Category Archives: ecology

Coal Myths and Legends: North Valmy as Dinosaur in the Coal Mine

The applause line “I dig coal” may play well in certain West Virginia venues, but it’s not playing all that well with Idaho Power:

“Idaho Power says its coal plants still generate capacity during high-demand periods, but baseload from the facilities has been declining—a trend it sees continuing in the region, and nationwide.

“The decline in baseload energy production is primarily viewed as driven by low natural gas prices and the expansion of renewable generating capacity,” the utility writes in its IRP. “Because of the low natural gas prices and expanded renewable generating capacity, wholesale electric market prices over recent years have frequently been too low to merit economic dispatch of coal generating capacity.”

Idaho Power is giving serious consideration to retiring its North Valmy plant in Nevada early; notice the references to natural gas prices and the expansion of renewable generating capacity.  In short, coal isn’t coming back, anywhere.

Why? Probably because capitalism works.  

“Coal has been crushed by the shale boom, which has made natural gas — coal’s biggest competitor — extremely cheap. The price that U.S. power plants have been paying for natural gas plunged 71% between 2008 and 2016, the Columbia report found. Coal prices were down just 8% in that same period.

At the same time, coal faces new competition from the rise of renewable energy, including wind and solar. The falling cost of solar energy combined with federal tax credits have created a boom in solar jobs. The solar industry ended 2016 with 260,000 workers, according to the Solar Foundation.” [MoneyCNN]

Why would a utility, or any other business for that matter, purchase supplies from a higher priced vendor when cheaper supplies are at hand?  If you want an example of how the “market works” this is it.  Utilities are increasingly using natural gas and renewables because those sources are (1) cheaper or (2) going to be cheaper in the long run.

A second point should be made — there are two coal markets: Metallurgical coal is used primarily in steel production; Thermal coal is used for electrical production.  Prices for metallurgical coal, also called Met Coal or Coking Coal, have increased as seaborne coal (from Queensland) tightens, and as supplies from Chinese mines diminish as their mines come under increased scrutiny about safety concerns.  The price of Met Coal is a function of not only American mines, but of Australian and Chinese sources.  The price of Thermal Coal has been declining since 2012 and doesn’t show any signs of reversing that five year trend anytime soon.  This is not a case of “if you mine it they will come,”  even with the decline in Thermal Coal prices, the price of natural gas and renewables are still putting pressure on the market.

The Columbia Study (pdf) explains, once again, how capitalism works.  What are the causal factors in the collapse of the coal mining sector of the economy?

“US electricity demand contracted in the wake of the Great Recession, and has yet to recover due to energy efficiency improvements in buildings, lighting and appliances. A surge in US natural gas production due to the shale revolution has driven down prices and made coal increasingly uncompetitive in US electricity markets. Coal has also faced growing competition from renewable energy, with solar costs falling 85 percent between 2008 and 2016 and wind costs falling 36 percent.”

Thus, bolstering the contention made previously that prices matter, and if lower prices are available for some commodity, then that’s where the “market” will go.  There are other factors: (pdf) A slowdown in Chinese manufacturing demands; deregulations may not have any significant effect on mining if the prices for natural gas and renewables continue to decrease; and, while we might expect a modest recovery to 2013 levels — that’s probably all that can be squeezed from this market.

So, Idaho Power/NVEnergy’s decision to concentrate on production using more renewables and natural gas is likely to be sound economically for long term corporate health — and the old coal-fired North Valmy plant sits like a Jurassic Creature in Pumpernickel Valley.

As for employment prospects, coal mining isn’t a growth industry: (pdf)

A plausible  range of US coal mining employment in these scenarios ranges from 70,000 to 90,000 in 2020, and 64,000 to 94,000 in 2025 and 2030 — lower than anything the US experienced before 2015.

Thus, basing economic policy on a sector which includes only 0.03% of our national economy makes precious little sense.  It makes even less sense to look backwards:

“When it comes to electricity generation in the US, the Department of Energy’s 2017 Energy and Employment Report suggests that the solar industry now employs more people than coal, oil, and gas combined. Oil still employs the largest share when including jobs related to fuels, however.

“Our findings would lead us to believe that the right place to invest dollars are in renewable energy rather than fossil fuels,” Delaney says. “These jobs are widely geographically distributed, they’re high paying, they apply to both manufacturing and professional workers, and there are a lot of them.”

How about job training for those seeking to move from a declining sector to sectors with more hiring prospects?  The Trump administration has lauded the prospects of job re-training and apprenticeship programs, but the money isn’t where the mouths are:

“Trump has proposed cutting the Labor Department’s budget by 21 percent in fiscal 2018.  That includes a 40 percent cut to the Labor Department’s Wagner-Peyser Employment Service, which supports about 14 million job seekers annually and last year helped nearly 6 million people find jobs. The proposed cuts also include a $1.3 billion reduction to programs that operate under the Workforce Innovation and Opportunity Act, which Congress reauthorized in a bipartisan move three years ago.”

Drilling down to “coal communities,” the impact is patently worse:

“Based on the limited information provided by the blueprint, President Trump’s FY 2018 budget would cut at least $1.13 billion from these programs and offices, including several in their entirety—a total that may increase when the full budget is released in May.2 Through the POWER Initiative, offices and programs targeted by the cuts funded more than $115.8 million in economic development, job training, and other grant projects targeting coal communities in more than 20 states from 2015 through early 2017.”

It is egregiously unseemly to give pep talks about “digging mining,” in coal country while slashing budgets for economic development and job training for the people facing declining employment prospects in the mining sector in those communities.  Indeed, the current administration gives every impression of saying “we love you,” to coal country residents while allowing greater pollution of their cities and towns, and cutting job training opportunities for residents seeking employment in faster growing sectors of the regional economies.

Meanwhile, the North Valmy plant stands in Pumpernickel Valley.

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Filed under ecology, Economy, energy, energy policy, Nevada economy, Nevada energy, Politics

America Last

The first law of negotiation:  It is impossible to be part of any bi-lateral or collective agreement if an agency is not at the table.

And thus, the Rose Garden Jazz Concert and International Default Announcement last week violated the First Law, by a noted (albeit self-described) deal maker.  Green lit public buildings around the nation and globe notwithstanding, the Grand Announcement was more theater than substance.  There’s a pattern herein.  First, the administration announces its announcements.  “On Wednesday, June ___, at 12:05 pm the White House will ____”  This sets up our cable news “panels” for almost interminable displays of speculation, multiplying the publicity.  Thence comes The Announcement, which may or may not be substantive.  Witness the now infamous Rick-Rolling “announcement” by the administration about President Obama’s birth certificate authenticity.  Notice there was never any apology issued for the Birtherism, and attendant racist cant, just an “announcement” made in conjunction with the opening of a family business hotel.

In reality, the first time the U.S. can withdraw from the Paris Accord comes after the next presidential election.  In reality, the accord is entirely voluntary, and has been noted in several commentaries, can’t be both draconian and voluntary at the same time.  In reality, the rest of the nations aren’t about to allow the US to “renegotiate” the terms, especially since the Paris agreement was framed to answer US objections to the Kyoto version to which the US would not agree.  In reality, the world witnessed a statement expressing the narrow vision of the current administration, violating the First Law of Negotiation.

In short, reality has precious little to do with the Rose Garden Jazz Concert Announcement.  Nor does reality square with the Trumpian bluster that the Deal Maker can get America a better deal in the foreseeable future.  At the risk of redundancy, in order to get a deal an agent must be at the table.  The question then becomes does the administration even want a seat at that table?

One theme among the pundits is that the current administration sees international agreements in zero sum terms, that is, every multi-national treaty or protocol is a link in the shackles restraining American sovereignty.  The problem, of course, is that each American retreat also comes with an obverse side — leadership abhors a vacuum, and others will step in where the US fears to tread.  Isolationism brings with it the specter of Splendid Exile.

A related theme is a theory of executive management in which Dear Leader sits atop the pyramid, in a well appointed corner office, issuing edicts which others are expected to follow without dissent.  This, however, is also a formula for a toxic corporate culture:

“Companies hire people because the managers can’t do everything themselves. It stands to reason that we should trust the people we hire to do their jobs, but some fearful managers can’t give up control.

They have to make all the decisions and call all the shots. A rule-driven, command-and-control culture is a toxic culture that will drive talented people away.”  [Forbes]

It will also drive away those who want to cooperate in major projects and programs — like environmental improvement.  Applying a “toxic” corporate culture model to the management of major governmental projects and processes is counterproductive.

It is equally toxic to consider that an increase in cooperative engagements means that gains by some necessarily means someone must lose.  It’s easy to see the world in terms of Winners and Losers, but this perspective excludes the possibility that if everyone gives a little then the prospects for mutual gains are improved.  This philosophy also denigrates the idea that improvement is always possible, holding instead that destruction is the best option.  One of the first regional trade agreements in the modern era, NAFTA, has problems (which may be feeding discontent with other agreements), however, this doesn’t mean that the benefits of freer movement of goods and capital need to be obliterated in the interests of “removing the shackles.”

The idea that the US can effectively lead by abandoning the field (or the bargaining table) is inherently false, as are the promises extrapolated therefrom.

The second law of bargaining says “never negotiate with yourself.”  Pronouncements concerning unilateral actions — as being preferable to mutually agreed upon items of interest — rarely lead to positive outcomes. It’s essentially bargaining with yourself.  For example,  the United States under the current terms of the Paris Accord can set its own carbon emission standards and goals.  Operating in mutual terms, the US could modify its goals and simply inform global partners of the changes and rationale.  The isolationist response assumes that xenophobia is a positive feature of national policy, and no other nation is deserving of notice of our intentions and reasoning.  This is tantamount to that isolated corporate executive in the corner office who sees no benefit in having his or her board actually question directives.

When other voices are ignored those directives and policies coming from the top floor are more likely to be the produce of interior monologues than of well crafted discussion, in other words the CEO/President is negotiating with himself.

Violating the first two essential rules of negotiation aren’t exactly the way to cement one’s reputation as a deal maker.

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Filed under ecology, Economy, Politics

Disinformation Dismay

Perhaps Representative Mark Amodei (R-NV2) would like to apply his talent for taking simple GOP talking points and putting them through the Amodei X600 Syntax Degenerator to the Trumpian version of why it was necessary to take the US out of a VOLUNTARY climate improvement agreement? Vox explains the 5 biggest bits of disinformation in the Rose Garden jazz concert and diplomatic disaster. Want more fact checking? Politifact provides more.

And, we hear that Senator Dean (Moderate in Name Only) Heller (R-NV) wants to get to “yes” on replacing the Affordable Care Act with some GOP approved insurance scheme that actually replaces affordable health insurance with a major tax cut for those who enjoy an income level in the top 2%.  How do we get to “yes” with this scenario?

“However, under the AHCA, currently under consideration in the Senate, the tax credit will be a flat rate based on age. Korbulic said a 40-year-old making $30,000 a year could see a more than $400 increase in premiums because of the flat rate, but a person over the age of of 60 making the same amount could see a $6,000 jump in premium costs.”

“I think you’re looking at a scenario where consumers are going to have less affordable access, and so that will likely mean they’re going to be priced out of the market,” Korbulic said. “

Meanwhile, the Trump Chicken put in an appearance at Senator Heller’s Las Vegas office. Senator Heller has a relatively predictable pattern. (1) Publicly announce “concern” or “trouble” with Republican legislation.  (2) Receive some nebulous assurance that the result of the Republican legislation won’t be the obvious. (3) Revert to standard GOP platitudes and clichés like “free market,” “freedom,” “personal choice,” and “individual responsibility,” and then (4) Vote right along with the GOP leadership as he had intended to all along.  (Examples?  SCHIP votes.  Financial Reform.)  There’s no particular reason to believe his performance on this matter will be any different.

Representative Amodei emerged from hiding to explain his chances for a statewide office are slim to none.   There is no indication yet in these parts that the tag team of Heller and Amodei will conduct town hall meetings with constituents in any populated area of the Silver State with lights, cameras, and real questions.

 

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Filed under Amodei, ecology, Health Care, health insurance, Heller, Politics

Amodei’s Fence Straddling: Science? No Science?

In his own, inimitable, fashion Congressman Mark Amodei (R-NV2) has encapsulated the wavering stance of those who don’t want to take any real action on climate change, but who’d like very much not to appear too much like the Inquisitors of Galileo.

“Amodei described himself as new to climate change issues and stopped short of endorsing the scientific consensus that rising global temperatures are driven by humans burning fossil fuels for energy.

But he said he will continue to gather research on the issue and added that facts should drive policy.

“It bugs me just as much when somebody starts out it is all BS as when somebody starts out the world is going to end tomorrow,” Amodei said. “If you are really going to be fact based then you need people who are going to argue both ways. You just don’t want a bunch of ‘yes’ people.” [RGJ]

First, Amodei noted that he didn’t think the request from the Trumpster transition team for a list of those Department of Energy employees who had worked on climate science projects was appropriate.  That’s good, because witch-hunts and purges have been notoriously counter productive.  Then come the excuses… “I’m new to the topic.”

This is analogous to “give me some time and I’ll get back to you.”

And, yes – facts should drive policy.  That would be scientific facts, not political ones.  Further, using the straw man technique doesn’t further even the political argument.  No one is saying “the world is going to end tomorrow.”  What scientists ARE saying is that there is concrete evidence that the increasing climate change is happening because of human activity.  These aren’t “yes men.” 

In fact, “The greater the climate expertise among those surveyed, the higher the consensus on human-caused global warming.”  [SSci]

What opponents of new energy sources and systems have been touting over the past few years is the MYTH of a lack of consensus:

“That’s why those who oppose taking action to curb climate change have engaged in a misinformation campaign to deny the existence of the expert consensus. They’ve been largely successful, as the public badly underestimate the expert consensus, in what we call the “consensus gap.” Only 16% of Americans realize that the consensus is above 90%.” [SSci]  (emphasis added)

Representative Amodei has firmly inserted himself into that mythological gap.  

On one side of his self constructed fence, he did co-sponsor the American Renewable Energy Production Tax Credit Extension, a bill which went to the House Ways and Means Committee, and then into oblivion.  On the other side, he co-sponsored the “Stop Green Initiative Abuse Act,” which amended the Energy Conservation and Production Act to repeal provisions of the Department of Energy’s weatherization assistance program for low income persons to increase the energy efficiency of dwellings. [OTI]

A some point it might behoove the Representative to note that not every one else is straddling a semantic fence and continue his education on the issue:

Here’s the Department of Defense on the implications of climate change on national security.

“The report finds that climate change is a security risk, Pentagon officials said, because it degrades living conditions, human security and the ability of governments to meet the basic needs of their populations. Communities and states that already are fragile and have limited resources are significantly more vulnerable to disruption and far less likely to respond effectively and be resilient to new challenges, they added.” [DoD]

In addition to national defense, there’s also the not-so-small matter of emergency planning and responses.  Emergency Managers have some thoughts on this:

“Since storms are becoming more severe, disaster response costs have risen. The costs of major hurricanes has increased sharply over the last decade, and the spending totals for cleaning up after major floods across the Midwest and South have spiked. More victims and more damages mean more money. If supplies are not available, they must be flown in. Victims may go without necessities and become ill, which results in increased medical costs or an increased demand for medical supplies. Disaster plans must account for the increasing severity of storms and how they create the need for more response supplies.” [EMD.org]

This scenario isn’t too difficult to follow.  Climate change leads to severe storms, severe storms cause more damage, more damage means more costs, more expenses mean more money.   The bottom line is that any emergency management plan which does NOT incorporate the effects of climate change isn’t really a plan at all – just a prayer and a wish list.

As much as Representative Amodei may want to dawdle, fence straddle, and muse about “collecting more facts,” the facts themselves are clear – climate change is happening – climate change is caused by human activity – and to ignore these facts is to make this country (and many others) more vulnerable.

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It has now been 2059 days since the president-elect promised to release his tax returns (April 27, 2011) In light of the ‘Russian Connection’ to the 2016 campaign it seems essential for the American public to find out what financial ties the prospective president has to the Russian government and economy.

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Amodei Quacks Like A FLAG-waving Duck

Amodei 3

Representative Mark Amodei (R-NV2) doesn’t like being categorized as “anti-public land,” or more precisely lumped in with the Bundy Boys.  However, his sponsorship of legislation and other activities have him on the Anti-Public Land list:

“Amodei landed on the list for sponsoring legislation that would give the state control of 7.2 million of the approximately 58 million acres of federally controlled land in Nevada, opposition to the creation of the Basin and Range National Monument, membership in Federal Lands Action Group and a statement about the Malheur occupation.

The statement, attributed to Amodei and two other members of the action group, said the lawmakers didn’t condone the Oregon action but added, “we do understand their frustration with increasingly heavy handed federal agencies that continue to violate the rights of hardworking American farmers and ranchers.” [RGJ]

Duck looks The poor little Republican has been cast amongst the Bundys.  How did he end up bunched up with them?  First, he’s a “FLAG” member.

“Rep. Amodei is a FLAG member and introduced H.R. 1484, the Honor the Nevada Enabling Act of 1864—which would seize Nevada public land for state control. In 2015, Rep. Amodei also introduced H.R. 488, which would cripple the Antiquities Act by blocking the extension or creation of national monuments in Nevada, unless authorized by Congress. Rep. Amodei has also cosponsored four other bills aimed at curtailing the Antiquities Act and seizing public lands. In response to the occupation of the Malheur National Wildlife Refuge, Rep. Amodei signed on to a joint statement that condemned federal officials for law-breaking, rather than condemning the actions of the armed militants.” [CAP]

So, what is FLAG, and how does it relate to the Anti-Public Lands crowd?  The organization is the brain child of two Utah Representatives, Stewart and Bishop, who announced its creation on April 28, 2015.  And, the purpose?

Today, Representatives Chris Stewart (R-Utah) and Rob Bishop (R-Utah) launched the Federal Land Action Group, a congressional team that will develop a legislative framework for transferring public lands to local ownership and control. […] This group will explore legal and historical background in order to determine the best congressional action needed to return these lands back to the rightful owners. We have assembled a strong team of lawmakers, and I look forward to formulating a plan that reminds the federal government it should leave the job of land management to those who know best.” [Stewart]

Who were among the first members of the FLAG group? “Other members of the Group include Representatives Mark Amodei (R-Nev.), Diane Black (R-Tenn.), Jeff Duncan (R-S.C.), Cresent Hardy (R-Nev.), and Cynthia Lummis (R-WY).” [Stewart]

We should assume the group means what it says.  It wants to transfer public land to local ownership and control.   Towards this end the FLAG group held its first “forum” in June 2015, and among the speakers was a representative of the “Independent Institute.”  Board members of this organization include a private equity manager, a person from Deloitte & Touche USA, a member of the Howley Management Group, the Botto Law Group, a managing director of Palliser Bay Investment Management, Reditus Revenue Solutions, Audubon Cellars and Winery, Berkeley Research Group LLC, and the former chair of Garvey International.  [II.org]  This isn’t a list that inspires one to ask if they are primarily interested in public land for the sake of conservation.

Prof. Elwood L. Miller (UNR) was on the initial panel, adding a touch of accounting expertise to the argument that the federal government is too bureaucratic and caught up in procedural questions to be a good steward of public lands.  Attorney Glade Hall added the usual federal control isn’t constitutional argument. “It is a patent absurdity to assert that such full powers of governance cover 87 percent of the land surface of a state of the Union and at the same time assert that such state has been admitted to the Union on an equal footing with the original states in every respect whatever,” Hall said.” [STGU] A sentiment echoed by the head of the Natural Resources Group, whose book on the “theft” of the environmental issue is available from the Heritage Foundation.

In short, there was nothing to remind anyone of a fact-finding operation in this inaugural panel sponsored by FLAG.  It was of, by, and for individuals who want to ultimately privatize federal lands.

It’s also interesting that the panel members offered these opinions based on personal experience, or “talking to people,” but nothing in the presentations was offered to demonstrably prove that the federal government has no authority (beyond the usual crackpot interpretations spouted by the Bundy-ites and allies) or is actually and provably incompetent to manage public lands.  The guiding assumption – however poorly demonstrated – was that the local agencies could do a better job. Period.

If anyone is still unsure of the ideology driving FLAG, please note that the Heritage Foundation and the Mercatus group aren’t the only players supporting the efforts.  There’s also the John Birch Society (They’re still around) touting the confab on Facebook.  Additionally, there’s the ever-present American Legislative Exchange Council (ALEC) imprimatur on the project.

One segment of ALEC testimony from a February 2016 FLAG meeting can serve as an illustration of their argument:

“Bureaucratic inflexibility and regulatory redundancy make it almost impossible for the federal government to handle the lands in its charge for optimal environmental health. Any change in strategy on how to manage the lands, such as harvesting trees on forest lands to reduce wildfire fuel loads and prevent pest infestation, can take years to adopt and implement. By the time the federal government is able to act, it is often too late.”

Examples? The argument is made that three factors are responsible for the severity of wildland fires – poor logging practices, overgrazing, and over aggressive fire control. At this juncture, we could well ask how, without regulatory control, can better logging practices be promoted throughout the region? Or, if the Bundy Bunch isn’t convinced by the Federal authorities to pay their grazing fees and not trespass on BLM lands, then how is a state with less in the way of resources supposed to take on the task? 

However, the most intriguing element of the ALEC position is this: Further, they have operated with budget shortfalls for over a decade calling into question whether they even have adequate funds to get the job done.”  At this juncture it’s appropriate to ask – and who is touting cutting the federal and state budgets?  Who, if not ALEC?  Thus, the federal government can’t do a better job because the funding has been cut, and because the funding has been cut it can’t do the job?  Circular Reasoning at its finest, looped in with the obvious cuts and shaving from state budgets.   The ultimate argument would be that neither the federal government nor the state governments can “do the job” and therefore the lands should be transferred to private hands.  Nothing would please the Koch Brothers more?

The second way one gets attached to the Bundy-ites is to get mealy and smushy about their activities.  As in, “we do understand their frustration with increasingly heavy handed federal agencies that continue to violate the rights of hardworking American farmers and ranchers.” [RGJ]  It’s past time to get specific.  Exactly what constitutes “heavy handed federal agencies?”  Are they agencies which are tasked to collect grazing fees?  How long is an agency expected to wait for a person to decide to pay those fees? 

Exactly what constitutes a “violation of rights of hardworking people?”  Exactly what rights have been violated?  How is it a violation of my rights to have to pay the same grazing fees, or have to move cattle from overgrazed areas, just like every other rancher in a given area under Federal management?  Freedom, rights, and independence are easy words to toss around, but without actual evidence of real violations of RIGHTS then the argument is hollow.

Bundy rally And, one lands on the anti-public lands roster by sponsoring legislation like Representative Amodei did in April 2015:

“Most recently, Congressman Mark Amodei (R-NV) introduced a “large-scale” public lands bill, which would allow the state of Nevada to seize and sell off public lands. Representative Rob Bishop (R-UT), chair of the House Natural Resources Committee, also requested $50 million in the federal budget in order to facilitate immediate transfer of public lands to state control.”  [TP]

Looks like a duck, walks like a duck, quacks like a duck, then there’s no reason to list it as anything other than a duck.

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Filed under agriculture, Amodei, ecology, koch brothers, National Parks, Nevada news, Nevada politics, Politics, privatization, public lands, Rural Nevada

Republican Water Wars: Clean Drinking Water and GOP Polluters

Amodei 3 It’s really hard to argue against Clean Water.  It’s especially difficult to argue against Clean Drinking Water in light of what’s happening to the public in Flint, Michigan.  However, that hasn’t stopped Republican members of Congress like Representatives Hardy (R-NV4), Heck (R-NV3), and Amodei (R-NV2) from aligning themselves with those who want to curtail, delay, and ultimately defeat regulations designed to prevent stream contamination in “coal country.”

Easy and Cheap Coal Mining or Clean Drinking Water?

Back in May 2015, opponents of clean water regulations decided to oppose any administration efforts to regulate what mining companies did with the debris from mountain top coal operations:

“Congressional Republicans are seeking to block an imminent rule protecting Appalachian streams from mountaintop removal mining, as opponents of the controversial practice say the mines are getting closer to communities and harming people’s health.

The White House is expected to announce a stricter rule for the disposal of mountaintop-removal mining waste into streams. Some Republicans in Congress are describing the move as the latest campaign in the Obama administration’s “war on coal.” [McClatchy DC] [see also The Hill]

The opposition would go beyond  the Reagan Era (1983) regulations which did not allow dumping debris within 100 feet of a river or stream.  The coal industry thought it had the system beaten when the George W. Bush administration allowed “waivers” from the rules during the last months of his presidency. [SeattleTimes]  The Obama administration promptly rescinded the last minute Bush Gift to the Coal Companies.  Coal interests just as promptly hauled out the hyperbole and declared the administration was declaring a War On Coal.

The result of the opposition clamor against allowing mining companies to dump debris into rivers and streams was the STREAM Act.  While the act doesn’t allow outright the trashing of American rivers and streams, it does wrap the EPA and Corps of Engineers in endless studies, evaluations of studies, and interminable hurdles to protecting water sources.  Representatives Heck, Hardy, and Amodei appear to be marching along with the coal industry.  Each voted in favor of the STREAM Act on January 12, 2016. [roll call 42]

Is Anyone Surprised?

The drinking water calamity in Flint, Michigan is a man-made problem.  Actions taken to “save money” have obviously proven to exacerbate contamination such that the population of Flint has been exposed to toxic lead levels.  We know what lead does – we also know what happens when a state government fails to act swiftly and responsibly to impending disaster.

What happens when creeks are filled with iron and aluminum hydroxides? When streams are polluted with contaminants from mountain top removal coal operations?  Three peer reviewed studies in central Appalachia found: (1) An overall increase in the rate of birth defects in counties with mountain top mining; (2) A 14.4% cancer rate compared to non-mountain top mining areas with a 9.4% rate; and (3) a $74.6 billion per year public health expense burden on Appalachian communities. [KFTC pdf]  This is not an isolated problem, nor is it new:

Between 1985 and 2001, 6,697 valley fills were approved in Appalachia, covering 83,797 acres of land and potentially affecting 438,472 acres of watershed.20 Valley fills can be as wide as 1,000 feet and over a mile long, and each can contain as much as 250 million cubic yards of wastes and debris—enough to fill almost 78,000 Olympic-sized swimming pools.
Burying fragile headwater streams located in valleys exterminates virtually all forms of life that get interred under millions of tons of waste and debris. From 1985 to 2001, the EPA estimates that valley fills buried 724 miles of streams.22 Another study conducted by the Office of Surface Mining Reclamation and Enforcement (OSM) found that approximately 535 miles of streams were negatively affected by mining from 2001 to 2005.23 All told, nearly 2,000 miles of Appalachian headwaters have been buried or polluted by mountaintop removal, and the damage to Appalachian watercourses has continued at an average rate of 120 miles per year. [NRDC(pdf)]

stream pollution

The track record doesn’t sound promising for those who want to protect their drinking water supplies, and the actions of the pollution protectors aren’t helping.  Perhaps Representatives Amodei, Heck, and Hardy, would care to explain why they don’t seem particularly disturbed about higher than normal levels of calcium, magnesium, manganese, sulfate, and selenium in coal country drinking water?

What does this stuff do?

 

We know that manganese is one of those minerals we need as part of a normal diet, but we also know that high concentrations of manganese isn’t a good thing for children – the young apparently having a greater absorption rate than adults – and that high absorption often correlates to learning disabilities. [WHO pdf] This is a bit more damage than just the brown staining on laundry common to manganese contaminated water, and much more than the toxicity it has for plant life – a burden for farmers downstream. [USGS]

Magnesium is not considered all that dangerous, in correct (normal) levels.  There is no “maximum contaminant level” assigned to this mineral. [EHS pdf]  However, both magnesium and calcium contribute to what is popularly known as “hard water,” that ever present danger to plumbing, and household appliances such as washing machines and hot water heaters.

Sulfates are another matter.   Right off the bat, water containing more than 400 mg/L should NOT be used when preparing infant formula. [MHealth] And, the stuff is corrosive, if the sulfate in the water exceeds 250 mg/L (MCL)  copper piping is particularly susceptible to corrosion. [MHealth]  Thus leading to copper contamination.  Sulfates have what is known politely as a “laxative effect,” which is not all that appealing when combined with the knowledge that sulfates are causing scale build up in the water pipes. [UGA edu pdf]  Nor should we diminish the impact of a “laxative effect” on young children and infants for whom diarrhea and dehydration can be quite serious health risks.

Selenium is a real mess.  It’s a heavy metal, and the current maximum contaminant level is 0.05 ppm (parts per million).  Long term higher-than-normal exposure can (and usually does) result in hair and fingernail loss, damage to the kidneys and liver tissue, as well as damage to the nervous and circulatory system.  In other words, it’s truly dangerous. [EPA]

Since much of the more obvious damage appears to be targeted at plumbing, pipes, and appliances, it’s too easy to dismiss the pollutants as mild (compared to the Lost Jobs?) about which the coal industry is concerned.  However, there are other contaminants to consider associated with coal mining operations:  Acid mine drainage; Coal Slurry, Coal Ash,  the ever present bug bear – Selenium, and Total Maximum Daily Loads.  [AppV]

And the mountain top removal contribution to the problems?  WV public.org reports: “It was pretty obvious to me that below valley fills, water was pretty tainted, and then it became a question of, ‘Is it getting into the human water supply?’” Stout said. “I started sampling people’s houses; some people’s water is really good, other people’s water is really appalling.” Stout has tested for and found water spiked with heavy metals and other contaminants. “Before it’s disturbed it’s as good of water you’re going to find anywhere on the planet. But after that it becomes tainted with heavy metals and bacteria and so forth and becomes unusable, except that these people don’t have any recourse,” Stout said.”

Nor, we might add, do the people of Flint have much recourse.

It’s a plausible argument that Representatives Hardy, Heck, and Amodei, are staunchly defending the exploiters and polluters who are managing a 19th century industry – rather like defending the profits of the buggy whip manufacturers before Ford.  Not only is natural gas making headway into the former domains of coal, but both wind and solar assets are increasing as well. As one environmental improvement advocacy group puts it, “Coal is making a long goodbye.”

Representatives Amodei, Heck, and Hardy appear to have both feet firmly planted in an America of the 20th century while we’re a decade into the 21st.  When they speak to their “visions” of America, voters might want to remember this point.

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VW Bugs

VW “With three Volkswagen and two Audi dealerships in Las Vegas told to stop the sale order of its four-cylinder diesel vehicles, Volkswagen AG said Tuesday that a scandal over falsified U.S. vehicle emission tests could affect 11 million cars worldwide as investigations of its diesel models multiply.” [LVRJ]

There are some interesting layers to this story.  Let’s call layer one the “regulations” layer.  We do want to set standards for the emission of nitrous oxide, which accounts for about 5% of greenhouse gas created by human activity. And, the stuff tends to stick around:

“Nitrous oxide molecules stay in the atmosphere for an average of 114 years before being removed by a sink or destroyed through chemical reactions. The impact of 1 pound of N2O on warming the atmosphere is almost 300 times that of 1 pound of carbon dioxide.” [EPA]

Therefore, it sounds like a good idea to set some standards for light duty vehicle emissions. [GPO.gov pdf]  Volkswagen, desirous of selling its products – in this case four cylinder diesel powered cars – was subject to those vehicle emission standards, just like other diesel vehicles manufactured by Ford, Mercedes Benz, and BMW. [AutoTrader]  So, why would the corporation cheat? One important reason is that the company could not manufacture a car with the three legs of the stool: Performance, Fuel Economy, and Low Pollution – and maintain its profits. [Vox]

As everyone knows by now, the corporation decided to install defeat software which fudged the numbers when the cars were being tested for emissions. In short, they could get the performance levels they wanted, at profitability levels they wanted, and this done by sacrificing the pollution part of the equation.  This explains the wide difference between the results of the road tests and the lab tests.

“The Environmental Protection Agency alleges the automaker had designed software to let its diesel cars detect when they were being tested for emissions. The software, known as a “defeat device,” was installed in some 482,000 cars, spanning model years 2009 through 2015, regulators say.” [LVRJ]

Again, as everyone knows by now, this was patently illegal.  Patently illegal behavior by a company with sales revenues of $202.46 billion in 2014; gross income of $33.88 billion; and, a net income of $10.85 billion. [MktWtch] Prior to this debacle, VW’s ROE (return on equity) was at 11.84%, Ford reported 14.33%, and BMW’s ROE was 15.61% [YCharts]

Investors like watching the ROE because:

“Return on equity (ROE) measures the rate of return on the money invested by common stock owners and retained by the company thanks to previous profitable years. It demonstrates a company’s ability to generate profits from shareholders’ equity (also known as net assets or assets minus liabilities). ROE shows how well a company uses investment funds to generate growth. Return on equity is useful for comparing the profitability of companies within a sector or industry.” [YCharts]

VW’s earnings for 2015 were estimated as about $234 billion. Ford, by contrast, was expected to see about $150 billion for 2015.  On June 24, 2015 VW was selling at $218.40/share; things started to go south quickly after VW hit $162.40/share on September 18, 2015, and the stock is reported at $111.50 September 23, 2015.   We are now sliding into the second layer of the story.  It’s not just that VW stock took a dive after the cheating was reported – nor that the cheating caused investors to sell – it may very well be that the very thing the corporate management feared, which caused the cheating, was the proximate reason for the Big Slide.

The Management Layer.   VW’s annual report to investors opens with a general description of board operations, “We also receive a detailed monthly report from the Board of Management on the current business position and the forecast for the current year. Any variance in performance as against the plans and targets previously drawn were explained by the Board of Management in detail, either orally or in writing. We analyzed the reasons for the variances together with the Board of Management so as to enable countermeasures to be derived.” [VW pdf]

What we appear to have at this point is Management Speak for Shareholder Value management.  It’s probably safe to assume that the discussions of “current business position” included the old standbys sales, revenues, expenses, liabilities, and analyst expectations.  We can base this conjecture on the reference to the “forecast for the current year.”  Remove the gilding on “variance,” and “targets,” and we’re most likely talking about share prices predicated on earnings expectations. 

So, in order to keep the earnings expectations nice and high, and thereby secure higher share prices – the management decided to roll the dice and hope that no one caught on to the Defeat Device.  More simply stated: Shot. Into. Own. Feet.

If there were a better reason to chuck the Share Holder Theory of Management – or at least to modify it such that it doesn’t drive the decision making process into the nearest convenient ditch – this just might be the appropriate occasion.

Note that it is not that Volkswagen wasn’t a profitable company.  It had a perfectly acceptable RoE (11.84%) with earnings expected to be in the $230B range for 2015.  Nor did the 4 cylinder diesel engine cars constitute a major portion of its sales.  While the total number of cars involved isn’t clear yet, VW has shut down sales of the 2015 and 2016 “clean diesel” models, noting that 23% (7,400) of new cars sold in August were diesel. [NYT]  Volkswagen Group manufactured some 10.2 million vehicles in 2014. [Stat]  The North American production for 2015 was estimated at 0.64 million. [Stat]

It almost defies common sense to perceive how cheating on the emissions testing for a group of products which were not a major part of the American market was really supposed to enhance the bottom line.  Unless, we revert to the “every penny counts” mindset in maintaining a certain targeted profit level.  Let’s take an educated guess that it was more important for VW management to maintain profit (and thus share value) than it was for them to develop and produce cars with legal levels of emissions, acceptable standards for performance, and reasonable fuel efficiency.  They were more interested in making money than in making cars? More interested in short term profits and rolling those dice against long term losses?

It wasn’t that long ago that Volkswagen wanted to be the global leader in unit sales, but as a CNBC commentator put it: “Volkswagen is learning that getting ahead at all costs eventually catches up with you. So much for being the leader on a global basis on auto sales.”

The international layer.  Diesel powered cars are much more popular in Europe than in the U.S.  Thus, economists are trying to sort out what the impact will be on the Eurozone economy [Express]  The company is now facing litigation in Italy over fuel economy related issues. [Telegraph]  And, there are reports that the EU is looking at stricter rules to close the gap between laboratory and road test results. [EuObs]  Ironically, a company that didn’t want to play by the rules may find itself facing a more rigid regulatory regime in the very part of the planet where it had 25% of the market.  As of yesterday, there were calls for greater scrutiny of all automobile manufactures in Europe. [MrktWtch

Perhaps even more ironically, a company that wanted to increase its value managed to cause a 30 billion Euro drop in market cap in two days. [MrktWtch]  The CEO has resigned, the Chancellor of Germany is calling for a prompt investigation, [Telegraph] and the UK is entering the lists for a probe of what went so ridiculously wrong. [Guardian]

What went wrong?  What’s been going wrong for a while now – the story sounds entirely too familiar?  Financial institutions which sold and then bet on the value of financial products on which they could not place a value (Lehman Brothers et al.) in the U.S. in 2007-2008? Subprime CDOs?   Bankers colluded to fiddle with the LIBOR rate?  Does it sound like the same motivation as seen in the Worldcom and Enron?  It’s founded in the same swamp land all the other egregious examples have inhabited – greed.

Perhaps it’s too easy to forget that money isn’t the root of all evil; it’s the LOVE of money, or  that “For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.” [1T 6:10]  There will be sorrows aplenty – in the regulation layer, the management layer, and on the international scene.  There is a relatively fine line between seeking economic growth and downright avarice, and when it’s crossed the results can be catastrophic.  The question becomes: How many more times do we have to see this play before we get the point?

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