The Multinational Monitor

March 1993

Fighting for Alaska

Table of Contents


Juneau After the Gold Rush

Fighting Dangerous Development

by Caryl Boehnert

Pushing Pesticides

Monsanto’s Toxic Giveaway

by Judy Price



Behind the Lines

Editorial: Ypsilanti Says No

The Front


From Stewards to Shareholders: Eyaks Face Extinction

An Interview with Dune Lankard and Marie Smith Jones


The Price of Privatization: British Miners in Jeopardy

by Helen Beatty

Corporate Profile

Burlington Northern: On the Wrong Track

by Dean Henderson

Book Reviews

Hired Guns: Buying Power in Washington

Investing in Peace

Names in the News



To the editor:

Now that there has been an overturning election and there is a new bunch in the power spots in Washington, it would be useful to know that the horror stories such as those in the January/February 1993 issue [The U.S. Corporate Welfare Rolls] are getting to people who have been empowered to do something about them. I will be glad to redirect my copy if you need it.

William P. Risso

Great Falls, VA

To the editor:

A suggestion. The next time the Monitor compiles its list of the "Ten Worst Corporations," please check your facts.

Last month the Monitor justified Caterpillar’s selection to this list because we allegedly gave our CEO an 18 percent raise, while 20 percent of our workforce had wages frozen and others only received a one percent increase.

The facts are that cash compensation of Caterpillar’s CEO actually declined 6.5 percent. At the same time, average wages of our UAW-represented employees increased 5.5 percent - from $16.98 to $17.93 an hour. Furthermore, the "20 percent" of the workforce that you cite had its wages frozen received increases to match the cost of living.

To the best of our knowledge, the Monitor obtained its information about Caterpillar solely from the United Auto Workers and did not contact the company. That obviously was a mistake. UAW leaders in Detroit have mounted a corporate campaign to pressure Caterpillar to sign a labor contract "patterned" after companies that are not our primary competitors.

Caterpillar is determined to remain globally competitive from our U.S. manufacturing base. But to do that, we need a labor agreement that’s fair and makes sense for Caterpillar. To agree to anything else would justify our being included on your list - because it would mean Caterpillar products would no longer be competitive.

William C. Lane

Public Affairs

Caterpillar Inc.

Peoria, IL

Behind the Lines

Summers Under Fire

ON JANUARY 21, PRESIDENT CLINTON appointed Lawrence Summers, chief economist at the World Bank , to the post of undersecretary for international affairs at the U.S. Treasury. Environmentalists in both the Third World and the United States say Summers’ work at the World Bank should disqualify him for the Treasury appointment, which has yet to be confirmed. Summers gained notoriety in December 1991 when an internal memo he wrote - advocating migration of polluting industries to the Third World and referring to a nonpolluted environment as "pretty air" - was leaked to the press.

According to the Treasury Department, as undersecretary for international affairs, Summers would advise and assist the secretary and deputy secretary of the Treasury in the formulation and execution of U.S. international economic policy, including the development of policies and guidance of department activities in the areas of international monetary affairs, trade and investment policy, international debt strategy and U.S. participation in international financial institutions.

The infamous Summers memo, which was widely reprinted in newspapers around the world, contained inflammatory statements such as "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable," and "I’ve always thought that underpopulated countries in Africa are vastly under-polluted ... Only the lamentable facts that so much pollution is generated by non-tradeable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste."

Summers issued a second memorandum to the World Bank staff in January 1992 stating that the widely circulating reports of his memo "unfortunately [make] it appear that I am seriously forwarding certain strong arguments when in fact these positions were stated ... as a sardonic counter-point."

At the time the memo was leaked, José Lutzenberger, former environmental secretary of Brazil, called it "a concrete example of the unbelievable alienation, reductionist thinking, social ruthlessness and the arrogant ignorance of many conventional ‘economists’ concerning the nature of the world we live in."

Doug Hellinger, managing director of the Washington, D.C.-based Development Group for Alternative Policies, says that for two years, "Summers blocked initiatives to make the World Bank more environmentally and socially responsible." In nominating someone who has aggressively promoted the economic austerity policies that have wreaked havoc across the South, Hellinger charges, Clinton is "rewarding Summers for pushing Reaganomics-type policies abroad."

Clara Couto Soares, a spokesperson for the Brazilian Institute for Social and Economic Studies (IBASE), says, "It is hard for us to believe that a Democratic administration would appoint Larry Summers. His ideas regarding development threaten the chances for a better understanding between the U.S. government and the people of the South."

Environmental and other U.S. non-governmental organizations, according to Hellinger, tried to warn the Clinton transition team that Summers’ appointment to any significant economic policymaking position "would be seen widely in the Third World as a slap in the face." In December 1992, these groups, including the Environmental Defense Fund, Friends of the Earth, Greenpeace and Bank Information Center, warned the Clinton transition team of the implication of Summers’ nomination for chair of the council of economic advisors. That nomination was blocked, but critics say the post of undersecretary of international affairs will in large part define U.S. positions at the International Monetary Fund and the World Bank.

Dave Batker, research associate for Greenpeace, says, "People working on ecologically sound development all over the world are horrified by this nomination and Summers’ name should be withdrawn before confirmation."

Both the World Bank and the Treasury Department declined to comment on the nomination.

Putting Out the Smoke

ON JANUARY 27, THE FIRST BRITISH CITIZEN was awarded compensation from her employer for health damages from the effects of environmental tobacco smoke (ETS) in the workplace. Thirty-six year old Veronica Bland, a nonsmoker, received damages totalling about $23,000. Bland claims that she suffers chronic bronchitis as a result of second-hand tobacco smoke from the cigarettes of workers stationed near her at the Stockport Metropolitan Borough Council in northwest England, where Bland is an information officer.

Bland’s case was supported by her union, the National Association of Local Government Officers, which represents public employees, as well as Action on Smoking and Health (ASH), the Washington, D.C.-based nonsmoking advocacy organization. Because the case was settled out of court, no legal precedent has been set in England. But according to ASH, many others in the United Kingdom are expected to follow Bland’s lead in seeking damages from employers or other agencies that permit smoking.

In the United States, says John Banzhaff, executive director of ASH, there have been "numerous situations where persons have been awarded settlements, worker’s compensation or injunctions against smoking in offices."

Also in January, the U.S. Environmental Protection Agency (EPA) released a report which classifies secondhand smoke as a carcinogen and finds that ETS kills about 3,000 U.S. non-smokers a year from lung cancer alone. According to Banzhaff, "In view of the Bland case and the new EPA report, there will be a tremendous increase in awareness about the direct and overwhelming effects of smoking in the office, or even elsewhere on the premises of any workplace."

The British settlement follows an announcement by Health Minister Brian Mawhinney that the ruling Conservative Party plans to introduce legislation to outlaw smoking in public places and at work sites if voluntary means fail. Mawhinney gave the notice in the House of Commons after the opposition Labour Party called for a ban on tobacco advertising.n
- Julie Gozan

Editorial: Ypsilanti Says No

ON FEBRUARY 9, WASHTENAW COUNTY Circuit Court Judge Donald Shelton ruled that General Motors (GM) cannot close down its Ypsilanti, Michigan Chevrolet Caprice passenger car plant. Shelton’s ruling, which was greeted with cheers from the crowd gathered in the courtroom, said that GM had "by its statements and conduct," promised to provide employment at the Willow Run facility in exchange for over $13 million in tax breaks granted to the company during the 1980s by the Ypsilanti local government. The abatements run until 2003.

In its lawsuit, Ypsilanti Township argued that, by accepting the tax abatements, General Motors had entered into a contract with the government. Shelton noted in his opinion that while about 30 states do treat tax abatement agreements as contracts, he was forced to reject the town’s argument under Michigan state law, which, he wrote, "unwisely did not intend to create contractual rights for the state or its subdivisions." The judge, however, held that GM is bound to remain in Ypsilanti by promissory estoppel, a legal doctrine that says if favors are granted as a result of a promise made, then the promise must be fulfilled. "My conscience will not allow this injustice to happen," Shelton said in issuing his ruling.

General Motors immediately appealed Shelton’s decision, and it is likely that the ruling will be overturned. But the case, and the judge’s opinion, are significant in pointing to the economic stranglehold large corporations have over U.S. communities.

"There would be a gross inequity and patent unfairness if General Motors, having lulled the people of Ypsilanti into giving up millions of tax dollars which they so desperately need to educate their children and provide basic governmental services, is allowed to simply decide that it will desert 4,500 workers and their families because it thinks it can make the same cars a little cheaper somewhere else," Shelton wrote.

GM’s behavior in Ypsilanti has been particularly appalling. In December 1992, the company announced it would close down either the Michigan facility or a plant in Arlington, Texas, pitting the two communities against one another in a bid to save their respective plants. Arlington workers agreed to accept special shift arrangements, allowing GM to operate the facility 24-hours-a-day.

"General Motors is not closing this plant because there is no demand for the cars," Shelton wrote. "It simply has chosen to transfer the one shift of production of those cars to add a new third shift at another plant." Arlington, along with the county and Texas state governments, also gave GM about $30 million worth of tax abatements and other incentives.

Ypsilanti and Arlington are symbolic of the vast numbers of U.S. communities which feel forced to sacrifice social services and their children’s education to corporate blackmailers. Corporations now routinely demand tax abatements before committing to opening new facilities, and frequently threaten to close existing ones unless they receive tax breaks. The threat of job loss, of relocation to lower-wage communities or countries (particularly Mexico in light of the upcoming North American Free Trade Agreement) pressures workers to make wage and benefit concessions, and communities to mortgage their futures.

The Ypsilanti case should be the harbinger of new assertiveness by U.S. workers and their families, and a new refusal to let corporate moguls roll over their towns. Immediately following the Shelton ruling, Boston Mayor Raymond Flynn asked the Massachusetts attorney general to investigate bringing a similar action against Digital Equipment Corporation which is planning on closing a Boston plant and laying off 190 workers. With nothing left to lose, communities may finally begin to demand some security in exchange for years of accommodating corporations.

The Ypsilanti experience demonstrates the futility of the tax abatement strategy - there is always another city or town willing to offer even greater concessions than the last. And, in any case, most corporate decisions about plant location are based on internal business concerns of far greater magnitude than the amount of state or local taxes avoided.

Government officials and community activists should develop new strategies to prevent corporations from playing communities against each other and to change the societal understanding of what companies owe to the communities in which they reside. They should look to Shelton’s opinion and its sense of moral outrage as the basis for developing more equitable relationships with large corporations which all too often consume and then abandon communities.n

The Front

Cash in the Pipeline

AN OBSCURE ACCOUNTING gimmick in Trans-Alaska Pipeline System (TAPS) shipping charges is pouring millions of dollars of hidden profits into the pockets of the pipeline owners each year, at the expense of pipeline shippers, including the state of Alaska. Hidden Billions: The TAPS DR& R Provision, a report written by Richard Fineberg, a former oil and gas specialist in the Alaska governor’s office, estimates the value of the dismantling, removal and restoration (DR& R) element of the TAPS shipping charge. Fineberg’s estimates indicate that TAPS DR& R collections and their earnings now exceed $3 billion and will grow to an estimated $12 to $22 billion by the year 2015. However, in implementing the provision which allows pipeline owners to charge for DR& R, the state of Alaska set the expected costs of dismantling the pipeline at only $872 million (in 1977 dollars).

The 1985 TAPS settlement between the pipeline owners and the state of Alaska determined the rate TAPS owners can charge for shipping oil through the pipeline. Oil from the North Slope of Alaska, which is transported via the 800-mile pipeline to Valdez in the southern part of the state, is expected to stop flowing in the early 21st century. Provisions of the settlement allow the pipeline owners - principally ARCO , British Petroleum (BP) and Exxon , the major North Slope producers - to collect sufficient funds to carry out whatever is necessary in terms of DR& R. The provision, according to Fineberg’s report, was not intended to be a money-making item - his analysis of the 1985 agreement shows that it was intended that DR& R payments virtually extinguish the DR& R fund when dismantling was completed.

The TAPS owners collect the DR& R funds from pipeline shippers. Pipeline shippers who do not have an ownership stake in the pipeline, such as Conoco - and the state of Alaska as a royalty owner and shipper - bear the brunt of higher TAPS tariffs.

Several unusual characteristics of the provision have led to the oil company windfall, according to Fineberg’s report. The TAPS settlement calculations assumed a pipeline shutdown date of 2011, with DR& R outlays taking place between 2010 and 2015. But unlike normal rate-making provisions extending into the future, the DR& R payments were not subject to periodic revisions as inflation and tax rates changed - the settlement instead fixed the DR& R payments through the theoretical life of the pipeline.

The report explains, for example, that the DR& R payments reflect the 46 percent federal income tax rate in effect at the time of the TAPS settlement. In 1986, the tax rate was reduced to 34 percent, but the DR& R terms were carved in stone at the higher rate.

Further, the collections were accelerated, or "front-end loaded," enabling the pipeline owners to take in the majority of the DR& R payments during the early years of the pipeline’s operation. The report notes, "Front-end loading is a legitimate accounting practice designed to allow investors to recoup their investment rapidly. In the case of TAPS DR& R, the technique appears to have been misapplied: To date, the TAPS owners have invested almost nothing in DR& R. Consequently, there is no DR& R to pay back by any depreciation method, accelerated or otherwise. In this case, the TAPS owners were allowed to charge shippers over a billion dollars in the early years of TAPS operations to make DR& R payments at an unspecified date."

The TAPS settlement calculated earnings on DR& R on the assumption that the TAPS owners would invest the money in such a manner that they would earn an amount characterized as a relatively conservative return, approximately equal to that which might be earned if the DR& R funds were placed in escrow. In fact, Fineberg writes, the "major TAPS owners’ average return on equity exceeded 20 percent, beating the corporate bond rate in the stipulated DR& R agreement by more than 8 percent per year."

Fineberg’s report concludes, "Primarily due to over-estimation of tax payments and under-estimation of the earning power of funds held by the TAPS owners (the North Slope producers), DR& R collections appear to have overshot their mark by a vast amount. By current estimates, the DR& R provision has generated at least $3.3 billion dollars for the TAPS owners. By the year 2015, if dismantling, removal and restoration are performed in accordance with the settlement provisions, on completion of its mission the DR& R fund will have a tax-paid surplus of $11.7 to $22.1 billion."

The report says that even if the actual costs of DR& R turned out to be twice that of the settlement estimate, the TAPS owners would still only have to pay out a small portion of the excess they are amassing. And if actual DR& R costs are less than originally estimated, the pre-collected DR& R money and its earnings will be left in the pockets of the TAPS owners.

"Oil and gas economics always seems complicated, but DR& R is straightforward," says Stan Stephens, an oil company watchdog who commissioned the report. "The DR& R provision of the 1985 TAPS settlement was overly generous. Through the magic of compounding, the TAPS owners are making hundreds of millions of dollars every year."

Stephens emphasizes that funds collected for DR& R are not placed in an escrow account managed by an independent trustee but are available funds for the oil companies to distribute to shareholders, co-mingle with internal accounts or re-invest. "This is probably one reason that the North Slope producers typically outpace other oil companies," Stephens says.

The state has allowed the companies to put the funds away in such a manner that DR& R represents "something of a cash cow to them," says Stephens. He does not believe officials involved in the complex TAPS settlement negotiations realized what a windfall the provision would prove to be for the North Slope producers. He adds, however, that Alaska’s state and local governments "place a great deal of trust" in the oil companies, "which know how to take advantage of that trust."

Stephens says he commissioned the report in response to repeated claims by pipeline operator Alyeska that the costs of implementing environmental protection measures might force an early shutdown of the North Slope. He questions why the excess DR& R funds cannot be used to finance environmental protections such as double- hulling oil tankers or hard-piping the tanker loading facility to contain potentially hazardous emissions.

Stephens points out, however, that he and Fineberg were unable to determine where the pipeline owner companies actually hold the funds and how they account for them. According to the report, an attorney who reviewed the financial statements of one of the North Slope producers concluded that they provided "no basis for understanding or quantifying DR& R." Stephens asks, "If the TAPS owners are holding that money, why can’t they use some of the excess to honor their environmental promises? If the money is gone, where did it go?"

So far, the report has received little governmental attention although it has been sent to state and federal legislators, and to the Alaska attorney general. Stephens is baffled by the lack of interest on the part of government officials. "This is a great deal of money," he points out.n

-Holley Knaus

LA Tax Dodgers

FACED WITH GROWING CITIZEN DEMAND that corporations profiting from Louisiana’s 10- Year Industrial Tax Exemption Program pay their fair share of taxes to support schools and other public services, 25 corporations in the state, led by Exxon , released proposals in January 1993 for further cuts in the school budget of the East Baton Rouge Parish. The proposals, which include cutting 400 food service jobs - the children could eat more ready-to-eat processed food - and bus drivers - cut down on the number of routes by having children walk farther to their bus stops - are an attempt to keep intact the Tax Exemption Program which allows the corporations to avoid paying local property taxes which would finance schools.

Meanwhile, the state legislature has called a special session for March 1993 to address the state’s $600 million budget shortfall. Of the many tax reform and revenue raising proposals, one, backed by citizen groups, including the Louisiana Coalition for Tax Justice (LCTJ) would no longer allow corporations to be exempt from paying school taxes. Says LCTJ field director Bill Thrift, "LCTJ’s goal is to make sure that the moneymakers, not poor and working Louisianans are the ones who pay for the budget shortfall."

LCTJ’s 1992 report, The Great Louisiana Tax Giveaway: A Decade of Corporate Welfare, 1980-1989, a study of Louisiana’s "10-Year" Industrial Property Tax Exemption, documents how corporations, particularly the oil, chemical, paper and utility industries, have failed - to the tune of $25 billion in industrial property tax exemptions - to pay their fair share of Louisiana taxes. Between 1936, when Louisiana adopted the 10-Year Industrial Property Tax Exemption, and 1988, the state granted more than 11,000 industrial property tax exemptions. Under the exemption program, the state can grant industries exemptions from paying local parish property taxes on new buildings, machinery and equipment (but not land) for up to 10 years (an initial five years and a five- year renewal). At the end of the 10-year exemption period, corporations begin to pay taxes on the property, but at its depreciated value. And often taxes are never collected on property such as dismantled or obsolete equipment.

The jobs scam

Ostensibly, the tax exemption program exists to create new jobs and entice industry to Louisiana. However, LCTJ contends that the program has failed miserably at both of these goals. According to the report, "almost three-quarters of all industrial property tax exemption contracts granted from 1980-1989 created zero new permanent jobs." And during the same period, jobs in the chemical, oil and paper industries (which received the most exemptions) declined by 13 percent - almost 8,000 jobs. Of the tax- exempted projects that did create new jobs, the cost to the taxpayer was enormous - the revenue lost in tax exemptions was the equivalent of an average of $41,508 for each new full-time job created. Additionally, instead of hiring unemployed Louisiana workers, many corporations benefiting from the tax exemptions hired out-of-state non-union contract workers.

As for attracting new industry to the state, "all but a handful of the exemptions went to existing plants; only 6 percent of the contracts went to companies building new plants," according to LCTJ. An estimated $135 million, or 21 percent, of the exemptions went to routine maintenance and upgrading.

According to Oliver A. Houck, Tulane University law professor, "The exemption program could not be more self-defeating. Louisiana’s educational and environmental miasma is well publicized and nationally known. Together, these problems constitute a formidable barrier to the inducement of any business that cares about its employees - the kind of business Louisiana should be most anxious to attract. The barrier is the image, and Louisiana is financing the wrong kind [of business]."

The Human Cost

Louisiana makes up for the lost revenue from industrial property tax exemptions with one of the highest sales taxes in the United States, a regressive system which, the report says, "punishes the poor, while rewarding the rich." For example, Louisiana families earning $10,800 pay a 14 percent share of their income in sales taxes, while families earning $608,700 pay only a 5.5 percent share, according to a study by the Washington, D.C.-based Citizens for Tax Justice. Sales taxes, which disproportionately hit low- and middle-income families, account for 51 percent of all state and local taxes.

The corporate tax breaks and regressive tax structure have contributed to Louisiana’s severe economic and social problems. The state ranks: last in the nation in workplace health and safety and in high school graduation rates; 49th for the gap between rich and poor; 49th in poverty (with 25 percent of residents considered poor); 47th in surface water discharges, heart disease and adult illiteracy; 46th in hazardous waste generation and teen pregnancy; and 45th in long-term unemployment, unemployment duration and health coverage. Louisiana is also first in the nation in lung cancer deaths, and in the top 10 percent of all states for all cancer death rates.

The Winners: Big Business

According to LCTJ, 90 percent of the $2.5 billion in industrial tax breaks went to the 50 largest corporations located in Louisiana. And 87 percent of all tax exemptions went to four industries, all high in toxic emissions and pollutants: utilities (36 percent), chemical plants (25 percent), oil refineries (19 percent) and pulp and paper mills (7 percent). Furthermore, LCTJ found that nine of these corporations sent more than half of the $2.5 billion in tax benefits to their out-of-state shareholders.

The exemptions are rarely linked to corporate conduct. For example, Exxon’s Baton Rouge petrochemical complex, and other Exxon locations, received exemptions on $878 million in property between 1980-1989, saving the company an estimated $92 million. The state left these exemptions untouched even after a 1989 explosion at the Baton Rouge complex shook nearby homes off their foundations and covered the neighborhood with asbestos and for which the Occupational Safety and Health Administration (OSHA) fined Exxon $3,000 for negligent maintenance that led to the explosion.

In a particularly heinous abuse of the exemption program, the state awarded Shell Oil a 10-year tax exemption of approximately $450 million to rebuild a refinery unit (which Shell’s insurance covered) destroyed in a 1988 explosion that killed seven workers and injured 48 others. OSHA faulted Shell for improper maintenance procedures that led to the accident and fined the corporation $3,630. Yet the state gave Shell a $2,500 tax credit for each new employee to replace the seven who died in the explosion.

Citizen Groups Work for Reform

Since its creation in 1990, LCTJ has worked to reform the tax system to ensure adequate funding for education and other public services through direct action organizing. In October 1990, LCTJ members awarded state officials a giant "rubber stamp" for automatically approving $2.5 billion in tax breaks to corporations at the expense of citizens and the environment. LCTJ later called for the resignations of members of the state board that awards the exemptions. And in a March 1991 protest, more than 55 citizens from 12 parishes and 36 groups expressed their dissatisfaction with the Board by carrying brooms symbolizing the need for a "Clean Sweep."

LCTJ calls for elimination of the 10-Year Industrial Property Tax Exemption and other corporate tax breaks or at least for the following reforms:

o Projects must create at least 10 new permanent jobs for Louisiana residents;

o Exemptions must be limited to a total subsidy of $10,000 for each new job;

o School taxes must be excluded from the exemptions;

o Exemptions for highly profitable or existing non-diverse industries must be eliminated;

o Projects must be ineligible (or eligible only for reduced benefits) if they produce new toxic emissions, or if the company has current environmental and/or workplace safety violations;

o Exemptions must be subject to public notice, hearing and approval of exemption applications at the parish level; and

o Corporations must pay back tax benefits in the event of plant closings and layoffs.

Louisiana citizens are determined to reform an economic system that has worked only for corporate tax dodgers. Says Mike Tritico of the environmental group RESTORE, "We’re tired of watching our public officials grovel and beg outsiders to come in and give us jobs while giving away our health, resources and labor."n

- Katherine Isaac


Juneau After the Gold Rush

Fighting Dangerous Development

by Caryl Boehnert

JUNEAU, ALASKA - "Mine it, drill it, hunt it, cut it" has become Alaska’s development philosophy. No entity reflects that philosophy more clearly than the state’s Department of Environmental Conservation (DEC), which is now headed by John Sandor, the former chair of Alliance for Juneau’s Future, an Alaskan pro-mining organization. The DEC is proposing weakened water pollution regulations which agency personnel admit are designed to allow pulp mills and mining companies to operate more cheaply. Critics, who have begun to call the DEC the "Department of Economic Collusion," charge that, in attempting to change the regulations to favor non-sustainable extractive industries like mining over other more sustainable ones, such as fishing and tourism, the DEC has abandoned its mission of protecting the environment and human health.

Development at any cost

Along with natural beauty and variety of wildlife, Southeast Alaska contains a wealth of minerals, a fact not lost on developers. Mining companies have 66 mines on the drawing board for Southeast Alaska and western Canada , and the Juneau Land Plan and the U.S. Forest Service consider mineral extraction their highest development priority. Watchdog groups, however, question the wisdom of fostering more mining when mines currently operating in Alaska have such poor environmental records. "The Red Dog mine in northwestern Alaska had 134 violations of effluent limitations and 28 separate violations for failing to report these violations. The Greens Creek Mine near Juneau has been cited for 81 violations of [its] permit and continues to operate out of compliance," says Peter Enticknap, head of the Lynn Canal Conservation, an environmental group opposing mines in this area. "Heavy metals are accumulating; indigenous Alaskans report that bottom fish and crabs are no longer found near the outfall; mine workers report that spills at the loading dock are not reported. We are told to have faith in our government, but what has really happened? The mining industry in America has poisoned over 12,000 miles of rivers and streams and 180,000 surface acres of lakes and reservoirs."

Environmentalists, residents and fishers are particularly concerned about two proposed mines near the Alaskan capital of Juneau, which are viewed by the industry as precedent-setters for the 64 other mines waiting to follow them into the area. Echo Bay Mines of Canada is attempting to reopen the historic Alaska-Juneau (AJ) mine, one of the world’s largest gold mines, located four miles from downtown Juneau. In conjunction with Coeur d’Alene Mines of Idaho, Echo Bay is also attempting to open the Kensington Gold Mine, 45 miles north of Juneau. Since 1989, Echo Bay has insisted that mining will cause no serious harm to the land, the lucrative fisheries at the site of the outfalls or Juneau’s drinking water supply.

Citizens groups, environmentalists and some state agencies disagree. In its criticism of an environmental impact statement for the AJ mine prepared by the Bureau of Land Management (BLM), the Department of Fish and Wildlife expresses "major concerns about the proposed AJ mine’s impacts on fish, wildlife and their habitats." However, the governor’s office seems to have ignored the agency’s statement, having voiced state support for the reopening of the AJ mine.

Juneau citizens are divided about the mine. With oil revenues dwindling and state jobs being cut, many fear an impending economic crisis. For them, the promise of economic diversity - with less reliance on revenue derived as a "government town" - sounds attractive. However, many traditional supporters of mining are siding against the AJ mine because of its construction problems, its proximity to downtown Juneau and the poor environmental track record of Echo Bay at other facilities. "When it [starts] threatening [the] drinking water supply, you have to get involved," says Gail Bills, a member of Alaskans for Juneau, a group formed to stop the AJ mine. "If you really look at what they are proposing for the aquifer, you see that we are talking a lot of months where there [won’t be] enough water for the city to use for fire-fighting and drinking. And the danger of pollution from spills and heavy metals is incredible."

David Stone, manager of public relations for Echo Bay, says, "We believe that this is one of the most environmentally sensitive mining projects anywhere in the world. More studies have been done on these mines than any project in Alaska, with the exception of the pipeline. That should give environmentalists a lot of comfort."

Many mining proponents dismiss environmental concerns on the grounds that Juneau was built on mining, and that the old AJ Mine did not leave damage. "Thirty percent of downtown Juneau sits on past AJ tailings," says Stone. "The old mine operated without environmental controls for 50 years without harm." But Laurie Ferguson Craig, a former placer and hardrock miner and president of the board of Alaskans for Juneau, disagrees. "There are plenty of places in Juneau where there are large hazardous waste sites from mining chemicals, and nothing is going to grow there for the next hundred years." Moreover, she adds, "Times have changed since mining began in Juneau in the late 1800s. Now they’re talking about processing 22,500 tons of ore per day, using 18 tons per day of cyanide to leach the gold from the ore."

The mine tailings (waste) from the AJ operation would contain heavy metals, including copper, lead, mercury, cadmium and arsenic, and residue from the cyanide; and would be dumped behind a proposed dam in what is now Sheep Creek Valley, a popular hiking and fishing spot. David Dorris, former project manager for the BLM, the agency responsible for drafting the environmental impact statement, admitted in July 1992 that "everything in Sheep Creek will be destroyed" if the AJ mine is reopened.

Wastewater from the mine (31 million gallons of it a day) would pour into Gastineau Channel, the waterway leading to Juneau, and home to humpback whales and salmon fisheries. Wastewater from the mine would not meet state or federal water quality standards without dilution in the channel, in effect turning the channel into a "mixing zone." Enticknap from Lynn Canal Conservation explains, "A mixing zone is a legalized pollution zone: it lets the mining company use the channel as an industrial sewer with a pollution zone buried under water where its impacts can’t be seen or properly monitored." Mining company officials assert that fisheries would not be damaged, however, even with millions of gallons of waste pouring from the mine through the wastepipe each day.

Disregarding residents

The costs of state development schemes to area residents are vast, and are compounded by the physical demands of life in Southeast Alaska. Juneau is literally built into the mountainsides of the Coast Range, and expansion is blocked by the Gastineau Channel in one direction and the mountains and a glacial icefield in the other. Housing, therefore, is at a premium; available land is scarce and new construction has dwindled since the 1988 recession. Vacancy rates in Juneau hover between 1.5 and 2 percent. When the legislature pours into town in January, the rate drops as low as .5 percent. The BLM estimates in its final environmental impact statement for the AJ that the mine would bring 1,600 people into town; they would need 570 units of housing (or 973 units for both AJ and Kensington), according to the BLM estimate. But the agency stops short of indicating where these units will be found. Echo Bay refused to agree to build housing to meet the obvious demand as part of the large mine permit negotiations for the Kensington. Instead, it negotiated an agreement with the city that requires the company to merely make its "best effort" to locate additional housing for those who need it. John Egan, of Housing First, an organization which works for the construction of low-income housing, states, "Whenever companies like this move in, they are not providing housing for the low- or even the middle-income family; and when the company leaves, there’s no way people with limited means can afford to buy the upper-income homes that were built."

W. Thomas Goerold, an economic consultant to the Southeast Alaskan National Resources Center, predicts that a boom-and-bust economy will emerge should the mines come to town. "If you don’t want to live here long, then it’s great: let your property values rise and then sell and get out, because the market is going to crash when the mines leave. Of course, if this is your home, and you want to stay here, then the news isn’t so good."

Kensington Mine: proposing disaster

Due in part to the avalanche of negative public reaction to the anticipated problems at the AJ, the BLM did not issue its final environmental impact statement until May 1992. Echo Bay’s other gold mine, the smaller but richer Kensington Mine, was rushed through public informational hearings, and the Forest Service issued its environmental impact statement on the mine in February 1992. By then, fishing, Native, environmental and citizens groups had drawn together to form the Kensington Coalition, which opposes the mine as currently proposed. A pamphlet put out by the Coalition estimates that mining operations will involve "milling 4,000 tons of ore a day, using cyanide processing to obtain the gold, and creating a half-mile-wide earthen dam to contain wet tailings."

Fishers cite concerns about the welfare of the $42 million per year fishery at Point Sherman where Kensington’s proposed wastewater outfall would be located. Warns the U.S. Fish and Wildlife Service, "If contaminants are not swept away from the Point Sherman area during the summer fishing season, they may cause a shift in the migration route of adult salmon. Due to the nature of the Point Sherman commercial fishery, even a small deviation could have a significant adverse impact on the anadromous fish [those swimming upstream to spawn] and their harvest." Echo Bay has long dismissed the idea that any harm could come to fish in the region of the outfall. Frank Bergstrom, the mine’s environmental compliance manager, cites studies conducted for Echo Bay in which salmon were exposed to heavy concentrations of pollutants and seem to show no effect: "So far," he says, "the fish exposed to heavy metals are perky little guys." The U.S. Fish and Wildlife Service, however, warns of the longterm effects to the fishery over many years and opposes the idea of a mixing zone.

Traditionally, Juneau’s fishing community has not opposed mining projects, but the audacity of Echo Bay’s proposals has galvanized the area’s fishers. Fishing, Alaska’s second largest industry (after oil and gas), "stands to lose one of Southeast’s richest fisheries for a 10 to 13-year mining project that will just leave pollution and a faulty dam when it’s done," Leon Woodrow, an independent fisher, testified before the Alaska Coastal Management Consistency Review panel. "We have to obey rules from DEC when we’re out there fishing: we’re just asking that the mines be required to obey rules in order to operate, too. And if you don’t follow the rules, you don’t operate - it’s as simple as that." Adds Sissi Babiche, another fisher speaking before the same panel, "There seems to be two sets of rules: one for the common [person] and one for big business."

Allying with the 15,000-member United Fishermen of Alaska are Native groups, community groups like Alaskans for Juneau and environmental groups such as Southeast Alaska Conservation Council and the Juneau Chapter of the Audubon Society. During the summer months, when most of the fishers were out on the water, the Coalition testified on their behalf at hearings against lowering the water quality standards and against the Kensington mine. By fall, Coalition members had adopted a clear platform stating what is acceptable and unacceptable for a proposed mine; and were conferring regularly with attorneys at the Sierra Club Legal Defense Fund (SCLDF).

Juneau has one of the strongest mining ordinances in the country, designed to protect "the health, safety, and welfare of the residents of the City and Borough of Juneau (CBJ)." The city’s Planning Commission held over 18 months of hearings, culminating in an intense 12-week series in the fall of 1992, to decide whether to grant a large mine permit for Kensington to Echo Bay and its partner, Coeur d’Alene.

The CBJ’s own engineering staff indicated in reports to the Commission that all was not well with the Kensington mine, labeling Echo Bay’s reclamation plan (which shows how the area will be "reclaimed" after mine operations are shut down) insufficient in meeting the requirements set forth in the mining ordinance. A CBJ engineer flatly stated that the "tailings dam as designed will fail after mine closure," posing risk to workers and presenting the danger of spills of untreated toxic wastewater into the fisheries of Lynn Canal. The Kensington Coalition presented evidence that the tailings pond had been planned in the path of an avalanche chute; the city’s engineer voiced concern about the stability of the dam should it be tested by avalanche or landslide, or deluged with sedimentation.

The Coalition testified on Echo Bay’s record of repeated cyanide spills in Nevada, including one spill of 579 pounds of cyanide in 16,000 gallons of solution, and violation of Environmental Protection Agency (EPA) regulations at the nearby Greens Creek Mine. Fishers testified about the water currents at Point Sherman, and claimed that Echo Bay had incorrectly placed monitoring devices and thus falsely measured the "flushing" of the area and the period of time in which fish might be exposed to toxic pollutants from the outfall.

For the most part, the state government has chosen to side with the mining industry and ignore the citizen coalition’s careful arguments against mining-at-any-cost policies. Faced with unanimous public testimony, including public agency reports, against the prospect of creating a mixing zone, the planning commission chose to defer decisions about water quality and the mixing zone until late spring and to issue the permit without these vital issues settled. The Commission also decided that it would not require Echo Bay and Coeur d’Alene to furnish proof that they could design a tailings dam that would not fail in the wet, avalanche-prone terrain of Southeast, but would instead make it a condition of the permit that some such design be found.

The commission granted Kensington a large mine permit in November 1992, despite its lack of a viable reclamation plan, faulty dam design and the questionable socioeconomic plans of its operating companies, and with the water quality and mixing zone issues unresolved. Even so, Barbara Sheinberg, chair of the planning commission, indicated that she felt that enough safeguards and stringent conditions had been built into the permit to protect the city. Others did not share her faith; the permit was appealed in late November by the Kensington Coalition.

Additionally, in December 1992 the Sierra Club Legal Defense Fund sent a 60-day notice letter to the EPA and the Army Corps of Engineers on behalf of the Coalition, after both agencies, early in the process, stated that they would not be responsible for regulating proposed tailings ponds in the two mines. The SCLDF letter charged that the Corps and EPA, under the Clean Water Act, could not avoid this responsibility; and notified them that they had 60 days to respond before a citizens’ suit could be filed. There has been no response thus far.

In January 1993, the AJ large mine permit hearings began before the planning commission, although no verdict has yet been reached on the Kensington appeal. Avenues of appeal in state and federal courts exist for both mines, should money and legal expertise become available.

But to those fighting the mines, the issues go beyond winning tougher standards at the AJ or the Kensington mines. They are challenging the state government’s development-at-any-cost mentality which promises a forbidding future for Southeast Alaska. Laurie Ferguson Craig of Alaskans for Juneau observes, "The same way of thinking that led to the Exxon Valdez is here once again."


Pushing Pesticides

Monsanto ’s Toxic Giveaway

by Judy Price

TALKEETNA, AK - In the summer of 1992, the Alaska Railroad Corporation finally bowed to a protracted citizens’ campaign against herbicides, agreeing to end its use of chemical herbicides to clear its tracks. In the wake of this victory, however, the giant corporation Monsanto introduced a new chemical threat to the Alaskan environment, securing the support of a Native corporation in a plan to aerially spray large tracts of the Native corporation’s land with the herbicide glyphosate. The release of this toxic chemical presents a new danger to Alaska’s pristine forests and is another indication that the pesticide industry’s campaign to market its wares is moving north.

Pawn in the pesticide wars

For the past two decades, while the rest of the United States has been embroiled in pesticide wars, Alaska has seen only skirmishes. In 1978, Jay Hammond, then-governor of Alaska, issued a directive which banned the use of herbicides by state agencies. The Alaska Department of Transportation and Public Facilities (DOTPF) immediately halted its roadside spraying. Even the U.S. Forest Service took its cue from the state and veered away from most pesticide use on the Tongass and Chugach National Forest lands. The Alaska Railroad (ARR), then a federal entity, was the only governmental agency to continue heavy herbicide use.

Since the 1950s, the Alaska Railroad has been chemical-dependent. In the 1970s, the ARR solved its vegetation management problem by treatment with surplus drums of Agent Orange (2,4-D and 2,4,5-T) leftover from the Vietnam War, as well as Bromacil, Amitrole and Picloram. Hammond’s 1978 order expressed a need for more information on herbicides before they could be used in Alaska, and the 500-mile-long railroad right-of- way became a de facto ground for experimentation.

Bill Burgoyne, pesticide use specialist for the Alaska Department of Conservation (DEC), conducted his own experiments with 2,4-D and Tordon on the railroad from 1978 to 1980. In 1979, Du Pont Biochemicals tried to gain a foothold in the market by testing a new formulation of the herbicide Bromacil on Railroad lands. But it was Dow Chemical USA that made the winning connection. In 1981, Dow’s industrial specialist, Jerry Beachell, wrote a letter praising Burgoyne’s research, and speculating about the herbicide ban, suggesting that perhaps it was just that Governor Hammond’s "emotions at that time were directed at the phenoxy herbicides [Agent Orange]."

Thereafter a cozy relationship developed between Dow, the Railroad and the DEC. Dow offered ARR free chemicals for experimentation, as well as advice and encouragement. The Railroad accepted both and Beachell sent his thanks, writing, "[I]t’s cooperators like you that make chemical companies like ours survive this increasing age of environmental concerns."

ARR was a willing cooperator with Dow, but it was DEC’s Bill Burgoyne who functioned as a virtual representative of the chemical company. When Dow learned that jurisdiction over ARR was to be transferred to the state - and so come under the governor’s ban - Beachell appealed to Burgoyne: "Perhaps some more extensive spraying could be done on the railroad next year before the state assumes control to establish some efficacy and disappearance bases [measuring how long chemical residue remains detectable in soil] for future reference on state property. Hopefully sometime the total ban on herbicides can be lifted."

Burgoyne subsequently arranged with the Railroad for more extensive cold climate studies of Garlon, Dow’s replacement for the phenoxy 2,4,5-T. He contacted the Alaska Department of Transportation and the U.S. Forest Service to ask if they too would be interested in Dow’s offer of free chemicals. When a resident of the railbelt sent a Freedom of Information Act request to the Federal Railroad Administration (FRA) in Washington, D.C. for information on its pesticide use, Burgoyne sent his own letter to the FRA urging that the request be denied.

Despite the powerful alliance - the DEC, the ARR and Dow - against them, the people who lived along the tracks fought hard against the spraying. In rural Chase of southcentral Alaska, where there are no roads and the only means of travel is along the railroad tracks, the residents had been reporting oversprayed streams to DEC and the Alaska Department of Fish and Game for nearly a decade with no tangible results. In 1982, local citizens met with Railroad officials and convinced them to flag "sensitive areas" adjacent to streams, gardens, cabins and flagstops as non-spray zones. During the regular spray run that year, the flagged areas were skipped as agreed. But two days later, the spray truck returned.

"I saw it go through at about midnight," says Chuck Blaney, whose cabin stands 100 feet from the tracks at Chase. Over the next few days, as Railroad officials denied that they had sprayed, Blaney and other trackside residents watched the plants along the tracks turn brown and die.

"They just turned the nozzle on in Talkeetna and didn’t turn it off for the next 30 miles," says Paul Bratton, a Chase resident and founding member of the grassroots group Alaska Survival. "Creeks, sloughs, flagstops. Everything was sprayed."

Within the month, Alaska Survival, represented by the Sierra Club Legal Defense Fund, filed suit in federal court to stop herbicide spraying on the Alaska Railroad. While the suit was under review, Federal Judge James van der Heydt allowed ARR to continue spraying. In August, ARR sprayer Eric Lind was fired after objecting to spraying in rain - a practice which violated provisions of ARR’s pesticide-use permit - near the town of Whittier. It was not until the following year, 1983, while ARR was again being investigated for overspraying creeks, that the court prohibited ARR from herbicide use until it had complied with the National Environmental Policy Act (NEPA) by preparing an environmental impact statement. But before any environmental document was produced, control over ARR was transferred to the state. For the next six years, it sought to buck Hammond’s ban. The Railroad made annual attempts to reinstate herbicide spraying, failing each time due to unflagging public opposition.

Suddenly, in the spring of 1992, ARR seemed to turn over a green leaf. The agency’s new chief engineer, Tom Brooks, declared that the Alaska Railroad was "sensitive to the public’s concerns about herbicides," and, in a precedent-setting move, ARR became the only major railroad in the United States to adopt a non-herbicide vegetation control program. Convicts are employed to clear weeds from the ballast, and rail equipment is used to cut vegetation in the rights-of-way along the sides. Canadian Pacific Rail’s steam machine, which is still in the prototype stage, potentially offers another chemical alternative on which ARR has set its sights.

Corporate scheming

The grassroots anti-chemical movement remains powerful in Alaska, but the pesticide industries have not retreated. Like good generals they have merely altered their avenues of approach, searching for a new way to circumvent the public will. And this past summer, Monsanto came forward to lead the way.

"It seems like every time we face another pesticide threat, we find a corporate schemer," says Bratton. "The pesticide companies like Monsanto are not just trying to sell a product, they’re manipulating the public process and trying to subvert the will of the people."

In late winter of 1992, Monsanto applied to the DEC for a permit to spray the herbicide glyphosate on 150 acres in the Windy Bay area of the Kenai Peninsula. Windy Bay is private land owned by the Port Graham Corporation, one of the many Native corporations set up by the 1971 federal Alaska Native Claims Settlement Act (ANCSA). Because the project involved aerial spraying, a DEC permit was required and the public was informed of Monsanto’s plans.

During the public hearings, it became apparent that Monsanto’s project was an extension of herbicide experimentation that has been taking place at Windy Bay over the past five years, and more recently near Fairbanks on the Tanana State Forest; neither project had provided public notice or opportunity for public comment, as required by NEPA. Both projects were funded by the federal government through State and Private Forestry - a branch of the U.S. Forest Service - and the Institute of Northern Forestry. And both projects were directed by herbicide researcher and strident chemical industry defender Dr. Michael Newton of Oregon State University.

Newton has long been known as a defender of the chemical industry and an advocate of herbicides, including Agent Orange. In a research paper, he wrote, "Chemicals ... are the only approach now known capable of dealing with the scale of currently non- stocked cutover land [in Alaska]." Speaking to a group of about 30 Alaska state and federal foresters, Newton revealed his vision for Alaska’s future in forestry. He said, "Thirty-five years ago, the Lower 48 was in the same place we are now in Alaska. Here we can accelerate the process."

Monsanto was one of the chemical companies whose products were used in Newton’s experiments, and it was eager to accelerate the process. With the help of Newton, Monsanto representative Ron Crockett convinced the Port Graham Corporation’s board of directors that herbicides were the solution to the problem of reforesting recently clearcut coastal forests. And when Monsanto offered free chemicals, free advisory help and free services of a spray plane to try out glyphosate at Windy Bay, the board accepted.

"What Monsanto is offering the people of Port Graham is a modern-day smallpox blanket," says Bratton. "Warm fuzzy reassurances that herbicide spraying will solve the problems created by clearcutting, but ... [we have] seen what’s happened outside of Alaska. It just adds the problem of toxic contamination on top of the problem of a devastated forest."

Native corporations own approximately four million acres of lands in Alaska. ANCSA stipulates that the corporations use these lands to provide economic security for indigenous people. In seeking ways to make money off the land, the Port Graham Corporation, along with a number of other Native corporations, has been logging the forests, although the difficulty of reforesting coastal forests after clearcutting has somewhat discouraged that effort. Brush and weeds that grow in the clearcut areas hinder the growth of seedlings. But industry promises of success with herbicides makes massive clearcutting of Alaska’s coastal and taiga forests more likely.

Crockett says that controlling competing vegetation with glyphosate cuts the growing time of trees in forest stands by up to 25 years, and thus benefits Native corporations which rely on timber.

In approaching Native corporations, Monsanto found unaccountable and potentially huge buyers of its herbicides. Native corporations are run by boards of directors, often with little involvement from the indigenous communities they represent. A comfortable business relationship, hidden from public view, developed between Monsanto and the board until Alaska’s permitting requirement for aerial spraying operations brought the Windy Bay project to light in Port Graham.

Many Port Graham villagers opposed the spraying. And even the board of directors objected when Monsanto’s Crockett tried to persuade the DEC to allow spraying within 180 feet of water, instead of the previously stipulated one-half mile set- back. Crockett told the Monitor that his recommended buffer zone was derived by doubling the most stringent set-back requirements ever implemented in Canada or the continental United States. Kit Ballantine, acting director of DEC’s Division of Environmental Health, initially refused Crockett’s appeal. "We don’t think we should modify the set-back as long as the corporation objects," she said.

But Crockett persisted. In a letter to the DEC, he wrote, "It has been my hope through the permitting process that decisions ultimately would be made on a technically sound basis. I am uncertain that all of the stipulations would measure up to that standard." Ultimately, Monsanto largely succeeded. DEC changed the set-back from one half-mile to 400 feet. According to Crockett, the Port Graham Corporation "felt comfortable with" the 400-foot buffer zone. Monsanto and Port Graham proceeded with the project.

The DEC failed to inform the public that it had granted the permit for more than two weeks after doing so; DEC paralegal assistant Billi Wilson blames the delay on "lack of secretarial help." Alaska Survival, along with other environmentalists, commercial fishers and charter boat operators, filed for an adjudicatory hearing and stay immediately upon learning of the permit approval. But before DEC could act on the appeal, Monsanto sprayed.

Rejecting the quick fix

Fifteen years and three administrations after Governor Hammond’s ban on herbicides, Alaska is once again in jeopardy of falling victim to the quick-fix promises of the chemical industry. This time around, there is no elected official willing to take the lead in protecting the integrity of Alaska. But the grassroots defenders of this pristine country are ready and determined.

In October 1992, a demonstration against herbicides was held outside an Alaska Reforestation Council’s workshop where Michael Newton was the featured speaker. That same month, statewide conservation groups came together at a Herbicide Summit to seek ways of dealing with the impending threat of herbicides to the Alaskan environment.

And in 1992, environmentalists formed a new group, Alaskans for a Herbicide Free Environment, with one goal in mind - to ban herbicide use on public state lands. The group has sponsored a ballot initiative that would do just that. Says Cindy Sykes, a member of the Green Party of Alaska and one of the primary sponsors of the initiative, "If [the initiative] works, great. If not, we’ll try something else. Alaskans don’t give up easily."


From Stewards to Shareholders

Eyaks Face Extinction

An interview with Dune Lankard and Marie Smith Jones

In September 1992, Dune Lankard and Marie Smith Jones, along with the environmental law firm Trustees for Alaska, brought an unsuccessful lawsuit against the Eyak Corporation to stop the corporation from clearcutting on lands sacred to the Eyak people. Both Lankard and Jones are shareholders in the corporation. Dune Lankard is part-Eyak and has served on the board of the Eyak Corporation. Marie Smith Jones is the chief of the traditional elders council established to protect the remaining heritage of the Eyaks. She is 74 years old and the last full-blooded Eyak Indian alive.

MM: What factors have led to the extinction of the Eyak people?

Dune Lankard: From 1889 to about 1915, a couple of events took place that were very destructive to our way of life and our people. In the late 1890s, five canneries were built in the Copper River Delta area. The Eyaks’ livelihood and subsistence lifestyle was drastically changed because the cannery workers placed nets five miles off-shore, funneled the fish into the canneries and blocked off the traditional salmon runs. So the Eyaks became dependent on the canneries for survival. And at the same time that they were taking the entire run, they were dynamiting streams. They basically wiped out our way of life.

When whites moved into the area and built the canneries, they brought alcohol. The canneries brought in a cheap Chinese labor force and the Chinese brought in opium. Just think about the destruction, about what can happen when the alcohol is mixed with the drugs: there is rape, there is violence, there is the abuse of Indian women.

Shortly after that, the railroad was built, right over the top of the last Eyak village site in Cordova. Then the government schools came in, the public schools that allowed only white children. Some of the Eyak children were shipped away to boarding schools in Oregon, some never to return.

The population of our people prior to the canneries being built was over 300; we were diminished to 50 by about 1920. The final event that wiped out many of our people was the 1918 flu.

Now, Marie is the last full-blooded Eyak Indian on the face of the earth. If Marie were white, this would not be happening. It would be a whole different ballgame then. People would be really concerned that a race of people is being destroyed. But we are just another Indian clan to a lot of people, so they are not taking this seriously. I believe that when Marie does pass on, there will probably be books written about her, maybe even a movie, like "The Last of the Mohicans" - "The Last of the Eyaks." By then it will already be a done deal. And it is so sad.

We were the last "founded," or rediscovered, tribe in North America and we are the first language and race of Alaskan Indians that will be wiped off the face of the earth when Marie dies. We were recognized as a tribe by anthropologists in 1933 and now, 60 years later, we are facing extinction. So more than anything, we want people to learn from this sad story and grasp its meaning so it never happens again.

MM: What were the impacts of statehood on Alaskan Natives?

Lankard: When Alaska became the 49th state in 1959, it took away the rights of the people. The land was incorporated into the U.S. system; the way governments have successfully taken the land away from the Alaska Natives or indigenous people all over the world is by incorporating the land. A nation is allowed to bring in its own military, supposedly to protect us, but actually to govern us. For example, when they built the railroad in the 1900s, they said it would help our people because it would provide greater access to the area. What it really allowed was our resources to be extracted much faster.

Marie Smith Jones: Even in the 1940s, during the war, the area was recognized as Native land. The railroad gave my father the right to live on any spot along that railroad. The tracks were just 50 yards or so from my father’s house. At that time, the railroad company recognized that it was Indian land and they honored that. I think after Alaska became a state, it started going downhill.

MM: In 1971, the Alaska Native Claims Settlement Act (ANCSA) extinguished all tribal claims of aboriginal title and placed 44 million acres of land in the hands of Native corporations, rather than in tribal ownership. What is your assessment of ANCSA?

Lankard: ANCSA took away the land rights of the people and gave them rights as shareholders. They are basically incorporated out of control of their own lives. They are not able to defend their ancestral lands, because they cannot go beyond the framework of the U.S. legal system. If we had retained our tribal government laws in 1971, we would now have 220 village tribal governments making laws that would not pertain to U.S. laws. When a number of Native leaders got together and incorporated the Alaska Federation of Natives in 1971, they had a choice right then to either retain tribal government status or to incorporate into the U.S. law system. When they chose the incorporation, the people lost their land claims. The claims went instead to these new Native corporations, which are multinational corporations wearing Native masks, in the sense that multinational corporations are interested in "development" and "progress."

Incorporating the land and its people made us all shareholders of the land. You look out over the horizon and you see all this wonderful land that we have lived on and made our living on for thousands of generations. But when you become a shareholder, which means that you have ownership in the land, it changes your perspective on how you look at that land. Instead of seeing beautiful forests, you see acres and acres of timber. Instead of seeing beautiful mountains, you see mines. You look at everything as a valuable resource rather than as a valuable way of life.

MM: How have the Eyaks come to be a minority on the board of their own corporation?

Lankard: The Eyak Corporation was fighting for its land claims along with the other Indian tribes in the region. It had come into view that the Eyaks were an extinct people - that we were pretty much assimilated into other tribes - so the federal and state governments considered the Cordova area or the Copper River Delta area a melting pot for a bunch of different Native groups. There were Aleuts there, as well as Klinkits, Chugach Eskimos (who are pretty much Aleuts), the Eyaks and a few Upiks and some Athabascans. You’ll find that type of mix anywhere in Alaska unless you’re in really remote villages.

The Eyaks’ ancestral claim to the land was proven. But some important terminology was instituted in the Land Claims Act itself that said membership in a village roll was to be determined by residency in a village: if you were considered a resident of the Eyak village area, and if you had a quarter Indian blood or more, then you were able to enroll as a member of the Eyak village. Three hundred Aleuts, Klinkits, Upiks and Athabascans then became a part of our village council - so right off the bat we became a minority in our own village council. They took over our council and passed laws that were not traditional to us. As soon as the Eyaks’ land claim was accepted, the board incorporated 148,000 acres of land. The Aleuts then took all the positions on the board of directors of the Eyak Corporation. So we have been a minority at the corporation since day one.

MM: What is your current dispute with the board?

Lankard: The board is making a move on our ancestral lands on the Eyak River. For the last three years, prior to June 1992, I sat on the board of directors of the Eyak Corporation. I tried to institute policies that protected our ancestral lands from being destroyed. I met with the board on many occasions to try to prevent clearcutting. We had a verbal agreement with the loggers and with the Eyak Corporation that the area right along the Eyak River would not be cut.

When I was out commercial fishing this summer, I heard on the radio that the loggers had made a move on the River. The area right along the River was cut. This section was called Eyak River East, but the corporate management and the board of directors called it the Curren Slough clearcut. They said there was a technicality in our verbal agreement stipulating that Eyak River East was not part of Eyak River. But the clearcut is adjacent to the Eyak River - it is the Eyak River. So I went to the board of directors and I pleaded with them not to cut the area until a cultural survey had been done to remove or excavate artifacts or burial sites or anything that was of significance to us before it was totally destroyed. They chose not to.

Jones: In the 1960s, I got a letter asking if I would sell the last Eyak village. I fought for the land for seven years. But just a few months ago, I was told that I sold that place. If there are any papers saying that I sold it, they have to be forgeries. Because I did not sell anything. I will not sell any of our people’s land. It is sacred to me. I would never be able to face myself, my family, my people or God if I had ever done such a thing. There isn’t enough money in this world. My land means more to me than all the money in this world.

Lankard: In response to the lawsuit, the corporate management alleged that Marie sold the village. In fact, that was not true, but they used it to discredit us and our claim to the land.

MM: Can’t you use your power as an Eyak Corporation shareholder to influence corporate decisions?

Lankard: As shareholders we have zero rights. All of the traditionalists are called "dissidents." The dissidents do not have the education, they do not have the money, they do not have the power to go against these corporate Indians. Twenty years after the passage of ANCSA, on December 18, 1992, the moratorium on the sale of our stock was supposed to be lifted. All of the Native corporations got together and changed the law a couple days before the moratorium was lifted, and added another year-and-a-half moratorium on the sale of our stock. The moratorium was instituted to protect Native corporations from hostile takeovers by outside interests, but one of its negative effects is that it shields Native board members from accountability. By taking away the right to sell our stock, they left us with no leverage to influence corporate decisions. Board members do not have to fear outside corporations coming in and taking over the board so they are free to act as they wish.

The corporate Indian position is that they feel that they have to give the Natives dividends because the Natives’ skin is brown - their attitude is basically, "We are Natives so we have to give our people dividends." They are buying into the welfare system that says they have to give us money.

Well, we don’t want the money. We want our land. With the land comes the resources and then in turn comes the money. We feel that there is more money in governing and managing our land than in developing its resources, because once the resources are gone the money is gone.

MM: How should the Native Corporation system be reformed? How should Native lands be managed?

Lankard: There needs to be a new vision and spirit put back into the hearts of the people who are silent right now. The change that needs to take place is to prove to the Natives that they do have power and that their voices do count. Because right now you have intimidated people who are afraid to talk and afraid to come forward. So their voice is deadened. I would say that our spirit has been broken in the last hundred years. What we are trying to do right now is revive the spirit of the people and put pride back in their hearts.

Then we need to begin to work in a new direction to preserve the lands the same way we have for thousands of generations. If one of the main concerns is to create dividends for Native people, we need to develop resources in an unobtrusive way.

By developing non-obtrusive tourism in Alaska, for example, you can create a number of jobs. We are running out of places like this in the world. [Responsible tourism] will also teach people to respect the land again. If you pack it in, you pack it out. No one is going to want to come visit Alaska after our lands have been clearcut and strip mined - they can see that in the Lower 48, they can see that from their own homes.

The important thing is to get people back on the land. When you live in the United States, your feet never touch the ground - you’re on pavement constantly, you’re in cars, you’re in homes. When you go out into a wilderness area and you are out in the woods and near a stream and your feet are solidly on the ground - you feel a sense of balance, you feel like you have come in touch with the earth. That is what the Native people have always had, that is why they have always been relaxed and wise. We have a saying now that with the corporate Indians, the wisdom has left their chiefs. In other words, they’ve lost touch with reality, they’ve lost their balance. They are caught up in a world that they are not familiar with.

We need to be able to go out to those woods, near those streams, out to those areas that are sacred to us. The last thing that we want is to walk into a clearcut, because there your heart is filled with pain. Or if you go to a favorite mountaintop and it is strip- mined, how are you going to feel about that mountain? It takes away the sacredness of the area.

This is what we are trying to protect. So people can enjoy what we have enjoyed for thousands of generations. The only way that anything is going to be left in this world is to make people hear what we are saying and understand the importance of why the land has to be left alone.


The Price of Privatization

British Miners in Jeopardy

by Helen Beatty

LONDON - In 1926, coal miners led the general strike. In the 1970s, they brought down a government and plunged England into darkness. Eight years ago, the workers’ picket led by the British coal miners was Europe’s largest strike for over two generations. Now, in 1993, the coal industry is again the source of national economic strife - but this time, the British government has been thrown into crisis without any miner having lifted a finger.

In October 1992, the British government announced the largest mass layoff in its history, as it revealed plans to close 31 coal mines - more than half the country’s coal pits - and to axe 30,000 jobs. The speed and scale of the dismissals rocked Britain. As the recession deepened, a storm of protest swelled against proposals that would have put thousands of miners out of work before the end of the week. While the government was reeling from the force of public outrage, British mining unions, including the National Union of Mineworkers (NUM), the Union of Democratic Mineworkers (UDM) and Nacods, the pit deputies union, won a High Court ruling that held the decision to shut the mines to be an unlawful breach of both British and European employment law.

But the unions’ victory in the courtroom was limited. The High Court ruled that the manner in which the pits had been closed was illegal, finding that the government broke a consultation agreement with the miners that placed decisions about closures at the discretion of an independent review. The court did not, however, rule the scale of the closures illegal. British coal miners still face pit closures and pressures to accept redundancy, or layoff, packages.

Coal mining has always involved many of the country’s most important employment issues. The mining strikes in 1972 and 1974 are linked in the public mind with the three-day week; with a snow-bound and strike-held Britain caught in the "winter of discontent." Much of the public remembers the failed 1984-1985 strike more for its flying pickets (union demonstrators who travel from one pit to another to set up picket lines and to persuade miners to vote for a strike in their regional ballot) and hardline union politics than for the massive layoffs that sparked the strike.

Now coal is back on the agenda. But this time around, the focus is radically different. The announcement of the pit closures became the touchstone of general dissatisfaction over economic policy and rising unemployment. As tens of thousands of miners faced the layoffs that haunted so many workers, the public began to question why the closures had been ordered. Today, the public is incensed over the way the government has treated the miners.

Miners, their unions and some Members of Parliament (MPs) blame the speed and scale of the closures on the government. The most bitter accusations are aimed at the government’s privatization of the coal industry; even the state-owned British Coal is critical of government policy. "The way the industry was privatized has had a very long bearing on the situation we find ourselves in. The closures are a consequence of the way the industry was privatized," says a British Coal spokesperson.

The country’s most contentious employment debate has begun to turn into a debate on economic policy. Since the failed 1984-1985 strike, the government has succeeded in directing the coal debate away from miners’ wages and coal as a national asset, and toward pit productivity and profit. But now the miners are challenging the government’s "free market" coal policies on the government’s own economic terms.

The right to jobs and wages

British unions have historically fought for better wages and against pit closures at the same time that politicians and industry have argued the need for cheap electricity, leading to a series of clashes between the right-wing Conservative government and the militant National Union of Miners (NUM). The two were poles apart: the NUM focused on the right to jobs and wages and saw the survival of mining as a social issue and British- dug coal as a national asset, while the Conservative government insisted that the coal industry and its workforce had to bend to market forces.

When the Labour government nationalized the British coal industry in 1947, it instructed the miners to produce as much coal as possible. But the advent of cheap oil in the 1950s and 1960s shifted that directive to producing coal as cheaply as possible. Although the country’s coal had a near monopoly on the domestic market, a trend of pit closures began.

As the pressure for productivity was increasing, the tension between the government and the unions grew. The NUM moved to the political left and more forcefully pressed for higher wages and better safety conditions in the deep underground pits. The miners’ anger finally boiled over in the 1970s, the decade when Britain’s unions reached their post-World War II zenith. In 1972, the miners held their first national strike in 50 years, resulting in power cuts that plunged the country into darkness. They successfully destroyed the government’s pay policy and became the highest paid workers in state-owned industry as oil prices quadrupled. When oil prices came down, the threat of pit closures rose again. In 1974, the miners went on strike again, forcing an election and bringing down the Conservative Heath government.

In the 1980s, the Conservative Party, returned to power with Margaret Thatcher’s 1979 election, decided to break the miners’ union as a central component of its right-wing ideological onslaught. Throughout the early part of the decade, the Thatcher government prepared for the intense conflict it had decided to provoke. First, the government began to build up coal reserves at power stations. Second, it appointed a manager who had earned a reputation as a union buster in the United States to the National Coal Board. As president of the U.S. mining company AMAX , Ian MacGregor refused to renew the United Mineworkers of America union contract at the Belle Ayr coal mine in Wyoming in 1974, breaking a strike and threatening miners with the loss of their jobs unless they left the union.

As head of the National Coal Board in the spring of 1984, MacGregor announced the closure of 20 British pits and dismissed 20,000 jobs. Under the radical presidency of Arthur Scargill, the NUM tried to fight back, declaring a national strike. But, with little support from the British left or public and divided internally, the NUM failed. In the wake of the strike, some miners formed a breakaway moderate union, the Union of Democratic Miners.

In 1987, the government transformed the National Coal Board into British Coal; the newly corporatized entity was given a mandate to lead the industry toward privatization. Between 1987 and September 1992, the mining workforce was halved to 60,000. Then-Prime Minister Margaret Thatcher’s "no turning back" policies won her respect from large segments of the population for confronting the threat that had dogged the Conservatives for so long.

The Tories came out of the conflicts with the upper hand. With pits closing at the rate of one-a-week in the late 1980s, miners buckled under the new ethos of making the pits pay. And facing stockpiled coal and heavy pressure to take voluntary redundancy payments, the mining unions had little leverage for a strike when the government announced the closures in October.

The drive for cheaper coal

Underlying the pit-closing announcement was the drive for cheaper energy. Business leaders argue from the depths of the current recession that they need all the help they can get to compete in the widened European and world markets. British coal has trouble competing in the international energy market, but that is largely because of a combination of subsidies and artificial market structures biased against it. In the 1980s, the pressure for improved productivity in British pits increased with competition from cheaper coal from foreign markets. But the drive toward privatization may have dealt the hardest blow to British coal - and not just the run up to the privatization of the coal industry. What many consider the bungled and inept privatization of the electricity industry also dug the grave for British coal pits.

As a whole, the British mining industry remains efficient and competitive at a world level: the costs of running the more expensive mines are offset by profits and lower operating costs of other pits. Plans to privatize coal would mean a vast reduction of the British coal-mining industry, however, with the government stripping the assets of the more expensive operations while maintaining the most profitable pits. "Looking at a government-commissioned report, [the government] would privatize coal by reducing the pits from 50 to 12 to make them more attractive to buyers," says a spokesperson for the Coalfields Communities Campaign, an association of local authorities in the mining districts. "It looks as if these closures were geared as a way of providing a quick fix for privatization."

However, the Coalfields Communities Campaign and other critics argue that it is problems associated with the coal market created under electricity privatization that have had the most devastating effects on the coal industry. In 1990, the Thatcher government sold the 12 government-owned regional electricity distribution boards to private investors. These newly privatized companies have a monopoly in each region in which they sell electricity. In 1991, the Conservatives sold off the electricity-generating industry - the main, if not sole, buyer of British coal - to PowerGen and National Power.

This duopoly in the electricity-generating industry puts it in an unnaturally strong bargaining position against the coal industry. "It’s a stagnant market. The government set up two massive companies when they could have had twenty. National Power is the second biggest utility in the world," says Andrew Holmes, writer for the Financial Times- published Power in Europe. "PowerGen and National Power dominate nearly three quarters of the country’s electricity generation industry," he says.

Because it is not subsidized, British Coal has been protected by an artificially priced five-year contract between the two generators. The contract expires in March 1993, and the "Big Two" are keen to more than halve the amount of coal they buy, as well as cut the price they pay for it. Government plans to round off the duopoly by privatizing a third energy supplier, the nuclear power industry, were thwarted by the reluctance of buyers who refused to touch the nuclear industry because of its massive operating costs. Withdrawn from the market, the industry is now subsidized as a state company, Nuclear Electric. Further, British Coal is now facing stiff competition from cheaper coal imports and from a politically charged move to gas.

The dash for gas

Government policies have squeezed British Coal, both by privatization and by subsidy. The most dramatic switch to another fuel source to replace traditional coal-fired power stations has come in the form of a "dash for gas." After the privatization of electricity, independent generators, threatened by a market dominated by National Power and PowerGen, formed plans to build new gas-burning power stations. The independents turned to gas partly to escape from the two big generators’ coal- and nuclear-generated electricity and partly because building gas-fired plants requires less upfront capital. The dash for gas took off as the generators bought the cheapest fuel, with the Big Two joining in the rush. The newly privatized company British Gas found generators pounding at its door, and British Coal’s sales were threatened.

Gas-burning power plants are billed for gas whether they burn it or not. Power stations buy coal by the ton, but they buy the right to burn gas. That right cannot be "stockpiled." And so they burn gas constantly, pushing coal to the sidelines. Companies are also obliged to buy electricity produced by the heavily subsidized Nuclear Electric which receives grants of £1.2 billion each year, adding up to nearly 11 percent of the final price of consumers’ electricity bills.

The move to gas and the apparent abandonment of coal by independents and the Big Two concerned the government. At a 1992 Select Committee hearing, the recently created electricity regulatory body said it was not in a position to dictate to companies what fuel to buy. And so, with its markets dwindling and the government refusing to pressure generators to purchase coal, British Coal ordered the pit closures in October.

Critics of the pit closures are calling for protection for the industry, not just to save miners’ jobs but as the basis of a long-term energy policy. Gas prices will not stay cheap forever. British gas reserves are estimated to last between 30 and 60 years; coal reserves are expected to last for several hundred. Even at current cheap gas prices, the reliance on gas raises economic controversy. It is a cheap fuel, but gas power stations are more expensive to run. Coal is more expensive, but its existing power stations are the cheapest to operate, according to British Coal. An increasingly cheaper supply of British coal could act as a long-term insurance policy against rising costs of imported coal and gas. But like any policy, someone has to pay the price before the policy pays off.

"Since 1988, the coal industry has not received any form of subsidy from the government. If we only got half of nuclear power’s subsidy, we would save every one of the miners’ jobs. British Coal is very close to beating the market price. The 31 pits are profitable. Give us a chance and we’ll run them," says Labour MP Dennis Skinner, secretary of the parliamentary miners’ group. He believes the market pressures squeezing British coal are strong enough, without added pressure from government policies, and argues that British Coal is not being given a fair chance to survive.

"The squeeze on British coal has been made tighter by the government’s ideological hostility to the miners and the NUM," says Skinner. He says this hostility has blinded it to a sensible energy policy. And this time around, the public has been outraged as the comparative costs of coal and nuclear power have come to light. "The public outcry this time round was the knowledge that nuclear power was subsidized to the tune of £1.2 billion. The government is embarrassed and should save the pits. But coal must be protected not just from the market but from the government as well," Skinner says.

Fueling the outcry

Many of the 31 pits earmarked for closure are profitable. The government’s argument that no one wants to buy British Coal is being publicly scrutinized in the light of British Coal’s bargaining position with the Big Two. The reduction of Britain’s mining industry has been criticized as short sighted and badly managed. British Coal has the lowest production costs in Europe, yet Britain continues to buy subsidized German coal and French electricity.

In light of the negative public reaction to the last coal miners’ strike, the government could not have anticipated the extent of public anger over the pit closures, and now finds itself in a no-win position. If it refuses to step in to protect the industry, the Conservative government will have to answer to the public. If it does take measures to hold up the industry, it will face criticisms from its own Conservative backbenchers who introduced the free market policies. Any U-turn in its free market approach will recall the Heath government’s weakness in the face of the 1974 strike that pushed the Tories out of power.

"The government created an enemy following within its own Tory Party who [directed] the economy to not rely on British Coal or the NUM. Having defeated the miners in ’84 they carried on with privatization. People thought it would work wonders, but now they are saying it’s no big deal and they could see British Coal was being privatized out of existence," says Skinner.

A Department of Trade and Industry spokesperson defends the government’s privatization policies and argues the electricity companies will not be able to exercise unbalanced market power over the coal industry. "Electricity is a regulated market. The purpose of any market that is privatized is to provide the element of competition and the regulator will promote that," he says.

British Coal itself places the blame for the crisis on its market’s doorstep. While it is still beating its costs down to world market prices, its sales are dependent on the Big Two. "The problem has been that the generators won’t take the coal. The two big generators have made it clear they won’t make the contracts more than 40 million tons next year and 30 million after that. This year it’s 65 million tons. If we are restricted to a market of 40 million tons then all those [pits] will have to close," says a British Coal spokesperson.

The state-owned corporation questions the economic argument behind the newly created electricity market, noting that many of the pits earmarked for closure are indeed profitable under the terms of the contract that is due to expire in March. But it is the contracts that set the price and determine which pits make a profit. "Whether coal is profitable or not is not the issue," a British Coal spokesperson told the Monitor. But closing pits that make money makes no sense in the public mind.

Miners’ advocates are now calling either for subsidies or a "level playing field" for British Coal. "Mr. Heseltine [Britain’s President of the Board of Trade] has hidden all along behind the argument that there is no market for the coal from the threatened pits. Clearly, he has been badly advised. Modest changes to the way the electricity industry operates can ensure that, at no cost to the public, there is a market for this coal and a viable future for these pits," says a spokesperson for the Coalfield Communities Campaign.

While the government brought this crisis upon itself, it is the miners who will bear the brunt of the pit closures. "The government wanted to reduce the workforce by 30,000 to just under 20,000. There’s no question the government speeded up the closures. Since 1979 [it has] been running down the coal industry. Union busting has got it into this crisis. Now the market for British coal is being taken away - that’s the real crunch," Dave Feickert, head of research at the NUM, told the Monitor. "We have the most technologically advanced underground coal mines in the world and we will be producing coal at competitive market rates from next year. Half our mines now can compete on their prices for coal. Yet the government is on track to throw away the British coal mining industry."

Feickert adds that miners’ futures will look even more bleak when British Coal is privatized. Private British mines are already competing with British Coal in the price war. "Wages in private mines used to be linked to wages in the public sector. That was removed by the government two years ago. The safety aspects are worse in private mines - the safety rate is six times worse than it was before, we’re back to levels from the 1920s and 30s. You can compare it with South Africa and [the former USSR]," he says.

Ironically, the Union of Democratic Mineworkers, one of the unions that joined in the court action against the closures, had originally spoken in favor of privatization at a Conservative Party conference. But when the pit closures were announced, UDM President Roy Lynk staged a one-man protest in a pit, and it was his union that called for a national strike, not the more radical National Union of Minerworkers.

The NUM has concentrated on appeals to the public, shifting to arguments that focus on national economics rather than employment. "We have been arguing the case for coal with its economic savings, environmental implications and energy requirements. We have lobbied the EC and it wants the British coal industry to stay open. They know we can compete with the world price. We are being supported by a wide range of people and organizations and are concentrating on winning the argument," says Feickert.

Scargill and the NUM are appealing to the public and, in 1993, the public seems prepared to admit they may have a case. Just as the government was on the verge of privatizing the industry, just as British Coal was beginning to compete on the world market and just as the mines were becoming an economic issue, the general public weighed in against the pit closures. The unions, they say, just might be right.


Coal Under Pressure: Europe’s Dying Industry

The coal mining industry is dying in Europe. Three years ago Europe imported 40 percent of its coal; by 2010 imports as a percentage of the market are expected to almost double. Coal extracted from Europe’s deep mines is facing stiffer competition as a result of expanded world trade. Colombia , for example, facing huge debt and a shortage of foreign exchange, increased its coal production by five times between 1980 and 1990. The country is notorious for its use of child labor and its policies of beating spiralling inflation by restricting wages. The European coal industry also competes with its industrialized trading partners, with imports from the United States and Australia , where coal is produced in less labor- and machine-intensive open cast mines.

European governments have either chosen to wind down the industry or to implement a series of policies to stem the tide against a flood of cheaper fuel. Europe’s deep mines are expensive to operate. European coal cannot compete on the current energy market unless it is protected or subsidized.

In France , the nuclear industry now produces three-quarters of the country’s electricity. Two hundred thousand French mining jobs have disappeared since the 1960s. The French government gradually ran down the workforce at its state-run mines through a long-term plan of early and natural retirement, heavy financial incentives and compensations.

After the Berlin Wall came down in 1989, 70,000 East German miners - half the country’s mining workforce - lost their jobs. Now the unified country is protecting its coal industry with heavy subsidies to enable it to compete in the European energy market. In real costs, Germany produces coal at up to three times the world price.

The European Community (EC), meanwhile, is pressuring European power stations to cut down dirty emissions. As one of the dirtiest fuels, coal produces high levels of the sulphur dioxide that causes acid rain. De- sulphurization equipment is expensive to install in existing coal power stations and the cost of building a "clean coal" burning station acts as a disincentive for many companies to burn coal.

Environmental pressure for "green" coal has also increased. Indonesia markets Envirocoal, a product with a lower sulphur content and more efficient energy release. But the environmental advantages of burning this kind of coal must be weighed against the environmental costs of its mining methods, says Roger Moody of MineWatch, a British advocacy group. "Clean" coal comes from open cast mines and is imported, while "dirty" coal is deep-mined in Europe. In the long term, Moody says, open-cast mining in both Indonesia and the United States destroys the land surface along with the homeland of many indigenous people. "Deep mining is more environmentally friendly although the coal does have higher sulphur levels," explains Moody. He believes that deep-mined European coal burnt at de-sulphurizing power stations may be the greenest form of coal-fired electricity.

At the same time that the EC is pressing the industry to clean up its act, it is also pushing member states to increase coal productivity and efficiency. Currently, it sets levels on the amount each country can subsidize energy; the countries may spend it any way they want on their energy industries. Virtually all use this to subsidize coal. However, this agreement is due to expire at the end of this year, and the EC plans to cut state aid to coal if the most unproductive pits do not bring their costs down to the European average, currently nearly three times the world price.

Britain contains half of Europe’s total coal reserves. British Coal has responded to demands to improve the efficiency and productivity of its pits, producing coal more cheaply than any other nation in the EC. Production costs are almost half those of Germany and nearly one-third those of Belgium. British Coal expects its mines to start producing coal at world prices in the near future. Yet the British government is willing to cut 30,000 mining jobs at a single stroke. Critics argue the cuts are a direct result of Britain’s refusal to subsidize its coal industry. It is the only European country not to do so, meaning that British coal, although mined the most cheaply, is not always the cheapest on the market.

The British government has insisted that in order for coal to survive, it must compete in the "free market." Moody says, "Britain is the only country that is not protecting the industry. Trade union opposition in the rest of Europe has been lower than in this country. There have been some strikes in Germany and Poland but changes have tended to be more gradual." In 1984, 170 deep mines in Britain were operating; in 1992, 50 remained, and this year the figure would have dropped to 19 had the government’s plans gone through.

The future of coal mining in Europe looks bleak. In Britain it looks bleaker still as a unique blend of social history and economic forces meet head on.n

- H.B.

Corporate Profile

Burlington Northern

On the Wrong Track

by Dean Henderson

ON MAY 13, 1992, BURLINGTON NORTHERN (BN) gave pink slips to 190 out of 250 workers at its locomotive repair shop in Havre, Montana. Eight percent of the locomotive repair workers at BN’s Glendive, Montana shop were also given notice. Similar job cuts occurred at BN facilities in Minnesota, Nebraska, Illinois and Washington, saving the company about $9 million a year. The cuts were made in the wake of General Electric’s production of new high-technology locomotives which are able to traverse the entire "high line" between Chicago and Seattle without any en route servicing.

Job insecurity is nothing new to railroad workers, and certainly not to BN employees. Over the last decade, the company’s payroll has plummeted from 52,000 to below 30,000, despite protracted campaigns waged by rail unions, including the United Transportation Union (UTU), the International Association of Machinists, the International Brotherhood of Electrical Workers and the International Brotherhood of Boilermakers and Blacksmiths. Since the deregulation of the railroads via passage of the 1980 Staggers Rail Act, which removed government controls on rail shipping rates, the industry has undergone massive changes. With BN leading the pack, the industry has experienced a flurry of mergers, the shutdown of smaller depots and spur lines (lines that branch off from main tracks) and rapid replacement of human labor with technological innovation. The consequences have been devastating for dozens of communities and thousands of workers.

When BN merged with San Francisco/Santa Fe Railroad in 1980, it became the largest of the remaining rail oligopolies in North America, with over 26,000 miles of track stretching from Pensacola, Florida to Vancouver, British Columbia. That same year, Milwaukee Road Railroad went bankrupt, leaving BN with a virtual monopoly over rail traffic from the Midwest to the Pacific Ocean. Scores of midwestern towns like Eureka, South Dakota, which had depended on the railroad to haul their bountiful wheat harvests, saw their steel rails abandoned, even torn up, by BN workers. BN regarded stops not located on the high line as inefficient.

BN has been aided and abetted by the U.S. federal government in undertaking the activities which have cruelly dislocated workers and communities. There is a strange logic to the federal government’s role; it helped create, built up and continues to subsidize BN, despite the company’s dismal social and environmental record.

Railroading workers

All of organized labor has been under attack from management since Ronald Reagan gave striking PATCO air traffic controllers the ultimatum to return to work or be fired in 1981. Since then, rail workers have had to fight not only their corporate employers, but also federal regulators.

In 1987, BN transferred its southern Montana "main line," which connects Sandpoint, Idaho with Huntley, Montana, to Montana RailLink. RailLink was resurrected from obscurity by Missoula-based business mogul Dennis Washington. The spin-off came during pending contract negotiations between the UTU and BN. Washington hired scabs, eliminated the job of caboose engineer and sent thousands of union workers packing. UTU members from North Dakota to Washington went on strike, but just five hours into the picket, U.S. District Court Judge Dennis Steart issued BN a restraining order to force an end to the strike. Although RailLink is not a legal subsidiary of Burlington Northern, BN retains control over the main line, since it owns and operates all connecting lines.

In 1991, UTU and the International Machinists union called a strike against BN in response to the company’s foot-dragging on the workers’ contract, which would ultimately cut crew sizes. On April 17, 1991, Congress issued Joint Resolution 222, which curtailed workers’ right to strike, ordering unionists back to work while federally appointed "special mediators" arbitrated between the unions and BN. The arbitrators approved all recommendations made by the Presidential Emergency Board (PEB) 219, an ad hoc group created by the Bush administration, which served to advise industry to streamline operations by cutting jobs and urged the federal government to grant huge tax breaks to companies that followed PEB prescriptions.

The PEB 219’s key recommendation was that crew sizes on trains be cut from 3.65 persons to 2.25 persons. Six months after these recommendations were issued, Burlington Northern announced the elimination of brake operator jobs on 65 percent of its lines and additional ground service cuts, amounting to 5,100 jobs sacrificed. Backed into a corner by Congress, UTU was forced to swallow the dubious medicine or lose members’ jobs altogether. According to John Peter Paul, chair of the International Machinists Union, "Ninety percent of railroad workers did not accept the contract. It was shoved down their throats by PEB 219."

The United Transportation Union is still trying to negotiate a new contract with BN. UTU General Chair Rick Marceau says that the union is "of course most insistent that our members who are disadvantaged receive a level of protection. It has always been UTU’s stance that any jobs that are eliminated should be as a result of attrition - like when the numbers of firefighters were reduced during the 1960s."

Burlington Northern was rewarded by the Bush administration with a $735 million second quarter 1991 "special charge" tax deferral which will go toward worker relocation, workers’ compensation claims and "anticipated" environmental cleanup. In other words, U.S. taxpayers will subsidize BN’s injuries against workers and the environment.

As for the May 1992 cuts, Roger Campbell, director of external communications at BN, says simply that "All affected employees were offered similar positions at other BN facilities in Minneapolis, Minnesota; Lincoln, Nebraska; and Seattle, Washington." He adds that in the case of the UTU, BN offered "an opportunity for voluntary separation in return for severance payments of up to $60,000 per employee." BN Chief Executive Officer William Greenwood said at the time of the lay-offs, "The decision was especially difficult for BN because of the exceptionally high quality work performed by all our shops’ employees. Their contributions to our locomotive and car operations have been superb."

BN’s family tree

The history of the BN empire provides a textbook case of corporate welfare. The company became "official" in 1970 when Chief Justice Earl Warren, in a departure from his normally regulationist stance, declared legal a 1901 "gentlemen’s agreement" between James Hill and J.P. Morgan to consolidate their respective railroads, Great Northern and Northern Pacific (NP). Prior to the ruling, the companies had functioned almost as a single entity, occupying the same headquarters despite the fact that an official merger had been disallowed on anti-trust grounds by the U.S. Supreme Court in 1904.

Under the 1864 Northern Pacific Land Grant, Morgan’s company had received 40 million acres of free land in return for NP promises to lay railroad track from Lake Superior to the Pacific Coast. NP did not deliver on its promises, but kept the land, winning a lawsuit brought against the company by the U.S. government in 1880. When NP went belly-up in 1893, J.P. Morgan stepped in to prop up the company with 100- and 150- year bonds secured by the Land Grant property.

The Morgan liens were retired in 1988 when then-BN chair Richard Bressler unhitched the railroad from its Land Grant properties by creating Burlington Resources (BR). With bondholders paid off, Burlington Resources was able to fully exploit the mineral, oil and gas deposits on the Land Grant properties that have made BN one of the U.S. West ’s largest landholders. Properties that had no resource value were liquidated by a BR subsidiary, Glacier Park Inc., which was formed as a real estate company to market unwanted BN Land Grant properties. As of December 31, 1991 proceeds from these sales totaled over $400 million, most of which has been invested in coal, oil and gas properties.

Since the spin-off of Burlington Resources, BN has engaged in a frenzy of limited partnerships and partial sales to take advantage of the 1987 tax reform law, which contains a loop-hole whereby resource companies which form limited partnerships do not have to pay any federal taxes. But while BN has spun off several companies, it has kept control of its empire through interlocking directorates and major stockholdings.

The BN empire

Burlington Northern owns portions of most major railway terminals and also boasts trucking firms, real estate development companies in New Mexico and Arizona, a communications company in McLean, Virginia and a railroad car leasing unit, BN Leasing Corporation. Amtrak operates service on BN tracks, under contract with and heavily subsidized by the U.S. government. The company has offices throughout the world, with significant joint ventures in Japan with Sumitomo and Mitsubishi and in South Korea with the Korea Electric Power Company. BN also operates the only foreign-owned railroad in the former Soviet Union.

Soon after BN’s "official" formation in 1970, the company began swallowing up smaller resource companies, which became integrated components of its rail monopoly. BN has made important acquisitions, including El Paso Natural Gas, an oil and gas holding company which operates 20,000 miles of natural gas pipeline from Oklahoma to California. El Paso, purchased by BN in December 1991, is a 50 percent owner of the Mojave pipeline, the only gas pipeline to California. Another substantial subsidiary is Meridian Oil, a Houston-based company which holds title to 10 million acres of proven oil and gas reserves from Alabama to North Dakota. In 1991, Meridian Oil purchased off-shore Gulf of Mexico properties and is now the largest non-integrated oil company in the United States.

Sacrificing forests

On December 31, 1992, Burlington Resources sold its general partnership interest and other remaining interests in what had been perhaps its most significant subsidiary, Plum Creek Timber. In 1989, only a year after BR was created as the resource branch of BN, Plum Creek, 11 percent of which was owned by BN, was spun off as a limited partnership. While Burlington Resources retained an 11 percent interest as one partner, it was able to transfer $325 million in long-term debt to Plum Creek, thereby avoiding a potential leveraged buyout. Since 1989, Plum Creek has paid nothing in federal taxes. The company owns more old-growth timber (1.4 million acres) and more grizzly bear habitat than any other private landholder in the United States.

Since BN bought the company in the early 1970s, Plum Creek has carved out 640- acre clearcuts from the Cascade Range to Montana’s Swan Valley, leading Representative Rod Chandler, D-Washington, to proclaim the company the "Darth Vader of the timber industry."

Most of the trees which Plum Creek cuts in the Cascade Range are not processed locally. They are sent to the Pacific Rim in raw form for milling, primarily to Japan through BN’s joint venture with Sumitomo Forestry. After consummating its relationship with Sumitomo in early 1990, Plum Creek shut down all of its West Coast sawmills, putting thousands of millworkers out of their jobs. By way of justifying the job cuts, industry propagandists concocted the infamous spotted owl crisis, dividing timber workers and environmentalists despite the fact that over-cutting and raw log exports shut down mills before the owl was listed as an endangered species.

While Plum Creek shut down its coastal mills, it re-tooled mills in its intermountain region with high-tech capital-intensive equipment. Plum Creek’s Evergreen, Montana facility, which recently received the largest fine ever levied by Montana’s Department of Health and Environmental Sciences for air quality violations, provides a classic example of the costs associated with capital-intensive mills. In the past few years, the mill has slashed its workforce by over 30 percent; nonetheless, more trees must be cut to keep pace with the new saws. It is this kind of short-term, cut-and-run corporate ethic which has created both a timber shortage and a job shortage in the region. In 1989, Plum Creek cut a record 597 million board feet of timber.

Loren Rose, financial officer for Pyramid Lumber of Seeley Lake, Montana, says, "If you drive up the Swan Valley, you get sick in a big hurry. It’s not that logging in itself is bad, but the way Plum Creek does it is intense."

Plum Creek Director of Corporate Affairs Sharon Kanariss responds, "We disagree that we overlog. We are working to get our logging into a managed state. Currently, in the Rocky Mountain area, 80 percent of our logging is done through selected harvesting, and only 12 percent by clearcutting."

Through market manipulations, the company has ensured that there are no competitors to provide an alternative milling model. In 1989, Representative Pat Williams, D-Montana, accused Plum Creek of deliberately bidding the price of federal Forest Service timber beyond the reach of locally owned mills in order to eliminate future competition. Three years later, mills such as Stoltze-Connor, WTD Industries and Intermountain Lumber are out of business in western Montana, and Williams’s claim seems to be beyond dispute.

Mike Bader, executive director of the Missoula, Montana-based Alliance for the Wild Rockies, says, "Plum Creek means environmental terrorism. The company epitomizes a colonial power coming in to extract resources, demonstrating blatant disregard for both the land and its people."

BN’s big appetite

While BN now reaches into numerous industries, rail transport remains its bread and butter. One third of BN’s cargo is coal. The company currently hauls all coal from Wyoming’s Powder River Basin and will be the exclusive transporter of coal from the Bull Mountains Mine north of Roundup, Montana when mining activity, scheduled for early this year, begins.

After coal, the railroad’s second biggest money-maker is grain. In 1986, San Antonio’s Public Service Board filed a complaint against Burlington Northern for excessive freight charges during the height of the Texas wheat harvest. A number of Montana’s elected officials, including Representative Pat Williams and Public Utilities Commissioner John Driscoll, also accused the company of "hiding" freight cars - that is, lying about their grain-hauling capacity - to create the illusion of a rail car shortage to justify its exorbitant rates.

In 1989, the Interstate Commerce Commission (ICC), after receiving numerous complaints from farmers, ordered BN to repay $9 million to Great Plains farmers whom the railroad overcharged for hauling their grain to Pacific ports. On February 9, 1993, the District of Columbia Court of Appeals overruled the ICC decision.

Many farmers, however, testify to BN’s outlandish hauling charges. Randy Johnson, former president of the Montana Graingrowers Association, claims that BN takes 20 to 34 percent off the top of the state’s wheat crop each year. Ted Schye, a Glasgow, Montana wheat farmer, says "I feel almost like a sharecropper to BN," because the company takes "a third of my crop every year."

Former Montana Public Service Commissioner John Driscoll blames BN for many of Montana’s economic woes. "We’re being made economically anemic by this parasite," says Driscoll. BN’s monopoly over rail traffic puts it in an extraordinarily powerful position in rail-dependent Montana. Here the company services 98 percent of all grain elevators. In Texas and Oklahoma, BN controls 90 percent of grain transportation.

Cheating on public land

Like the titans of numerous U.S. industries, BN is heavily subsidized by U.S. taxpayers, harms the environment and exploits its workers and small business. Critics wonder why the company is given such free rein.

Like any successful business rogue, Burlington Northern is a major player in the game of Washington influence peddling. Its various political action committees contribute almost $1 million a year to a cross-section of the Congress and Senate, with the highest donations going to representatives from states with a major BN presence. Last year, for example, BN’s railroad political action committee contributed $10,000 to Senator James Exon, D-Nebraska, and $9,000 to Senator Larry Pressler, R-South Dakota. Burlington Resources has its own political action committee, as do several of its subsidiaries. BN’s efforts are supplemented by the industry group Association of American Railroads, which gives generous donations at election time, and which is supported by Burlington Northern.

Over the past 12 years, BN has been given federal encouragement to mechanize people out of jobs and export valuable resources tax-free to foreign countries, while the Bush administration and industry hammered spotted owls and "jobs vs. the environment" arguments into the public psyche. Many people, however, are no longer buying this rhetoric.

Don Driscoll, mayor of Havre, Montana, has seen his community devastated by BN job cuts. "Jobs are not being created [by increased logging] and don’t let anybody tell you they are. Corporate America needs to examine its soul. All I see inside [BN officers’] heads is numbers jumping over numbers. What about American workers and their families?"

Dr. John Osborne, President of the Spokane, Washington-based Inland Empire Public Lands Council, thinks he has the solution to the problem of Burlington Northern. "If BN has not lived up to the letter and spirit of [its] Land Grant, [Burlington Northern] should forfeit [its] lands," he says. By law, Congress can force Burlington Northern to do just that, as soon as it finds the courage to do so.

Book Review

Hired Guns

Buying Power in Washington

by Louis Nemeth

The Lobbyists:

How Influence Peddlers Get Their Way in Washington

By Jeffrey H. Birnbaum

New York: Times Books, 1992

334 pp.

PEAKING WITH THE 1990 BUDGET ACCORD that finally shattered President Bush’s infamous "read my lips" pledge - and his chances for reelection - Jeffrey Birnbaum’s The Lobbyists presents what too few U.S. citizens see: the day-to-day workings of the influence peddlers who promote their clients’ agendas, often at the expense of the public.

Birnbaum, who covers the White House for the Wall Street Journal, follows a handful of the most powerful members of Washington’s "Fifth Estate" through the years of the 101st Congress, 1989 and 1990. Some, like Stuart Eizenstat, former aide to Jimmy Carter, and Charls Walker, former deputy treasury secretary under Richard Nixon, are well known fixtures on the political scene. Others, such as Thomas Donohue, president of the American Trucking Association, or Robert Juliano, who has ties to labor (Hotel and Restaurant Workers) and business (American Express), are famous only in their own circles.

Each of them, however, has a common interest: representing corporate America in the never-ending budget struggles that constituted much of the work of the 101st Congress.

It is, as Birnbaum notes, a battle that frequently occurs "on the fringes," where obscure provisions in a tax law can save or cost a client millions of dollars. He writes, "[It] is there, in relatively small changes to larger pieces of legislation, that big money is made and lost. Careful investment in a Washington lobbyist can yield enormous returns in the form of taxes avoided or regulations curbed - an odd, negative sort of calculation, but one that forms the basis of the economics of lobbying."

The two years Birnbaum profiles are full of opportunity, treachery and disappointment for the lobbyists he follows. Walker, Mark Bloomfield of the American Council for Capital Formation and others mount an ultimately unsuccessful campaign for a reduction in the capital gains tax. Eizenstat fights, more successfully, to retain a tax break for research and development. Donohue labors mightily, and with mixed results, against an increase in the motor vehicle fuels tax, and Robert Juliano masterfully protects one of the few benefits both his business and labor clients enjoy: the tax deduction for the "three- martini lunch."

During the period portrayed in Birnbaum’s book, much of the debate in Washington centered on the skyrocketing federal deficit and attempts to reduce it. In that environment, Birnbaum points out, tax breaks for the largest U.S. corporations and wealthiest individuals were an easy target for members of Congress desperate for revenue. The lobbyists he follows make their names and their fortunes protecting such corporate bonanzas.

To do so, they have grown increasingly sophisticated in their methods. Birnbaum effectively traces the evolution of lobbying from its roots in what was essentially bribery to the modern techniques of direct mail and telephone outreach, mass circulation advertising and affiliations with academic and scholarly institutions designed to provide intellectual camouflage for profit-driven motives. Birnbaum is at his best describing methods by which lobbyists operate: blending social, political and personal relationships into a seamless whole that rarely affects legislation directly, but distorts the lens through which legislators view issues and make decisions. "If you spend a lot of time with millionaires," declares one Hill staffer, "you begin to think like them."

Birnbaum notes that one result of lobbyists’ penetration of Washington culture is that "corporate America, once a perennial sacrificial lamb when it came to government crackdowns, has become something of a sacred cow. Not only are lawmakers and policymakers reluctant to make changes that would hurt businesses, they even have a tendency to try to help them." One example he points to: "In 1990, Congress passed ... the biggest deficit-reduction bill ever. But of its approximately $140 billion in tax increases over five years, only 11 percent came from corporations. The rest came from individual, taxpaying families."

Where Birnbaum fails is in analyzing - or even acknowledging - any link between the accounts his book portrays and the growing public cynicism toward all political institutions. Although he discusses the downfalls of former House Speaker Jim Wright and California Representative Tony Coelho, he only superficially points out that it was their relationship with lobbyists that led to their disgrace.

Nor does he provide any indication that the budget accord or the ethics travails of Wright, Coelho and much of the Department of Housing and Urban Development - all of which occurred in the period covered - had any lasting effect on U.S. political life or society. Even the most casual observer would conclude that these events in large part shaped the 1992 election and, as a result, the history of the United States for at least the near future. Yet, even in his epilogue, written just prior to the November election, Birnbaum only casually suggests that there may be something more to all of this than his book outlines.

Given the opportunity and the ammunition for a widespread indictment of the modern political process, Birnbaum settles for the more timid "behind the scenes" profile common for the reporter he is. "Just the facts" seems to be the motto. Birnbaum should have gone all the way, reaching the conclusion for which his book cries out.

Despite this shortcoming, and an unnerving insistence on writing almost exclusively in past tense (referring to individuals, organizations and Congress itself as if none of them exists any longer), Birnbaum’s The Lobbyists remains a compelling profile of a system ripe with problems. Perhaps his next literary undertaking will outline a solution.

Investing in Peace

Converting the Cold War Economy:

Investing in Industries, Workers and Communities

By Ann Markusen and Catherine Hill

Washington, D.C.: Economic Policy Institute, 1993

85 pp.

THE PROPOSAL TO CUT U.S. MILITARY SPENDING in half, long advised by peace advocates and others who have spent the last 12 years puzzling the ironies of U.S. budget priorities, is now being seriously considered even by some policymakers and elected officials well outside "the nuclear freeze crowd." The end of the cold war challenges the U.S. government to free up $140 billion per year by halving military expenditures over the next decade - or to deny that the "peace dividend" resulting from such a policy is desperately needed to bolster education, revitalize manufacturing, reduce budget deficits, provide jobs, income security and housing, invest in health care and restore the environment.

In Converting the Cold War Economy: Investing in Industries, Workers and Communities, a report released in February by the Economic Policy Institute, Rutgers University economist Ann Markusen and research associate Catherine Hill argue that the federal government’s creation of guaranteed markets and its provision of research and development (R& D) funds ensured the bloated success of a small group of U.S. industries: aerospace, communications and electronics. These three industries provided a large portion of U.S. manufacturing growth and export earnings in the last 30 years. Converting the Cold War Economy contends that science and engineering fields became swollen and defense-dependent, drawing talent away from civilian sectors. Moreover, the authors say, military production was highly concentrated in particular regions and communities, heightening their vulnerability to cuts.

The authors, operating under the sound assumption that a 50 percent military spending cut is imperative to economic health in the United States, focus their report on the means of successfully converting the cold war economy. They recommend that the federal government pursue a coherent R& D policy, emphasizing research on products that meet genuine social needs and ensuring that the benefits of federal R& D spending are spread out more geographically evenly than Department of Defense (DOD) spending has been.

The economists note that military cutbacks have already begun to erode the relative prosperity of "the gunbelt," where they contend that worker adjustment is hampered in part by the regional concentration of defense-oriented plants. The study shows that physical isolation of defense plants from civilian industrial districts makes it harder for workers to find new jobs.

Markusen and Hill argue that it would be unwise to expect the DOD to oversee conversion: in addition to a fundamental conflict of interest, the Defense Department has no expertise in civilian production or commercial competition. To achieve conversion efficiently, the authors propose establishing a temporary Office of Economic Conversion outside of any cabinet agency and responsible directly to the president. The Office of Economic Conversion would craft policy, review government programs and provide state and local governments with badly needed data on forthcoming cuts and their probable impact. Otherwise, they warn, U.S. citizens can fear the worst for their defense-addicted economy. "Deliberate, concerted action is required to shake the dependence of our economy on Pentagon dollars without the worst ‘cold turkey’ symptoms afflicting our industries, workers and communities," write Markusen and Hill.

Names in the News

Propping Up the C-17

THE U.S. AIR FORCE has been bailing out financially strained McDonnell Douglas , the nation’s largest defense contractor, according to the findings of a Pentagon inspector general (IG)’s report released in late January. The report prompted two powerful House members to call for a Securities Exchange Commission (SEC) investigation of the company and a Justice Department criminal investigation into the C-17 Aircraft (designed to be a state-of-the-art airlift capable of landing on short fields) program and individual members of the Air Force.

The IG’s report found that from August through December 1990, the Air Force implemented a plan to provide financial assistance to the McDonnell Douglas Aircraft Company, to ensure the contractor’s continued performance on the C-17 program. This assistance came at a time when McDonnell Douglas appeared to be in financial straits and to have run out of money to continue the C-17 program.

Representative John Conyers, D-Michigan, chair of the Government Operations Committee, and Representative John Dingell, D-Michigan, chair of the Energy and Commerce Committee, who have held hearings on the C-17 program, called for SEC and Justice Department investigations.

The IG’s report found that "expedited government payments were made that exceeded appropriate amounts by $349 million. Financing provided also exceeded the fair value of undelivered work by an additional $92 million."

"Improper contracting actions reduced contractor financial risk on the C-17 Program by $1.6 billion and created a false appearance of success to facilitate both the contractor obtaining additional financing through commercial sources and issuance of debt securities, and the Air Force securing additional funding from Congress," the IG’s report found.

The Air Force is conducting its own investigation of the report’s findings and is preparing for a March 17 hearing that Conyers’ Government Operations Committee will hold on the C-17 program. McDonnell Douglas is still reviewing the report and will soon submit comments to the Pentagon.

Flammable Vans

NISSAN MINIVANS ARE A POTENTIAL FIRE HAZARD, according to a petition filed with the National Highway Traffic Safety Administration (NHTSA) by Ralph Hoar & Associates, a vehicle safety consulting firm. The firm has asked NHTSA to force Nissan to repurchase the 33,000 1987-1990 (G)XE minivans for design defects that cause fires.

Nissan had issued three previous voluntary recalls to address fire problems, none of which corrected the problem at the root of the fires - excessive engine compartment temperatures. Nissan has admitted to the government that extreme engine compartment heat is a problem in the vans.

The company’s three prior recalls only replaced engine compartment components that Nissan claimed had "inadequate heat resistance." According to Sean Kane, a senior associate with Ralph Hoar & Associates, Nissan replaced those components that are most susceptible to high heat, but not other components that are also failing. At least four (G)XE vans have caught fire since the last recall.

Kane also provided information indicating that Nissan officials are secretly purchasing burned vans from salvage yards and preparing them for shipment to Japan. Nissan claims that it had salvaged the vehicles for inspection, to check into what caused the fires. "But if Nissan was looking to just check," says Kane, "[it] wouldn’t purchase the vans from a wrecking yard; [it] would purchase them first-hand from the owners who suffered a fire problem with the vehicles."

"We strongly resent any implication that our actions were motivated by anything other than the safety of our customers," says a Nissan prepared statement.

The petition cites Nissan and NHTSA documents, former Nissan officials and employees and minivan fire cases to establish that Nissan had prior knowledge of excessive engine compartment temperatures that could cause fires.

Outrage at Oak Ridge

NINETEEN WORKERS WERE CONTAMINATED with radioactive waste in late December while working at a Department of Energy (DOE) laboratory in Oak Ridge, Tennessee.

The radioactive material, cesium-137, was first discovered at the end of the work day on December 29, 1992. A pipe at the worksite was found dripping radioactive waste. The pipe had been originally cut open during construction on December 23.

"These people were exposed over a six-day period before it was detected," says Jackie Kittrell, a Knoxville attorney who represents whistleblowers at the Oak Ridge Laboratory. According to Kittrell, "Cesium has a half-life of about 30 years. It probably won’t get out of the body of an adult" within his or her lifetime. "The health effects probably won’t be known for another five or 10 years."

Technicians from the Oak Ridge lab discovered that the leak had contaminated 19 of the 28 workers on the site. Cesium was found in the homes of three of the workers and in the clothing and cars of others.

According to Kittrell, the contaminated employees are carpenters who were working in a trench when they were exposed to the pipe dripping cesium. Prior to working on the project, the employees were told the area was clean of radioactivity. Most of the workers were employed at Tomahawk Construction, a subcontractor employed on the site by M.K. Ferguson, the construction contractor working for DOE. The leak came from the Analytical Chemistry Division, a laboratory building run by Martin Marietta.

"If they had a health physicist person or any kind of monitor they would have been able to detect that that was a hot pipe, but they didn’t because subcontractors operate under different safety rules than contractors," Kittrell says. "A lot of workers feel that this is a real problem because DOE can get the job done much cheaper and with less stringent safety precautions by hiring subcontractors."

- Ben Lilliston



Alaskans for Juneau

P.O. Box 22428

Juneau, AK 99802

Lynn Canal Conservation

P.O. Box 964

Haines, AK 99827

Southeast Alaskan Conservation Council

419 Sixth Street

Juneau, AK 99810

United Fishermen of Alaska

211 Fourth Street #112

Juneau, AK 99801

Alaska Center for the


519 West 8th Avenue, Suite 201

Anchorage, AK 99501

Alaska Survival

P.O. Box 320

Talkeetna, AK 99676

Native American Rights Fund

310 K Street, Suite 708

Anchorage, AK 99501

Trustees for Alaska

725 Christensen Drive, Suite 4

Anchorage, AK 99501

Alaska Public Interest Research Group

519 W. 8th Avenue, Suite 204

P.O. Box 101093

Anchorage, AK 99510

Housing First

P.O. Box 20186

Juneau, AK 99802


3800 Ryan Street

Lake Charles, LA 70605

Mineral Policy Center

1325 Massachusetts Avenue NW

Washington, D.C. 20005

Burlington Northern

3800 Continental Plaza

777 Main Street

Fort Worth, TX 76102

Burlington Resources

999 Third Avenue

Seattle, WA 98104-4096

United Transportation Union

14600 Detroit Avenue

Cleveland, OH 44107

World Bank

1818 H Street NW

Washington, D.C. 20433

U.S. Treasury Department

Room 3442

1500 Pennsylvania Avenue, NW

Washington, D.C. 20220

The Development Group

for Alternative Policies

1400 I Street, NW, Suite 520

Washington, D.C. 20005


1436 U Street NW

Washington, D.C. 20009


800 North Lindbergh Boulevard

St. Louis, MO 63166

National Union of Miners

Holly Street Sheffield

South Yorkshire S1 2GT


British Coal

Hobart House

Grosvenor Place

London SW1X 7AE


The Coalfields Communities Campaign

9 Regent Street, Barnsley

London S70 2EG



218 Liverpool Road

London N1 1LE



Lost Frontier: The Marketing of Alaska

By John Hanrahan and Peter Gruenstein

New York: W.W. Norton, 1977

Coming Into the Country

By John McPhee

New York: The Noonday Press, 1991

Hidden Billions: The TAPS DR& R


By Richard Fineberg

Talkeetna, AK: Research Associates, 1992

The Pesticide Hazard: A Global Health and Environmental Audit

Compiled by Barbara Dinham

Highlands, NJ: Zed Press, 1993

The Great Louisiana Tax Giveaway

By Louisiana Coalition for Tax Justice

Baton Rouge: LCTJ, 1992

The Gulliver File: Mines, People and Land - A Global Battlefield

By Roger Moody

London: Minewatch, 1992

The Legacy of Hardrock Mining

By LightHawk - The Environmental Air Force

Aspen, Colorado: LightHawk, 1992

Power in Europe

London: Financial Times Business

Information Ltd., 1990

To Punish or Persuade -

Enforcement of Coal Mine Safety

By John Braithwaite

Albany: State University of

New York Press, 1985

Union Advocate

Union Advocate Newspaper Inc.

St. Paul, MN

covers Burlington Northern

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