The Corporate Crunch in Vermont
by Richard Grossman
Diet for a Corporate Planet
Industry Sets World Food Standards
by Natalie Avery
Behind the Lines
Justice for Sale
Losing Jobs to 936
Challenging Corporate Abuses
An Interview with Elaine Lamy
Cultivating Disaster: Structural Adjustment and Costa Rican Agriculture
by Alicia Korten
Ogden Martin: Trash and Burn
by Eric Weltman
Homestead: The Glory and Tragedy of an American Steel Town
by Lou Nemeth
Names in the News
Thank you for highlighting the issue of ICI Agrochemical’s misleading advertisement in Malaysian newspapers promoting paraquat as environmentally friendly (Multinational Monitor, June 1993 ).
We protested to the Pesticides Board in Malaysia against the misleading advert and the Board has asked ICI to withdraw the advert. The advert no longer appears in our local newspapers.
S.M. Mohd Idris, JP
Consumers Association of Penang
In response to the findings of the report, Allies: The ACLU and the Tobacco Industry, Public Citizen Health Research Group and the Coalition on Smoking OR Health, comprised of the American Cancer Society, the American Heart Association and the American Lung Association have publicly denounced this source of financial support for the ACLU because of the "carnage caused by the tobacco industry."
The study, authored by former Washington Post reporter Morton Mintz, reveals that between 1987 and 1992, the ACLU Foundation received $500,000 from Philip Morris Companies, the owner of the largest cigarette producer in the United States. Mintz points out that the ACLU is an active supporter of the tobacco industry’s efforts to halt legislation that would place restrictions on cigarette advertising and questions the ACLU’s decision to keep this relationship with the tobacco industry a secret from its members.
The report suggests that the ACLU’s support of the tobacco industry surpasses protection of free speech because the organization has joined the industry in casting doubt on studies that suggest cigarette advertising entices the public, especially youth, to begin smoking.
The ACLU denies that the grants from the tobacco industry affect its ability to be objective about the dangers of cigarette smoke. The organization cites the organization’s absolutist stance on the First Amendment and says that it will not refuse money from any source, regardless of the practices advocated by that source.
The growers contend that the fungicide, Benlate DF, contained sulfonylurea (SUs), a powerful weed-killer also manufactured by DuPont. DuPont maintains that although both SUs and the main ingredient in Benlate are manufactured at the same site in Belle, West Virginia, no cross-contamination incidents could have occurred because the company takes numerous safety precautions to prevent accidents of that nature.
DuPont recalled Benlate in March 1992 in response to complaints from more than 2,100 U.S. growers that the chemical had ruined their crops and land and by November had paid more than $510 million in damages. DuPont abruptly stopped payments in November, however, when it claimed that its own tests showed Benlate could not have caused the damage. As a result, over 400 lawsuits were filed against the company in 21 states. The July suit, involving growers from Georgia, Hawaii, Michigan and Alabama, is the first to come to trial.
Much of the evidence being used to prosecute DuPont in the trial, which began July 6, comes from the company’s own internal documents which the growers allege show DuPont’s knowledge of the cross-contamination involving Benlate.
The plaintiffs further claim that the company’s failure to notify affected growers or federal pesticide regulators of the contamination constitutes fraud. DuPont responds that the information in the documents being used against the company is often taken out of context and that company representatives did not knowingly try to conceal the contamination from the growers.
A Federal District Court Judge in Columbus, Georgia fined DuPont a $1 million contingent fee prior to the onset of the trial for destroying documents that may have been used as evidence by the plaintiffs.
The report, Nuclear Lemons, identifies the worst nuclear reactors in the United States based on 11 safety, performance and economic criteria. The report is based solely on government and industry documents.
The report charges that "many of the containments in GE-designed reactors are virtually certain to fail in the event of a severe accident." The report says that a 1987 Nuclear Regulatory Commission document on GE Mark I and Mark III containments says that "data indicate that early containment failure (during a severe accident) cannot be ruled out with high confidence for any of the plants."
A GE statement says that the company’s reactors are "safe, as proven by their successful 30-year operating record in many nations around the world." The GE statement also criticizes Public Citizen: "The group making these allegations opposes nuclear power and their statement needs to be taken in that context. They hold an annual press conference and in the past have made misleading allegations. We have no intention of debating them on an allegation-by-allegation basis."
Public Citizen President Joan Claybrook contends that the Nuclear Regulatory Commission should close down these unsafe facilities. "Just as a car that is a lemon is taken off the road, these nuclear lemons should be shut down before they melt down."n
- M. Sindy Felin and Holley Knaus
Take the case of U.S. Philips v. Windmere. In 1984, U.S. Philips , a manufacturer of rotary electric shavers, sued Windmere , a U.S. distributor for the Japanese Izumi , also a manufacturer of rotary shavers. Philips charged Windmere with patent infringement and unfair competition. Windmere then counter-sued Philips for antitrust violations. Izumi, which had an indemnity agreement with its distributor, covered all of Windmere’s legal costs. Philips won the patent suit, but was awarded only $6,500 in damages. In 1990, a jury found in Windmere’s favor and awarded Windmere $89 million on the antitrust claim.
What happened next raises serious issues about the power of wealthy corporations to shape the law. Before Philips’ appeal of the verdicts could be heard, the company struck a deal with Windmere. A May 1992 settlement between the two corporations gave Windmere an additional $57 million - on one condition. The settlement required Windmere to join with Philips in requesting a federal appeals court to vacate the lower court jury’s verdict. Philips’ motivations for entering into this agreement are made clear in the settlement: "It is the intention of all parties to this settlement agreement that the judgment, the opinion and the jury interrogatories on [Philips’] unfair competition claim and Windmere’s anti-trust claim will be of no force and effect and shall have no precedential or other value."
The case is not unique. Many U.S. corporations have taken advantage of the vacatur process. A party that loses a significant court decision has the standard option of appealing the decision to a higher court. But parties that fear an appeals court upholding of the lower-court decision - and future litigation based on that decision - have another option: get the appeals court to simply wipe out the original ruling and its precedential value. This is accomplished most often by paying a settlement to the winning party with the requirement that the winning party join in a motion to vacate the lower- court decision. A decision to vacate erases the unfavorable ruling from the court record.
While no court is required to grant motions to vacate, it is becoming routine for many appeals courts to do just that. And while any losing party can encourage the winner to join in a motion to vacate a decision, it is wealthy corporations that have the resources to pay the large settlements that may convince winners to join in a vacatur motion.
In February, the Supreme Court agreed to hear a challenge to the Philips- Windmere vacatur. Izumi, which wanted the antitrust decision kept on the record, has brought a case targeting the Federal Circuit’s blanket policy of granting vacatur motions without considering other interests at stake. In October, the Supreme Court will hear oral arguments in Izumi v. U.S. Philips Corp., et al,. and Windmere Corp. on whether large corporations will be permitted to routinely erase the precedential value of adverse court rulings by paying off the winning party in a case.
An amicus curiae brief filed in the suit by the Washington, D.C.-based Trial Lawyers for Public Justice (TLPJ) outlines the case against habitually granting vacatur motions. "Routine vacatur works a harmful distortion on the litigation process. It reduces respect for the judiciary by permitting a judicial decision, the public act of a public official, to be bought and sold." The brief notes that the process favors wealthy corporate interests, particularly those that often land in court. "Certain types of litigation, including products liability, toxic court cases, and employment discrimination claims, frequently pit an individual plaintiff with limited litigation experience ... against an institutional defendant with repeated exposure to the litigation process. The defendants in these cases have both the reason and the resources to ‘roll the dice’ and then, if the gamble fails to pay off, to buy out unfavorable decisions. The plaintiffs do not."
The routine granting of vacatur undermines the public value of court decisions and rulings. As the TLPJ brief notes, "A judgment’s value extends beyond the fact that it resolves a particular dispute: it may have preclusive effect in subsequent litigation; it serves as a precedent, developing the law; and it imposes public accountability on litigants whose actions result in a finding of liability."
The Supreme Court should reject the notion that parties that settle a case are entitled to vacatur. It should direct lower courts to review motions to vacate with the presumption that the motion will not be granted simply at the request of the parties. In fact, unless the lower court judgement can be proven unsound, courts should be directed to deny vacatur motions requested by parties that have reached a settlement. Selling justice is too costly at any price
AMID THE POSTURING and pontificating in the U.S. Congress this summer over the budget reconciliation process, lawmakers passed restrictions on what Senator David Pryor, D- Arkansas, calls "the Mother of All Tax Shelters:" Section 936 of the Internal Revenue Code. But the changes are too little, too late for the 483 workers laid off in May 1993 when Acme Boot closed its Clarksville, Tennessee plant. These workers are only a few of the nearly 24,000 in the mainland United States who have lost their manufacturing jobs due to Section 936, according to a recent study by the Midwest Center for Labor Research (MCLR).
Also known as the Possessions Tax Credit, Section 936 exempts U.S. corporations from paying federal income tax on profits generated by a qualified Puerto Rican subsidiary at the cost of $3 billion a year to the U.S. Treasury and at the expense of high-wage jobs in the mainland United States. Yet the extent to which Section 936 benefits the Puerto Rican economy is questionable. Companies accounting for 12.6 percent of Section 936- related employment received 63.5 percent of the loophole’s benefits, according to the April 1993 testimony of Samuel Sessions, Deputy Assistant Secretary of the U.S. Treasury. The pharmaceutical industry alone - including Pfizer , Merck and American Home Products - reaped a tax benefit of $66,281 per Puerto Rican employee in 1989, according to the U.S. Treasury Department. With such a tax break, says Richard Leonard, director of special projects for the Oil, Chemical and Atomic Workers Union (OCAW), "mainland U.S. workers could work 80 hours a week for nothing and would not come close" to competing on wages with jobs in Puerto Rico.
Congress, in its 1993 budget, placed caps on how much profit corporations can exempt under Section 936. Corporations must now choose between an income-based limit (60 percent now, to be phased down to 40 percent by 1998) on their tax exemption or a limit based on a fixed percentage of the credit allowed currently under 936 rules.
The Puerto Rico/USA Foundation, a Washington, D.C.-based membership organization of 70 manufacturing corporations, financial institutions and other businesses with operations in Puerto Rico related to Section 936, says the congressional action "is an improvement to the approach originally taken by the Clinton Administration and the House of Representatives," but "represents a substantial reduction in the economic incentive" for U.S. companies to locate in Puerto Rico.
But Leonard of the OCAW, whose members have lost thousands of jobs due to Section 936, says that the new rules will affect only a few dozen of the more than 500 U.S. corporations benefiting from the tax break. "Most corporations, including Acme Boot Company, won’t be affected - the caps will end only the worst abuses of the largest corporations, particularly pharmaceuticals, which have enormous intangible assets" currently sheltered under 936.
The OCAW favored a runaway plant bill introduced by Representative George Miller, D-California, that would restrict Puerto Rico from granting to any company any incentive that would have an adverse effect on a related mainland enterprise. This is the "ideal way" to go about protecting mainland jobs, says Leonard, because it gives workers and communities cause of action to sue runaway corporations in federal court. The provision would let the Puerto Rican government off the hook as long as it secures an annual statement of compliance from corporations to which it grants local tax breaks. Congress did not enact any of several proposed runaway plant provisions.
MCLR’s The Impact of Internal Revenue Code Section 936 on Manufacturing Jobs in the United States identifies 50 cases - involving 23,664 jobs at a total of 59 plants - of layoffs and major plant closings in which work was transferred to U.S. possessions. California was the state hardest hit with 4,295 job losses at 10 locations, followed by Pennsylvania (3,660 jobs), New Jersey (3,450 jobs) and Maine (2,515 jobs). Most of the jobs were directly shifted to Puerto Rico.
The majority of those job losses have occurred since 1985, although some of the cases occurred in the 1970s (36 of the 50 cases occurred within the 1985-1993 time period). Although Congress enacted Section 936 in 1921, the loophole became more popular as a result of the Tax Reform Act of 1986 and new Puerto Rican laws granting local tax exemptions. The 1986 Act created a "twin plant" initiative, allowing U.S. subsidiaries in Puerto Rico to shelter investments in "twin" plants in certain Caribbean countries. By 1992, U.S. corporations had established 50 twin plants in the Dominican Republic largely due to geographical proximity and low-wage labor (available at approximately 40 cents per hour).
The MCLR report, commissioned by the OCAW, estimates that as a result of the 23,664 jobs lost directly because of Section 936, an additional 56,342 mainland workers lost their jobs due to a ripple effect. A total of 80,006 job lossess - direct and indirect - have cost local, state and federal governments between $71 and $94.7 million in the form of fewer taxes collected, reduced business taxes and increased social benefits for workers, including unemployment compensation, welfare and food stamps. The report offers a profile of the circumstances of each of the cases cited.
Workers at Acme Boot Company became the latest to suffer the impacts of a runaway corporation when Acme closed its Clarksville, Tennessee bootmaking plant in May 1993. Acme began hiring workers for its new Puerto Rican facility in January 1993. The United Rubber Workers (URW), which represented workers at the Tennessee Acme plant, petitioned the Puerto Rico Office of Industrial Tax Incentives for a hearing on the granting of local tax breaks necessary to obtain the larger breaks from Section 936. A few weeks before the hearing and just one day after a network television producer expressed interest in the story, Acme withdrew its tax exemption petition. The company is, however, free to reapply for the tax breaks at any time in the future. The URW has called for a boycott of Acme products including Acme, Dingo and Dan Post boots.
Workers at the American Home Products (AHP) facility in Elkhart, Indiana managed to win some compensation from the corporation after it closed the Elkhart facility in November 1991, transferring approximately 500 jobs directly to Puerto Rico. AHP, manufacturer of over-the-counter medications and other health care products, including Advil, Anacin and Dristan, opened a plant in Guayama, Puerto Rico in 1988 and began moving packaging lines and other equipment there from the Elkhart facility [see "American" Home Products Moves Abroad, Multinational Monitor, April 1991]. The OCAW filed a class action suit on behalf of the laid-off workers. AHP settled in July 1992 when, five days before the trial, it agreed to pay its former employees $24 million - the first settlement made in a 936 runaway plant case. Yet, according to AHP’s 1991 Annual Report, the company saved $105.6 million in taxes - or $75,000 per Puerto Rican employee.
The trend of U.S. corporations transferring manufacturing jobs from the United States to Puerto Rico to take advantage of 936 looks likely to continue unabated. "The fear of getting dragged into court [as prompted under the Miller bill] is probably the most effective way of policing [runaway corporations] - but it is also the least likely to get passed in Washington," says Leonard.
by Richard Grossman
"THE WHOLE PREMISE OF THIS SILLY LAW is that we can only get corporations to come to Vermont by prostituting ourselves like Delaware; that we can only get them to come here by giving away as many privileges as possible to corporate directors and managers, by showing them they can screw employees and the natural environment and Vermonters and get away with it."
David Briars, a Vermont piano rebuilder and activist, is referring to S1, a bill enacted by the Vermont General Assembly early Sunday morning, May 15, and signed by the governor along with other economic development legislation. "There are Vermonters who have a different view. We wanted to rewrite Vermont’s corporation law to attract responsible entrepreneurs and sensible investment to this state," says Briars. "We tried to raise the idea that we could use the corporate law to create preferred Vermont corporations which would meet high standards with regard to shareholders’ and employees’ rights, the environment, the community and citizens."
Briars had been working on telecommunication issues in the state legislature, but only got wind of S1 in February 1993. "I thought it must be dangerous since it was written in impossible lawyer language, had no table of contents and a bunch of Republicans was trying to ram it through. So I read it. I was unimpressed and surprised that it was regarded with such reverence by the people advocating it."
Briars spent hours putting S1 into a readable format, integrating Senate and House amendments into the text, preparing a table of contents to the bill and soliciting comments. Along with a handful of other concerned citizens, he formed The Committee To Comprehend S1, seeking to stimulate debate over Vermont corporate law and citizen control over the economy. The Committee convened meetings of citizens and legislators and circulated annotated copies of the bill.
The "hands-off" approach
By the 1930s, U.S. judges, laws and regulatory processes had granted vast rights and powers to corporate entities [see sidebar]. But a problem remained for corporations. Many state corporation laws, constitutional amendents and legal precedents which citizens had used to control corporations were still on the books. State laws and state constitutions still extended to citizens and their elected officials legal rights to grant and revoke charters, to set criteria for corporate existence, to hold managers, directors and stockholders liable for their corporations’ abuses, to safeguard minority stockholders and to govern the internal structure of corporations.
Enter the American Bar Association (ABA). For the past 60 years, the ABA has been aggressively peddling its "Model Corporation Act," which has become the basis of corporation law in most states. Every few years, ABA lawyers come up with a revised model and work with more states to modernize their corporate law. To the ABA, modernizing means transforming what had been defining state corporation laws to "enabling" statutes. According to Economic Structure of Corporation Law by Frank Estelbrook and Daniel Fischell, enabling statutes allow "managers and investors to write their own tickets, to establish systems of governance without substantive scrutiny from a regulator. [This is] a ‘hands-off’ approach."
In Vermont, the effort was headed by Laura O. Smiddy, associate professor of law at the Vermont Law School, chair of the Vermont Bar Association, Business Association Law Committee and chair of the committee that drafted S1.
In a Fall 1992 Vermont Law Journal article, Smiddy argued that Vermont’s corporate law was "seriously outdated [making] other states more desirable." She wrote, "If the Reform Act [S1] is passed, it will modernize Vermont’s corporation law, provide the flexibility needed to adapt to changing business practice, and make Vermont’s law consistent with the law of other jurisdictions." Smiddy’s clear intent is to bring Vermont’s corporate law in line with states such as Delaware, West Virginia and Nevada where officials eagerly grant charters to corporations with few questions asked.
In introducing S1, officially titled "An Act Relating To Business Corporations," Republican Senator John Bloomer of Rutland County said that the bill’s purpose is "to comprehensively revise and recodify Vermont law relating to business corporations" chartered in Vermont, or chartered elsewhere and doing business in Vermont. Originally introduced in 1991 as HB 265, the bill passed the House unanimously but died in the Senate when the legislative session ended. According to Representative Tom Smith of Burlington, "There had been no real public discussion, and no opposition was raised. Basically, corporate lawyers seemed to run the show." Reintroduced this session as S1 - 190 pages of what the Burlington Free Press called "a mogul field of jargon" - it picked up 106 amendments in the Senate and 60 amendments in the House on its way to the House-Senate conference.
Advocates described S1 simply as a modernization of Vermont’s 1960 corporation law, last amended in 1970. When pressed for details, they referred the curious to Smiddy’s law journal article, where in 106 pages and 384 footnotes, she contended that the state’s existing corporation law was "unsuitable to modern business transactions," that it was "organized poorly, lack[ed] clarity and certainty," and was "overly rigid and inefficient." Robert Martin, a state official who lobbied for S1, summed up the official line at a March 1993 meeting with the Committee to Comprehend: "There is nothing more here than an effort to update the law. This law merely tells would-be incorporators where their corporation’s birth certificate should be filed. If you are looking for corporations to be more environmentally sensitive, for example, this law has nothing to do with that."
Others argue, however, that S1 is far more than a simple update of corporate law. Jerry Colby, a freelance journalist and former co-chair of the Vermont Coalition for Bank Reform, says that S1 is "about consolidating corporate life and power in Vermont’s economic life." Colby explains that the S1 prevents small shareholders - even if they make up the majority - from exercising rights which have been traditional under Vermont law. It strengthens corporate managers’ and directors’ protection from stockholder lawsuits and public liabilities. It decreases the ability of shareholders in Vermont corporations to stave off hostile takeovers. It also removes stockholders’ and citizens’ ability "to delay corporate actions which might later be seen as harmful to shareholders or the public," and weakens legislators’ traditional power to dissolve harmful corporations. "The whole question of engaging in unlawful business - where are the sanctions?" asks Colby. "This law not only encourages financial services and Walmart-type corporations to come in by removing obstacles, but more importantly, it will contribute to corporate takeovers in our small state."
Briars and his allies argued against granting more power to incorporators through S1, declaring that Vermont’s citizens had to take responsibility for planning and shaping the state’s economic and social future. But these arguments were drowned out by official choruses claiming that Vermont had to become a more "hospitable" domicile to corporations in order to foster economic development and progress. As Progressive Representative Terry Bouricius of Burlington says, "The concept of reining in the corporation was exactly the opposite of what the authors’ sought in this legislation. ... All this bill was trying to do was to accommodate this corporate world as neatly and efficiently as possible."
The Vermont General Assembly passed Governor Harold Dean’s Economic Policy Act along with S1. The Act’s primary goal is to attract corporations to the state by giving them tax breaks and subsidies, in tandem with S1 which represents business corporation law that, in the words of Professor Smiddy, "permit[s] corporations to operate without undue restraint."
The Vermont Progressive Economic Development Task Force, a citizens group made up of academics, planners and organizers, was also concerned about the direction in which the governor’s Economic Policy Act would take the economic development of the state. In an April 1993 report, the Task Force said that the Act’s focus on public subsidies for "large (often out-of-state or foreign) employers is demonstratably short-sighted and naive. These are companies ... over which we, as a small state, have no control. ... We need look no further than GE , IBM , Simmonds and Digital to see the fragility of a job base dominated by such giants." The Task Force concluded, "The Economic Policy Act ignores one of the fundamental causes of our continuing decline, which is a loss of control over our economy."
Task Force member and University of Vermont economics associate professor Jane Knodell says the Task Force had a sense that S1 "would reduce the state’s capacity to regulate private corporations ... [and] would make all the alternate polices we are proposing not possible." But the Task Force did not pay much attention to S1 as it made its way through the Vermont legislature.
That task was left to the small group of Vermonters who became The Committee To Comprehend S1. The Committee attempted to make S1 accessible to all citizens, focusing on the need for citizen sovereignty over corporations. It framed its meetings with citizens, legislators and the press around corporation-state-citizen relationships: Should each state set criteria for issuing corporate charters and corporation performance, and regularly review a corporation’s record? Should states exercise their historic rights to prevent corporations which cause harm from doing business in their states? Why shouldn’t states revoke the charters of harmful corporations? Why shouldn’t employees, shareholders and corporate neighbors have as many rights as corporate directors and managers? If taxpayers subsidize a corporation, why shouldn’t those taxpayers have ownership rights in that corporation?
The group’s last-minute efforts - including a meeting at the State House in the same room where the Senate Judiciary Committee had polished up S1 - enabled a handful of Progressive legislators to startle the legislative leadership by posing a few amendments to strengthen shareholder and employee power. They opened up discussion about the relationship between Vermonters and corporations, and about the state’s economic future.
But Briars and his committee received little help from organizations and citizen leaders traditionally concerned with issues relating to giant out-of-state financial, agribusiness, energy, retail, information and timber corporations. No consumer, labor or other citizens’ organization - from the Vermont Public Interest Research Group (VPIRG) to the Progressive Economic Development Task Force to the Vermont Business Association for Social Responsibility - was active in fighting S1. Vermont’s U.S. Representative Bernie Sanders - the nation’s only Socialist member of Congress - chose to keep his state-wide political organization at a distance. "I had assumed some of the private, non-profit groups involved in public advocacy would express interest, but they did not, even though the way corporations misbehave is at the core of what they are fighting," Briars says. A VPIRG staff member told the Monitor that the organization could not make S1 a priority. "I would have liked time to put into the bill, but there were other competing issues; we were working on health care reform, telecommunications and air-quality issues."
However, Briars does note, "I was astounded that there were so many people interested in this concept - ordinary people as well as lawyers. ... They regarded corporate law with the same horror I regarded it, did not want to look at S1 any more than I did. But they read it. They felt it was essential for ordinary people in our society to understand and to think about stuff like this."
But the legislative process was stacked against them. Briars says of legislators who came to the citizens’ meetings, "I got the clear impression that they were already overwhelmed, were just trying to sort out smaller bills, and were at their wits end, and here was this huge bill. Even in the form we had created, it was difficult for conscientious legislators to digest. After all, they are part-time lawmakers, with no staffs."
Representative Smith echoes Briars. "This spring, because of a little citizen organizing, different perspectives were put forward. At least there was some sort of debate on a number of items." Smith adds, however, "I think real debate over something like S1 requires a preexisting body of knowledge. That takes time. ... I had an amendment on putting employee representatives on the board of corporations. ... [T]here was some sympathy for this in the House, but not enough. ... Hopefully, this was the beginning of a debate."
Representative Bouricius also notes the impact of the small public revolt against S1. "We had this yeoman’s citizen group which ... played a positive role, allowing a few Progressive legislators to formulate amendments on the floor. They gave us good ideas for bills next year, on workers’ rights and related issues," he says. Bouricius acknowledges the need for greater mobilization on this issue. "If citizen groups could have persuaded the secretary of state to take a consumerist, populist position, that would have helped. But our hope to restructure debate on ‘what are corporations?’ needed to have outside mobilizations - unions and other citizen groups writing letters, organizing, talking about corporations, history and alternatives. We needed a mobilized organization ready to go, along with a [corporate] scandal that forces these issues to be newsworthy."
Bouricius views the fight for greater citizen control over corporations and the economy as a long-term struggle. "I’m in it for the long haul," he says. "This spring, I offered quite a few amendments, a few got through, rather minor ones but more than just what we Progressives wanted. ... We tried to make S1 more shareholder-friendly, less director-friendly. But we could not raise the issue of greater state democratic control over corporations. We keep pushing, believing there will be an historic shift. ... It can be done."
Without stepped-up citizen involvement, corporate manipulation of state legislatures and the law will continue. In state after state, large corporations are gaining tax abatements and other subsidies, and putting the latest version of the ABA’s hands-off corporation law on the books. Dangling tax payments and promises of jobs as incentives, corporations rule as state politicians compete for corporate favor.
Corporate lawyers and sympathetic politicians have defined the terrain, the language, the agenda, the role of citizens and the legislative process. As Bouricius explains, "Even once legislators wade through bills like S1, few have the time or experience to understand the implications and compare it with the existing law or with norms in other states, to put each section into context."
In Vermont, corporations have rewritten the law which governs their own creation and operation. Activist organizations, struggling against many different corporations, were overwhelmed and caught napping. But a few citizens and legislators spoke out and organized a long-overdue effort to assert citizen sovereignty over the modern corporation.
Corporate Charters and Citizen
For one hundred years following the American Revolution, U.S. citizens and legislators fashioned the nation’s economy by directing the corporate chartering process. Laborers, small farmers, traders, artisans and landed gentry opposed English-chartered corporations such as the East India Company and the Hudson’s Bay Company which kings had used to exploit resources and labor and to extend their control over faraway continents.
Having thrown off English rule, the revolutionaries did not give governors, judges or generals the authority to charter corporations, but instead made certain that their elected representatives issued charters, one at a time and for a limited number of years. Thoughout most of the 19th century, corporate charters and corporation law set limits on the time period a corporation could exist, wrote explicit rules governing legal relationships between stockholders and directors/managers, held directors, managers and stockholders liable for the harms their corporate decisions caused and in other ways defined and subordinated the corporate entity.
A charter of incorporation was regarded as a privilege - and with that privilege came the corporate obligation to serve the public interest. Citizens delegated to their elected state legislatures the authority to bestow corporate charters and the responsibility to ensure that managers and directors fulfilled their obligations. And so legislatures routinely revoked charters, or allowed corporate charters to expire and corporations to be dissolved, when they determined such corporations were not serving the public good.
By the early 20th century, however, banks, railroads, manufacturing corporations and the great trusts of the Robber Baron era had grown powerful thanks to government spending during the Civil War, massive Congressional subsidies and favorable legal doctrines concocted by U.S. judges. Large corporations - more powerful than many states - had forged a counter-revolution.
U.S. judges effectively gave certain corporations the power of eminent domain - the right to take private property with minimal compensation to be determined by the courts. They eliminated jury trials to determine corporation-caused harm and to assess damages. Judges created the right to contract, asserting that the goverment had no right to interfere with wage and hour agreements between employers and their workers through legislation or regulation.
One of the biggest blows to citizen constitututional authority came in 1886 when the Supreme Court ruled that a business corporation was a natural person under the U.S. constitution, sheltered by the Bill of Rights and the 14th Amendment. Over the next decade, the Court struck down hundreds of local, state and federal laws enacted to limit corporate rights and powers.
At about the same time, legislators began to modernize state laws, making them more flexible, in an attempt to attract as many corporations as possible to their states. Led by New Jersey and Delaware, state legislatures watered down or removed citizen authority clauses. They limited the liability of corporate owners and mangers, then started granting charters that literally lasted forever, and gave corporations the right to operate in any fashion not explicitly prohibited by law.
The populist movement, the largest democratic mass movement in U.S. history, arose to pose an intense challenge to this new corporate power. Citizens pushed for state constitutional amendments giving legislatures explicit instructions regarding corporations, and forced the passage of state laws reasserting citizen power over corporate entities. At rallies and protests, citizens proclaimed that corporate charters were a privilege bestowed by the people, not a right belonging to corporations.
As the 20th century unfolded, federal courts increasingly struck down state laws asserting civic authority over corporate existence and defining their structure. More and more state legislators, spouting corporate theology, chose corporations as their electoral saviors. In desperation, citizen activists turned to Congress for assistance in curbing corporate power.
But the regulatory state which Congress created (and the courts shaped) over the next 60 years is not based on citizen authority to create and define corporations. Rather, it relies upon appointed federal regulators far from the sites of investment and production - and without genuine legal authority over corporate existence - to curb corporate excesses and persuade corporate executives to act responsibly.
Laura O. Smiddy’s University of Vermont Law Review article sums up this history in a single footnote: "General corporation laws emerged during the late 19th and early 20th centuries in response both to the growing popularity of the corporate form and to the inefficiencies of having corporations created by special legislative acts." So much for the historical perspective of Vermont’s corporate law expert on the corporate overthrow of state legislatures, and the largest democratic mass movement in U.S. history.n
- Adapted from the pamphlet "Taking Care of Business: Citizenship and the The Charter of Incorporation" by Frank T. Adams and Richard Grossman. "Taking Care of Business" can be ordered by sending $4 plus 52 cents postage to Charter Ink, P. O. Box 806, Cambridge, MA 01240.
by Natalie Avery
THERE IS ONE THING that those participating in the contentious General Agreement on Tariffs and Trade (GATT) negotiations over rules governing trade in food and agriculture seem to agree upon - if world food trade is to expand, nations must be required to harmonize on as wide a basis as possible food safety and quality standards. This will allow food companies to adhere to one set of international rules instead of adjusting to a diverse array of national standards. International harmonization of food standards will undoubtedly facilitate the expansion of world trade. This, say GATT supporters, will allow consumers around the world greater choice of lower-priced food products.
Many public interest advocates and environmentalists, however, disagree with this assessment. Harmonization of food standards, they argue, will lead to lower safety standards in many countries and undermine future national attempts to raise standards. One of the primary concerns raised by these public interest advocates is the new role carved out for the Codex Alimentarius Commission, an obscure United Nations (UN) body established 20 years ago. The agreement assigns Codex the formidable role of setting international food standards to which GATT member countries will harmonize their own national standards. Many assert that Codex is likely to put the interests of the food industry over those of consumers.
For example, Tim Lang, director of the UK-based Parents for Safe Food, claims, "With an increased role for Codex under GATT, nations will effectively hand a great deal of control over the regulation of food safety and quality to global trade and corporate interests." According to Cracking the Codex , a recently issued report co- authored by Lang for the UK’s National Food Alliance and endorsed by 47 public interest groups from around the world, representatives from industry associations and agrochemical and food corporations play a substantial role in setting international food standards. Public interest advocates, in contrast, play a minimal role. This imbalance appears to be reflected in the standards set by Codex. Food policy expert Dr. Erik Millstone of the Science Policy Research Unit at the University of Sussex told the Monitor, "If we look at the judgements Codex has made in the last 20 years, it is difficult to avoid the conclusion that [it has] repeatedly favored commercial and industrial interests rather than giving the benefit of the doubt to consumers."
The history of Codex
In 1963, the Food and Agriculture Organization (FAO) and the World Health Organization (WHO) jointly established an inter-governmental body, the Codex Alimentarius Commission, to coordinate international food safety and quality standards. Codex founders hoped that food exporters would eventually follow only one set of internationally accepted standards. This would simplify import and export procedures, and thus facilitate the expansion of world trade.
For 30 years, Codex member governments have met in two-year cycles, participating in committees which propose standards for specific areas of the food trade such as labeling, pesticide residues and additives. National delegations to the Codex may include industry representatives, consumer group members, independent scientists - in short, anyone a government wants to include on a delegation may attend. UN-recognized organizations and industry federations may also attend Codex meetings as International Observers. At an International Organization of Consumers’ Unions (IOCU) Conference in May 1992, Alan Randell of the Codex Secretariat noted, "It (Codex) is the only international organization in the food trade that brings together government regulators, scientists, consumers and industry representatives in both official and advisory capacities to develop standards for food manufacturing and trade."
Codex has set standards for 230 food commodities, and has made recommendations for several hundred pesticides and additives. In this sense it has lived up to the expectations of its founders. However, member nations have not widely accepted Codex standards. "Some countries have found it convenient to adopt Codex standards," explains Martine Drake of the UK’s Food Commission. "However, replacing national standards with Codex ones has generally not been a priority for most nations."
"Unnecessary" trade barriers
Governments are currently neither obliged nor directly pressured to adopt Codex- recommended standards, but that may soon change. New rules carved out in the Uruguay Round of the GATT and in negotiations of other trade agreements like the North American Free Trade Agreement (NAFTA) give the organization unprecedented influence over government. "Efforts to increase harmonization of food safety standards," in the words of a U.S. proposal, has become an integral part of the GATT agenda.
Under proposed GATT rules, national food standards set more strictly than those set by Codex could be considered illegal barriers to trade if they affect imports. Gretchen Stanton, counselor of the GATT secretariat, explained the rules to an IOCU conference in 1992: "The basic premise is: if a country restricts and claims this restriction is for protection of health, this has to be proved."
Any nation choosing to set a standard higher than an existing Codex standard could be required to prove its validity to a GATT panel. This panel of trade experts - meeting in secret - would decide if the food standard in question was "necessary" and "based on sound scientific evidence" or if it constituted an "unnecessary" barrier to trade. The proposed GATT draft does not allow governments to cite environmental or animal welfare protections as justifications for stricter standards. Nations which fail to justify a standard to the satisfaction of a GATT panel could then be subjected to retaliatory trade measures, or alternately, required to pay compensation to exporter nations affected by the higher standard. Dr. Melanie Miller, a food policy expert who at one time represented IOCU in Codex meetings, told the Monitor, "It will be very difficult for nations to maintain standards higher than Codex if they affect trade."
Many argue that these fears could be unfounded and that harmonization could offer the opportunity to raise standards to the highest level. Countering such assertions Miller explains, "experience shows that harmonization usually means lowering of standards." Harmonization of food standards in the European Community (EC), for example, will increase the permitted list of additives in every EC country. The number of additives allowed in Germany and Greece will more than double, and the range of foods which can contain additives will increase substantially. "In the process of harmonizing food standards in the EC, the interests of food and chemical manufacturing," Miller says, "were given precedence over public health."
Many Codex standards are lower than national ones, thus harmonization proposed in the GATT treaty would be a real set-back for activists who have fought to improve standards on a national level. For example, Codex allows residues of some of the most hazardous pesticides in the world, known as the "dirty dozen" - DDT, Parathion, Paraquat, the "drins" (aldrin, dieldrin and endrin) and Lindane. Residues of these pesticides are banned or strictly limited in many countries of the world. "It’s not only the industrialized countries that have stricter standards than Codex," Miller points out. "Many Third World countries have banned pesticides allowed by Codex. For example, Codex has set residue limits for the pesticide Lindane which is not permitted in Bolivia, Ecuador, Egypt and Guatemala." Codex also allows residues of five pesticides classified as human carcinogens by the U.S. Environmental Protection Agency. It permits 14 dyes which are banned in Norway and nine banned in the United States.
There is much support within the food industry for the new role of Codex. The internationalization of food standards will help corporations by streamlining export procedures and reining in what many in the food industry have characterized as "regulatory excess." Furthermore, harmonization will enable food and agrochemical corporations to concentrate lobbying efforts at the international level, instead of fighting off national regulation efforts all over the globe. A Nestle spokesperson told the Monitor, "Globally speaking we support the new role for the Codex Alimentarius Commission. After all we have to follow the rules."
Not only do the food and agrochemical industries have to follow the rules established by the Codex Alimentarius Commission, they appear to play a significant role in making them. In theory, Codex member governments set international standards with the advice of all interested parties, including consumer and industry groups. In practice, consumer representatives are severely outnumbered by those from industry. According to Cracking the Codex, between 1989 and 1991, 81 percent of non-governmental participants on national delegations came from industry. Only 1 percent represented public interest groups.
The study examines participation on all Codex committees which met between 1989 and 1991, finding that industry representatives accounted for 26 percent of all participants on these committees. Industry participation increased on committees dealing with particularly controversial issues. For example, one-third of the 387 participants in the two meetings of the Committee on Pesticide Residues were industry representatives, and 86 of these participants represented specific agrochemical and food companies; only three participants at these meetings represented public interest groups. Forty-one percent of the participants in the two meetings of the Codex Committee on Food Additives and Contaminants were food industry representatives. On the Codex Committee for Nutrition and Special Dietary Uses, 47 percent of participants represented industry.
Industry representatives also outnumbered government representatives from many parts of the world. Between 1989 and 1991, 445 industry representatives participated on national delegations - outnumbering government and public interest group representatives from either Latin America or Africa. Total industry participation, including industry observers, reached 660 individuals, outnumbering government representation from Africa, Latin America, the Caribbean and Eastern and Central Europe combined.
Food trade officials deny, however, that food companies are playing an excessive role in setting Codex standards. A Nestle spokesperson, for example, told the Monitor, "This is not true. Only governments can be members of the Codex but they can ask for technical assistance from industry. Being the largest food company in the world, it’s perfectly logical that authorities ask for the assistance of Nestle experts."
Between 1989 and 1991, 30 Nestle experts participated on national delegations, "providing technical assistance" to governments. Consequently, Nestle was better represented than most national delegations at Codex meetings: only 22 of the 105 countries that participated in Codex between 1989 and 1991 sent more than 30 representatives to Codex meetings. The high level of Nestle representatives at Codex does not surprise Patti Rundall of the UK-based Baby Milk Action. "It’s much easier for an enormously rich company like Nestle to send representatives to Codex meetings, most of which take place in Europe or North America, than it is for many public interest groups and poorer nations in the South," Rundall points out.
Other industry representatives offer justifications for the high level of food trade representative participation in the Codex process. Andrée Dooms of the European Crop Protection Association, a pesticide manufacturers trade organization, claims that large numbers of industry representatives on Codex committees provide regulators with ready access to scientific data. In setting pesticide standards, for example, Codex committees often rely on data from a related FAO/WHO body, the Joint Meeting on Pesticide Residues (JMPR). "Almost all the data used is provided by industry," says Dooms. "The need to have an immediate dialogue with industry is obvious."
A Nestle spokesperson was more forthcoming on the issue of industry participation in an April 24, 1993 interview with the New Scientist magazine, saying, "It seems to me that governments are more likely to find qualified people in companies than among the self-appointed ayatollahs of the food sector."
Dr. Marvin Norcross of the U.S. Department of Agriculture and U.S. delegate to the Codex Committee on Veterinary Drug Residues in Food told the Monitor, "Many of the toxicologists and other scientists who participate on U.S. delegations are there because of their expertise. They just happen to be from industry." Norcross says he supports moves to increase consumer participation on delegations.
Many believe that public interest representatives have a role to play in determining international food policy. Miller says, "Public interest groups campaigning to reform Codex recognize the need for some industry representation and expertise on Codex and related committees. The problem lies in the gross imbalance in the input of industry compared to public interest groups." She concludes, "If Codex is to have credibility, its committees and procedures must be changed to allow public interest groups a full role in decision making."
Cracking the Codex
Cracking the Codex calls for a thorough review of the Codex as well as for substantial reforms. Martine Drake, a co-author of the report, says, "Many Codex members, along with the FAO and WHO, have recognized that Codex must change in preparation for its new role, especially in the area of consumer and developing country participation. Yet the reforms they have so far proposed are superficial. They fail to address the fundamental concerns many consumers have in regard to Codex - like loss of democratic control over the way national food standards are set and the possibility that the large industry presence on Codex committees could adversely influence Codex standards and procedures."
The report recommends that a high-level United Nations body undertake a comprehensive review of Codex’s role in light of sustainable development, public health and safety and environmental protection. "In its current form," Jeannette Longfield, NGO coordinator in the run-up to the WHO International Conference on Nutrition in December 1992, says, "Codex will lead to unnecessary downward pressure on future efforts by nations to set high food standards. Already some nations are using Codex standards as an excuse to downgrade standards. Food standards should be set openly, their main purpose being the protection of consumers and the environment. Individual nations should not be obliged to sacrifice high standards in order to facilitate world trade and the movement of global capital."
Supporters of harmonized Codex standards assert that food standards are only fair if they
are "science-based." Patrick McCabe of the Animal Health Institute, a trade organization
representing U.S. animal drugs manufacturers, says, "Codex standards should be based on
science and not on socio-economic factors."
Food policy expert Dr. Melanie Miller counters, "This exhibits a misplaced faith in scientific assessments as a basis for resolving food standards unambiguously and on a permanent basis. Science does not operate in a vacuum. It is subject to political, economic and social factors." And Dr. Erik Millstone of the Science Policy Research Unit at the University of Sussex, adds, "The suggestion that Codex standards are fair and sensible because they are based on scientific evidence glosses over several key facts. It fails to acknowledge that available scientific evidence is often incomplete and inconsistent and usually derives from laboratory animals which provide poor guides to the effects that chemicals can have on humans." Furthermore, Millstone asserts, "Even if the laboratory evidence were more reliable, it would not be sufficient to enable us to decide what is and what is not an acceptable risk. That issue is not a matter which can be decided on scientific grounds. It is a social issue and ought to be decided in an open and democratically accountable fashion."
Both Millstone and Miller believe that, by relinquishing national control of food regulation to Codex, GATT could undermine national democratic processes which involve citizens in setting standards. "Under the provisions of the draft GATT treaty, responsibility would be handed over to a group of supposed experts, many of whom have vested interests in the companies whose products they are judging. " Miller elaborates, "The groups that carry the burden of risks - mainly consumers and workers - must have the main voice in deciding the level of risk in society. Codex recommendations have not been sufficient to provide consumers with the levels of protection which they deserve, and to which they should be entitled."
An interview with Elaine Lamy
Elaine Lamy has been a full-time organizer on issues of corporate responsibility for 15 years. She became one of the first grassroots organizers on the Nestle Boycott in the late 1970s. She has been a leader throughout INFACT’s GE Boycott Campaign, holding many positions of responsibility in INFACT prior to becoming its executive director. Lamy has also been active on women’s, peace and homelessness issues.
Multinational Monitor: How did INFACT form and what were its original goals?
Elaine Lamy: INFACT was started in 1977 by a handful of people who were outraged by the aggressive promotion of infant formula in developing countries to poor families that could not use the product safely. Large companies like Nestle and American Home Products were aggressively marketing these products which resulted in the deaths of about one million babies a year from something called "bottle baby disease." INFACT started as a grassroots consumer effort in the United States to pressure these big corporations, particularly Nestle, to stop their marketing of baby formula in developing countries.
The Infant Formula Campaign was already growing in other parts of the world. For example, in the UK , a development group called War on Want was doing public education around these outrageous abuses. For years doctors in developing countries were complaining about the disastrous impact of the formula companies on babies’ lives. In the United States, the Interfaith Center on Corporate Responsibility had been filing shareholder resolutions with the U.S.-based companies around their marketing practices in developing countries. INFACT was started primarily to raise awareness at the grassroots in the United States about these abuses and to organize millions of ordinary people to put pressure on these companies.
The Nestle boycott was called in July 1977 and ended in January 1984 when Nestle - the world’s largest food company - sat down and negotiated an agreement to make major reforms in their marketing of infant formula. This was an unprecedented accomplishment and built on the Campaign’s earlier successes, including the United Nation’s passage in 1981 of the World Health Organization’s (WHO) International Code of Marketing for Breast Milk Substitutes. This step by the UN marked the first time that the WHO pointed to commercial forces as a cause of health problems in developing countries and clearly called upon an industry to make changes.
An important point to note about the Nestle boycott is that while Nestle actually did implement a good deal of the provisions of the agreement, it did not implement all of them. So a few years later a sister organization formed called Action for Corporate Accountability; it has continued to work on Nestle’s compliance with the agreement. There has been some important progress in that compliance since then, but that work is not finished.
MM: How did INFACT move into working on nuclear weapons issues?
Lamy: A few years before the end of the Nestle boycott, INFACT made an organizational decision to broaden our mission beyond the goals of the Infant Formula Campaign. INFACT’s purpose is to stop life-threatening abuses of transnational corporations (TNCs) and increase their accountability to people around the world. So, at our core, INFACT is a corporate accountability organization.
In early 1984 INFACT made an assessment of the most pressing abuses of transnational corporations that demanded change. At that time, we were at the very peak of the outrageous and horrendous Reagan-era build-up of these weapons of mass destruction. We believed that corporations were the driving force behind the nuclear weapons build-up. So in May 1984 we launched a campaign called the Nuclear Weaponmakers Campaign, to add to the good work of other organizations such as SANE/Freeze and Physicians for Social Responsibility. What we added to these efforts were large numbers of people organized to directly expose and challenge the role played by corporations not only in building these weapons but in influencing national security policy-making in Washington.
MM: How did your strategies differ from other groups working against nuclear build-up?
Lamy: Our strategy was different to the extent that we were mobilizing large numbers of people to put pressure directly on the corporations that made these nuclear weapons, most notably General Electric (GE), which became our strategic target as the industry leader. We worked to get the companies themselves to make the decision that it was in their financial interest to stop producing nuclear weapons. So while we were and continue to be very supportive of efforts to control these behaviors through government action, one of the things that makes INFACT different is that we organize people to get these companies to make the change directly.
MM: What were some of the most effective strategies in the nuclear weapon-makers campaign?
Lamy: By letting large numbers of people know which companies were involved, and how much profit they made, we exposed the fact that profit was the primary, driving force behind the weapons build-up. A boycott of GE products became the primary strategy of a larger campaign intended to make it undesirable for corporations to be in the nuclear weapons business - to change the cost-benefit ratio. We wanted GE, which for 50 years was the industry leader, to set a precedent and make it clear to other corporations that nuclear weapons production was no longer a desirable business. Our goal was essentially to make it in GE’s financial interest to get out of nuclear weapons and remove the most powerful corporate force behind nuclear weapons.
We employed several different strategies and tactics, many of them aimed at decreasing GE’s sales or increasing its costs due to its involvement in the nuclear weapons business. Among them was a very effective consumer boycott that involved over four million individual consumers around the world. It also involved hundreds of institutions and eventually succeeded in getting some major retailers, most notably Target (with 402 stores around the United States) to break a 25-year exclusive agreement with GE and begin to devote half of its shelf space to non-GE light bulbs.
Once this solid foundation for the Boycott was built, we escalated the pressure on the company by targeting a few of its strategic vulnerabilities. One of these was its medical division. GE is the largest producer of diagnostic medical equipment in the world, equipment like CT scanners and X-Ray machines. We learned that there was a lot of support in the medical community for purchasing this equipment from GE’s competitors given GE’s leadership role in the production and promotion of nuclear weapons. We worked with the religious medical community in the United States and with the International Physicians for the Prevention of Nuclear War in other parts of the world. We can document over $50 million in lost medical sales to GE (in the United States and Europe), not to mention all of the money and time GE spent trying to stop the medical sales losses.
Another important strategy we used was to decrease the value of GE’s image by exposing the reality behind it. GE has spent millions of dollars establishing its "we bring good things to life" image. INFACT chose to expose the deadly reality behind that image through our film: Deadly Deception: General Electric, Nuclear Weapons and Our Environment. This is a hard-hitting documentary that contrasts GE’s warm and fuzzy TV ads with the graphic and compelling stories of people who have been harmed by radiation and toxic poisoning from GE’s nuclear weapons work. Deadly Deception won an Academy Award in 1992 which increased the pressure on GE even more since the Oscar afforded tremendous press coverage of the film and INFACT’s Campaign.
MM: What was GE’s response to the campaign over the years as it became more widespread and effective?
Lamy: One of the things that we have learned in taking on two very powerful transnational corporations is that the companies always respond in one way or another.
In GE’s case, as the pressure grew, it began sending letters to specific people trying to dissuade them from supporting the boycott. The company targeted people affiliated with organizations like medical institutions or religious groups.
The other response that we believe is attributable in large part to our campaign is an increase in GE’s image advertising. In the first four years after we called the boycott, GE’s image advertising dollars increased four times over the previous four years.
A third very notable response was the increasing and direct engagement of the company’s top management at tactical escalation points. When a midwestern chain of grocery stores removed GE products from the shelves of all 14 of its stores, GE sent two representatives to Hudson, Wisconsin to offer the retailer "incentives" to change its mind. The retailer refused to budge. As the medical equipment boycott grew, GE’s top management became involved: John Trani, Vice President of GE Medical, sat down and met with medical supporters. And eventually Jack Welch himself, GE’s chief executive officer, was pulled in to do damage control. In one instance, the company flew a group of Catholic sisters from Texas who own a major health system to GE’s home base in Fairfield, Connecticut to meet with Welch. And, as recently as July 1992, Welch flew by helicopter to Pennsylvania to meet with two other groups of sisters who own hospitals.
But, of course, the most important response of all is that GE got out of the nuclear weapons business. The company had taken some big steps out of nuclear weapons as the Campaign grew, but last November it announced it was taking the biggest step of all by selling its entire aerospace division to Martin Marietta.
MM: What impact do you think GE’s selling of its nuclear weapons division to Martin Marietta will have on the rest of the industry?
Lamy: What we were seeking broadly to do was change the public climate so that people would know that there was an industry pushing for these weapons - it was not simply the "Soviet threat" or the Cold War. We believe we added tremendously to that public awareness. Our campaign, the work of other organizations focused on nuclear weapons issues and certainly the change in global conditions all came together to create a situation in which it really is no longer desirable for many corporations to be in the nuclear weapons business.
We believe the biggest impact we had was removing an extremely powerful transnational corporation - General Electric is a $60 billion corporation - from its influential spot in determining public policy on national security issues. So even though major corporations like Martin Marietta and General Dynamics are still involved, these companies are not as powerful as GE is. We believe that removing GE from the nuclear weapons business eliminated a very powerful force driving nuclear weapons; that will affect the whole problem and certainly the industry.
MM: How are your relations with the labor community? How did GE workers respond to the boycott, for example?
Lamy: Less that 25 percent of GE’s workforce is unionized; there is not much "organized" labor at GE, but of course there are certainly a lot of laborers. We were careful with the GE campaign to communicate with GE’s labor unions and let them know what we wanted and what we were about. And we worked when we could with certain parts of their labor constituency. For example, after GE bought RCA and acquired NBC, we worked a lot with the NBC unions to help them with their various efforts fighting GE.
In our campaign, we emphasized that our grievance was with the policy-makers at GE, that what we wanted the company to do was find safe and responsible ways to employ people beyond the production of nuclear weapons. Since our emphasis was on the policy-makers, our involvement with GE workers was not extensive, but we certainly did get a significant amount of support from some GE workers, especially after we released Deadly Deception.
MM: How was the decision made to focus on the tobacco industry after the GE campaign? What other industries were considered?
Lamy: INFACT did three things in order to make that decision. The first was an inventory of the most outrageous and egregious abuses of transnational corporations around the world. We gathered information about social problems, eventually narrowing our pool to 18 possible issues that we might take on. These included environmental issues like ozone depletion, rainforest destruction, the greenhouse effect, toxic dumping and pesticide dumping. We looked at abuses of the pharmaceutical industry, both in the United States and abroad - overpricing of drugs, lack of access to drugs; we took a specific look at corporate profiteering in response to the AIDS epidemic. We looked at agribusiness and the control of the food supply; we did some work on biogenetic engineering. And we looked into the outrageous behavior of the tobacco industry as it markets its deadly products around the world.
The second step was consulting with the people and organizations who currently work on these issues. We conducted over 80 interviews with organizations like Greenpeace, the Interfaith Center on Corporate Responsibility, Rainforest Action Network and Health Action International. We met with the people who work on these issues both to learn about the issues and to get their opinion about what INFACT might contribute to their efforts.
And the third very important step in the process was to consult our own supporters. We did about 300 in-person visits with INFACT supporters around the United States. We sent a "corporate abuse survey" to 4,000 of our supporters in the United States and other countries, and 1,000 of them came back.
All three of those components were factored into our Board’s decision in May to launch a major campaign targeting the abuses of the deadly tobacco industry. A major reason for this campaign is that 2.5 to 3 million people around the world die each year from tobacco-related illnesses - that’s 80,000 each day. To make up for the 5,000 customers the industry loses each day in the United States (from people quitting and dying), this industry targets children and young people to find replacement smokers. And, while there are many successful and important efforts which educate people about the dangers of smoking, and legislative and other efforts to curb the problem, what seems to be missing is a major international grassroots movement of people directly challenging the source of the problem - the powerful tobacco transnationals like Philip Morris, RJR Nabisco, BAT [British-American Tobacco Company] and American Brands. This is what INFACT plans to contribute.
MM: What are the demands of this campaign?
Lamy: There are three long-term goals of INFACT’s Tobacco Industry Campaign: stop the marketing and promotion of tobacco to children and young people around the world; stop the industry’s actions that undermine public health efforts, including interference in public policy-making; and forge an international movement of people holding TNCs accountable for their abuses.
MM: What tactics will you be employing in this campaign?
Lamy: Right now, INFACT is concentrating its efforts on widely exposing and beginning to directly challenge the abuses of the industry. The first phase of the campaign, which we are launching in October, is essentially to put the industry on notice that consumers are aware of and opposed to its marketing practices. We will be generating contact with these companies through large numbers of ordinary people - we are aiming to have 50,000 people communicating directly with these companies.
During this first phase we will also be raising public consciousness that household names make cigarettes and aggressively promote smoking to children and young people. Philip Morris owns Kraft General Foods; RJ Reynolds (RJR) is now RJR Nabisco. These companies gain a lot of their support from us as consumers in the grocery store - we give them our money all the time. So we have some economic power over these companies.
If the companies do not respond to the growing public call to end their marketing to children and young people - even the Surgeon General and the American Medical Association have asked RJR Nabisco to stop its "Joe Camel" campaign which targets young people - we will likely escalate the pressure through another boycott campaign with possibly more than one company target. Even though these companies get most of their profits from tobacco sales, they also rely on major revenues from their other divisions. A boycott of this industry would focus mainly on these other products. Since cigarettes are an addictive product, we would be asking smokers to join in by boycotting the other products of these companies.
Through the Infant Formula and Nuclear Weaponmakers Campaigns, INFACT has amassed a lot of experience in waging effective campaigns to bring about change in corporate behavior which include boycotts and other tactics. As the Tobacco Industry Campaign grows, we will escalate the pressure with a number of strategies and tactics that best serve the goals of this Campaign.
MM: What are the benefits of getting citizens involved in directly challenging corporate abuses?
Lamy: A very important underlying point for INFACT is that transnational corporations are very powerful institutions growing more powerful by the day in our society. And because they are institutions unto themselves, we believe that it is extremely important for people interested in social change to find ways to directly hold these companies accountable for their abuses. We applaud efforts to hold companies accountable through the legislative process. But that, in some ways, says that companies can do whatever they want, that it is the government’s responsibility to stop them. We do not believe that - we believe that companies should not act irresponsibly.
As consumers who vote with our dollars every time we support one of these companies, we have a responsibility to insure that the company behaves in a socially responsible manner. It is no different from the democratic process in which we have a responsibility as citizens to vote for the policy-makers that are going to implement policies that affect our lives. Every day, corporations make policies that profoundly affect our lives.
I think more and more people are becoming aware that our legislative process itself is largely controlled by corporations - and that is particularly true for the tobacco industry. The Surgeon General has made it very clear that smoking is a very dangerous practice; more and more government officials and health advocates are making very clear the dangers of this addictive product. Yet Congress has done little to regulate tobacco. And the reason why is that the industry has a "stranglehold" over Congress, in the words of Representative Mike Synar. So we believe that in addition to working through the legislative process, we have to work to get this industry to back off of that process.
MM: Do you have a sense that there is an awareness among the general public of the massive power international corporations hold and of the harm they cause? Are these issues of concern to U.S. citizens?
Lamy: Our experience after two grassroots campaigns is that people have a general sense that something is really wrong; what they do not know are the specifics, and they certainly do not know what they can do about it.
One of the things that we add to corporate accountability efforts is to take a general feeling out there among people and share the specifics. We say, "This is exactly what is going on, and here is what you can do." That is a very powerful formula. You give ordinary people the information they need and they will act. People need to know more.
The mainstream media in our country is of course controlled by major corporations - GE owns NBC. So access to information is definitely limited. Once people know the specifics, they get outraged and then they want to do something.
That is where INFACT comes in: we expose the abuses of powerful corporations and then we organize large numbers of people in effective campaigns to bring about a change in corporate behavior - we give people something they can do to make a difference.
by Eric Weltman
UNTIL 1985, OGDEN CORPORATION was primarily a "smokestack operation" - it built ships and freight cars, manufactured machine tools and processed scrap metal. However, in 1985, Ogden sold these operations to its employees to concentrate on services. "The new Ogden," company ads proclaimed, is "putting America’s house in order."
Today, Ogden Corporation is a "service-oriented" company with 40,000 employees and net sales and service revenues in 1992 of over $1.76 billion. Based in New York City, its businesses include Ogden Building Services, which manages and maintains commercial buildings; Ogden Entertainment Services, which promotes concerts; and Ogden Aviation Services, which refuels planes and prepares on-flight meals. Ogden Environmental and Energy Services provides consultation to the nuclear industry and is involved in the cleanup of Defense and Energy Department contaminated sites.
More than half of Ogden’s 1992 income, however, continued to derive from what most would regard a smokestack operation - incineration of municipal solid waste. Ogden Corporation owns 84.5 percent of Ogden Projects, Inc., based in Fairfield, New Jersey; Ogden Projects’ Ogden Martin Systems operates 24 incinerators in the United States, representing 25 percent of U.S. incineration capacity. The company currently has four incinerators under construction in Maryland, New York, Florida and New Jersey. Ogden burns 8.8 million tons per year of U.S. waste - 28,135 tons per day - which is roughly 4.5 percent of the nation’s solid waste. Since 1988, income from these operations has increased more than sixfold, to almost $70 million in 1992.
Ogden Martin has only been in the incineration business since 1983. Today it is one of the industry’s leading players, if only because it is one of the few left. According to Ellen Connett, an editor of Waste Not, a watchdog newsletter that tracks the solid and hazardous waste industries, in 1985 about 60 incinerator vendors operated in the United States; now only about five remain. Indeed, part of Ogden’s growth strategy has involved acquiring and operating existing incinerators. In January 1993, for example, Ogden completed acquisition of the U.S. incinerator business of Asea Brown Boveri, comprised of facilities in Honolulu, Hartford and Detroit.
Ogden builds its facilities under municipality or city contracts with fixed operating fees. This arrangement has worked to shift responsibility for increases in construction or operating costs from the company to the municipalities, which are often forced to fund these increases by raising taxes and waste disposal fees. In addition, as an agent of municipalities, Ogden is partially insulated from criticism by environmental groups and other opponents.
Incinerators emit a wide array of toxic and carcinogenic chemicals including toxic heavy metals (such as lead, cadmium, mercury, chronium and arsenic), dangerous organic compounds (such as dioxins and PCBs), acid and acid-forming compounds (such as nitrogen oxides and sulfur dioxide), carbon monoxide and ozone-forming chemicals.
Dr. Richard Denison, a senior scientist with the Environmental Defense Fund, has determined that liquid leaching from incinerator ash (ash leachate) frequently contains four times as much mercury and three times as much lead as permissible under federal drinking water standards.
These threats to human health - along with incineration’s economic costs and adverse impacts on recycling programs - have led to local opposition to incinerator siting in communities throughout the United States. Ogden Martin has chosen to meet that opposition with fierce aggression. The experiences of several U.S. communities in their dealings with Ogden highlight the company’s methods. Ogden’s tactics comprise a virtual source book on how to bully, manipulate and mislead communities into what Connett calls "the most expensive way to poison yourself."
Paying for pollution
Along with the environmental and health risks associated with incineration, taxpayers are forced to bear the considerable financial costs involved in building and operating Ogden facilities. The case of Lake County, Florida offers a dramatic example of the financial toll Ogden can exact from a community. The county’s original 1984 incineration proposal called for General Electric (GE) to design, finance, build and operate a facility, at no cost to the community. By the time construction began in 1990, however, GE had pulled out of the deal, Ogden was the builder, operator and owner of the incinerator and construction costs had risen to $79 million. In addition, the county is paying the plant’s property taxes.
County Commissioner Richard Swartz says, "We went straight from a situation where Lake County had no financial obligation - zero, none - to a situation where Lake County ended up paying not only for the $79 million in construction costs, but to a total obligation for debt service and operating costs of nearly $300 million over the 22-year life of the Ogden contract."
Like many communities that have negotiated with Ogden, Lake County locked itself into a "put-or-pay" contract, which forces the county to provide the incinerator with a required tonnage of garbage, or else be charged a penalty. The county is also responsible for disposal of the incinerator ash.
Swartz says the Ogden contract has undermined the positive economic and environmental effects of the county’s recycling program. "We’re in the classic situation of having recycling compete with incineration. Even though Lake County is growing, our tonnages available for burning have been leveled or are going down. As a result, Lake County, through Ogden Martin, is importing tens of thousands of tons of medical waste, pharmaceuticals and plastics." Says Swartz, "In order to meet its contractual obligations to Ogden Martin, Lake County imported and burned waste from other Florida counties and lost money on the deal. Our county’s estimated real costs were approximately $74 per ton, but we were receiving as little as $16 per ton. We made up the difference by charging Lake County residents higher fees."
Swartz concludes that the county’s decision to build an Ogden incinerator has not made long-term economic sense. "Certainly if Lake County had chosen to recycle and compost, then landfill the little that was left, we could have done it for significantly less than we pay now. No sane person looking at the numbers would doubt that." He adds that Lake County commissioners at one time considered not using the incinerator at all, because of its high operating costs. "The problem was that we didn’t own the incinerator, so we couldn’t just mothball it and pay it off. We were locked into a contract with Ogden Martin, and we were fairly certain that Ogden Martin would have sued us had we broken off the contract."
Swartz advises other communities to seriously consider alternatives to incineration before entering into contracts with companies like Ogden. "I invite officials and citizens from other communities to talk to me about Lake County’s experiences and to explore all of the alternatives before they lock themselves into incineration," he says. "I am willing to talk to any community and share the Lake County experience."
Slap on the wrist
Ogden’s operating procedures in Indianapolis, Indiana offer another ominous example of what communities can expect from the company. Jeff Stant, executive director of the Hoosier Environmental Council (HEC), a citizens’ group, says that the Indianapolis city council - which entered into a contract with Ogden in the late 1980s - is in no position to regulate the company for environmental violations. He says, "If you’re like Ogden Martin, you realize, ‘The city can’t afford to admit it made a mistake, so we just won’t run our scrubbers. The city isn’t going to admit we’re violating our limit. The city has a lot of political capital at stake.’"
Stant asserts the City of Indianapolis finally initiated efforts against Ogden for environmental violations but only in order to prevent more far-reaching action by citizen groups. In what Stant describes as a slap on the wrist, the city struck a consent decree with Ogden in which the company agreed to pay $25,000 for failing the state’s particulate emissions standards at two of its three incinerator units. In 1992, the U.S. Environmental Protection Agency (EPA) cited Ogden for 7,000 violations between 1989 and 1991. Stant says the EPA may have issued those citations as a means of prodding action at the state level. In January 1993, the state entered a consent decree in which Ogden agreed to pay $350,000 in fines, and the EPA dropped its actions. HEC contends that the fines only cover a fraction of the 7,000 EPA-cited violations.
Stant notes that entering into consent decrees with regulators has worked in the company’s favor. "These consent decrees are a real problem because they generally levy light fines and contain language in which the company and the regulatory agency get to avoid or waive admissions of guilt," he points out. "Later on, it’s difficult to enforce or invoke ‘good character laws’ that bar companies with records from public contracts because the companies say, ‘Look, we weren’t convicted.’"
HEC also charges Ogden with poor maintenance at the Indianapolis facility. According to Stant, "Ogden was getting $8 to $10 million a year from the city to do maintenance." Yet, HEC contends, the company failed to clear scrubber tubes that were clogged, allowed boiler tubes to rupture, and failed to inspect and maintain the baghouse (a system used to gather particulates from the gases leaving the incinerator furnace). Despite these problems, the company continued to burn garbage, Stant says, in violation of its operating permit. Now, Ogden is "trying to bar us from looking at its maintenance plan, claiming it’s a trade secret." Scott Mackin, president and chief operating officer of Ogden Martin Systems, told Multinational Monitor that the plan contains "detailed information about our internal staffing and operations procedures" that industry competitors would use.
Ogden barred certain HEC representatives, including technical consultants, from touring the incinerator in 1991. Wil Baca, an engineer from California who provides technical assistance to HEC, says, "As a general policy, they don’t like anyone with expertise visiting their facilities - especially [people from] the other side." Ogden also prevented Baca from attending negotiations in which technical aspects of the consent decree were discussed by Ogden, HEC, the city, the state and attorneys from all sides. "They were vetoing who we could bring as our technical experts," Stant charges. He further notes that in March 1992, Ogden threatened to withdraw from negotiations if Stant testified regarding the company’s Indianapolis plant in an adjudicatory hearing in Montgomery County, Maryland.
Ogden vs. the public
Ogden has threatened or pursued legal action against communities which resist the construction of company facilities or have attempted to limit or restrict incineration altogether. In Rhode Island, for example, Ogden is suing to oppose a state ban on incineration.
In July 1992, Rhode Island, in which Ogden Martin had contracts to build two incinerators, voted to become the first U.S. state to ban municipal waste incineration. The day before the vote on legislation, Ogden Martin threatened the state with a $100 million lawsuit if the incinerators were not built. After the legislation passed, Ogden filed suit in federal court, seeking either to overturn the ban or be awarded more than $50 million in damages. Ogden argues that the ban constitutes an unconstitutional taking of its property and violates its contract with the state. William Harsch, a former director of the Rhode Island Department of Environmental Management, replies, "I strongly believe that the state’s case is very winnable and that Ogden Martin does not have a winning claim on either ground - constitutional violation or contract damages." Terrence Tierney, special assistant to the Rhode Island Attorney General, adds, "The state believes that the ban on incineration is a valid exercise of its police power to protect the health, safety and welfare of the public."
Harsch is representing the town of North Kingston, Rhode Island in another lawsuit involving Ogden. The town has filed a suit in state court, challenging the state Department of Environmental Management for issuing air permits for Ogden’s proposed Quonset Point incinerator after the state legislature voted to implement the ban. "This permit is illegal, it is invalid and it should be canceled," says Harsch.
Harsch describes the considerable intrigue surrounding the state case: "Until recently, North Kingston was represented by the firm of McGovern and Noel [which was] counseling the town to ... allow the incinerator to be built. The town council brought this deal before the citizens, who blew up and said, ‘no way!’. ... [Attorney] Gregory Benik ... moved to McGovern and Noel, then turned up as lead counsel for Ogden Martin. We filed a motion to disqualify him. The judge magistrate ruled that McGovern and Noel was in violation and ordered Ogden Martin to get new counsel. Ogden Martin has ignored this ruling and order." Harsch concludes, "What could be a more obvious conflict? As legal counsel to the town, McGovern and Noel had access to privileged information."
Harsch is critical in general of Ogden’s method of dealing with the community. "The Ogden style is ‘in-your-face.’ ... It causes enormous strain for the town and the state," he says. "The bottom line is that the Quonset Point incinerator is unwanted by the town and the state at large. Ogden has chosen not to hear that very loud message."
Ogden’s interests are also at stake in Ontario, Canada where two lawsuits regarding provincial waste management legislation are underway. Mayor Bob Johnston of the Township of Georgina is bringing the first suit on the grounds that the Ontario government’s July 1992 Waste Management Act (WMA) violates the civil rights of the citizens of York region by not allowing them to argue in favor of waste incineration or transport before the Environmental Assessment Board (the Act requires five regions in southern Ontario to provide landfill sites within their borders, specifically prohibiting or discouraging the transport of a region’s waste to disposal facilities outside of that region).
Subsequent to the passage of the WMA, Ontario implemented a province-wide ban on new incinerators. Robert Charney of the Ontario attorney general’s office says, "Even if Mr. Johnston were to win his case on the constitutional grounds, he would still be faced with the provincial ban on incineration, and the Ministry of the Environment is empowered by the Environmental Protection Act to implement that ban."
Johnston’s suit has gone to trial; the judge is currently considering an attorney general appeal on a motion for summary judgement. The second suit, filed by the region of York in September 1992, is also challenging aspects of the WMA. This suit has not yet gone to trial.
In March 1993, Waste Not reported that Ogden Vice-President Jeffrey Hahn told Ontario activist David Mochrie that Ogden is suing Ontario. Mochrie says Hahn’s statement to him was the first time citizens were told of Ogden Martin’s role in these suits. Ian Blue, the representing attorney in both lawsuits, told Waste Not that Ogden is giving "technical assistance" to Mayor Johnston.
"Ogden is not a party to any legal action in the Province of Ontario," Ogden’s Mackin told Multinational Monitor. "Ogden does, however, have a vital interest in assuring that all legal decisions affecting its interests are made on the basis of complete and accurate information. ... Ogden Martin’s Executive Vice President, Jeffrey Hahn, therefore, responded affirmatively to a request by parties involved in a lawsuit against the interim waste disposal authority of the Province of Ontario to provide expert testimony on the health and environmental impact of waste-to-energy facilities and landfills."
Citizens speak out
Citizens in Lee County, Florida, Orillia, Ontario, Haverhill, Massachusetts and Montgomery County, Maryland, among others, all have similar tales to tell about Ogden. All can point to cases of the company’s efforts to lock citizens out of the decision-making process.
"Incinerators pose as big a threat to democracy as they do to our environment," says Paul Connett. Don Slisher, a Lee County commissioner from 1984 to 1992 who opposed an Ogden incinerator, adds, "Never has so much time and energy been spent at the detriment of so many for the benefit of so few."
Defeating a Dangerous
In 1990, Ogden approached Orillia, Ontario, a town of 24,000 residents, with a proposal
to build an incinerator to burn 3,000 tons of trash per day. A group of Orillia’s doctors
researched published papers on the health effects of incineration, and in June 1990,
released its own report rejecting incineration. The report - endorsed by 52 of Orillia’s 54
doctors - along with a petition signed by 9,000 residents against the incinerator, played a
role in convincing the city council to cancel the project.
Ogden charged that the physicians had "recklessly published baseless, libelous statements ... to defame Ogden Martin." The company threatened to file defamation suits if the report’s signatories did not retract their endorsements. An Ogden vice president of marketing told The Orillia Packet and Times, "We’re injured. You can’t let a thing like that go on its course. It’s too damaging." The result of the threat, however, was to encourage a 53rd doctor to endorse the report and the Ontario Medical Association to pass a resolution defending the doctors as physicians "who stick their necks out for the good of public health." Ogden never filed charges.
Dr. Walter Ewing is associate medical officer of health in Simcoe, Ontario and one of the 53 doctors to endorse the report. He describes his concerns about siting the incinerator in his community: "I’m very disturbed by the potential contamination, with cadmium and other toxins, of the food my family and neighbors eat. My family eats fish from local lakes, and fruit from local farms. We drink milk from local cows. As a physician, I’d hate to tell a mother that she can’t breast-feed her child. That would be devastating."
Ewing says Ogden threatened him with legal action if he did not remove himself as a supporter of the report. "My reaction was to contact my lawyer because I’m committed to protection of health and the environment." He concludes, "I stand by our report. ... If anything, the data that is available now would make for stronger recommendations against incineration."n
Environmental information and materials disseminated by Ogden may serve to misinform
the public about the risks of incineration. A company public relations pamphlet, Ogden
Martin Systems: Your Link to a Clean Community, says, "The high combustion
temperature [in an incinerator] ... breaks down organic compounds, including dioxins."
Paul Connett, editor of Waste Not and a professor of chemistry at New York’s
St. Lawrence University, counters, "It’s true that under ideal conditions you can destroy
or capture any dioxins that are in the waste stream. But Ogden fails to point out two
things. First, conditions for destruction and capture are rarely ideal. Second, and this may
be more important, dioxins are re-formed after the combustion chamber. Overall, when
you look at the mass balance, more dioxins come out of an incinerator than go into the
incinerator in the trash."
Ogden Martin Systems President and Chief Operating Officer Scott Mackin replies, "The ideas that dioxin reformulates in the stack of a waste-to-energy facility is a theory that has been studied and disproved. Moreover, numerous tests conducted by independent third parties and state regulatory officials confirm that dioxin emissions from waste-to-energy facilities are not detectable."
Environmentalists and even other incineration companies dispute Mackin’s claim, however. "There is no question dioxin is detectable from incinerators," says Rick Hind of Greenpeace’s toxics campaign. Hind says that Waste Technology Industries has admitted to dioxins emmissions at its Columbus, Ohio incinerator.
Your Link to a Clean Community also states that Ogden incinerators reduce burned waste 90-95 percent by volume. Yet Connett notes, "That’s very deceptive. Ogden Martin says that as if [the company was] reducing the total waste stream by 90 to 95 percent, but it’s not. First of all, a significant part of the waste stream doesn’t burn well and goes straight to the landfill. Second, studies have demonstrated that in the real world, even burning everything they can, incinerators reduce the volume of the total waste stream by 60 to 70 percent, not 90 to 95 percent." Connett points out, "People must also keep in mind that in a raw waste landfill, the volume of waste is often reduced 60 percent through compaction. So, at enormous public financial cost and great risk to human health, incineration offers little or no advantage when it comes to volume reduction." Connett concludes, "The average person or public decision-maker reading Ogden Martin’s statement could easily be misled."
Despite its environmental claims, Ogden’s adherence to the bottom line remains clear. The Connetts point to an Ogden incinerator in Stanislaus County, California where Ogden officials tested new mercury control technology, found that it was removing the mercury and then removed the controls. Says Connett, "It appears that they are only interested in using ‘state-of-the-art’ technology as a way to woo a few hundred million out of the next community. They seem to have little or no interest in making sure their old incinerators keep up with state-of-the-art technology."
Mackin replies, "The tests were conducted at our Stanislaus County facility based on its selection as a test site by the EPA. No mercury concerns have been raised with respect to this facility’s operations. Furthermore, Ogden Martin operates the Stanislaus County facility for public entities in the area. From a legal and regulatory perspective, a permanent change in the facility’s air pollution control equipment would be subject to both client and regulatory approvals. The clients would also be responsible for the cost of this equipment."n
by Lou Nemeth
Homestead: The Glory and Tragedy of an American Steel Town
By William Serrin
Copyright 1992, Times Books
WILLIAM SERRIN’S Homestead: The Glory and Tragedy of an American Steel Town, presents an epic tale of the great U.S. Industrial Age through the eyes of the residents of Homestead, Pennsylvania.
It is a story that encompasses a century of history, two world wars, the birth of industrial production, the building of the U.S. labor movement and the rise and fall of the world’s largest corporation. It includes some of the most famous names in business and labor, such as Andrew Carnegie, Henry Frick, John L. Lewis, J.P. Morgan, Elbert Gary, Samuel Gompers and John D. Rockefeller. Serrin manages to convey this sweep of history on both a personal and grand scale, keeping to the roots on which his story is based while discussing people and events far from Homestead.
Homestead, Pennsylvania was a quintessential company town. A few miles outside Pittsburgh on the Monongahela River, it was settled in 1786. But it would be almost 100 years before the town became the heart of the U.S. steel industry.
In 1881, a group of merchants opened the Homestead Works. Confrontations between workers and management, a severe lack of capital and the falling price of steel compelled the owners to approach Andrew Carnegie, who purchased the Works in 1883 for $350,000. Along with Carnegie’s extensive holdings in iron mills, natural resources and other companies, Homestead would form the backbone of what became Carnegie Steel.
As Carnegie’s fortune grew, so did Homestead. The great wave of immigration in the 1870s and 1880s, primarily English, Welsh, Irish and German, provided Homestead with a skilled labor force. Supplemented by Eastern and Southern Europeans, who began arriving in the late 1880s, Homestead Works grew to employ more than 3,500 people by 1890. Homestead had become a steel town.
The U.S. labor movement was growing almost as fast as industrial production, despite the best efforts of Carnegie and other industrialists. By 1892, Carnegie had broken the union at the nearby Edgar Thomson Works, and had prevented the Amalgamated Association Of Iron and Steel Workers from organizing other Monongahela Valley plants. Homestead was the last holdout, and Carnegie was determined to eliminate union representation at the Works.
On July 1, 1892, 2,400 Homestead workers walked off the job, joining 1,100 others who had been locked out by the company in the previous two days. On July 2, the company served the workers notices of discharge. What followed was one of the epochal events in U.S. labor history. Carnegie hired armed Pinkerton guards to secure the Works so strikebreakers could enter the plant. Arriving on two barges on July 6, 300 Pinkertons were confronted by hundreds of workers and townspeople who had stormed the Works.
In the ensuing melee, dozens were wounded, and several people on both sides of the confrontation were killed. As the Pinkertons huddled down on the barges, the workers and townspeople employed numerous strategies to roust them. They fired cannons at the ships (with poor aim and little effect); set afire an oil-soaked raft and released it to float downstream to the barges; rolled a flaming railroad car down train tracks toward the water; and used a fire engine to pump oil, which was then set ablaze, onto the water.
By 4:00 p.m., 12 hours after the fighting had started, the Pinkertons had surrendered. But the Homestead workers’ victory was short-lived. On July 12, the National Guard was dispatched to "protect the property rights of the Carnegie company." The company brought in strikebreakers, and the struggle was lost. Four strikers were arrested and charged with murder in the death of a Pinkerton guard; in all, 167 were indicted on charges ranging from riot to conspiracy; 34 were charged with treason against the State of Pennsylvania. It would be 30 years before unions regained prominence in the steel industry.
Serrin relates these events in great detail, and links them to the submissive spirit of Homestead workers and residents who, even 100 years later - when faced with extinction - could not effectively rise up against the company that built, and then abandoned, their town.
In 1901, Carnegie sold his companies to J.P. Morgan and other investors for the then-incredible sum of $480 million. The Carnegie properties formed the backbone of what became the world’s largest corporation, "the combination of combinations," as it was called at the time, U.S. Steel.
At its forming, the United States Steel Corporation controlled 65 percent of the U.S. steel industry and employed 168,000 workers. It owned the combined assets of Carnegie and Federal Steel, about half the nation’s known iron-ore reserves, and 57,000 acres of coal lands in southwestern Pennsylvania.
Over the next 60 years, U.S. Steel would build the United States. Across the country, bridges, skyscrapers, railroads, warships, aircraft and roads were all built with steel from plants owned by the corporation. And Homestead was at the center of it all. The post-World War II boom in consumer appliances further fueled the company’s - and Homestead’s - fortunes.
With the exception of the Great Depression, the first half of the 20th century was a time of growth for U.S. company towns. With the unionization of the late 1930s came increased pay, increased benefits and better lifestyles. Homestead residents reaped these fruits of their hard labor.
Serrin excels in describing these "golden years," and in relating how the complacency of organized labor planted the seeds for the eventual devastating decline in workers’ standard of living and job security. For most of this period, labor and management were essentially partners. The Steelworkers Union’s bureaucracy - far removed from the concerns of the average worker and consumed with its own power - reveled in friendships with presidents, corporation executives and the wealthy denizens of society.
Homestead, however, truly comes alive in its portrayal of the downside of the industrial revolution. U.S. Steel - saddled with executive complacency, stifling bureaucracy and its own gigantic size - time and time again failed to anticipate or adequately respond to the threats all around it, including increased international competition. The last section of Homestead outlines the fall of U.S. Steel. More than just a recital of industrial demise, Serrin’s book conveys the human toll by returning to Homestead.
On July 25, 1986, U.S. Steel closed the Works for good. On that day, only 23 workers remained employed at the plant - all that was left of a workforce that had once numbered almost 10,000. Serrin relates the despair of the town:
"There was one man I never got out of my mind - Rich Locher, the hooker from Number Two Structural who had denounced the government’s retraining programs [as ‘bullshit’]... I had planned to meet with Locher, but time passed, and I was busy. ... When I got to Homestead, I ran into Mike Stout, the former grievance man. When I told him that I was going to call Locher, he said: ‘Don’t bother. Locher is dead. He finished the retraining program [to be a nurse] but couldn’t get a job, so he took a gun and killed himself - shot half his head away, in his garage.’ ...
"I liked Locher. He was a good man. ... He was an excellent father and husband, and he probably deserved more out of life than to take two brief vacations at hot trailer parks in Virginia and go out to eat once a month at McDonald’s or Long John Silver’s, to lose his job as a craneman and not get a job as a nurse. One more thing. Locher was right about the retraining programs. They were bullshit."
Serrin’s book is a compelling indictment of U.S. corporations, a stunning reminder of the devastation of industrial centers such as Homestead, and an engaging story of the people that built the United States. As George Couvaris, who once owned a restaurant and candy store in the town, points out: "It wasn’t Homestead, Pa. It was Homestead, USA."
The test in question, administered between 1987 and 1991 to applicants for store security positions in Target stores in California, consisted of true/false questions pertaining to applicants’ sexual practices and religious beliefs. Applicants were required to respond to statements such as: "I have never indulged in unusual sex practices;" "I believe my sins are unpardonable;" and "I feel sure there is only one true religion."
"The settlement is a complete vindication of the privacy rights of job applicants," says Brad Seligman, the plaintiffs’ attorney. "Our goal was to stop the testing. ... This settlement sends a strong message to other employers that they cannot trample upon the constitutionally protected privacy rights of applicants and employees."
The settlement will go into a fund for security officer applicants who took the Rodgers Condensed CPI-MMPI test. The class action lawsuit represented approximately 2,500 job seekers. Each class member is expected to receive at least $500 for having to take the test. Target will also pay $60,000 to be divided between the four named plaintiffs in the case.
The settlement requires Target to destroy all records of test results on a specified schedule and to run a direct mail and newspaper advertising program to notify class members about the settlement. Target spokesperson Robert Sykes says, "We hope that the establishment of a fund will help address the concerns of those candidates to whom the test was administered."
Target officials claim the test was used to assess the emotional fitness of security officer applicants. A Target statement says that the testing was fully confidential and conducted by an independent psychological consulting firm.
Times for NAFTA
IN A JULY LETTER TO THE NEW YORK TIMES
’ executive editor, journalism professors and media critics blasted the newspaper for
creating special advertising sections that promote the North American Free Trade Agreement (NAFTA). The critics
say the Times refused to accept advertisements from NAFTA opponents for the
"It is a basic tenet of responsible journalism that the views of advertisers should not influence editorial content," 11 professors and critics wrote to Times Executive Editor Max Frankel. "Nor should editors beat the drum to ingratiate themselves to advertisers. Nor should a newspaper discriminate against advertisers simply because the paper disagrees with their viewpoint. The New York Times violates all three principles with its special advertising sections on NAFTA."
The critics’ letter was written in response to an April promotional letter that New York Times sales manager Eve Kummel sent to potential advertisers. "While we agree that this accord is of critical importance to the future economic growth of Mexico, Canada and the United States, many Americans require further understanding if they are to be supportive of free trade and anti-protectionism," Kummel wrote. "In an effort to educate the public and influence Washington decision makers, the New York Times has planned a series of three special advertorials presenting the positive economic and social benefits of NAFTA."
The journalism professors, including Ben Bagdikian, former dean of the Journalism School at the University of California at Berkeley, say that the Times refused to sell space in the advertorial sections to opponents of NAFTA, including the AFL-CIO. "By limiting expression on a contentious public policy issue to one side, the newspaper flouts the ideal of a free forum of debate," they wrote to Frankel. "It is doubly unfortunate that the side excluded is the one with less money and generally less opportunity to have its views heard in regular news coverage."
The 24 landowners charged that Combustion Engineering polluted creeks and streams near Lincolnton, Georgia, causing extensive environmental property damage. The landowners’ lawsuit charged that the company’s kyanite mining practices left ore deposits and other mining materials open and exposed, causing acidic pollution to flow downstream when it rained. Polluted streams running off the mountain have contaminated 1,134 acres of land, according to the lawsuit.
William Pannell, the plaintiffs’ attorney, describes the damage: "If you look at an aerial picture of the mountain it looks like a big cancerous boil. ... What they’ve created by leaving all that exposed and not sealing it off from oxygen is a giant sulfuric acid factory."
Pannell says, "The streams are polluted and some have dead trees and dead vegetation. They are acidic, and the normal aquatic life that you would find in a stream is just not present."
The jury decision represents the largest punitive damage award for environmental property damage in Georgia history. The jury also awarded the landowners $47,000 in compensatory damages and $227,000 in attorneys fees.
"The award of punitive damages is grossly disproportionate with the harm the jury found in the way of actual damages," says a Combustion spokesperson. "Combustion Engineering will appeal the award and pursue whatever other legal rights it has in the matter."
5-11 Worship Street, Third Floor
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Washington, DC 20523
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Chicago, IL 60647
P.O. Box 281200
Lakewood, CO 80226
1701 Pennsylvania Avenue,
Washington, DC 20008
1625 Massachusetts Avenue, NW,
Washington, DC 20036
1730 Rhode Island Avenue
Washington, DC 20036
122 Maryland Avenue, NE
Washington, DC 20002
215 Pennsylvania Avenue
Washington, DC 20003
1875 Connecticut Avenue,
Washington, DC 20009
229 West 43rd Street
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Two Pennsylvania Plaza
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Wilmington, DE 19898
Cracking the Codex: An Analysis of Who Sets World Food Standards
by Natalie Avery, Martine Drake
and Tim Lang
Washington, DC: Essential Information, 1993
Nashville: WSMV-TV, 1993
available through OCAW
30-minute videotape on Acme Boot
and American Home Products workers
Produced and Directed by Debra Chasnoff
Boston: INFACT, 1991
30-minute videotape on General Electric
by Karen Hansen-Kuhn
Washington, DC: The Development GAP, 1993
by Jim Riccio and Matthew Freedman
Washington, DC: Critical Mass
Energy Project, 1993
Work on Waste, Inc.
Canton, NY 13617
Toronto, Ontario: Province of Ontario,
Ministry of Environment and Energy
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