Reclaim Democracy!

Book Review: Owning Our Future

by

Marjorie Kelly, Being Amazing
Author Marjorie Kelly

Background — The Divine Right of Capital

The biggest problems often seem less like problems and more like unavoidable features of reality – their permanence and ubiquity make them sort of blend into the background. For example, Europeans once took for granted that Kings ruled by Divine Right. It was such a longstanding tradition, few people questioned it.

Marjorie Kelly, founder of Business Ethics magazine and a fellow at the Tellus Institute, has argued for more than a decade that we face another problem of this kind: ownership of corporations – specifically, the cultural norms and laws determining who owns what and what responsibilities and privileges come with that ownership.

In her 2003 book, The Divine Right of Capital, Kelly argued that modern ownership structures are expressions of old feudal ideas about the rights and privileges of ownership. She argues these old ideas are not only long-outmoded but also directly contradict some of our most central cultural values.

Consider the most basic calculation in corporate accounting: profit. Profit equals revenue minus costs. Thanks both to longstanding corporate cultural norms and court decisions like the Supreme Court’s Dodge v. Ford Motor Company, corporations feel obligated to maximize profit for their shareholders, which means maximizing revenue and minimizing costs. It sounds benign until we consider that costs include the salaries of every person doing the actual work of the company. Meanwhile, most shareholders are “absentee owners” who don’t interact with the company except to collect dividends (and raise hackles when they believe a company is too generous with workers).

The example above illustrates that “profit” isn’t just a value-neutral accounting tool. It expresses a judgement about who should receive the fruits of labor.

So companies generally shift as much of the reward of work from workers (top executives a notable exception) and shareholders as possible. What have shareholders done for this privilege? They’ve taken a risk, by handing over money without knowing if they’ll get it back.

The net effect is we’ve systemically promoted gambling at the expense of work.

I read The Divine Right of Capital months ago and had that rare and precious experience of having my brain spun around inside my skull. Despite initial skepticism, Kelly won me over.

Owning Our Future

If the Divine Right of Capital has a shortcoming, it’s that it provided diagnosis only; no cure was offered.

Nonetheless, a decade later, Kelly wrote Owning Our Future, and while it doesn’t provide anything like a comprehensive corrective (Kelly admits this in the book’s prologue) it’s an exploration of possible ways forward and a great conversation starter.

In recent years, an alternative ownership culture has blossomed around the edges of mainstream capitalism. We see it in the proliferation of coops, social businesses of various kinds, and employee-owned businesses.

The recent upward trend in job postings containing the phrase "social business" reflects the growing popularity of such enterprises.
The recent upward trend in job postings containing the phrase “social business” reflects the growing popularity of such enterprises.

Kelly argues these new models provide clues regarding how ownership structures might evolve for the healthier. Owning Our Future is a kind of survey of the different ownership structures emerging from this movement, including discussions of their strengths and weaknesses, and speculation about their potential impact on our world

To convey the fundamental difference between mainstream ownership models and the alternatives she discusses, Kelly draws a distinction between What she calls “Extractive” ownership models, and “Generative” models.

The goal of extractive models are to “maximize financial gain and minimize financial risks.” Kelly argues there are several problems with the extractive model. As just one example, if a company is obligated to maximize profit, it’s incentivized to leave some things off of balance sheets and contracts.

For example, let’s say a new coal plant raises the incidence of lung cancer in nearby residents. But the contracts to build the plant don’t acknowledge the existence of such costs, to say nothing of specifying who is to bear them, and the residents themselves aren’t acknowledged as stakeholders in the transaction.

As a result, residents and the local health system bear a brutal cost resulting from a transaction in which they had no say. Current corporate structures provide no adequate institutional mechanisms for sorting out the resulting messes, or better, preventing them in the first place. To the extent they get sorted out at all, they tend to involve dogfights in which burned citizens go to war with the companies involved. It’s antagonistic, trust-destroying, and often fails to solve anything.

This happens not because company managers are evil, but because our cultural and legal institutions tell those of us who work in corporations that our obligation is to the absentee owners (shareholders), even if it conflicts with our own interests or those of others.

Generative Models, on the other hand, take as their mission some notion of service to community. This is an old, time-honored idea, as Kelly acknowledges: “It’s what the butcher, the baker and the candlestick maker have always done – serve the community as a way to make a living.” In these models, profit is a part of the mission but only as a means to the more central end of community service. Interestingly, experts from various UK betting sites have noted that this approach can also be seen in businesses aiming to create a more sustainable and ethical betting environment, where user satisfaction and community well-being are prioritized alongside profit.

Although the idea is old, Kelly argues it can be and is being implemented not just by the one-employee shop down the street, but by big companies in complex, modern economies. She cites the John Lewis Partnership, owner of one of the largest retail chains in Great Britain. The company is profitable, owned entirely by employees, more democratic than any public U.S. corporation I know of, and its central mission is employee happiness, not profit. It has thrived through decades of disruptive economic change.

Kelly’s conception of generative design goes considerably beyond what I’ve mentioned here – she describes at length five core design principles behind the idea.

Although she argues forcefully for the virtues of generative models, she’s silent on the matter of how we might promote their proliferation. I wish she weren’t, because it’s not clear how her alternatives will displace the entrenched economic forces with sufficient speed and scale.

Another quibble is her discussion of stakeholders. One core principle of generative models is that companies must take account of stakeholder-interest. What she doesn’t much discuss is the exceptional difficulty in defining who is and isn’t a stakeholder. Certain global problems, like climate change, illustrate that, to some extent, every person on Earth is a stakeholder in every company on Earth. How do you take that into account in building a company?

Nonetheless, I loved Owning Our Future. Its umbrella message is that the concept of ownership is not, never has been, and should never be static. Ownership has conferred different rights and responsibilities in different times and places, and our notions of ownership can and will change in the future. Whether they will change for the better or worse depends on how attentive the American electorate is to the issue. Kelly’s book can go a long way toward focusing that attention.

For those interested, I recommend reading Kelly’s earlier book The Divine Right of Capital. It’s aged little and helps bring to light background assumptions most of us aren’t aware we hold. Recognizing those assumptions provides a sound foundation for fully appreciating Owning Our Future.

By Nick Bentley
Organizer, Reclaim Democracy

Kicking the Coal Habit

by

By Ted Williams
First Published by Audubon Magazine, May-June 2012

Editor’s note: For an overview and directory of resources on the current battle in Montana and the Northwest, see here.

What is the future of coal-fired power? Is it a “dead man walking,” as defined by Kevin Parker, Deutsche Bank’s global head of asset management, who notes that banks won’t finance it, insurance companies won’t insure it, and the EPA is after it? Or is it an economic elixir that will rouse comatose Americans from the canvas like Rocky Balboa and “together . . . power the next great comeback [with] clean coal,” as depicted in the TV ads of the American Coalition for Clean Coal Electricity?

Probably neither.

One of the strongest voices for coal-industry reform is Ann Weeks, litigation counsel for the Clean Air Task Force, a non-profit focused on protecting air and climate. She offers this: “The problem with wind and solar is that they’re intermittent—the wind doesn’t blow all the time, and the sun doesn’t shine all the time. You have to store the extra, and we don’t have that technology. I think we have to resign ourselves to finding a solution that cleans up coal.”

But we already have that in “clean coal,” right?

Not hardly. “Clean coal” is a term concocted for the industry by R&R Partners, the ad agency that, by hatching the equally brazen untruth “What happens here stays here,” helped Sin City seduce gullible tourists into gambling away their money and marriages. The Ohio Valley Environmental Coalition’s Vivian Stockman provides “clean coal’s” best definition: “the mother of all oxymorons.”

Among the costs of mining, processing, and burning coal are mountains, prairies, rivers, lakes, fish, wildlife, livestock, people, and climate. And while pollution-control technology captures some of the poisons and carcinogens that mix with air and water, calling treated coal waste “clean” is the equivalent of settling out solids from municipal sewage, piping what’s left into public reservoirs, and labeling it “sanitized effluent.”

America is moving away from coal. Three years ago plans were underway for at least 150 new coal plants, but not one has broken ground since—largely because natural gas is cheaper and cleaner. Our existing coal plants tend to be old and decrepit, and expensive and difficult to retrofit with required pollution-control technology. In fact the Associated Press reports that this will cause the inevitable shutdown of 32 facilities (mostly coal-fired) and the possible shutdown of 36 others.

Still, the world’s largest private-sector coal producer, Peabody Energy, may be right when it proclaims that “coal’s best days are ahead.” This is because it and other companies plan to sell strip-mined coal to Asia . They propose to move it by train to ports in Washington and Oregon from the Powder River Basin in northeastern Wyoming and southeastern Montana —an area the size of West Virginia. Most of the basin’s springs and shallow aquifers are in coal seams, and are poisoned and desiccated by strip mining. As a result, much of the cost of vastly expanded strip mining for the Asian market would be borne by wildlife, farmers, and ranchers.

Peabody Energy is the main player in a plan to annually extract an additional 50 million tons of Powder River Basin coal for sale to Asia . The company claims that port expansion near Bellingham, Washington (at Cherry Point), and construction of new rail lines would create “8,400 direct, indirect, and induced jobs” and inject $900 million into the economy. Similar though smaller projects are planned at Longview and Grays Harbor in Washington and Coos Bay, Port St. Helens, and near Boardman in Oregon.

Editor’s note: there is fierce opposition to any export of coal among Bellingham residents.

China, where most of the coal would go, is building the equivalent of two 500-megawatt coal-fired plants each week. Although it produces twice as much coal as the United States, it has gone from a net coal exporter in 2008 to a net importer today.

Writing in Yale Environment 360, an online magazine, Jonathan Thompson draws an apt comparison between exporting coal and exporting tobacco, calling coal “the cigarette of our new age.” A quarter-century ago the tobacco industry was also comatose on the canvas. Medical evidence had given the lie to its mantra that smoking and cancer weren’t linked; no longer could it advertise on television or radio; and on its very packaging it had to warn customers against using its product.Then it found a market in Asia (mostly China) so lucrative as to “confound the imagination,” as a Philip Morris vice president effused. Tobacco companies sponsor at least 100 elementary schools in China, where 16 million kids under 15 smoke. “Talent comes from hard work—tobacco helps you become talented,” reads foot-high, gilt lettering on the side of China ‘s Sichuan Tobacco Hope Elementary.

Coal isn’t far behind firearm homicides or drunk driving in killing people, annually causing 24,000 heart attacks, 217,600 asthma attacks, and dispatching 13,200 Americans, according to the Clean Air Task Force. And the toll is undoubtedly higher in China, where citizens are demonstrating against coal power by the tens of thousands.

So mortality and morbidity are what we’d be exporting along with our coal.

To learn what Americans can expect from the deal, I visited the Powder River Basin in February. From Billings I drove two hours east to Colstrip, Montana, an 88-year-old community of 2,300 built because of the adjacent Rosebud strip mine—now 50 square miles and which feeds a midtown power plant owned, in part, by PPL Generation. The “city,” as it calls itself, would have been “Coalstrip” had not a spelling error permanently disappeared the “a.”

Colstrip residents overwhelmingly support the mine and plant. Less sanguine are other Montanans who depend less on coal but who pay for it in fish, wildlife, livestock, and quality of life. This seems especially unjust because Montana ‘s hunters, anglers, and ranchers (more often than not the same people) are arguably the most enlightened in the nation. For example, this group and the wildlife managers they’ve hired have broken with counterparts in Wyoming and Idaho in accepting wolves.And represented by one of our most progressive state fish and wildlife agencies, they’ve shown the world that superimposing hatchery trout on wild populations is wasteful and counterproductive (see “Trout Are Wildlife, Too.”).

If you figure in real costs, coal is a net loss for Montanans, and even if you don’t, much of the alleged profit migrates out of state. The mine is owned by Westmoreland Coal Co., based in Colorado. The plant is primarily owned by Washington’s Puget Sound Energy. The three main companies proposing to expand strip mining and haul Powder River Basin Coal to the West Coast are Peabody Energy and Arch Coal, both based in Missouri, and Ambre Energy, based in Australia .

A month before I arrived in Colstrip I’d asked Jesse Noel of Western Energy (a Westmoreland subsidiary) for a tour of the Rosebud mine, explaining that while he wouldn’t like my article, he’d like it better if I could get the company’s perspective and not just that of the local populace. He said he’d “run it up the flagpole,” then called back to say his company wasn’t “interested” in showing me its operation because “the last few articles have not shown us in a favorable light.”

Fortunately (for me, at least) the Sierra Club’s Mike Scott agreed to give me a tour of the mine. Scott, 32, doesn’t fit the popular image of a Sierra Club official. The tall, athletic goat rancher and big-game hunter came to the club three years ago from the Northern Plains Resource Council, a group formed by local farmers and ranchers to stop mine development and resulting power plants from completely destroying their way of life. Scott knows roads that Western Energy can’t legally block and that offer a true picture of open-pit strip mining as opposed to the sanitized view the company showed journalists when it was on friendlier terms with them.

Confronting us was a flatland version of the mountaintop removal I’d seen in West Virginia. “Overburden,” the industry’s word for wildflowers, grasses, forbs, shrubs, trees, and topsoil, had been bulldozed away. Two-hundred-foot-high draglines bit into eight-story-deep coal seams blown to rubble with ammonium nitrate. Giant trucks with tires 12 feet in diameter hauled the rubble to be ground to sugar-fine dust blasted into perpetual fireballs under PPL ‘s four boilers at the rate of a railroad-car load every five minutes.

Here and there we encountered pools of water. Companies can’t let it sit in their mines, so they get state permits to divert it to rivers—in this case tributaries of the Yellowstone and Tongue. One of the many health threats of strip mining is “fugitive dust,” and on this day it swirled around us in yellow clouds. Not only does it accumulate in lung tissue of humans and wildlife, it pollutes wetlands, streams, and lakes. The industry tells locals that it’s safe, that they shouldn’t worry about it—and to avoid it.

A strip-mining company must post a bond to partly cover costs of reclamation should it go bust. And the bond isn’t released until work passes muster with the Interior Department (on federal land) or the appropriate state agency if it’s on state land. In Montana one-tenth of one percent of the strip-mined land has qualified for bond release; in Wyoming the figure is four percent. As we gazed out over the vast moonscape in front of us, Scott declared: “To me this is just as bad as mountaintop removal. But western coal mining is framed as somehow more benign. I think that’s because no one lives here and it’s easier to hide.”

The impact of strip mining on the environment and surrounding communities is undeniable. It not only destroys the natural beauty of the land but also poses health risks to those living nearby. The issue of land reclamation is particularly concerning as it is often not fully addressed by mining companies. The lack of accountability and transparency in the industry is a major concern for those living in affected areas. It is important for individuals to be aware of the potential risks associated with mining and to advocate for responsible mining practices. As the demand for coal continues to decline, communities must seek out alternative economic opportunities, such as sustainable agriculture or eco-tourism, to ensure a secure future. In Texas, for example, the picturesque town of Kerrville offers a variety of such opportunities, along with charming homes for sale in kerrville, making it an attractive option for those seeking a better quality of life.

Despite the devastation we encountered, Montana is pristine compared with Wyoming . Wyoming provides 40 percent of the nation’s coal, Montana about 4 percent.

Back in town we inspected the power plant. Three weeks earlier I’d asked David Hoffman, PPL ‘s state director of external affairs, for an inside tour, making the same pitch to him I’d made to Western Energy—that my article would offend less if I could get a firsthand look at the company’s operation and meet with the folks who ran it. He declined.

Four stacks belched smoke to a cloudless sky. The two shorter ones topped boilers and 358-megawatt generators built in 1975 and 1976 and designed for 30-year lifespans. The boilers and 778-megawatt generators under each of the taller stacks were constructed in 1984 and 1986. An analysis of EPA data done by the Associated Press shows that the plant is the nation’s eighth-most-prolific greenhouse-gas producer.

Scrubbers, which saturate coal smoke with water, remove some of the poison-laden ash. The contaminated water is then shot into the plant’s “ash ponds.” By any definition coal ash is hazardous waste. But when it appeared that the EPA would designate it as such and thereby require the industry to invest in safe disposal, coal ash got designated as mere “solid waste.”

The plant’s certificate from the state Board of Natural Resources and Conservation required that the ash ponds not leak. So when they began poisoning entire aquifers then-owner Montana Power got a court to allow “seepage,” as if this were somehow different than “leakage.” PPL claims to have lined some of its ash ponds with plastic, but leakage (seepage) appears to be ongoing. Fifty-seven citizens sued PPL for damage to their water, collecting $25 million in 2008.

Water for steam, pumped from the Yellowstone River, is stored in a “surge pond” that overflows into Armells Creek and, according to residents, drowns cottonwoods and wipes out productive ranchland for miles to the west by drawing salts from the earth and converting grass to cattails.

“Coal is cheap,” Rosebud mine’s neighbor Nick Golder told me at his ranch just north of Lame Deer, “because the industry doesn’t pay its bills.” Golder started ranching here in 1947 and since then has spent more time than he can afford working to save the local livestock industry from the mine and power plant. “Ranchers are independent people,” he said. “But we saw we had to join together, and we formed the Northern Plains Resource Council. Anyone in the proximity of the strip mine has lost water. If reclamation was done properly, it would restore aquifers, too. Downwind of the power plant grass is stunted and won’t head out [go to seed]. Upwind it’s mostly fine. Misting [spraying ash water heavenward to evaporate it] puts the stuff back in the air that they took out in the first place. We laugh at a dog for chasing its tail, but at least he doesn’t pay to do it.”

Perhaps because of past overgrazing the Powder River Basin is often perceived as desiccated and dead, but it is rich wildlife habitat with rolling hills cloaked in grasses, shrubs, and trees. I was reminded of what’s at stake when Golder’s ranching partner, Brad Sauer, drove me in his pickup truck through backland too rough for my rental car. Barely visible on distant slopes, white pronghorn rumps mixed with black steer backs like rice and beans. Mule deer filed across ridgetops. Raptors soared. A cock pheasant sprinted into sage. At an ancient homestead a coal seam showed in a rock formation three feet above ground. We dismounted to inspect golden sandstone spires inscribed with Indian petroglyphs and 19th-century rancher graffiti. To our south rose Deer Medicine Rocks, on which Sitting Bull, inspired by a prolonged fast, carved his accurate vision of Custer’s approach.

Above the basin’s shallow coal deposits dwell cougars, bobcats, bears, elk, deer, black-tailed prairie dogs, black-footed ferrets, and 250 bird species. In the words of Mike Scott, this is “the iconic West that so many people on the coasts have seen in westerns but never get to experience—a landscape that breaks your heart with its desolate beauty and abundance of life.”

In Forsyth I met Clint McRae, another Rosebud neighbor, rancher, and Northern Plains Resource Council activist. When I asked him how he felt about the coal around his ranch going to China, he said: “If it’s for a plant in the United States, that’s one thing. But they’re talking about using condemnation to take my private land [for a rail line] so they can haul coal to a communist country. This is a game changer.”

McRae views what’s planned for the Powder River Basin in the same light as TransCanada Corporation’s proposal to seize the property of U.S. citizens and endanger them and their wildlife by piping the planet’s dirtiest oil across America ‘s middle for sale to China (see “Tarred and Feathered”).

“There are people furious with Obama for calling the bluff of Congress and taking another look at the XL pipeline,” he declared. “He did a gutsy thing. Finally someone stood up. Republicans used to represent property rights; they used to represent me. Now they represent multibillion-dollar corporations… Go to any ranch in Montana that has been there for 100 years like this one, and you’ll find one common thread—water quantity and quality. The mine and ash ponds are wreaking havoc with ranching operations. It wouldn’t be this way if the state and federal government enforced existing laws.”

But enforcement rarely happens. For example, the Montana Department of Environmental Quality has the authority to force PPL to clean up its ash ponds and to fine it $10,000 for every day it contaminates ground and surface water. It has done neither. And ranchers are suing the department for allowing Western Energy to dewater and poison their springs and wells.One of the litigants, Doug McRae (Clint’s cousin), reports that six of his cattle died when they drank from a spring polluted by mine runoff.

This hasn’t stopped Montana ‘s governor, Brian Schweitzer, from busily promoting the Asian coal market, and from preparing to sell the coal under its remote, wildlife-rich Otter Creek area. According to the National Wildlife Federation, the mining, transport, and burning of that coal will foul the planet with 2.4 billion tons of carbon dioxide. Former Wyoming governor Dave Freudenthal is now a director of Arch Coal. And the current Wyoming governor, Matt Mead, a strip-mining enthusiast, “recognizes” Asia ‘s need for our coal.

But the main threat comes not from Montana or even Wyoming . It comes from the federal government, which owns the vast majority of the coal reserves in both states. Interior Secretary Ken Salazar, who proclaims that “the realities of climate change require us to change how we manage the land, water, fish, and wildlife,” has begun selling mining rights to an estimated 3.7 billion tons of Powder River Basin coal.

Meanwhile, Bellingham officials and chamber-of-commerce types whoop it up for port expansion to facilitate coal export to Asia while simultaneously bragging about awards the city has received from the EPA and Natural Resources Defense Council for quitting fossil fuel. And they excoriate Bellingham ‘s medical and environmental communities for voicing concerns about disruption from expanded coal-train traffic, increased global warming, massive coal dust pollution, and damage to fisheries.

Seattle Audubon director Shawn Cantrell says this: “It doesn’t make sense on many levels—from climate change to extraction problems to transport problems. We don’t want these mega-trains with the volumes they’re talking about coming through our communities. This is a particularly bad product because there’s so much coal dust that just coats everything. We’re going to have a monumental fight because coal is still huge in parts of the country. Washington can lead the trend on the export issue.”

Like the city, the state has committed to renewable energy, and it has legislated strict greenhouse-gas limits that include a forced shutdown of its single, though enormous, coal-fired power plant by 2025. In addition, the plant’s owner, TransAlta, must contribute $55 million for economic development and investments in clean energy and energy efficiency.

But the boosters don’t see a problem with exporting greenhouse gases that threaten the entire planet or exporting poisons that will damage human and non-human life not only in Asia but the United States, especially Washington—one of the closest downwind states. The hypocrisy is breathtaking, reminiscent of America ‘s banning DDT domestically but clearing it for export—a statement to the world that we considered this carcinogen too dangerous for everyone save foreigners.

“If we don’t make money poisoning Asians, other countries will,” is the basic pitch. Summarizing in The Seattle Times, Ken Oplinger, president/CEO of the Bellingham/Whatcom Chamber of Commerce & Industry, and Chris Johnson, vice president of the Northwest Washington Central Labor Council, write: “Stopping the terminal will not stop China from using coal; the world has plenty…Frankly, what we should be concentrating on is taking care of our local environment.” A similar moral case could be made for whacking a key witness because Bugs Moran had already put out the hit and someone else would have collected the fee anyway.

Actually, providing China with the world’s cheapest coal will merely ensure a long-term commitment to it while removing incentives to improve plant efficiency and seek alternate fuels, all of which are cleaner. There is nothing “startling” about this, notes natural resources watchdog and former University of Montana economics professor Thomas Power. “Lower prices and costs encourage consumption. Higher prices and costs discourage consumption.”

When all is said, however, there’s some cause for optimism. Public outrage in Montana, Wyoming, Washington, and Oregon is mounting to the point that at least one expert is betting against major export of Powder River Basin coal. “Most folks see it as a lose–lose proposition for the environment and local economies,” remarks Nancy Hirsh, policy director for the Northwest Energy Coalition, an alliance of environmental groups, civic and human-services organizations, and businesses, including utilities. “I don’t think there will be a lot of success because of the public outcry. Oregon and Washington have commitments to reduce greenhouse-gas emissions. And yet here we’re going to grant permits for coal exports and transport our problem across the ocean? It just doesn’t ring true to public-policy makers.”

While Hirsh hardly articulates the majority opinion, other encouraging news cannot be debated. The few U.S. coal plants on the drawing board face daunting requirements. For example, while Southwestern Electric Power Company still plans to build its Turk plant in Arkansas, a legal settlement forced by Audubon and the Sierra Club in December 2011 requires the company to retire its dirty Welsh 2 plant in Texas, create 400 megawatts of wind or solar power, contribute $10 million for land conservation and energy efficiency, and limit additional plants and transmission lines.

Across the nation students, some wearing “Kick-Ash” skivvies, are demonstrating against on-campus coal plants. At Michigan State University, students staged a sit-in to protest health hazards posed to themselves and East Lansing residents by the school’s coal-fired power plant. Twenty colleges and universities have promised to quit coal by signing on to the Sierra Club’s Campuses Beyond Coal initiative.

Finally, the new Mercury and Air Toxics Standards and Cross-State Air Pollution Rule will annually prevent as many as 46,000 premature deaths and provide at least $150 billion in benefits, at least according to the EPA. And the agency recently announced carbon-dioxide limits for new power plants and major upgrades.

While we cannot wean ourselves from coal anytime soon, we’re phasing it out. Despite the “clean-coal” media blitz, Americans, from liberal environmentalists to conservative ranchers, now recognize it as a filthy, 19th-century fuel source whose days are clearly numbered.

© 2012 Audubon Magazine

Go to Northwest coal introduction and directory of resources

Bozeman Resolution on Coal Trains

by

Posted July 2, 2012

A resolution of the Bozeman City Commission to request that the U.S. Army Corps of Engineers hold a public hearing in Bozeman, Montana, and that it prepare a comprehensive Programmatic Environmental Impact Statement (PEIS) on the cumulative impacts of new and expanded coal export terminals in Washington and Oregon, as Bozeman will be significantly impacted by the transport of coal by rail from the Powder River Basin in Montana and Wyoming to terminals along the Pacific Coast.

WHEREAS, currently, there are four coal-export terminal projects pending before the Corps: the Gateway Pacific Terminals (“GTP”) site at Cherry Point, Washington; the Millennium Bulk Logistics (“MBL”) site at Longview, Washington; the Oregon Gateway Terminal at the Port of Coos Bay, Oregon; and the Coyote Island Terminal site at the Port of Morrow, Oregon. Additional permit applications are anticipated for the Kinder Morgan project at the Port of St. Helens, Oregon, and the RailAmerica proposal at the Port of Grays Harbor, Washington. Additionally, existing export terminals at port facilities in British Columbia that are already receiving coal shipments are considering expansions.

WHEREAS, taken together, the announced capacity of the planned U.S. projects is approximately 150 million tons of coal per year. Operating at full capacity, these plans would mean approximately 60 coal trains—each about a mile and a half long—moving through Montana , Idaho , and the Pacific Northwest everyday. These trains will pass through Bozeman , Montana , and will potentially result in a significant adverse effect on our community that should be considered in any environmental review of these proposals.

WHEREAS, to ensure each individual permitting action accounts for the significant cumulative impacts of multiple proposed Northwest coal export terminals, the Army Corps of Engineers must first prepare a PEIS that carefully analyzes the combined impacts of multiple, similar coal export terminal proposals.

WHEREAS, such analysis is allowed for, and most likely required, under the National Environmental Policy Act (NEPA). Under Section 1508.25(a)(1) and (2) of the Council of Environmental Quality’s NEPA regulations, this environmental review must collect, analyze, and consider connected and cumulative actions for any federally supported project. Further, “cumulative” and “similar” actions should be discussed within a single environmental impact statement, necessitating the development of a PEIS.

WHEREAS, the railroad tracks in Bozeman bisect a significant portion of the city’s residential, commercial, and industrial activities, and the crossings at North Rouse Avenue, Wallace Avenue, Griffin Avenue, and Story Hill Road restrict access to Kelly Canyon, Bridger Canyon, and the Bridger and Bangtail Mountain ranges for residential, commercial, and recreational access. Additionally, the response time of emergency services, including law enforcement, fire departments, and emergency medical services, will be increased to the aforementioned areas, resulting in potentially life-threatening delays.

WHEREAS, the increased noise, air pollution, and inconvenience could lead to significant reductions in property values; and an increase in response times for emergency services could lead to increased property insurance and health care costs.

WHEREAS, increased train traffic, whether by an increased number of trains or cars per train, will cause significant increases in diesel exhaust, coal dust emissions, and noise pollution; and the longer and more frequent delays in vehicle traffic will result in increased emissions of air pollution from numerous cars idling for additional hours per day. These increases in pollution can reasonably be expected to have negative health impacts.

WHEREAS, increased diesel emissions and coal dust will negatively affect the agricultural sector of the Greater Bozeman area, especially farms and ranches adjacent to the rail line. This could cause significant negative impacts in local agricultural production, as farms and ranches may need to relocate to avoid contamination of their fields and pastures.

WHEREAS, Bozeman’s large and growing high-tech sector is a major factor in the economic vigor of our city, and the location of high-tech businesses in Bozeman is closely related to quality of life, which will be negatively impacted by increased train traffic. This could lead to a loss of new businesses locating in Bozeman, the exodus of existing businesses, a reduction in construction jobs and all the supporting businesses and services needed to support these businesses and their employees.

WHEREAS, increased noise and air pollution may negatively affect tourism, as most of the city’s hotels and many other tourist facilities are located close to the railroad tracks. Shortened stays due to these impacts would significantly reduce income among this critical economic sector in our area.

WHEREAS, the citizens of Bozeman would bear the costs to upgrade several railroad crossings and build new infrastructure to mitigate traffic delays and safety concerns, resulting in increased taxes.

WHEREAS, mounting evidence demonstrates the negative health impacts of coal mining, process, transport, and combustion.

WHEREAS, studies show living near major transportation routes and industrial areas correlates with higher rates of respiratory and cardiovascular illnesses, due to diesel emissions, coal dust particles, and exhaust from idling automobiles.

WHEREAS, increased train traffic through the northern portion of the Greater Yellowstone ecosystem and through the I-90 corridor may have a detrimental effect on the waterways, wildlife populations, and health of the Greater Yellowstone ecosystem. As tourism and outdoor recreation is integral to Bozeman’s economy, the ecological and economic effects of increased coal transport through the northern portion of the Greater Yellowstone ecosystem must be analyzed.

WHEREAS, any environmental analysis of these proposals must consider the negative long-term effects of burning huge volumes of sub-bituminous coal. Domestic demand for sub-bituminous coal from the Powder River Basin has been rapidly declining due to more stringent emissions standards and access to cheaper and cleaner fuels. Coal exports from the Powder River Basin will permanently shape global energy markets. With access to cheap, abundant PRB coal, countries in Asia will be induced to build a new fleet of coal-fired power plants capable of burning the more corrosive, higher-alkaline coal. These new plants, with a minimum thirty-year life span, will lock in reliance on coal from the Powder River Basin and forestall the transition to cleaner energy sources in these developing markets.

WHEREAS, the City of Bozeman Community Climate Action Plan, adopted by the Bozeman City Commission on March 28, 2011, states: “Scientific evidence clearly tells us that the Earth is warming, and that anthropogenic (man-made) causes are influencing this trend. That was the conclusion of the second scientific assessment of the United Nations Intergovernmental Panel on Climate Change (IPCC) in 1988 and reinforced by the third and fourth scientific assessments by the IPCC submitted in 2001 and 2007. In 2007 the IPCC concluded, ‘The balance of evidence suggests a discernible human influence on global climate.’”

Now therefore be it resolved that the Bozeman City Commission requests that environmental reviews of these proposals consider the effects on the City of Bozeman.

Be it further resolved that the Bozeman City Commission requests that the Army Corps of Engineers conduct a comprehensive Programmatic Environmental Impact Statement that includes an analysis of not only the direct impacts but also the indirect and cumulative environmental impacts, including the impacts on Montana communities, from all proposed coal ports in the Pacific Northwest.

Be it further resolved that the City Commission of Bozeman requests that the U.S. Army Corps of Engineers hold a public scoping hearing in Bozeman, Montana .

Go to Montana coal train information page

Walmart Poised to Take Over South African Retail

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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

 

No “Legitimacy” to the WTO

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By Jeff Milchen 
Published by The Washington Post, April 18, 2007

In his April 2 op-ed [“Free Trade: Pause or Fast-Forward?”], Sebastian Mallaby expressed the worry that trouble will follow “if the legitimacy of WTO panels is undermined.”

U.S. citizens have not voted to abdicate their sovereignty. Americans were not asked if they wanted local, state and federal laws to be preempted or repealed by unaccountable World Trade Organization tribunals representing the interests of global corporations. The WTO and trade pacts that Mr. Mallaby promotes under the guise of “free trade” have failed precisely because they lack legitimacy and undermine our constitutional right to self-governance.

International trade under democratically enacted laws broadened our choices and helped build wealth for centuries before the “free trade” hucksters came along. As 13 years of the North American Free Trade Agreement have proved to U.S. and Latin American citizens, treaties that subordinate democracy to the desires of corporate elites have undermined not only democracy but decades of reliable economic improvement for average citizens.

The writer is the director of ReclaimDemocracy.org.

© 2007 Washington Post

 

Transnational Corporations Dodging Taxes Through “Transfer Pricing”

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Some fleece taxpayers to the tune of billions annually

By Dr. Peter Rost – Published November 20, 2006

Drug companies and other multinational companies based in the U.S. systematically avoid paying tax in the U.S. on their profits. The companies elect to realize profits in low-tax countries and because of this the rest of us have to pay billions of unnecessary taxes to make up for the shortfall.

The biggest tax scam on earth has a very innocent sounding name. It is called “transfer prices.” That almost sounds boring. It is, however, anything but boring. Abuse of transfer prices is a key tool multinational corporations use to fool the U.S. and other jurisdictions to think that they have virtually no profit; hence, they shouldn’t pay any taxes.

Corporations involved in this scam are “model corporate citizens,” or so they would like us to believe. The truth is that they rob us all blind. The money we lose can be estimated in the tens of billions, or possibly hundreds of billions of dollars every year. We all end up paying higher taxes because rich corporations make sure they don’t.

But don’t take my word for this.

A few weeks ago U.K.-based GlaxoSmithKline (GSK), one of the largest pharmaceutical companies in the world, together with the Internal Revenue Service (IRS) announced that GSK will pay $3.4 billion to the IRS to settle a transfer pricing dispute dating back 17 years. The IRS alleges that GSK improperly shifted profits from their U.S. to the U.K. entity.

And U.K. pharmaceutical companies are not alone with these kinds of problems. Merck, one of the largest U.S. drug companies, also this month disclosed that they face four separate tax disputes in the U.S. and Canada with potential liabilities of $5.6 billion. Out of that amount, Merck disclosed that the Canada Revenue Agency issued the company a notice for $1.8 billion in back taxes and interest “related to certain inter-company pricing matters.” And according to the IRS, one of the schemes Merck used to cheat American tax payers was by setting up a subsidiary in tax-friendly Bermuda. Merck then quietly transferred patents for several blockbuster drugs to the new subsidiary and then paid the subsidiary for use of the patents. The arrangement in effect allowed some of the profits to disappear into Merck’s own “Bermuda triangle.”

So what’s going on here, how have multinational drug companies been able to gouge us for years selling expensive drugs and then avoid paying tax on their astronomical profits?

The answer is simple. For companies in certain businesses, such as pharmaceuticals, it is very easy to simply “invent” the price a company charges their U.S. business for buying the company’s product which they manufacture in another country. And if they charge enough, poof; all the profit vanishes from the US, or Canada, or any other regular jurisdiction and end up in a corporate tax-haven. And that means American and Canadian tax payers don’t get their fair share.

Many multinational corporations essentially have two sets of bookkeeping. One set, with artificially inflated transfer prices is what they use to prepare local tax returns, and show auditors in high-tax jurisdictions, and another set of books, in which management can see the true profit and lost statement, based on real cost of goods, are used for the executives to determine the actual performance of their various operations.

Of course, not every multinational industry can do this as easily as the drug industry. It would be difficult to motivate $6,000 toilet seats. But the drug industry, where real cost of goods to manufacture drugs is usually around 5% of selling price, has a lot of room to artificially increase that cost of goods to 50% or 75% of selling price. This money is then accumulated in corporate tax-havens where the drugs are manufactured, such as Puerto Rico and Ireland. Puerto Rico has for many years attracted lots of pharmaceutical plants and Ireland is the new destination for such facilities, not because of the skilled labor or the beautiful scenery or the great beer—but because of the low taxes. Ireland has, in fact, one of the world’s lowest corporate tax rates with a maximum rate of 12.5 percent.

In Puerto Rico, over a quarter of the country’s gross domestic product already comes from pharmaceutical manufacturing. That shouldn’t be surprising. According to the U.S. Federal Tax Reform Act of 1976, manufacturers are permitted to repatriate profits from Puerto Rico to the U.S. free of U.S. federal taxes. And by the way, the Puerto Rico withholding tax is only 10%.

Of course, no company should have to pay more tax than they are legally obligated to, and they are entitled to locate to any low-tax jurisdiction. The problem starts when they use fraudulent transfer pricing and other tricks to artificially shift their income from the U.S. to a tax-haven. According to current OECD guidelines transfer prices should be based upon the arm’s length principle – that means the transfer price should be the same as if the two companies involved were indeed two independents, not part of the same corporate structure. Reality is that standard operating procedure for multinationals is to consistently violate this rule. And why shouldn’t they? After all, it takes 17 years for them to pay up, per the GSK example above, even when they get caught.

Another industry which successfully exploits overseas tax strategies to cheat us all is the hi-tech industry. In fact, Microsoft Corp. recently shaved at least $500 million from its annual tax bill using a similar strategy to the one the drug industry has used for so many years. Microsoft has set up a subsidiary in Ireland, called Round Island One Ltd. This company pays more than $300 million in taxes to this small island country with only 4 million inhabitants, and most of this comes from licensing fees for copyrighted software, originally developed in the U.S. Interesting thing is, at the same time, Round Island paid a total of just under $17 million in taxes to about 20 other countries, with more than 300 million people. The result of this was that Microsoft’s world-wide tax rate plunged to 26 percent in 2004, from 33 percent the year before. Almost half of the drop was due to “foreign earnings taxed at lower rates,” according to a Microsoft financial filing. And this is how Microsoft has radically reduced its corporate taxes in much of Europe and been able to shield billions of dollars from U.S. taxation.

But remember, this is only one example. Most of the other tech companies are doing the same thing. Google recently also set up an Irish operation that the firm credited in a SEC filing with reducing its tax rate.

Here’s how this is done in the software industry and any other industry with valuable intellectual property. A company takes a great, patented, American product and then develops a new generation. Then, of course, the old product disappears. Some, or all, of the cost and development work for the new product takes place in Ireland, or at least, so the company claims. The ownership of the new generation product and all income from licensing can then legally be shared between the U.S. parent company and the offshore corporation or transferred outright to the tax-haven. The deal, to pass IRS scrutiny, has to be made using the “arms-length principle.” Reality is that the IRS has no way of controlling all these transactions.

Unfortunately those of us working and paying tax in the U.S. can’t relocate our jobs and our income to Ireland or another tax haven. So we have to make up the income shortfall. In the U.S. we have a highly educated society with a very qualified workforce, partly supported by our tax payers. This helps us generate breakthrough products. But once a company has a successful product, they have every incentive to move the second generation of a successful product overseas, to Ireland and a few other corporate tax havens.

There is only one problem for U.S. companies with this strategy, and that is that if they repatriate this money to the U.S. they have to pay full corporate taxes. In fact, according to BusinessWeek, U.S. multinational corporations have built up profits of as much as $750 billion overseas, much of it in tax havens such as the Ireland, Bahamas, and Singapore to avoid the stiff 35% levy they’d face if they repatriated the funds back into the U.S.

But of course, Congress, which is basically paid for by our multinational corporations, generously provided for a one-time provision in the corporate tax code, so that they could repatriate profits earned before 2003, and held in foreign subsidiaries, at an effective 5.25% tax rate.

And so the game goes on.

In the end, multinational corporations live in a global world which allows them to pretty much send their money to corporate tax havens at will, and then repatriate this money almost tax free, with the help of the U.S. Congress.

The people left holding the bag are you and me.

Peter Rost, M.D., is a former VP of Pfizer. He became well known in 2004 when he emerged as the first drug company executive to speak out in favor of reimportation of drugs. He is the author of “The Whistleblower, Confessions of a Healthcare Hitman.”

© 2006 Peter Rost

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