator to try and protect miners and communities from faulty dams and negligent coal companies.

The Martin County Coal slurry impoundment is 70 acres in size and has a capacity of more than 2 billion gallons. Part of the lagoon is situated above underground mines. In the early morning hours of Oct. 11, 2000, the bottom of the slurry impoundment broke into one of the mines. A torrent of sludge and water blasted through about two miles of underground mines until the flood punched out of a mine opening in the side of a mountain and began flooding Coldwater Creek.

Residents described the flood as a black lava flow. Janice Maynard remembers seeing five big turtles, supine in their shells on top of the slurry, which had enough density to raise bridges as it crested the creek banks.

“It smelled like hydraulic fluid,” she said. “Nothing smells worse than hydraulic fluid.”

Eventually, the thick sludge stopped flowing, but the less viscous slurry at the top of the impoundment was still rushing into the mine. This caused a pressure build up, which resulted in a second flood that punched through mines on the Wolf Creek side of the impoundment.

There was no loss of human life, but aquatic life was annihilated, and animals that came in contact with the sludge got stuck and perished, or died because they were unable to get uncontaminated drinking water. Many residents exhibited severe rashes and suffered from respiratory problems. No one in the area dares drink tap water for fear that a number of hazardous substances found in slurry, such as arsenic and mercury, have permanently poisoned the municipal water systems.

It’s a stroke of luck that no miners were killed. A conveyer belt that hauls coal to the preparation plant runs through the area where the breakthrough occurred. A miner had just vacated that section of the mine minutes before the catastrophe. Officials say that if all of the slurry had come down the Coldwater side, hundreds of homes would have been submerged and the loss of life would have easily surpassed the death toll at Buffalo Creek.

Within two days of the disaster, Davitt McAteer, then assistant secretary of labor for mine safety and health (a 1994 Clinton appointee), assembled an accident investigation team. Tony Oppegard, now general counsel for the Kentucky Department of Mines and Minerals, was the team leader.

Jack Spadaro was the No. 2 man. “Jack was highly qualified for the job,” said Oppegard. “I knew he’d be a diligent member of the team. He knew a lot about impoundments, and I knew that he had investigated the Buffalo Creek disaster. McAteer told me that if I wasn’t there, Jack was in charge.”

Spadaro immediately set out to find the root causes of the Martin County Coal accident: “I was concerned that we were having a failure of this magnitude 30 years after Buffalo Creek. There had been a lot of safeguards implemented over time. But all that was related to the dams and the earth structures. Not a whole lot of attention had been given to the reservoir areas. I was interested from a technical standpoint and a personal standpoint because I had been involved with these things for so long, and I knew what kind of tragedy could result if we didn’t do a good job of investigating.”

Oppegard started his investigation by wading through slurry-filled mines at Martin County Coal to try and get a close-up look at the diaster. The details of the May 1994 spill, six years earlier, in which about 100 million gallons of slurry were dumped, didn’t come to light until later in the investigation. But when they did, certain documents read like smoking guns.

Of particular interest is a June 13, 1994 memorandum obtained by Salon through a Freedom of Information Act request. In that memo an MSHA engineer made a series of nine critical recommendations that Martin County Coal and MSHA regulators needed to address before the company could resume using the impoundment. The engineer, Larry Wilson, also observed rising bubbles in the slurry impoundment, indicating that there was still a breech. “[Martin County Coal] should not be allowed to let the [slurry] level rise until a complete evaluation by the Company’s consultant has been completed [sic],” wrote Wilson .

The Wilson memo caught the attention of Mark Skiles, head of MSHA’s engineering division, which is known as Technical Support. Skiles was ordered by McAteer in October 2000 to do a complete review of MSHA’s files on the May 1994 accident.

Skiles’ investigation resulted in a memorandum to his boss that stated: “I would conclude from this investigation that after the 1994 failure the [local MSHA district office] did not follow [Larry Wilson’s] recommendations. Technical Support in light of the 1994 failure did not follow up on the recommendations.”

What’s more, Martin County Coal’s own engineering firm was aware that another breakthrough after the May 1994 accident was “virtually inevitable,” according to testimony given to the accident investigation team. (The Lexington Herald-Leader newspaper obtained transcripts.) In his testimony an engineer for Geo/Environmental Associates, Scott Ballard, said that there was only 15 feet of rock and dirt between the bottom of the slurry impoundment and the location of the 1994 breakthrough into the underground mine. (The MSHA recommended amount is 150 feet.)

Plans to seal the rupture and minimize leakage were “never intended to prevent a breakthrough in any form or fashion,” Ballard told MSHA investigators. “In fact, the question was asked during the MSHA review process: Will this prevent it? And the answer was emphatically ‘no.’ There’s no guarantees. There’s nothing here that will prevent a breakthrough.”

According to Jack Spadaro, Ballard testified that at least five Martin County Coal executives were aware of the risks their impoundment posed to miners and the surrounding communities. Massey Energy declined to comment.

Two months into the Martin County Coal accident investigation, evidence started coming to light that the Massey subsidiary could be charged with criminal negligence, which could have severe financial and legal implications, according to 비트코인 등 다양한 결제수단을 지원하는 토토사이트. MSHA was also in the hot seat: Its own district managers, who were vested with holding Martin County Coal accountable to the law, appeared to have given the company a pass. Despite the warnings inherent in another impoundment rupture, MSHA let Martin County Coal increase the volume and height of its slurry impoundment after the 1994 accident.

But the direction of the investigation abruptly changed when Bush was sworn in as the nation’s 43rd president. In late January 2001 Bush administration officials installed a new team leader to take charge of the Martin County Coal investigation, a switch that was neither required by law nor politically necessary. In fact, MSHA’s lead investigator, Tony Oppegard, had gotten indications that he was going to be put on contract so he could finish the investigation. But, with no explanation, he received word that the Bush administration had not approved his contract.

Instead, Tim Thompson, the district manager from MSHA’s Morgantown, W.V., office, was brought in. According to some members of the accident investigation team, Thompson made it clear that investigators were expected to immediately start wrapping up their work and write the final report. There were as many as 30 interviews that the team had left to conduct, but Thompson whittled that number down to about six. Spadaro says that Thompson explicitly said, “We’re not going to let any fingers point at MSHA.” Thompson did not respond to a request for an interview.

According to investigation team members who spoke with Salon on condition of anonymity, Thompson was in frequent communication with the new assistant secretary of labor for mine safety and health, David Lauriski, who was appointed by Bush in March 2001. These communications took place particularly when Thompson was at odds with the rest of the team over critical issues, the sources said.

Bush’s top leadership at MSHA is stacked with former mining executives. Lauriski, MSHA’s chief, was an executive with Energy West Mining. Deputy assistant secretary John Caylor worked for Cyprus Minerals, Amax Mining and Magma Copper. MSHA’s other deputy assistant secretary, John Correll, worked for Amax Mining and Peabody Coal.

In Kentucky there’s a high degree of suspicion that MSHA officials were getting their orders from higher-ups in the administration, and from Sen. Mitch McConnell, R-Ky., who, like the Bush-Cheney ticket, is heavily backed by campaign contributions from the coal industry, including Massey Energy. In a full-page editorial in the Lexington Herald-Leader, the newspaper’s opinion writer put it this way: “When President Bush took office in January 2001, Elaine Chao, Senator Mitch McConnell’s wife, became Secretary of Labor with responsibility for MSHA. David Lauriski, a Utah coal operator, became MSHA’s director. Lauriski hired a McConnell staffer, Andrew Rajec, who attended the MSHA investigator’s meetings and now works in Chao’s office.”

Coal has been king in these parts for more than a century. As an example of how coal companies wield political influence these days, consider this excerpt from a meeting in 2002 between coal magnate Bob Murray and MSHA inspectors. West Virginia Public Radio managed to obtain notes from the meeting. Said Murray : “Senator Mitch McConnell calls me one of the five finest men in America, and last time I checked he was sleeping with your boss.”

On Jan. 10, 2003, the inspector general’s office in the Labor Department completed its findings on Spadaro’s allegations that the Bush administration was obstructing the accident investigation into the Martin County Coal slurry spill. Salon obtained a copy of the 25-page report by filing a Freedom of Information Act request. It’s heavily redacted. Whole pages are blanked out, leaving the public to wonder how the Inspector General was able to exonerate MSHA. The report’s final sentence: “No evidence was uncovered to substantiate any allegations relating to MSHA’s Martin County Coal accident investigation.”

The Courier Journal newspaper in Louisville, Ky., wrote on its editorial page: “The message a Labor Department Inspector General’s report has sent, not only to those in charge of the U.S. Mine Safety and Health Administration but to all the friends of business whom George W. Bush has planted in the federal bureaucracy, is clear: Complaints about business-friendly regulation will be given short shrift.”

Ellen Smith, an award-winning investigative journalist who publishes Mine Safety and Health News, had this to say about the IG report: “I have been reporting on mining issues since 1987, and I can tell you that in all of these years of reporting on mining issues we have never seen a government report with redactions like this one. They might redact people’s names. They might redact dates. But in this case, it was literally half the report, and there are pages and pages of redactions. How they reached their conclusions, we will never know, because they have taken all of that out of the report.”

The inspector general’s office justified the redactions by citing the need to protect personnel privacy and internal matters. But according to MSHA officials familiar with the IG investigation, what’s more likely is that the inspector general had an interest in not revealing details of sensitive discussions and documents that could have implicated Labor Secretary Chao and top MSHA officials in a coverup.

As an example, the report notes that the accident investigation team leader, Tim Thompson, called four of the investigators into his office to sign the final report. When they were handed just the signature page, not the completed report, they objected and refused to sign. The report says, “Thompson made a conference call to Assistant Secretary [for Mine Safety and Health] Dave Lauriski.” Several lines are redacted, then the report continues: “Thompson provided a copy [of the report] … a few typographical errors were identified and corrected. The four members willingly signed the final report without reservation.”

What did Lauriski say? And what did he or the inspector general make of the fact that Thompson wanted the investigators to sign a report they hadn’t read? The public may never know.

The IG report also addresses the Mark Skiles memo of October 2000 noting that the local office of the MSHA had not followed the recommendations of the report written by the engineer who had analyzed the 1994 spill. But the only information that’s imparted is that the memo exists. The entire next page has been redacted.

What follows the redactions is a brief description of a so-called District Response Memo to the Skiles memo, a sort of tit-for-tat dueling memo in the bureaucratic blame game that purports that all the recommendations made by MSHA engineer Larry Wilson after the May 1994 slurry spill had been followed up on. Again, no pertinent information is imparted, and the next two and a half pages are completely blanked out. This is significant because these documents go to the core of culpability and charges of criminal negligence.

According to some members of the accident investigation team, who provided testimony to the inspector general, there are two revealing details that the IG most likely redacted: 1) MSHA investigators had alleged that top management at MSHA put pressure on Mark Skiles to alter his memo in order to water down his conclusion that “after the 1994 failure the [MSHA district office] did not follow [Larry Wilson’s] recommendations;” and, 2) MSHA investigators had alleged that the district response memo was fabricated, back-dated and surreptitiously made available to the investigation team after the Skiles memo was leaked to reporters and appeared in regional newspapers. If proven, either one of these allegations would have been grounds for obstruction of justice.

One investigator said he had doubts about the district response memo when it first appeared, late into the investigation. For one thing, it was dated Oct. 31, 2000 . The Skiles memo was undated, but it was later said to have been written on the same day, Oct. 31. The Skiles memo, which is a detailed two-and-one-half-page report with more than 20 pages of attachments, had to make its way through at least two offices before the local district office could draft its response, which is four pages in length and disputes, point-by-point, all of the allegations that MSHA and Martin County Coal did not follow through on nine safety recommendations.

What’s more, according to members of the investigation team, the district response memo contains “flat-out lies.” For example, the initial engineering recommendations in 1994 called upon Martin County Coal to install weirs at its impoundment to monitor for outflow. Skiles noted in his memo that this recommendation had not been followed up on. The district response memo rebuts that “weirs were installed at all outflow locations.” But at least two MSHA investigators say they saw no evidence of the weirs when they inspected the site after the October 2000 disaster.

Investigators on the accident investigation team wanted to cite Martin County Coal for eight violations, including at least one for willful negligence. Instead, the number was whittled down to two with a total fine of $110,000. Massey Energy appealed those citations; one was removed. The only federal violation Massey is cited with is for failing to properly notify MSHA about changes in water flow from the impoundment; fine: $55,000.

A fine by the state of Kentucky was much stiffer. Martin County Coal agreed in the summer of 2002 to pay $3.25 million in penalties and damages, the largest mining-related fine in the state’s history.

Massey Energy says it has spent over $40 million in cleanup costs. But Massey’s CEO, Don Blankenship, also announced during a conference call with investment bankers on July 31, 2003, that the company had just won a $21 million insurance settlement for property damage and business interruptions that resulted from the October 2000 slurry spill.

The January 2003 finding by the inspector general that there was no evidence to support Spadaro’s allegations that Bush administration officials were obstructing the investigation may have cleared the way for putting Spadaro on administrative leave. But it was never a secret at MSHA that Spadaro was a marked man. He’d acquired a well-deserved reputation as a whistle-blower, a “calls-them-as-he-sees-them” type of government employee, often with the public’s interest at heart.

Spadaro has worked with Republican and Democratic administrations over the years. But he never seemed to get on track with the administration of George W. Bush. In addition to the Martin County Coal matter, Spadaro clashed with top officials at MSHA over allegations that lucrative contracts were being handed out to friends and former associates. Earlier this year, Spadaro blew the whistle on Lauriski and MSHA’s two deputies, Correll and Caylor, for their connections to not-for-bid contracts that went to longtime friends and associates Gerry Silver and Ben Sheppard. Sheppard obtained a series of contracts worth about $190,000. Silver received more than $100,000 from MSHA.

In October 2003, MSHA charged that the superintendent had abused his authority at the academy, made unauthorized cash advances on a government credit card, and failed to follow supervisory instructions and appropriate accident procedures. The most serious of MSHA’s charges against Jack Spadaro revolve around the superintendent’s granting of free room and board to two instructors who were disabled. MSHA also says that Spadaro violated government rules by providing free room and board at the academy to participants in a mine rescue competition.

Spadaro’s attorney, Jason Huber, says the charges are specious. “There were at least two individuals who required disability accommodations, and Jack provided for them,” says Huber. “Everything that Jack did as superintendent was according to either directives that were handed down to him from superiors in accord with policies that existed prior to Jack’s arrival, or that were required under the law.”

MSHA spokesperson Rodney Brown said that the agency cannot comment on an ongoing personnel matter.

The unauthorized cash advances were a series of transactions in the amount of $200 or less, totalling about $1,800. According to Huber, Spadaro promptly paid his credit card bill each month and that the advances were for MSHA-related activities, including a dinner with Chinese businessmen at a restaurant that didn’t accept credit cards, requiring Spadaro to get a cash advance at an ATM. MSHA also cites labor grievances from several years ago: a delayed promotion, reprimanding an employee, and two complaints about relocating employees to different offices in the building.

Spadaro says that given the nature of the charges against him, the June raid on his Beckley office is particularly alarming. “There’s no justification for the raid that was done on my office,” he says. “Even if I was guilty of all the crimes they accuse me of, there was no justification for attacking me and my office in the way that was done. We can’t find any precedent for what they did, and we think it was extreme. That’s going to be part of our complaint to the Merit Systems Protection Board [a federal agency that protects civil servants’ rights] and later in federal court.”

If you don’t live in a state that produces coal it may be easy not to notice that fully 50 percent of all electricity generated in the United States comes from coal-fired power plants. But if you’re in coal country the presence of the black rock is unmistakable. Take northeastern Kentucky as an example. Drive down Route 23 — the Country Music Highway with signs that pay tribute to the likes of Loretta Lynn, Dwight Yoakam and other hometown stars — and not a minute goes by without seeing a big rig hauling what miners call a “coal bucket,” a long, gray-stained trailer covered with a tarp to hold in its payload. Flecks of coal click and crack against car windshields as fleets of these trucks make their way to railroad lines, shipping docks and power plants. Thick white exhaust, like a cumulonimbus cloud, billows into the sky at the American Electrical Power plant; a mountain of coal, as big as a professional football stadium, charging the network of electric cables and transformers.

If you live in the coal fields, your life is intimately linked to the coal industry. For decades there was almost a symbiotic relationship between coal field residents and coal companies. Jobs glued them together. Nowadays the coal industry is less dependent on vast numbers of workers. It’s highly mechanized. Instead, the relationship, as one coal field resident put it, is more like that of a husband and his battered wife who keeps coming back for more. Large-scale mining operations have literally flattened whole mountains, filled entire valleys with rubble, and rattled homes with high-powered explosives. In some areas, piles of rubble as high as a modest skyscraper entomb whole valleys from mouth to crest. Many valleys, or what are called hollows in the Appalachians, have been filled with coal slurry.

Machines aren’t as selective as human hands with picks, so when coal is stripped out of the ground a lot of rock and dirt comes with it. That extra material needs to be separated from the coal. Mine operators have what’s called a preparation plant where the raw coal goes through a series of chemical processes. When it’s through, the coal is as fine as baby powder — no more lumps. The excess liquid, dirt, rock and chemicals — the slurry — is then pumped into an impoundment.

In the aftermath of the Martin County Coal accident investigation, the big question lingering in Kentucky is this: If there was obstruction of justice and a subsequent coverup, why would Bush administration officials get behind it? The new team in Washington could have let the previous administration take the blame. Both Martin County Coal slurry accidents in 1994 and 2000 occurred on Davitt McAteer’s watch. The newly anointed Bush administration could have easily made the case that Clinton and his team fell asleep at the stick, scoring a few easy points with environmentalists.

But those familiar with the coal industry and federal politics say there’s a much larger picture. One MSHA investigator told Salon, “The investigation didn’t have to do with just Martin County Coal. The bigger question is ‘Should slurry impoundments be allowed over old mines?’ That would have been addressed in our report.” With an estimated 200 such impoundments, the coal industry had a lot riding on MSHA’s report.

Hundreds of coal field communities near slurry impoundments had a lot riding on the report as well.

The fear of catastrophic slurry spills animates the dark recesses of mountain life for many a coal field resident. On one chilly fall evening, Abraham Lincoln Chapman — his friends call him Link — and his 13-year-old daughter Paige stand outside their home on the edge of Coldwater Creek, one of the waterways most severely affected by the October 2000 slurry spill. They hear something splash in the water. It’s a welcomed sound. Paige is pretty sure it’s a muskrat, a creature they haven’t seen much since the accident three years ago. Link says the water used to be crystal clear. Now it’s murky brown, and if you poke a stick into the bottom, black clouds of fine slurry rise to the surface.

“It used to be full of fish, full of ducks, turtles, muskrats,” Link laments. “We basically have nothing now. I’ve seen some minnows in it lately. I don’t know if they’ve been released in it, or if they’re minnows from up in the hollow that have come down from where it wasn’t directly affected.”

“We used to catch sand dabs, bass, creek chubs, anything,” says Paige. “It was really full. When the sludge came, it washed away the bank we used to stand on. Everything is gone.” She really misses walking up the creek and catching bullfrogs; their legs are a local delicacy. Now, the bullfrogs are all gone, and Paige says she wouldn’t get in the creek even if she had to.

Her father worked in the coal industry most of his life. His jobs included being a safety director and a purchasing agent. From those vantage points he’s seen the types of chemicals used to process coal. There are conflicting reports on how toxic the slurry is. A study from Eastern Kentucky University found that there are reasons for residents to be concerned. But a government study says there’s no need for alarm. Link doesn’t buy it. He says dryly, “According to what we’ve been told [by the government] as of lately, the slurry’s probably good for you, if you’d eat you a handful of it every day. You ain’t going to grow horns or nothing.”

His children aren’t assured that there won’t be another catastrophe. Link spent his life savings to add a top floor to his house so he could get their bedrooms off the ground level because they were so scared the slurry would come down through the hollow again. “That’s the kind of mental thing it’s done to the residents that live here,” said Link. “I know what’s in the old mines up there and when my little girl would get ready to go to bed at night and she’d say, ‘Dad, the slurry won’t come out tonight will it?’ And, I had to look her in the eye and say, ‘No, it won’t come out. You sleep.’ It was really, really hard to do that, knowing what was still up there.”

People familiar with the mines say there could be anywhere between 50 and 100 miles of abandoned mines near the tops of the mountains filled with water and slurry.

The question of safety seems very real when you stand below a slurry dam. A typical rock and earth structure, about 250 feet tall, stretches to the top of a valley mouth to hold back slurry in the Sun Dial impoundment at Independence Coal, another Massey subsidiary based near Whitesville, W.V. A truck driving across the top of the dam looks the size of a toy Hot Wheels vehicle. Below the slurry dam, which is grown over with grass, is the preparation plant, a series of buildings and conveyer belts painted baby blue. Vertical white lines accent the bigger buildings at regular intervals, like yard lines. The plant is situated next to Marfork Creek and draws water from it to process the coal. There’s a coal silo, and piles of coal around the property.

Directly across the creek from Independence Coal is the Marsh Fork Elementary School where 200 students are enrolled. There’s a green-and-yellow play structure with slides, a small bridge and a cupola amidst a grassy play yard. There’s a sports field behind the school with a scoreboard adorned with a Pepsi logo. Night lights are available for evening games. Freda Williams, an organizer with the advocacy group Coal River Mountain Watch, shudders at the thought of a slurry accident here. “I would really hesitate to say what would happen to all those school children,” she says.

It’s hard for her to come out and say that if anything like what happened at Buffalo Creek in 1972 or Martin County Coal in 2000 occurred here, the school would be buried within seconds. It’s late in the afternoon, and no one’s at the school now. But I ask Williams what school officials think about being so close to an impoundment.

“The coal companies can come into the school and distribute their T-shirts and literature, but those of us who are trying to educate the people on the conditions that surround the school and the area, we’re not welcome,” she replies. It’s then that I notice a chain link fence topped with barbed wire that goes around the perimeter of the school grounds, an out-of-place security precaution for a small mountain town where most people leave their homes and cars unlocked.

The Independence Coal impoundment is just one concern for communities in and around Whitesville. What looms most ominously for them are plans to make the largest impoundment in the country at Brushy Fork. It now holds 5 billion gallons of slurry, and, according to Coal River Mountain Watch, it’s scheduled to hold up to 9 billion gallons. Its dam is 950 feet tall. The Brushy Fork impoundment sits on top of underground mines, and it’s engineered by the same firm that designed the 2 billion-gallon Martin County Coal slurry impoundment.

Williams is the daughter of a coal miner, a union man who was run out of so many coal companies that by the time Freda was 16 she’d attended 16 different schools. At her home in Whitesville, she proudly displays a picture of her father with a group of determined, hardworking men in suits. It was 1921, and they were the victorious defendants in the historic trial of the Blair Mountain Mine War, a labor struggle that pitted thousands of miners against federal troops. Freda sadly notes in the picture that four black men are segregated to the background, also in suits, allowed to partially share the historic moment with their white counterparts. Coal has always been a part of her life.

The mountainside near her home is one side of the hollow that makes up the natural basin of the Brushy Fork impoundment. She noticed the other day that mud was trickling down the slope. It could mean that slurry is pushing on an underground mine. Earlier in the day, as we drove down a two-lane road, she noticed gray water coming down a hillside, a telltale sign that slurry is leaking. She reported both sightings to MSHA.

Her perspective on the coal industry is very clear: “We’re not against coal mining. We just want the coal mining to be done legally and responsibly.”

Meanwhile, Jack Spadaro’s fate sits in the hands of MSHA’s deputy assistant secretary Correll, who’s weighing the superintendent’s appeal of his termination notice. Spadaro doesn’t expect any sympathy from Correll, the target of one of his whistle-blowing activities.

Spadaro is just a few years from retirement and he stands to lose his pension. “I’ve been in federal government for 27 years, and this is the most lawless administration I have ever seen,” he said. “They care nothing for the rights of their employees. They certainly care nothing about enforcing the laws they are charged with enforcing, and they run roughshod over anyone who might try to get them to obey the laws.”

Phillip Babich is an investigative journalist and radio producer based in the San Francisco Area. He’s currently the Managing Producer at the National Radio Project.

© 2003 Salon.com

Related feature: The Root of Sago Mine Disaster: Corporate Crime Pays

Filed Under: Corporate Accountability, Food, Health & Environment

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