On Being A Titan, Part One, Or, See It, Say It, Sue It

Got a simple little story for you today of a multinational corporation that wants to build a great big cement plant in North Carolina really, really, bad, and the local opposition to what appears to be a corrupt and distorted decision process.

Two local activists in particular have drawn the ire of Titan Cement, the Grecian corporation who seeks to build the plant—and because the Company doesn’t like what the activists have been saying about what the impact of that plant will likely be or how the deal’s going down…they’re suing Kayne Darrell and Dr. David Hill, residents of North Carolina’s New Hanover County, and the two folks who are doing the complaining the Company dislike the most.

The Company further claims that they were slandered and defamed by the damaging statements that were uttered by the two at a county commissioners’ meeting and that they have lost goodwill and the chance to do business with certain parties as a result of these statements.

But what if everything the Defendants said was not only true…but provably so—and the Company was, maybe…just looking to shut people up by sending teams of lawyers after them?

As I said, it’s a simple story today—but it’s a good one.

We have tomorrow
Bright before us
Like a flame.

Yesterday, a night-gone thing
A sun-down name.

And dawn today
Broad arch above the road we came.
We march!

--From “The New Negro”, by Alain Locke

So here’s the deal, as it sits today: for a number of years now Titan Cement has been looking to build this great big cement plant near the environmentally sensitive North Carolina coast (part of the site includes 600 acres of “pristine wetlands”), and part of running a cement plant is running cement kilns.

Ya gotta cook limestone, sand, and clay, along with some other ingredients, at very high temperatures (above 2700o F), which sort of fuses everything together; that makes “clinker”, which eventually becomes cement, and that’s why you need giant kilns and, often, pre-heater towers.

You need fuel for those really hot kilns and towers, and our friends at the Army Corps of Engineers advise that, in the kiln fuel game, you can actually kill two birds with one limestone by burning hazardous waste as a substitute for anywhere from 20% to 50% of your original “fuel of choice” (which is often coal).

According to the Corps, you can burn 12 tons of fuel an hour in one kiln, and that means up to six tons of…

byproducts of pharmaceutical, cosmetic, and electronics manufacturers;
solvents and inks used to print newspaper and other publications;
solvents used to recycle paper;
dry-cleaning solvents;
paint thinners and paint residues;
sludge from the petroleum industry;
used motor oil;
agricultural wastes;
and scrap tires.

…might be going into the mix every hour—and as it turns out, that stuff might contain:

…arsenic, cadmium, chromium, lead, nickel, thallium, and zinc.

Now if you’re burning that stuff, it’s either going up the smokestack or out the door as a component of the clinker you just made, and if you live anywhere near this plant, you’re going to be at least a little concerned…and if you have the impression that the people who are trying to get the permits are running a big ol’ hustle to get those permits, you’re going to be even more concerned…and it looks like that’s what’s been going on…and if you put all this together, and you lived in the neighborhood, you might show up at a local County Commissioners’ meeting and say something like this…

“From lawsuits for price fixing and court-ordered mine closures of Titan’s Florida plant, to allegations of corruption coming from Raleigh, to emails raising suspicion whether Titan was ever even considering any other location, which would make incentives completely unnecessary, the clouds of corruption grow dark as new controversies emerge almost daily.”

…or this…

“The bottom line is we know from numerous studies that if we build this thing, more children will get sick, a handful of them will die. We also know from the adult studies that more adults will get sick and quite a few more of them are going to die as well. Which ones? Can’t tell you. That makes it difficult, but there will be some.”

...which are the two utterances which are today at legal issue. (Ms Darrell is being sued for the first statement, Dr. Hill, the second.)

The reason we are all gathered here today is to figure out whether either of those statements are truthful or not…because if the statements are truthful, they cannot be either slanderous or defamatory.

So let’s break it all down, one clause at a time:

Ms. Darrell talked about lawsuits for price fixing, and sure enough, CemWeek (“Global Cement Industry. Knowledge”) ran a story in October of ’09 entitled “Nine US cement companies accused of price fixing”, describing a lawsuit filed for price fixing in which Titan was one of the Defendants.

Court-ordered mine closures? Coffey Burlington, attorneys at law, recount their success with a certain case on their website (Sierra Club v. Army Corps of Engineers, Rinker Group, Tarmac America, Florida Rock Industries, APAC-Florida and Miami-Dade Limestone Products Association), which did in fact result in a court-ordered mine closure of Florida facilities operated by Tarmac America, which is a Titan subsidiary.

Allegations of corruption? How about this, reported in January of 2010 by the Wilmington, NC, StarNews:

A corporation that shares an address and president with a Titan America subsidiary bought a Wilmington office building for more than twice its tax value from Democratic fund-raisers under scrutiny by state and federal prosecutors.

To add to this element of the story, the current Governor, Bev Perdue, has asked the State Bureau of Investigation (SBI) to look into Titan's permitting process, which is something that usually follows allegations, if I recall correctly.

Let’s move on: the folks in the Wilmington, NC, area have a private economic development committee that has negotiated secretly with Titan for some time; the result of that effort was the decision to provide $4.2 million in local government incentives to Titan.

But here’s the thing: if Titan never meant to build anywhere but on that one site, and they still hustled the community for the incentives by using the threat of building somewhere else…well, that’s why Ms. Darrell was talking about:

“…emails raising suspicion whether Titan was ever even considering any other location, which would make incentives completely unnecessary…”

In 2008, Keith Barber, he of Wrightsville Beach Magazine, documented Titan’s multi-decade interest in this particular location:

Titan has made very little effort to conceal the fact it plans to move forward with construction of a cement plant and limestone mining operation on the banks of the Northeast Cape Fear River. In a 2005 interview with Titan CEO Aris Papadopoulos in Cement Americas magazine, Papadopoulos confirmed the Greece-based company had been considering building a plant in Castle Hayne for nearly two decades…

… In addition, even though the permitting process is 18 months to 2 years out, the North Carolina Department of Transportation (NCDOT) Web site reveals that CSX Railroad is already constructing a new spur track at the site of the proposed Carolinas Cement Company.

The Charlotte News & Observer documents the existence of those pesky emails in a January 2010 editorial:

…[Titan lobbyist John] Merritt said he would talk to then-Commerce Secretary Jim Fain. Earlier, he had advised a company spokeswoman on how to respond to questions without raising suspicions that Titan might not qualify for a state grant.

"It is very important that the company not do anything that suggests that this is the only site you are looking at," Merritt e-mailed. And sure enough, in its application for incentives Titan asserted that it was considering sites elsewhere.

Let’s jump in for just a second and take a look at where we are:

Ms. Darrell made this statement…

“From lawsuits for price fixing and court-ordered mine closures of Titan’s Florida plant, to allegations of corruption coming from Raleigh, to emails raising suspicion whether Titan was ever even considering any other location, which would make incentives completely unnecessary, the clouds of corruption grow dark as new controversies emerge almost daily.”

…and based on what we’ve seen so far, every single word of that statement turns out to be absolutely, provably true:

--There was a price-fixing lawsuit.
--There was a court-ordered mine closure of Titan’s Florida plant.
--It’s alleged that something funny was going on with that office building, and North Carolina’s SBI is investigating.
--We did in fact discover that emails exist raising suspicions as to whether Titan was considering any other location.
--And here we are, talking about one of the new controversies that emerge almost daily.

Today’s tale of legal bullying is running pretty long already, and we still have half of the story to go…so let’s take a break for today, and we’ll pick this up by looking at the statement made by Dr. Hill when we get together next time.

In the meantime, if you’re keeping score…I’m thinking that after Round One, it’s Defendants, 1, Titan, 0.

On Responding To Oil, Or, “Disaster, Or Emergency, Or Neither?”

We’re now into day way too many of the BP oil spill, and the President has just yesterday been down on the Louisiana coast—again.

There have been suggestions that the Administration should take action to essentially push BP out of the way and take over the work itself, particularly as it relates to the cleanup.

It may have even occurred to you that an official declaration of some sort might be needed, in order to bring the full power of the Feds into play.

That’s some good thinking, but before we go jumping right into declaring things we better understand the law, because if we don’t, we could actually make things worse.

It was a deathbed scene, but the director was not satisfied with the hero’s acting.

“Come on”, he cried, “Put more life in your dying!”

--From “10,000 Jokes, Toasts, & Stories”, Lewis and Faye Copeland, Editors

So right off the bat, we need to give credit to Francis X. McCarthy of the Congressional Research Service, who put together “Potential Stafford Act Declarations for the Gulf Coast Oil Spill: Issues for Congress”, which will, unless indicated otherwise, be our source for today’s discussion, and the most excellent Steven Aftergood, who, among his other good works, sends me those “Secrecy News” emails that should be coming to every one of your inboxes as well.

And with that said, let’s get to work:

In a situation such as the oil spill, the Stafford Act, which is the law governing emergency and disaster responses, gives the President a fairly limited number of options: he can do nothing, leaving BP as the lead party in the response, or he can declare, on his own initiative, that an “emergency” exists. He can also agree to respond if the Governor of a State declares that an emergency or “major disaster” has occurred within that State.

So which means what?

From the Stafford Act itself (42 USC 5122):

“(1) Emergency.— “Emergency” means any occasion or instance for which, in the determination of the President, Federal assistance is needed to supplement State and local efforts and capabilities to save lives and to protect property and public health and safety, or to lessen or avert the threat of a catastrophe in any part of the United States.

(2) Major disaster.— “Major disaster” means any natural catastrophe (including any hurricane, tornado, storm, high water, winddriven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought), or, regardless of cause, any fire, flood, or explosion, in any part of the United States, which in the determination of the President causes damage of sufficient severity and magnitude to warrant major disaster assistance under this chapter to supplement the efforts and available resources of States, local governments, and disaster relief organizations in alleviating the damage, loss, hardship, or suffering caused thereby.”

It’s not just terminology, either…there are functional differences as well.

The biggest: if the President declares an emergency, on his own initiative, FEMA will not be permitted to offer Disaster Unemployment Assistance, which is a program that does just what you think it does for people like South Louisiana’s fishers and tourism workers. If the Governor declares a disaster, on the other hand, such assistance would become available.

Other “disaster-only” assistance would include paying for “emergency protective measures”; this means that FEMA, and not the State, would bear some of the cost of building the proposed “barrier islands” that might keep some of the oil off the coast.

For most emergency and disaster assistance the Federal “cost share” is 75%; it can be modified up to 100% if the President so declares.

So far, so good…but there is another side to this story.

In the aftermath of the Exxon Valdez incident the then-Governor of Alaska, Steve Cowper, tried, twice, to get George Bush the First to declare a disaster. He was unwilling to do so.

The reasoning behind this was that…well, how about if I just let you hear the story firsthand:

“The Department of Justice opposed a declaration of disaster by then-President George H. W. Bush on the basis that it might impact adversely the case of the United States against Exxon. When asked at a Senate Appropriations Committee hearing by Senator Ted Stevens (R-Alaska) why no declaration of disaster had occurred, the then-Acting General Counsel of FEMA, George Watson, said on the record that he had issued a legal opinion stating that no declaration of an oil spill could be made under the Stafford Act.

When Sen. Stevens asked for a copy of the opinion, Mr. Watson said he would furnish one. Instead of an opinion, a somewhat garbled statement was given by FEMA’s congressional liaison for insertion in the record. The statement basically concluded that where a parallel statutory scheme offered both compensation and better litigation rights to the United States than the Stafford Act, then the president would not declare a disaster or emergency.”

The money for these responses comes from the Disaster Relief Fund. This Fund is not part of the annual Federal Budget appropriations process; instead, it’s refilled, as the need arises, by supplemental appropriations.

The Fund is almost empty at the moment, and even before this event it was predicted that the money could run out by this month. (It’s estimated that the Fund is spending about $350 million a month to mitigate the various disasters currently on the books, with only about $600 million in the Fund as of May.)

A supplemental appropriations bill, part of which would provide $5.1 billion for the Fund, to cover past and future expenses, is before Congress right now (H.R. 4899).

The Senate wants its version of the bill adopted (it’s not just a FEMA bill: there’s lots of juicy defense appropriations in there as well, among other allocations), and they’ve asked for a House/Senate conference. Almost a third of the Senate is on the Conference Committee, so you know there are a lot of negotiations ahead—unless, suddenly, a new sense of urgency is felt by all parties involved.

(Fun Fact: There was a large cleanup of spilled oil associated with Katrina, to the tune of about 9 million gallons.)

We need to stop, for just a moment, and talk about two other potential sources of cleanup funding out there: the Oil Spill Liability Trust Fund (OSLTF), and, possibly, the EPA’s Superfund.

If BP should turn out to be unwilling to pay the billings being submitted by the US Government for cleanup and other expenses, or if the Company denies claims from third parties that the Feds think should be paid, then the Trust Fund is available to pay claims while collection actions against BP are underway.

However…the Fund can only pay claims associated with oil pollution. Claims related to pollution caused by other hazardous materials…like dispersant…cannot be paid by this Fund.

The normal solution would be to charge those expenses to the Superfund, but there’s a “however” attached to that. Long story short, the Superfund cannot pay for claims related to pollution in bodies of water.

There’s more: the OSLTF is limited, by law, to $1 billion, maximum, per incident, with only $500 million of that available for the natural resources cleanup associated with that incident.

(Fun Fact Number Two: There is such a thing as microwaveable haggis.)

At about this point, you’re probably thinking that we should declare something pretty much right away.

Not so fast there, Gentle Reader…because here’s the “you could make things worse” part:

If the Stafford Act is invoked, and an emergency or disaster is declared:

“Any person who intentionally causes a condition for which Federal assistance is provided under this Act or under any other Federal law as a result of a declaration of a major disaster or emergency under this Act shall be liable to the United States for the reasonable costs incurred by the United States in responding to such disaster or emergency to the extent that such costs are attributable to the intentional act or omission of such person which caused such condition.”

And therein lies the trouble.

If BP can successfully argue that they did not intentionally spill that oil, then the ability to recover money spent cleaning it up would be severely limited, if not entirely lost.

So as of this morning, that’s where we’re at: there’s a belief that BP is not doing all it can to fix this, or to clean it up, and that one way to get around that problem would be for the Federal Government to invoke emergency powers and take over the cleanup itself.

The Oil Pollution Act of 1990 provides some capability in this area, through the Disaster Relief Fund, but the money available for the task is limited, and probably insufficient for the work that needs to be done.

And while the Stafford Act provides additional authorities of its own, there is a real possibility that invoking the Act will let BP off the hook for the giant legal liability that appears to be facing them down today.

It’s a really tough situation for a national leader, and if you ever wondered why Barack Obama’s hair seems a bit grayer lately…well, this might be part of the reason why.