Category Archives: Economic development

Dulles Gets High Scores in at Least One Metric — Frustration

Washington Dulles International -- the wow factor ends with the architecture

Washington Dulles International — the wow factor ends with the architecture

by James A. Bacon

Washington Dulles International Airport is the Brazil of U.S. airports — it’s the airport of the future… and always will be. Unfortunately, that future is looking further and further off as both passenger and freight traffic decline precipitously. Peaking at 27 million in 2005, the number of passengers declined to 22 million last year. Peaking at 767 million pounds in 2007, air freight dove to 524 million in 2013, according to airport statistics.

It is dogma in Virginia’s political class that Dulles, along with the ports of Virginia in Hampton Roads, is one of the economic development “crown jewels” of the Old Dominion, and that whatever is good for Dulles is good for Virginia. Hence, proposals are working their way through the state’s transportation funding system to invest hundreds of millions of dollars in highway projects to make Dulles freight cargo more economically competitive — and that’s on top of more than $7 billion to extend the Washington Metro system to Tysons, Reston and Dulles.

Now comes the Airport Frustration Index published by Bloomberg, which ranks Dulles as the third most frustrating of 36 major North America airports, trailing only LaGuardia and Newark.  What are the factors that go into compiling the frustration index?

One is the length of the commute to get to the airport. The rush hour drive time, at 67 minutes, is the seventh worst in the country.

Another factor is the passenger experience at the terminal. Based on survey scores, Dulles scored 5.6 on a one-to-ten scale for security, the worst of any airport but Miami. Its restrooms, with a 6.3 score, ranked seventh worst. Shopping, at 5.1, also ranked seventh worst. Interestingly, competing Ronald Reagan Washington National and Baltimore Washington Thurgood Marshall outscored Dulles in all of these passenger-amenity ratings by wide margins.

Finally, Dulles scored 9th worst in on-time flights (tied with three other airports); only 75% of its flights took off on time.

Bacon’s bottom line: When the Silver Line service opens at Dulles in several years, its airport commute time may improve. (For $7 billion, it had darn better improve!) But the Bloomberg survey suggests that there are some fundamental management issues at work here. What excuse is there for poor security or dirty bathrooms? What excuse is there for a second-rate shopping experience?

Dulles is a tremendous economic development asset for Virginia, at least potentially. But if the Dulles airport lobby wants to soak Virginia taxpayers for hundreds of millions of transportation dollars in subsidies to make its air cargo business more competitive, I’d have a lot more confidence that the money would be invested effectively if I saw evidence that the airport was being run really well. But if airport management can’t keep the restrooms clean, how can it be trusted to build a world-class air freight business?

My Drive Through Two West Virginias

A natural gas well fire in nothern West Virginia

A natural gas well fire in northern West Virginia

 By Peter Galuszka

It was a biting eight degrees when I hit the road in Beckley, W.Va. last Wednesday morning having held a book signing and given a talk in Charleston the night before.

I wanted to drive two hours up to Harrison County, where my family lived from 1962 to 1969, and see what had changed. I hadn’t been there in a few years.

Harrison and neighboring counties Doddridge and Lewis had long been coalfield areas along with natural gas. Coal had pretty much played out after the 1980s but there are still some big mines. Its real claim to fame is the underground rock formation ideal for glass-making. In the 1890s, it had attracted hundreds of craftsmen from Italy who made Clarksburg an important glass center and home to the locally-famous “Pepperoni Roll” – a small loaf of bread with a long stick of pepperoni inside.

As I drove up Interstate 79, I noticed the first signs of the area’s most recent transformation. There were plenty of oversized truck rigs with oddly-shaped machines. A number carried long steel pipes.

When I drove on familiar roads, I noticed that small lots that might have stored strip coal mine gear were all now filled with bright-orange wellheads. Davisson Run, a small creek where we used to hunt for frogs, is now near a large new building for Dominion Transmission — yes, that Dominion based in Richmond — which plans a $5 billion natural gas pipeline from the area through Virginia and North Carolina.

Welcome to Fracking Central. This part of northern West Virginia is booming thanks the Marcellus Shale formation rich with hard-to-get natural gas. In just a few years, hydraulic fracking, using high pressure water and powerful chemicals to fracture underground gas pockets and pump them out, has revolutionized the U.S. energy industry.

My mission (which failed) was to find a woman living in a rural house in the rolling hills and dairy farms of western Harrison County. She had been on YouTube two years ago complaining how her neighbor had sold gas rights and turned pleasant pastureland into an obnoxious industrial site with all-night floodlights and diesel generators roaring 24/7. Huge trucks carrying water for high pressure injection clogged narrow county roads.

I drove through Salem, a tiny college town, and noticed signs reading “Antero Resources” that reminded truck drivers supplying rigs to drive slowly and not to “Jake Brake” – use brakes on some trucks that make a loud, machine gun sound as they tap engine exhaust to slow down.

Antero Resources was a big clue. They are an independent gas and oil firm based in Denver that has hit the fracking craze in a big way. They have rights to something like 384,000 acres of gasland in the surrounding area. Having gone public only recently, the company has revenues that have zoomed from $195 million in 2011 to $259 million in 2012 to $689 million last year.

Antero has had its problems. In July 2013, “flowback” material from a Doddridge Count well exploded, badly burning five workers and killing two. Earlier this year, the West Virginia Department of Environmental Protection issued a case operations order to Antero because of tank ruptures. The firm has also been accused of released methane into the private wells of 12 individuals.

I couldn’t find out if some are enjoying the economic benefits of fracking. One reads of people suddenly drawing $1 million a year in royalties. I did notice was that there was a lot more drilling support activity and more shopping malls.

My road trip was in marked contrast to one I had taken the day before in the southern part of West Virginia.

Upper Big Branch memorial in Whitesville

Upper Big Branch memorial in Whitesville

I was on my way to give a talk in Charleston about the paperback edition of my book “Thunder on the Mountain: Death at Massey and the Dirty Secrets Behind Big Coal.” I had the time so I chose to head up fateful Route 3 through the Coal River Valley where I have spent a lot of time in the past four years.

Route 3 in Raleigh County is a lot different from any road in Harrison County. The peaks are taller, steeper with more distinct hollers. Rock outcrops jam out at you, unlike the gently rolling hills of the north. The late fall sun is dramatically restricted.

This is the road that suddenly became flooded with ambulance and fire trucks on April 5, 2010. A huge explosion at the Upper Big Branch deep mine owned by then-Richmond-based Massey Energy killed 29 miners. Before then, it had been Ground Zero in the environmentalists’ vigorous war against Mountaintop Removal, which is strip mining on an obscenely large scale. Hundreds of feet of mountaintops are lopped off by gigantic drag lines. The leftover dirt and trees are dumped into creek beds destroying habitat.

I headed north along Big Coal River, which is anything but. Its valley provides just enough space for a road and a CSX rail line in some areas. I went past the new Marsh Fork Elementary School that Massey Energy was forced to build to replace one a few miles away that was threatened by its mine operations.

There was Jarrett’s store (new sign) where bystanders watched all the police cars and ambulances that fateful April day. Soon, the old Marsh Fork school appears. It had been a focus of yet another battle over coal but today it is abandoned and fenced in. Its playground is close to huge coal storage towers. Soaring above them is an earthen dam holding back a lake with about 3 billion gallons of toxic sludge.

There was very little activity – odd since the coal of the valley is the best in the world. Then it came – Upper Big Branch mine – lifeless. It was sealed after the disaster. Past roads with signs reading “Ambulance entrance” there was the portal where the UBB miners came and went. There is a lonely memorial of 29 black helmets at the base of a steel tower. Another memorial to them is a few miles north at Whitesville – a classic coal town filled with empty stores, although the florist shop is still busy.

No coal trucks, no pickups, for miles. The only activity was at the Elk Run deep mine at the very top of Route 3.

Why? One reason is that fracked natural gas from Harrison County and its region is stealing electric utility market share away from coal.

The other reason is Asia’s economic slowdown. Coal River and UBB provide metallurgical coal used for export to smelt steel in foreign mills. (They don’t anything to do with “Keeping Our Lights On” as the pro-coal propagandists say.) Met coal can be enormously lucrative but its prices are down two thirds from three years ago.

That’s bad news for Bristol-based Alpha Natural Resources, which bought out Massey for $7 billion after the disaster. Alpha is in such bad straits that hedge funds are lining its stock up for shorting trades, according to this morning’s Wall Street Journal.

Well, that’s my road trip. Not to worry, though, I’ll be back soon. The criminal trial of Donald L. Blankenship, former Massey CEO and otherwise known as “The Dark Lord of the Coalfields,” starts Jan. 26 in U.S. District Court in Beckley.

Proposed CO2 Regs Will Harm Virginia’s Economic Competitiveness

Image credit: Department of Environmental Quality

Image credit: Department of Environmental Quality

by James A. Bacon

Proposed federal regulations to cut future carbon dioxide emissions from electric power plants would put Virginia at a significant competitive advantage by giving the state no credit for its progress in reducing CO2 over the past ten years, asserts the state Department of Environmental Quality (DEQ) in a letter response to the Environmental Protection Agency (EPA).

Even back in 2005, Virginia power plants emitted less CO2, a greenhouse gas, per unit of energy produced than those of other many states, thanks to the state’s reliance upon nuclear power. Since 2005, Virginia power companies have phased out older coal-fired plants and substituted natural gas. Although natural gas is a fossil fuel that emits CO2, it is much cleaner burning than coal and produces less CO2 per unit of energy.

In 2005, coal accounted for 46% of Virginia’s electric generation; by 2012, coal had fallen to 20%.  Virginia reduced carbon “pollution” by 39% between 2005 and 2012, the seventh best performance nationally. In 2012 Virginia ranked 15th among the 50 states for the rate of carbon “pollution” from all electric generating sources.

Rather than credit Virginia for recent progress or how much citizens spent to get there, argues the DEQ letter, the EPA Proposed Emission Guidelines bases its performance targets on a state’s electric generating system as it exists now. States the letter:

EPA’s approach fails to recognize the achievements made by many states, including Virginia, that have reduced CO2 emissions by making significant investments in zero and low carbon emitting generation, such as nuclear power, and rewards states that have not done so by giving them substantially higher CO2 emission reduction targets.

carbon_goals

Source: Division of Environmental Quality

All of Virginia’s neighboring states have electric generating systems that are more carbon-intensive than Virginia’s, but all have emission rate goals substantially higher than Virginia’s final goal of 810 [pounds per Megawatt house]. In fact, the Proposed Emission Guidelines would require greater reductions in megawatt hours or carbon intensity from affected units in Virginia than from similar units in either Kentucky of West Virginia, even though those states generated approximately twice the amount of electricity on a megawatt hour basis from fossil fuel than did Virginia in 2012.

“The disparity in state goals,” writes the DEQ, “leaves Virginia at a competitive disadvantage to its neighbors and numerous other states because they will be able to comply with the Proposed Emission Guidelines more cost effectively. … Such states could use their competitive advantage over Virginia to keep their state electric rates or taxes relatively lower in order to lure away existing Virginia businesses and render Virginia less competitive in the quest for new business.”

Governor Terry McAuliffe says he supports the EPA’s goal of reducing carbon emissions to combat global warming. But he says the proposed regulations could be “more equitable,” according to the Times-Dispatch.

Bacon’s bottom line:  Not only are onerous new environmental regulations being imposed by executive fiat, not based upon anything contemplated by Congress when it enacted the Clean Air Act… Not only are these regulations being enacted  on the basis of claims that runaway global warming (a) is occurring, (b) will prove to be an unmitigated catastrophe and (c) that re-engineering the U.S. economy by reducing CO2 emissions is the best way to deal with it… but the state-by-state implementation of the regulations will punish Virginia for its previous efforts to be environmentally virtuous.

Virginia, like the United States, faces many environmental challenges. As a society, I believe, we should steadily increase our investment in environmental protection. But we also need to prioritize that investment to accomplish the most good per dollar spent. I’m far from convinced that spending billions of dollars — the proposed EPA regs could cost Virginians an estimated $5 billion — will generate anything tangible for Virginia or its environment. If these regulations go through, they will be a tragedy of the first order.

More Money for Millionaires

by James A. Bacon

Here’s one way to look at it: If the commonwealth is going to shower millions of dollars in tax credits and grants to multimillionaires for making movies in Virginia, it might as well give it to Virginia multimillionaires. At least that keeps the money in the state!

According to the Times-Dispatch, the state gave a $200,000 grant and an $800,000 tax credit to the production company that filmed “Field of Lost Shoes” about the Civil War battle of New Market in which VMI cadets helped defeat a Union army. The company is owned by Thomas Farrell II, CEO of Dominion Resources, who co-wrote, invested in and raised money for the movie. Farrell’s son, Peter Farrell, a Henrico County delegate to the General Assembly, also was an investor, co-producer and actor in the movie.

If the state is going to shell out that kind of money to lure film production to Virginia — the independent film company spent nearly $4 million in “qualified expenses” on the project — why give it all away to the likes of multibillionaire Steven Spielberg, who filmed “Lincoln” in the Old Dominion? Share the wealth, baby!

Of course, I’m being totally facetious. The state has no business subsidizing film production for anyone — Virginian or non-Virginian; millionaire, billionaire or pauper — any more than it has subsidizing painters, fiction writers, graphic novelists, musicians, bloggers or any other artist.  Welfare (or incentives, whatever you want to call it) for millionaires is not justifiable in anybody’s moral framework.

The point of the film tax program is to encourage economic activity — film production — in Virginia that wouldn’t take place here otherwise. Did giving Farrell’s production company $1 million induce him to film in Virginia as opposed to somewhere else? Where else was Farrell, a University of Virginia grad, going to film a movie about VMI and a battle fought in the Shenandoah Valley? Kentucky? Southern California?

This is one more instance of Virginia’s political class picking the pockets of taxpayers and redistributing it to the wealthy and politically connected. Republicans, who increased this particular subsidy under the McDonnell administration, are blocking the expansion of Medicaid on the grounds that we can’t afford it (which we can’t). But they’re OK with subsidizing a millionaire’s personal artistic passion? Shame! Shame!

While I deplore the tax breaks, I have to say, the movie trailer looks pretty good. The Farrells lined up some serious B-List talent — Jason Isaacs, Tom Skerritt, David Arquette — and the acting and production values come across as very professional. I hope the movie is a financial success. If it is, maybe Tom Farrell will film more stories from Virginia history… without the benefit of tax breaks.

Former Massey Coal Chief Indicted

DonBlankenshipBy Peter Galuszka

The indictment today in Charleston, W.Va. of coal baron Donald L. Blankenship, the former head of the notorious Massey Energy Company, for violating federal mine safety and securities laws, has been long awaited, especially by the families of the 29 miners who died on April 5, 2010 in a huge explosion at Massey’s Upper Big Branch mine in Montcoal, W.Va.

It was the worst coal mine disaster in this country in 40 years. It topped off a wild run by Blankenship, who thought he had political potential and spoke for the Appalachian coalfields while dodging safety violations and blowing away mountains in horrific surface mining practices.

He was a poster man for the view, popular among this country’s business elite, that cost cutting and productivity are sacrosanct, human lives are cheap and environmental concerns such as climate change are mere diversions from the country’s true goals. At one point he literally wrapped himself up in the American flag to push his ideas.

A federal grand jury today turned those arguments on their heads. The four charges accuse Blankenship of conspiracy in blunting the numerous federal safety violations that lead to the catastrophic disaster at the Upper Big Branch mine.

For several years leading up to that fateful day, Blankenship allegedly connived to ignore concerns that the mine had broken equipment and excessively high levels of highly inflammable coal dust. He also is accused of keeping federal mine inspectors from doing their jobs.

The grand jury also claims that Blankenship violated federal securities laws by giving investors misleading information about Massey stock.

Blankenship was a huge celebrity in the Appalachian coalfields. Tying himself to a reactionary ideal of doing what he thought was best for America, he spent a million dollars at what was an anti-Labor Day celebration in West Virginia in 2009. He wore a costume formed from an American flag and hired testosterone-infused country music stars Hank Williams Jr. and Ted Nugent to entertain his crowd.

The irony was that it was a holiday to celebrate labor unions while Blankenship and his firm were notorious for union-busting. He also had a habit of taking the chief justice of the West Virginia supreme court on vacation on the French Riviera.

Another irony is that Blankenship, like much of the U.S. coal industry, promotes the propaganda that there is a “War on Coal” and that coal is essential to “keeping our lights on.” Never mind that the free market and the flow of natural gas from hydraulic fracturing drilling from the very same area, not the U.S. Environmental Protection Agency, are what is really hurting the Appalachian steam coal market.

The coal mined at Upper Big Branch, however, had nothing to do with power generation. It was metallurgical coal that was exported to make steel in markets such as China. At the time of Upper Big Branch, China’s steel market was hot and met coal prices were going through the roof.

The indictment reads that the group of mines associated with Upper Big Branch “generated revenues of approximately $331 million, which represented 14 percent of Massey’s approximately $2.3 billion in in revenue.” Obviously, it was in Blankenship’s interest to keep the steel-making coal flowing.

In that process, according to the indictments, Blankenship oversaw efforts to cut corners, dodge safety issues and keep miners on edge. They are rich in detail about poor ventilation; flawed water sprays to keep explosive coal dust down and warning when federal coal inspectors were on the prowl.

After he was forced to resign from Massey Energy with an over-sized golden parachute, Blankenship kept quiet for a couple for of years. Recently he came back on the scene with a self-made documentary just on the eve of the fourth anniversary of the Upper Big Branch disaster. The movie was so tasteless that even Joe Manchin, a U.S. Senator from West Virginia who was quoted in the film, disassociated himself from it. Families of the dead mines were appalled.

The long-in-coming indictments illustrate the problems of coal as an energy and steel source and just how its issues have been ignored in the Appalachians for about 150 years. In the past, huge mine disasters, such as the 1968 blast at Farmington W.Va. that killed 78, sparked real safety reform.

Not so after Upper Big Branch. Pro-coal Republicans in Congress have blocked bills to toughen rules. This is a reason why the federal indictments are so important. They show that leading a culture of safety laxity will no longer be tolerated.

It may be curious that Blankenship’s indictments come just after President Barack Obama has just agreed to a turning point treaty with heavy polluter China to cut carbon emissions. But they should give some closure to long-festering problems in a part of the United States where industrial death and destruction are considered business as usual.

Kudos: U.S.-China Climate Pact

Shanghai: Soot City

Shanghai: Soot City

By Peter Galuszka

President Barack Obama’s trailblazing pact with Chinese leader Xi Jinping to limit greenhouse gas emissions through 2025 is welcome news and could do much to reduce carbon dioxide emissions since the two countries are responsible for about 40 percent of the globe’s total.

China is an economic powerhouse so energy hungry it builds a new coal-fired generating plant about every eight to 10 days. Its leaders have pledged to cap  carbon emissions by 2030 or earlier.

Obama announced a plan to cut U.S. emissions by 26 to 28 percent below 2005 levels by 2025. This is a bigger cut than the 17 percent reduction by 2020 that he had announced earlier.

The agreement, reached in Beijing, is most welcome for the obvious reason that it would make a huge contribution to reducing greenhouse gases. It also undercuts the arguments by the fossil fuel industry, some utilities and their drum beaters that any steps the U.S. takes in cutting carbon pollution are pointless since China (or other Asian countries) will keep polluting anyway.

The arguments are crucial since Virginia’s Big Energy industry and the staff of the State Corporation Commission are attacking plans by the EPA to greatly reduce carbon.

Consider this gem of wisdom from another correspondent on this blog: “Virginia could revert to stone-age levels of zero greenhouse gas emissions tomorrow, and the savings would offset the increase in CO2 from coal-fired power plants built in India and China in a year! (OK, maybe not a year, but over a very short period of time.)”

Sadly, this kind of mentality is regressive and, with the new Washington-Beijing pact, is becoming increasingly irrelevant.

One thing many American commentators don’t seem to realize is that China isn’t necessarily a primitive business juggernaut stomping on any rational plan to check pollution. Beijing and Shanghai have some of the highest rates of air pollution in the world and its leadership, especially engineers and policy makers capable of understanding how technology can help them, knows they just can’t continue as before.

Three years ago, I visited both cities to research a book on the coal industry (newly out in an updated paperback, by the way, see below). I also went to Ulanbatour, the capital of coal-driven Mongolia where the air was so bad, I felt delirious within hours after arrival and by the next morning I showed signs of pulmonary illness.

The promise for changing things seems to money and the system.

In the U.S., we have a regulatory oversight apparatus over energy generation. This is reasonable because it prevents electric utilities from using their monopoly power to stick customers with high rates. But the system is flawed because: (1) it too often favors big utilities over average consumers and; (2) it is rigged to prevent new, experimental and possibly transformative technologies that very well could allow the use of dirty and dangerous but still cheap coal.

In the latter case, the thinking seems to be to go for ephemeral cost benefits (like using natural gas) without having any long-term strategy that actually might save lots more money through better health and more efficient, less-polluting energy.

In several cases, regulators nixed pilot plants that burn coal but use special new ways of doing so that capture a lot of carbon either in a chemical process involving ammonia or by stripping off the carbon emission from the pollution stream and sequestering them safely away. The plants cost big money. They are much cheaper to do as greenfield sites but regulators are more inclined to prevent them in favor with the soup d’jour of power that happens to be cheapest at the moment, in our current case, natural gas. Continue reading

How Not to Spend Public College Money

vsu multi-use

Virginia State’s multi-use center

By Peter Galuszka

As Virginia’s students and their families struggle paying their tuition and related expenses, the state’s 15 public universities continue to charge excessively for mandatory fees for athletics and massive bricks and mortars projects.

These are the conclusions by the Joint Legislative Audit and Review Commission (JLARC) which has issued a series of studies on college spending to the General Assembly. Dubious fees and a $7 billion collegiate construction boom are some of the reasons why the average tuition for in-state students has risen 122 percent over a decade.

One doesn’t have to look far to see the shiny new buildings. At Virginia Commonwealth University in Richmond, former President Eugene Trani spent decades expanding his school’s two campuses. In the process, he transformed downtown for the better but one must ask why the huge expansion seemed to get more attention and resources than raising the school’s academic status. . Late this summer, VCU ordered a $21 million budget cut to help the state with its $881 million revenue shortfall.

In Charlottesville, students at the University of Virginia can enjoy the recently completed $100 million South Lawn project that was a decade in the making and added a patch of new buildings. It is now adding a children’s medicine building at his health care complex.

For one of the stranger examples of dysfunctional spending, consider Virginia State University near Petersburg. The small, historically Black school is well into building an $84 million multi-use center that would serve students as well as offer a venue for community events, much like VCU’s Siegel Center which hosts graduation ceremonies for many area high schools.

As the center is being built, school officials plan to use it to help transform the surrounding areas of the small town of Ettrick. They are using the model of VCU about 25 miles up Interstate 95 as a blueprint for linking school expansion with local community development.

Yet VSU faces such serious financial problems that its president Keith Miller, stepped down unexpectedly on Halloween. Thanks to shortfalls in financial aid and other problems, the school ended up with a sudden $19 million shortfall. Attendance at the school is down 1,000 from last year and 550 short from what the administration had expected.

Students complain that they found out about cuts in their state and federal aid only at the very last minute and many had to drop out. VSU has been through a series of financial problems that have forced it to switch to a fast food-only menu at one of its dining halls. Laboratory equipment is scarce, students say.

They wonder why the school is busy erecting a huge new multi-use center when they have many more obvious and pressing problems at hand. A school spokesman says that funding for the new center is handled by a foundation and is not directly linked to the school’s financial system. VSU is expected to name an interim president later this week after more than 900 students signed petitions asking for a wholesale revamp of the school’s top management.

JLARC found other areas of concern, such as forcing students to pay mandatory fees for sometimes oversized athletic programs that tend to operate in their own worlds that have little relevance for most students. Not every student cares about all of the sports or has time to support every team. Plus, JLARC says that the state should reconsider its methods of handing out financial aid to make sure that low and middle income students are the ones who actually get it.

One hears a lot about overpaid professors and administrators. But the JLARC studies suggest their salaries may be less of a problem than using colleges as cash cows for construction projects and to prop up ambitious sports programs that may have very little to do with the schools they represent.

Richmond EDA Needs to Open up the Books

Major Dwight Jones (left) and Governor Terry McAuliffe. The commonwealth donated $5 million to the project.

Meanwhile, in the City of Richmond… The Economic Development Authority is ducking transparency in the $74 million Stone Brewing project, a major economic development coup for the city and the state. At issue is the role of the Richmond EDA, which is helping to finance construction of the brewery and related restaurant. On Oct. 22, the EDA picked Hourigan Construction from a field of six contractors.

EDA officials won’t say if Hourigan submitted the lowest bid, on the grounds that the final contract has not been signed yet. Another key question is who Hourigan’s subcontractors are. As Graham Moomaw reports for the Times-Dispatch, the EDA considers not only price but its track record of delivering projects on time and its ability to meet a target of using minority-owned businesses for subcontracts.

The Dwight Jones administration has aggressively pushed economic development such as the Shockoe Slip ballpark, Boulevard redevelopment and the Washington Redskins training camp, in which the city plays a prominent role in financing. Unlike entirely privately financed deals, projects funneled through the EDA are subject to the minority set-aside requirement.

Writes Paul Goldman, a Richmond political activist in a recent email missive:

The EDA is being used for one reason in the Brewery deal: to get around city and state law [that] mandates the use of an open, transparent bid process creating a level playing field and insuring the best result for the city’s taxpayers.

The key to this backroom deal, as the others, is the special “wink, wink” for political influence peddlers and their cronies.

Are buddies of the mayor getting special treatment? Who knows. But that’s the suspicion when city government takes an active role in the financing of economic development projects. Let me be clear: There is no evidence of any wrong-doing. But “trust me” just doesn’t work in this day and age. The public would like assurances that there’s no hanky-panky. Open up the books, please.

– JAB

Takeaways From the GOP’s Big Win

gillespie warnerBy Peter Galuszka

The night of Tuesday, Nov. 4 was an ugly one for the Democrats and a big win for Republicans. Here are my takeaways from it:

  • U.S. Sen.Mark Warner clings to a tiny lead that seems to grow slightly, still making it uncertain if opponent Ed Gillespie will ask for a recount. The surprisingly tight race is an embarrassment for Warner. It likely takes him out of consideration to be Hillary Clinton’s running mate in 2016 although Democrats Tim Kaine and Jim Webb are still possibilities.
  • Ed Gillespie ran a smart campaign and came off as a solid candidate. Of course, we are comparing him against Kenneth Cuccinelli and that’s a very low bar but Gillespie’s projection of being relaxed and confident helped him. Gillespie did very well despite being dissed by the national Republican money machine. Look for him in the gubernatorial race of 2017.
  • Barack Obama takes his lumps — again. The country’s on the mend and things are going fairly well (despite what you may watch on Fox), but Obama is incapable of cashing in on that. His cool, detached style is a big minus and makes him seem careless and incompetent, especially when crisis like ebola come up that are not of his making.
  • The Republican wins on Capitol Hill are more significant than the Tea Party inspired once during the 2010 midterms.But the earlier races brought in a kind of mindless negativity and gridlock by both parties that truly hurt the country. Will that happen again? Or will older, wise heads prevail?
  • Increase in coverage my Obamacare The New York Times

    Increase in coverage by Obamacare
    The New York Times

    You might get some bipartisan action on taxes and the budget, but deadlock remains for Affordable Care and immigration. The fact is that Obamacare is too far along to change much and people actually like it, despite what you hear in the right-wing echo chamber. This chart from the New York Times shows that the ACA has boosted health coverage in some of the poorest parts of the country, such as the Appalachian coal country, the African-American belts of the Deep South; and poor parts of the Southwest like New Mexico and parts of Arizona. This alone is a big success.

  • Immigration. Look for Obama to use executive authority to come up with an immigration plan. It is an emotional, hot button issue that reveals lots of ugly attitudes. But something needs to be done fast. The GOP has no plan, except for George W. Bush who actually pushed a workable solution that was compassionate. That got soaked by the Tea Party, but then Republican Mitt Romney came up with a health care plan for Massachusetts that looks remarkable like Obamacare and was a precursor. If the GOP can get back to those helpful ideals, there may be hope.
  • Warner lots big swaths of voters who had been with him, like Loudoun County and parts of rural Virginia. This is alarming for the Dems and shows they need to project their messages a lot better. Warner’s poor performance in debates didn’t help either.

It is a big win for the GOP, but somehow I don’t feel as bitter as I was in 2010.

In Energy Studies, No Renewables, Please

Karmis of VT's Center for Coal Research

Karmis of VT’s Center for Coal Research

By Peter Galuszka

For years, Virginia Tech has operated the Center for Coal Research which is dedicated to studying bituminous product, enhance its marketability and make mining it safer and less environmentally destructive.

The center receives funding and has sponsors and an advisory board made up of big utilities like Dominion, coal-hauling railroads like Norfolk Southern, a few state officials and coal company executives from Alpha Natural Resources, Arch Coal and Patriot Coal. No environmental advocates are advisers nor are proponents of renewable energy.

So, it was with considerable interest that I was introduced to a new “watchdog” group named the Checks and Balances Project, based in Northern Virginia and  funded by advocating clean energy and sustainability such as the New Venture fund and Renew American Prosperity Inc.

In several intriguing blog posts, Scott Peterson, a former media spokesman for the New York Stock Exchange and now executive director of Checks and Balances, asks why Michael Karmis, an internationally-known VT coal expert, was asked to write the cost-benefit analysis for the State Energy Plan released last month that will guide the General Assembly in passing laws relating to energy.

Peterson notes that Karmis’s report was a foundation document used by the State Corporation Commission staff when it gave a big thumbs down to the U.S. EPA’s proposed rules to cut carbon dioxide. The SCC claimed that the rules would shutter much coal-fired generation (much of which was going to be shut down anyway) and that renewables like solar and wind are too expensive, unreliable and scarce to replace the lost generation capacity.

I blogged about this repeatedly in recent weeks and I asked why Virginia has such a puny share of renewable energy compared to its neighboring states. I got responses from the SCC and also from Dominion as well as the Virginia Chapter of the Sierra Club and posted them.

Peterson’s points are spot on. Why would the state and the SCC go to such an overwhelmingly pro-coal group for what seems like a self-serving and self-dealing cost-benefit analysis? Do Virginians not deserve input from other players pushing forms of energy? Why did they not consult economic forecasting groups specializing in energy but chose instead Chmura Economics & Analytics of Richmond, which has no special energy expertise and has been criticized (by me) for tending to say what state officials want.

It is really a shame that the administration of Gov. Terry McAuliffe is following the same stacked-decks that former Gov. Robert F. McDonnell used to use. During his time in office, I outlined several instances where McDonnell chose “advisors” mostly from the coal and nuclear and natural gas industries to “study” energy needs or whether uranium mining near Chatham would be safe.

Also take a look at who the sponsors of the Virginia Tech coal center are:

  • Alpha Natural Resources of Bristol bought the extremely troubled and controversial Massey Energy whose renegade CEO, Don Blankenship, was so loose with safety and so strong on production demands that 29 miners lost their lives in a massive blast at the Upper Big Branch mine in West Virginia on April 5, 2010, according to three probes of the incident. I wrote a book about it.
  • Arch Coal is one of the most controversial users of ecologically devastating mountaintop removal surface mining in southwest Virginia, Kentucky and West Virginia,.
  • Evan Energy Investments is a Richmond-based firm started by E. Morgan Massey, whose family started A.T. Massey coal which later became Massey Energy. E. Morgan Massey had no corporate duties at Massey Energy during the 2010 blast but during the 1980s, he beat the United Mine Workers by instituting his “Massey Doctrine” of tough negotiating.
  • Patriot Coal is a spin-off of Peabody Coal, the largest coal firm in the U.S. Peabody had assets in the Central Appalachians but found that its western U.S., Illinois Basin and foreign operations were more profitable so it created Patriot. The spin off has been bankrupt at least once and has been criticized for trying to cut benefits for retired miners who had worked for Peabody.

To be sure, several state and federal organizations are also sponsors and I’m told that the center does do worthwhile working on setting up computer-based networks of sensors that would automatically shut down a deep mine’s operations if it found bad levels of explosive coal dust or methane. It also has done work to find carbon capture technologies that could allow coal to be burned cleanly.

The larger point is that the state is structured in ways that do not provide a place at the table for people not associated with big, traditional, base-loaded energy such as coal and nuclear power stations. Many accounts show that solar and wind are becoming much more technically and cost effective. Although the U.S. Department of Energy does not expect wind or solar to be more than about 20 percent of the total energy mix any time soon, its growth is picking up speed.

If more houses and businesses adopt solar panels as they get cheaper and better, they will reduce their need for Big Energy. As that happens, the large utilities, coal firms and railroads may get stuck with trillions of dollars’ worth of “stranded” and unused assets. Guess will end up paying for a lot of them? The ratepayers, of course, with the SCC’s blessing.