Tag Archives: business and society

The Political Project of MCRC v. EPA, Revisited

Judge Robert Holmes Bell dismissed the Marquette County Road Commission’s case against the EPA back in May, and last week the Road Commission’s attorneys at Clark Hill PLC filed a motion to alter and amend that judgment. They complain that the Court’s dismissal for failure to state a claim is not only mistaken on points of law but, more dramatically, it allows the “EPA and the Corps to wage a war of attrition on local governments seeking to protect the health and welfare of their people.”

I was struck by this inflammatory piece of political rhetoric about federal overreach for a couple of reasons. First, because it’s just the sort of hyperbolical language Michigan State Senator Tom Casperson and StandUP, the 501c4 dark-money organization funding the Road Commission lawsuit, have used to frame the case for County Road 595 and advance what, in a series of posts (1, 2, 3, 4) last summer, I called the political project of MCRC v. EPA. Second, because the motion here tacitly admits that mining activity on the Yellow Dog Plains has put “the health and welfare” of people in Marquette County at risk. Rio Tinto and then Lundin Mining proceeded with their plans to mine copper and nickel at Eagle Mine and truck it to Humboldt Mill without a clear haul route. They not only went ahead; they were permitted by the state to do so. The risk was transferred to the public.

This is a familiar pattern, but the story it tells is not about federal overreach or intrusive oversight. Quite the opposite: it’s a story about mining companies rushing projects into production without due consideration for the communities in which they are operating, regulatory capture or lax oversight and enforcement, and elected officials who all-too-easily and all-too-conveniently forget where their real duties lie.

The June 13th motion doesn’t often have recourse to this kind of language. For the most part, the motion deals with fine points of administrative law, citing a few cases that it claims the court misread or misapplied. Probably the most important of these is the Supreme Court’s discussion of the Administrative Procedure Act in a May 2016 opinion, United States Army Corps of Engineers v. Hawkes Co.. (Miriam Seifter explains Hawkes over at ScotusBlog. Even with her very clear analysis in hand I can only hope to make a layman’s hash of things.)

In Hawkes, a company that mines peat for golf-putting greens — a process that pollutes and destroys wetlands — sought an appeal of “jurisdictional determinations” by the Army Corps of Engineers that wetlands on their property were subject to the Clean Water Act.

The “‘troubling questions’ the Clean Water Act raises about the government’s authority to limit private property rights” came up for some brief discussion in Hawkes, notes Seifter, but that was not the main focus of the Supreme Court opinion. The case instead revolved around the question whether jurisdictional determinations are “final,” which in this context means they constitute an action “by which rights or obligations have been determined, or from which legal consequences will flow.”

The Army Corps in Hawkes maintained that appeals of the Corps’ jurisdictional determinations should not be allowed, because the determinations of the Corps are still subject to review and are not “final” or binding. The court found unanimously in favor of the peat-miners, saying that determinations by the Corps were final — they would put legal constraints on the peat-miners, who would have to stop polluting or face penalties — and therefore could be reviewed in court.

In MCRC v. EPA, the Road Commission now seeks a decision along similar lines. “The Court erred,” the motion complains, “by holding that EPA’s veto was not ‘final’ because Plaintiff could submit a new application to the Corps.”

In other words, the court held that the EPA’s objections to County Road 595 weren’t the last word: they didn’t constitute “final agency action” and did not entail legal consequences or impose obligations the Road Commission didn’t already have. The Road Commission can even now take EPA’s opposition to the road under advisement, go back to the Corps and seek a new permit. They can continue to work with the EPA, whose objections to the road are “tentative and interlocutory”: there is still room for conversation.

The attorneys for the Road Commission don’t deny that the Road Commission could have gone back to the Army Corps of Engineers; but they say that it would have been time consuming, burdensome and ultimately futile, as the Corps had joined the EPA in its objections to the road, and the EPA’s objections had the effect of a veto.

This brings us back to the arguments advanced in the original complaint. The EPA didn’t just object to the Road Commission’s proposal; they unfairly vetoed the new road, in a “biased and predetermined ‘Final Decision’.” The Final Decision, according to the motion, took the form of a December 4, 2012 objection letter from the EPA to the Marquette County Road Commission, to which the Road Commission replied on December 27th. They did not receive a reply, and the EPA’s failure to reply was tantamount to a “refusal.”

The EPA’s refusal (or failure) to reply to the Road Commission’s December 27th letter indicated that their objections had “crystalize[d] into a veto,” according to the motion. “Unequivocal and definitive,” a veto is a final agency action, “akin” to jurisdictional determinations made by the Corps. What legal consequences flowed from the veto? For starters, the EPA’s Final Decision divested the state, specifically the Michigan Department of Environmental Quality, of any further authority in the matter.

While this is not a new position for the Road Commission, the way the motion lays it out is nonetheless clarifying. The discussion of Hawkes, especially, brings into focus the question before the court — a question of administrative law concerning the “finality” of the EPA’s objections to CR 595. Of course that question entails others: whether the EPA’s failure to reply to the Road Commission’s letter of December 27th amounts to a refusal of the Road Commission, whether that refusal, in turn, crystalized their objections into a veto, and whether EPA vetoes are really “akin” to jurisdictional determinations by the Corps.

Stronger accusations are only being held at bay here. For example, it would be difficult to read the EPA’s failure to reply to the Road Commission’s December 27th letter as a deliberate refusal to reply without accepting the original complaint’s charges of bias and allegations of conspiracy at the EPA, or indulging its witch hunt for “anti-mining” attitudes and its demonizing of “activists.” But even if we are not willing to follow the plaintiff down that dark road, it would also be difficult, now, to overlook the serious dysfunction and administrative incompetence exposed by the Flint Water Crisis, which cost the head of EPA Region 5 her job, and which showed the world just how broken the system of environmental governance is in Michigan.

The Political Project of MCRC v. EPA, 3

Third in a Series

Wisconsin Governor Scott Walker, pushing jobs.

Wisconsin Governor Scott Walker, pushing jobs.

Sunlight and Skullduggery

When it comes to parceling out the land, water and future of the Lake Superior region to the highest bidders, few have matched the auctionary zeal demonstrated a couple of years ago by David Dill, a member of Minnesota’s House of Representatives. In the debate over the proposed Boundary Waters Land Exchange, Dill was among those urging that the state should exchange School Trust Lands in the Boundary Waters area for 30,000 acres of Superior National Forest. Since by law Minnesota would be bound “to secure maximum long-term economic return” from lands thus acquired, Dill proclaimed, “we should mine, log, and lease the hell out of that land.”

Dill understood this much: if there is hell to be found in Superior National Forest, there is probably no better way to bring it out.

The unanswered question in Minnesota and throughout the Lake Superior region is not, however, theological: it’s whether extractive industries and the developments they bring will actually deliver “long-term” economic benefit for the region, and not just a short-term spurt or boom, or another period of destructive plunder followed by long-term decline. That is not just a question up for debate by economists and other experts; it is, at root, a political question.

As I’ve suggested in my first two posts in this series, the complaint filed by the Marquette County Road Commission against the EPA is part and parcel of an effort to shut this question down, or exclude it from public consideration. This complaint is only incidentally about a haul road. It’s part of a political offensive that aims to stifle debate and hand the future of the region over to unseen powers. Those powers lurk under legal cover of the dark 501c4 “public welfare” organization funding the MCRC’s lawsuit against the EPA.

So with this lawsuit, the Road Commission pretends to political authority that goes way beyond building and maintaining Marquette County’s roads: it assumes the authority to direct economic development in Marquette County and decide what’s in the area’s best interest. In order to seize that authority, I’ve said, the complaint sets up an “anti-mining” straw man, and tries but fails to prove that the EPA had a “predetermined plan” to prevent the construction of County Road 595.

No surprise, then, that the argument gets especially tendentious whenever the complaint tries to demonstrate collusion or discover “anti-mining” attitudes within the ranks of the EPA itself; and where it comes up short, it raises questions about the motives and associations of those bringing these allegations.

Consider, for example, the report to Senator Carl Levin’s office by an unidentified “informant” (Exhibit 15), who alleged that at a meeting with “environmental and tribal groups,” EPA Regional Administrator Susan Hedman made remarks to the effect that:

1. the EPA will fight mining in Michigan,
2. that there will be no mining in the Great Lakes Basin,
3. that there was or will be an EPA sponsored Anti-Mining committee, and
4. that the KBIC [Keweenaw Bay Indian Community] tribe had received an EPA grant which [sic] they used the funds to sponsor an anti-mining activity.

The informant seems to have been lying in some places and exaggerating in others: Hedman claims she never made the remarks attributed to her. But the MCRC complaint doesn’t hesitate to repeat the informant’s false allegations, and it tries to build its case around Senator Levin’s staffer’s awkward summary of what she heard from an unnamed informant who proved untrustworthy in every particular.

True to pattern, the complaint casts both environmental groups and the KBIC as “anti-mining groups” as it doubles down on the informant’s lies. The detail about the EPA grants is wildly inflated. The EPA gave the tribe “hundreds of thousands of dollars,” the MCRC claims, even as the KBIC was “actively lobbying USEPA against local mining and against CR 595.” This turns the false report of an unspecified “anti-mining activity” to “actively lobbying,” and it neglects to mention that EPA grants to the KBIC are, in large part, to help the tribes cope with the lasting damage done by mining and industrialization. (In recent years, grants have supported things like a survey of tribal fish consumption habits to reduce health risks associated with contaminants in fish, or the tribal Brownsfield response program.)

The phrase “actively lobbying” is especially cheeky here, for a couple of reasons.

First, the Eagle Mine project went ahead without the full, prior and informed consent of the KBIC. A Section 106 hearing ignored testimony from tribal elders that the ground at Eagle Rock is sacred to the Ojibwe, and objections by the KBIC and the Ho Chunk to the location of the mine portal at Eagle Rock were summarily dismissed. Tribal appeals to the EPA went unheeded.

Second, if we are really going to start tracking lobbyists and money spent on lobbying efforts, then in all fairness let’s spread the sunshine around and give a full account of money and efforts spent actively lobbying for mining interests in northern Michigan and throughout the Lake Superior region over the last decade. Or if that is too arduous a task, a full accounting of the money behind this complaint would suffice.

The complaint also fails to mention that the EPA responded immediately to Senator Levin’s office with a full schedule of grants given to the KBIC and the charter of the “cross-media” mining group at EPA Region 5. Cross-media groups are formed to satisfy the Cross-Media Electronic Reporting Rule. The fearsome EPA-sponsored “Anti-Mining” group turned out to be a specter of the informant’s imagination, and really comes down to bureaucratic reshuffling in order to make electronic reporting easier. There’s just no red flag to raise.

Elsewhere, when the complaint tries to demonstrate “anti-mining” sentiment within the EPA itself, the best the MCRC can do is police tone. There is an EPA official who writes “sarcastically” to a colleague at the Army Corps of Engineers, and then there are a couple of sentences in a January 2011 email by Daniel Cozza, an EPA Section Chief. Cozza refers to Wisconsin as “the new front” and says that in a three-hour town hall meeting Governor Scott Walker was “pushing jobs” when promoting the Gogebic Taconite project.

I think the WI Governor’s additions to the Welcome to WI signs stating ‘Open for Business’ is a sign of things to come. I listened to the 3hour [sic] townhall meeting last night regarding the G-TAC or taconite mining project in the Gogebic Penokee range and sounds like they are pushing jobs.

This sounds pretty innocuous, and I am unsure where the offense is: “pushing jobs”? That’s a pretty apt description of the rhetorical tactics used to promote mining in midwestern districts and around the world for that matter. Job numbers are overstated, as Tom Power notes in his study of sulfide mining projects in Minnesota. In Wisconsin, Senator Tim Cullen, Chair of the Senate Select Mining Committee, said he was amazed that immediately upon signing a controversial mining bill into law in 2013, Scott Walker and his cronies were “telling the workers of Wisconsin, who need jobs, that the jobs are just around the corner….The people who understand the mining industry know the jobs are years away.”  Sounds like they were being pretty pushy to me.

Of course, “front” might suggest a battle or military campaign, or it might imply that Cozza sees himself or the EPA as embattled, fighting against the encroachment of mining projects — which of course the EPA is, and will continue to be if it is going to protect the environment against the resurgence of mining all around Lake Superior. Forbes Magazine, hardly a bastion of environmental activism, struck the same note when it ran an article on Gogebic Taconite’s Chris Cline with the title: “Billionaire Battles Native Americans Over Iron Ore Mine”; Dale Schultz, a Republican State Senator who broke with his party to oppose Wisconsin’s mining legislation, said his conscience would not allow him to “surrender the existing environmental protections without a full and open debate”: no one gasped in horror and astonishment at the white-flag battleground metaphor. Mike Wiggins, Chair of the Bad River Band of Lake Superior Chippewa, did not mince words and declared the Gogebic project tantamount to “genocide,” as it would kill the wild rice crop. The list could go on.

So the real objection is that some people working at EPA are not enthusiastically on board with the agenda of the mining company and its development plans for the area. They’re not supposed to be; they’re supposed to protect the environment. The complaint is still far from proving that the EPA itself, when making its specific determinations about CR 595, acted with bias or according to a predetermined plan.

It’s interesting, however, that the complaint should make an example of Daniel Cozza and his attitudes toward Wisconsin mining. Cozza has a long history with the environmental regulation of mining in Wisconsin, and he was working in EPA Region 5 when the Crandon Mine project unraveled, due to the inability of the mine’s backers, which included Eagle Mine developers Rio Tinto and Kennecott Minerals, to meet tribal water quality standards and deliver appropriate environmental assurances. Cozza is said to have caused “consternation” when he reminded Crandon Mining in a letter of its “duty to look at the cumulative economic and environmental impacts” of other mining projects in the region; and it was this big picture perspective that prevailed when Governor Tommy Thompson signed a mining moratorium into law in 1998.

To many people inside and outside the mining industry, Crandon seemed to signal the end of mining in Wisconsin, and there are still bitter feelings within the industry about the failure of the Crandon project. Having lost in the courts and the legislative arena, the industry and its backers resorted to other means, achieving their first big comeback victory in Wisconsin with Scott Walker’s 2013 mining bill.

By signing it, the governor also obliterated his past. He had voted for the mining moratorium in 1998 as a member of the Wisconsin Assembly. As governor, Walker worked to ease regulations, and did a decisive about-face during his 2012 recall election, when he received a $700,000 contribution from Chris Cline and Gogebic Taconite. That mind-blowing, mind-changing contribution came via the Wisconsin Club for Growth, a dark money 501c4 like Stand U.P., the organization now putting up other people’s money — whose? — for the Marquette County Road Commission’s lawsuit against the EPA. Corruption is in the cards.

Can Mining Be Saved?

TeslaGigafactory

The Tesla Gigafactory, currently under construction in Storey County, Nevada.

Andrew Critchlow, Commodities Editor at The Telegraph, speculates in a recent article that Elon Musk and Tesla might “save the mining industry” by ushering in a new age of renewable energy. Domestic battery power production at the Tesla Gigafactory (now scheduled to go into production in 2016) is bound to create such demand for lithium, nickel and copper, Critchlow thinks, that the mining industry will find a way out of its current (price) slump and into new growth, or possibly a new supercycle.

“Major mining companies are already ‘future proofing’ their businesses for climate change by focusing more investment into commodities that will be required by the renewable energy industry,” writes Critchlow; and the “smart commodity investor” will follow suit, with investments in “leading producers” such as — this is Critchlow’s list — Freeport-McMoRan, Lundin Mining and Fortune Minerals.

It’s a credible scenario, but it’s also terribly short-sighted. The big switch over to domestic solar power and battery storage Musk is hyping in the run up to the opening of the Gigafactory would no doubt give miners a short-term boost, but it will also take a lasting toll on the places where copper and nickel are mined, raise serious human rights concerns, and put even more pressure on the world’s freshwater resources.

After all, the copper and nickel used to make Tesla’s batteries are going to come from places like the Democratic Republic of Congo, where Lundin and Freeport-McMoRan operate a joint venture at Tenke Fungurume, and which has been at the center of the recent debate in the EU parliament over conflict minerals; Peru, where protests against Southern Copper Corporation’s Tia Maria project led the government to declare a state of emergency in the province of Islay just last Friday; or the nickel and copper mining operations around Lake Superior that I’ve been following here, where there are ongoing conflicts over free, prior and informed consent, serious concerns that sulfide mining will damage freshwater ecosystems and compromise one of the largest freshwater lakes in the world, fights over haul routes, and repeated complaints of lax regulatory oversight and political corruption.

Rice farmers clash with riot police in Cocachacra, Peru. The fight is over water. (AP Photo/Martin Mejia)

These are just a few examples that come readily to mind. It wouldn’t take much effort to name others (Oyu Tolgoi, Oak Flat, Bougainville) and to see that the same problems arise, to a greater or lesser degree, no matter where copper and nickel mining — sulfide mining — is done.

The mining industry and commodities investors have historically tended to minimize and marginalize the environmental and social costs of sulfide mining; so it’s really no surprise that Critchlow should argue that increased demand by battery producers is all it will take to “save” mining. Leave it to others, I guess, to save the world.

But the supply and demand model is reductive and misleading, even for those looking to make a fast buck. A recent Harvard study of company-community conflict in the extractive sector summarized by John Ruggie in Just Business suggests just how costly conflict can be. A mining operation with start-up capital expenditures in the $3-5 billion range will suffer losses of roughly $2 million for every day of delayed production; the original study goes even further, and fixes the number at roughly $20 million per week. Miners without authentic social license to operate lose money, full stop. So Critchlow’s is at best a flawed and myopic investment strategy that ignores significant risks. It also appears to shrug off legitimate human rights claims, and turn a blind eye to environmental degradation, and deadly violence of the kind we’re seeing in Peru right now. That’s irresponsible, if not downright reprehensible.

A Macquarie Research report cited by Critchlow claims that the switch away from fossil fuels to battery power in the home is all but inevitable. But if we make the switch to renewables and fail — once again — to address the ethics of mining, what exactly will we have saved?

Five Questions On Business And Society

Dow Chemical is currently soliciting questions for a Google Hangout on “Redefining the Role of Business In Society.” The Wednesday morning Hangout will be moderated by Alice Korngold, author of A Better World Inc., and feature Dow Chairman and CEO Andrew Liveris along with other “global sustainability leaders.”

I submitted five questions for the group’s consideration. I can’t say whether they’ll address any of them or whether these questions are even appropriate for this forum. This is a huge topic, and there are lots of ways to approach it. Nor do I pretend that these are the only five questions worth asking. But it strikes me that these five simple questions might help others start and structure a conversation about business’s role in society. So, after tweeting my questions and putting them up for easy reference on Google docs, I thought I’d post them here as well.

  1. Governance: Where’s the seat for “society” in the boardroom, and who sits there?
  2. Priorities: Whose role is it within the company to identify and set social priorities?
  3. Non-performance: What mechanisms should be in place to identify and address human rights and environmental grievances?
  4. Authentic social license: What mechanisms ensure all stakeholders — esp. dissenters, skeptics, opponents — are represented?
  5. Metrics: How does [the company; in this case, Dow] currently measure social performance, and factor it into overall business performance?

The First CEO: A Political Revolution?

I’ve been associating the cultural icon of the CEO with big changes in America, most of which were well underway in the 1970s, when the acronym “CEO” first comes into wide use: the collapse of manufacturing, the financialization of the economy, the emergence of the neoliberal order. David Graeber offers yet another way to characterize these changes: “total bureaucratization.”

An excerpt from Graeber’s new book in the latest issue of Harpers lands us in familiar territory:

What began to happen in the Seventies, which paved the way for what we see today, was a strategic turn, as the upper echelons of U.S. corporate bureaucracy moved away from workers and toward shareholders. There was a double movement: corporate management became more financialized and the financial sector became more corporatized, with investment banks and hedge funds largely replacing individual investors. As a result, the investor class and the executive class became almost indistinguishable. By the Nineties, lifetime employment, even for white-collar workers, had become a thing of the past. When corporations needed loyalty, they increasingly secured it by paying their employees in stock options.

What Graeber at first characterizes as “a strategic turn” and the merging of the corporate and financial sectors, he then goes on to call “a political revolution”:

At the same time, everyone was encouraged to look at the world through the eyes of an investor — which is one reason why, in the Eighties, newspapers continued laying off their labor reporters, while ordinary TV news reports began featuring stock-quote crawls at the bottom of the screen. By participating in personal-retirement and investment funds, the argument went, everyone would come to own a piece of capitalism. In reality, the magic circle only widened to include higher-paid professionals and corporate bureaucrats. Still, the perceived extension was extremely important. No political revolution (for that’s what this was) can succeed without allies, and bringing along the middle class — and, crucially, convincing them that they had a stake in finance-driven capitalism — was critical.

The parenthetical affirmation — “(for that’s what this was)” — asks us to pause and really take the point. Having read only this excerpt, I don’t know whether Graeber goes on to explain why what he elsewhere calls a “shift” or “turn” counts as a “political revolution,” or how exactly he thinks this overturning of the political order was brought about. No doubt there was fraud, collusion and conspiracy, and “everyone was encouraged” to believe they were included; but the passive verb here leaves way too much unsaid. For one thing, the triumph and establishment of  the new order at home and abroad was really not so bloodless as Graeber (here, at least) makes it out to be.

The celebration and glamorization of the CEO — as a leader, a rule-maker and a rule-breaker, the agent and steward of shareholder value — was one of the things that duped ordinary, middle-class Americans into thinking “they had a stake in finance-driven capitalism.” It deserves a chapter in the story Graeber’s out to tell. The acronym “CEO” itself belongs to what Graeber calls the “peculiar idiom” of “bureaucratic techniques” and meritocratic myths — a language with origins in self-actualization movements of the 1970s, “full of bright, empty terms like ‘vision,’ ‘quality,’ ‘stakeholder,’ ‘leadership,’ ‘excellence,’ ‘innovation,’ ‘strategic goals,’ and ‘best practices.’” It’s good to see this language held up for scrutiny, especially since, as Graeber rightly points out, it still “[engulfs] any meeting where any number of people gather to discuss the allocation of any kind of resources.” To the victors go the spoils, and that’s not likely to change as long as we are speaking their language and playing by their rules.

Where Are the Women in Mining?

Glencore remains the only FTSE 100 company that does not have a woman on its board of directors. At the shareholder’s meeting at the start of this week, Chairman Tony Hayward promised that the company would remedy the situation by year’s end; but some big institutional investors have grown impatient, and UK business secretary Vince Cable said “it is simply not credible that one company cannot find any suitable women.”

The problem is industry-wide. A 2013 report by Amanda van Dyke (of Palisade Capital and Chair of the organization Women in Mining) and Stephney Dallmann (of PwC) found that mining companies “have the lowest number of women on boards of any listed industry group in the world.”

Maybe that doesn’t come as a great surprise to those familiar with mining, but within the industry there are companies who seem to be doing more than bluffing or hoping the issue will go away. Most of those are high profile global players. Women’s numbers decline steadily as we move down the ranks to the so-called juniors; and the likelihood that women will have a board seat or participate in a board committee also varies by territory. (South Africa leads the pack: over 21% of the committee seats of listed South African mining companies are occupied by women.)

Canada boasts the highest number of listed mining companies, and the “large mining companies in Canada are much further down the road [than smaller firms] in terms of their understanding of the importance of the role women play on boards.” The top-tier Canadian companies with high market capitalization (and the increased visibility that comes with size) have nearly 14% of board directorships held by women, but among the bottom 400 of the world’s top 500 miners, Canada has “the lowest participation on board committees by women, at 5.9%.”

The authors acknowledge that many of these companies are at early stages of development and they have only a few board seats to fill; but if they expect to grow and mature (as they do), there is no time like the present to lead or at least follow the lead of the big league players. When the same men keep winning the game of musical chairs — and when they sit next to each other (as they do) not just on one board, but on several, and their affiliations stretch back over decades — the result is likely to be not just over-familiarity but insularity, both of which are likely to impair and impede judgment. Meetings become a day at the club; the boardroom becomes an echo chamber.

As van Dyke and Dallmann note in a 2014 follow up report, it’s misleading to say, as many mining company executives do when pressed, that the small number of women directors correlates in a meaningful way with the lack of women with mining-related degrees. Only 32% of men on boards of mining companies have an engineering degree. So “there is no shortage of women in the talent pool;” according to van Dyke and Dallmann, “there is simply a perception of a lack of available female talent.”

This blinkered view of reality has real-world consequences, for shareholders and stakeholders in the communities where the miners operate. Mining companies with women on their boards see performance improvements on a number of fronts, from financial to social and environmental performance. “Sustainability” — as measured by water use, Bloomberg ESG score, UN Global Compact participation, Community Spend, and CSR or Sustainability Committee — improves across the board. For example, average total water use by mining companies “decreases steadily with an increase of women” in director roles — though it’s not entirely clear to me why that should be so — and “the amount [mining] companies spend on community projects and initiatives increases with the number of women on the board.” The authors are careful not to urge any hasty conclusions, but after surveying the data they are compelled to suggest that “the security of a company’s social licence to operate may be improved by having women on the board.”

I would go one step further: it’s difficult to countenance a mining company asking for social license to operate even as it deliberately insulates itself from social reality.

Is Respect Really All That Simple?

Last week, John Ruggie addressed the UN Global Compact Leaders Summit, where a “new global architecture” for corporate sustainability was unveiled and celebrated. Ruggie started out by talking about the special challenges — the “problems without passports” — that the world’s “tightly-coupled” systems present, and the inadequacy of our “largely self-interested politics” to address them. This was not, however, the brief he’d been given, so he had to move on; and I hope he’ll have more to say on the topic in the future. Instead, Ruggie had been asked, he said, “to say a word about respect,” and — not surprisingly — he took the opportunity to talk about the UN Guiding Principles on Business and Human Rights, and how the framework helps companies meet their obligations to respect human rights.

I have been asked to say a word about respect, specifically about respecting human
rights. Its meaning is simple: treat people with dignity, be they workers, communities in which you operate, or other stakeholders. But while the meaning is simple, mere declarations of respect by business no longer suffice: companies must have systems in place to know and show that they respect rights. This is where the UN Guiding Principles on Business and Human Rights come in. [pdf.]

Fair enough, but I found myself pausing here, and wondering whether the meaning of “respect” is really so simple as Ruggie makes it out to be, or at least whether “treat people with dignity” is sufficient guidance.

I understand that Ruggie’s intention here is largely rhetorical: we all know what respect means, but we need more than fine words, declarations and definitions. We need practical and consistent ways of acknowledging, checking and demonstrating human rights commitments — “systems” like the UN Guiding Principles.

Still, there are good reasons to start unpacking — and challenging — this simple definition, if only to ward off misconceptions.

First, to say that “[to] respect” human rights means “[to] treat people with dignity” (and leave it at that) invites confusion, because it passes the semantic buck from respect to dignity. If we are to treat people “with dignity” — if that’s our definition of respect — then we had better have a good working definition of dignity to govern or temper our treatment of others.

Of course, the word “dignity” is a staple of human rights discourse, so we’ve got to make allowances for shorthand here. If we don’t — if we want to take the long route and spell things out — we will most likely find our way back to Kant’s moral theory. I’m not going to attempt a summary here except to say that for Kant, dignity imposes absolute and non-negotiable constraints on our treatment of other people. Our dignity derives from our moral stature as free, rational and autonomous agents — ends in ourselves — and cannot be discussed in terms of relative value (or usefulness, or any other relative terms). It must be respected: in other words, dignity imposes strict and inviolable limits, absolute constraints, on how we treat others and how others treat us.

Most obviously people may not be treated merely as means to our ends; and that caveat is especially important when it comes to business, where, for starters, people are valued and evaluated as priced labor or “talent,” in terms of services of they perform or as “human resources.” To respect the dignity of people — “be they workers, communities in which you operate, or other stakeholders” — is to recognize them as persons (or ends in themselves) and not just mere functions in an efficiency equation.

This is hasty pudding, but suffice it to say that in the Kantian idea of dignity there is the suggestion that respect follows from our recognition of others as persons: this is an idea suggested by the word “respect” itself, which comes from the Latin respicere, to look back, to give a second look. Every person deserves a second look — or I should say, demands it. Recognition is something we demand of others and others demand of us.

I like to put it this way: respect is always the first, and sometimes the only thing we ask of each other. How we respond to this demand will depend in all cases upon whether we understand that our dignity as persons makes us mutually accountable or answerable to each other in the first place. So before we can talk about how we “treat” others — before we jump, with Ruggie, to considerations of behavior — let’s take a couple of steps back, and make sure that when we talk about respect we are also talking about recognition as well as accountability.

Of course all of this may be implied in Ruggie’s definition, and I wonder if recognition and accountability are just other ways of saying that companies must “know and show” that they respect human rights. My concern is that when you gather business leaders at the UN and tell them that to respect human rights is to treat people with dignity, you may leave them with the mistaken impression that dignity is something they have the power to confer on others, rather than something that makes them answerable to others. Dignity is not something the mighty can grant or deny the meek, and respect is not another word for benevolent gestures companies might make toward communities, workers and other stakeholders. Where people stand, business must yield.

The Hysteria of H.R. 761

The authors of the National Strategic and Critical Minerals Production Act (H.R. 761) complain that we depend on China — can you believe it? China! — for rare earth minerals that are “vital to job creation, American economic competitiveness and national security.” But the Act, which passed in a House Committee on Natural Resources vote on May 15, 2013 with bipartisan support, will effectively ease regulation of foreign multinational mining companies operating in the United States, including those who mine here and market U.S. minerals in — yes, you guessed it — China.

Bureaucratic delay puts “good-paying mining jobs…at the mercy of foreign sources,” according to the Act. Our security and prosperity are threatened from without, so we need to protect ourselves from within; and we are asked to believe that the surest way to do that is to replace careful assessment and regulatory oversight of risky mining operations with new efficiencies. The Act laments the weight of “onerous government red tape”: if only Atlas would shrug.

The authors of this act do not even try to disguise their contempt for the role of government in regulating industry and the “environmentally responsible development” they purport to uphold. Citing a report by international mining consultancy Behre Dolbear Group (with offices in Beijing, Chicago, Guadalajara, Hong Kong, Sydney, and Ulaanbaatar, Mongolia, among other places, where, presumably, its teams of advisors and engineers steadfastly champion the strategic and economic interests of the United States), they note that “the United States ranks last with Papua New Guinea out of twenty-five major mining countries in permitting delays, and towards the bottom regarding government take and social issues affecting mining.”

That last clause about “government take” and “social issues affecting mining” gets sneaked into the sentence here without consideration for the social effects mining operations have: society here is just in the way of business and taxes or takings are just a burden. This is reckless thinking, but it’s carefully smuggled into discussions of the Act with the distracting reference to Papua New Guinea. That line snorts mockery and imperial contempt, and it’s intended to shame and prompt outrage — like the newspaper headlines the ranking inspired: The Wall Street Journal: “U.S., Papua New Guinea at Bottom of List for Mining Permit Delays.” Mineweb: “Protracted Permitting Delays Depress U.S. Mine Investment.” The Hill: “U.S. Wins Race to the Bottom on Mining Permits — Again.” The comparison with Papua even figured into an article by M.D. Kittle in the Wisconsin Reporter: “Wake Up, Environmentalists: Your Cell Phone Was Mined Somewhere Else.”

Needless to say, these newspaper discussions aren’t balanced by any appreciation of the complex social, environmental and human rights issues around mining in Papua New Guinea (or the United States). The promoters of H.R. 761 certainly aren’t going to invite debate on the situation in Papua — where growth in the mining sector has brought corruption, violence, and environmental devastation. Their intention is clear: they want to hold up Papua as one of those foreign and dirty places, a slow, corrupt and silly place, a little, squalid, underdeveloped and dark place. Certainly not an efficient place.

Lest the Chinese enslave us or we end up living like pygmies in grass huts, we have to make it easier for big mining companies to give Americans jobs. That is the hysteria just under the surface of H.R. 761. The legislation is so broadly and poorly written, and either so cynical or so ill-conceived, that any mining operation will be able to claim its protection from regulatory oversight. The “strategic and critical” exemption from government interference and delay will be repeatedly invoked, as it was by Republican Chip Cravaak in 2011, who at the time represented Minnesota’s 8th district in the U.S. House.

Before his defeat in 2012, Cravaak advanced the claim that exploiting the copper and nickel resources of the Boundary Waters Canoe Area in Minnesota would be “necessary for U.S. strategic interests.” According to a 1978 law, those areas can only be mined in case of national emergency; but Polymet, a Canadian company, has been working since 2006 to obtain permits for an open pit mine in Superior National Forest. They negotiated a land exchange and loan scheme to get around the prohibition. Cravaak waved the stars and stripes for them on the Hill. Meanwhile, Toronto-based Polymet made a deal with the Swiss company Glencore to sell its American metals on the global market. At the time, Elanne Palcich noted, demand was especially strong in China and India.

The CEO and the Social Compact: Conibear Comes to Michigan

I’ve been puzzling over the few public comments Lundin Mining CEO Paul Conibear has made regarding the announcement that his company plans to acquire the Kennecott Eagle Mine from Rio Tinto. Industry analysts studying these same tea leaves at the end of last week seem to have judged the Eagle sale to be auspicious. But I am looking for other signs — evidence of Lundin’s disposition toward the communities around the Eagle Mine and some indication of how Lundin plans to approach and address the social and environmental challenges of the Eagle Mine project.

There are suggestions in Conibear’s resume of some interest in local and global development issues and an appreciation for the environmental and social facets of large scale mining projects. An engineer by training, Conibear made his way as an operations man, parlaying his experience in Latin America, Europe and, above all, at the Tenke Fungurume mine in the African Congo into a leadership position — first at Tenke Mining, where he served as CEO before its merger with Lundin, and then, when Phil Wright resigned in 2011, as CEO of Lundin Mining. During his time in Africa, according to his official corporate biography, Conibear was “active in advancing the group’s corporate social responsibility initiatives”; and he “is one of founding directors of the Lundin for Africa Foundation, a charitable entity established to support sustainable development across Africa”. Here, then, is a CEO with CSR credentials.

It’s too early to tell whether this will matter when it comes to Lundin’s work in the UP. Reports that the company will uphold Rio Tinto’s commitments to the communities around Eagle Mine — and keep the current Kennecott team in place — are still short on specifics. That will probably be the case at least until the transfer of the mining permit is complete and Lundin has had a chance to figure out firsthand what’s working at Eagle and what isn’t. Conibear’s affiliation with Lundin for Africa, and that organization’s focus on social enterprise, may not translate to efforts on the ground in Michigan, for all sorts of reasons; he himself has said nothing so far about how the company will continue, depart from, or improve upon what Rio Tinto has already done. In a press release Lundin issued last week, the CEO is quoted as saying only that the acquisition of the mine in Michigan’s Upper Peninsula

fits ideally within Lundin Mining’s asset base and is the result of the disciplined approach we have been focused on for some time to acquire high quality, advanced stage assets in low risk, mining oriented jurisdictions. The Eagle Mine represents a very unique opportunity to acquire a high-grade project which is under construction and expected to begin generating significant levels of metal production and cash flow prior to the end of next year. Northern Michigan has an outstanding iron ore, gold and base metals mining history and consequently excellent regional power, road and rail infrastructure, with extensive mining expertise within local communities to support and staff Eagle Mine.

I was struck by a couple of things here, but most of all by the invocation of northern Michigan “history” in the last sentence. What makes the history of the Upper Peninsula so “outstanding,” in Conibear’s view? Nothing like what drew Richard White to his classic study of the French and the Algonquins in the pays d’en haut. Not the brutal strikes and hard times Arthur Thurner wrote about in Rebels on the Range; not the complex system of social patronage that obtained between immigrant hard-rock miners and the tight-fisted, iron-willed mining captains, described by historians like Larry Lankton. Not even the attitudes toward history that impressed me most in the interviews I did in connection with 1913 Massacre — the deep and heartfelt emotion many people in the area invest in the past, and the pride they feel in what their ancestors accomplished and endured; the way that shared stories have both concealed past trauma and allowed the region to heal; a resilience that has allowed communities on the Keweenaw to weather boom and bust.

It may not seem reasonable to expect much feeling for the history of the UP in Conibear’s remarks. He’s got a mining company to run and investors and analysts to impress. But it’s worth noting that a more considered view of UP history (and a look at the environmental damage caused by the last round of mining) would not necessarily lead one to characterize a mining venture in the Upper Peninsula as “low risk.” For Conibear, UP history seems to matter to the extent it can be exploited for business advantage. The past has value in the present as a source of “infrastructure” — a reliable power grid, rail and roads — and “expertise.” Widen the lens a bit, however, and that same history becomes a source of uncertainty and obligation as well as strength.

Take roads, for instance. It’s odd that Conibear would single out roads as one of the things that attracted Lundin to northern Michigan and the Eagle Mine. A proposed $80 million project to build a haul road from the Eagle Mine to the Humboldt Mill ended in failure earlier this year, after the Michigan Department of Environmental Quality denied the permit for County Road 595. It was a big setback for Rio Tinto, which had fought for the road for five years. Defeated, the company announced that it would spend $44 million to upgrade existing roads instead, but that plan remains controversial — and now that project and the cost as well as the controversy it entails are Lundin’s to manage.

There’s another, more general observation to be made here as well. History doesn’t just throw all those things — power, roads, expertise — into the Rio Tinto deal. If history, or the experience of the past 150 years of mining, works in favor of companies operating in the UP today, it also marks a good place to start enumerating the responsibilities mining companies have to society. This is a point about the relationship of business to society that Elizabeth Warren made in the run up to last year’s presidential election, and which snowballed into a ridiculous controversy over Obama’s “You Didn’t Build That” remark. It’s worth recalling Warren’s argument in this context. A skilled and educated workforce, reliable infrastructure, the protection of the law, even the free association to do business with whom and where you like, Warren said, are part of an “underlying social contract.” Companies have to honor that contract and “pay it forward” if they hope to continue to benefit from public goods; and society has a responsibility to push hard on companies until they do.

In Michigan, of course, Governor Rick Snyder and his cronies did all they could during last year’s lame duck session to weaken the compact between business and society and to relieve mining companies of the obligation to pay forward anything at all. A bill sponsored by the UP’s outgoing Republican representative Matt Hukki set out to “ease upfront costs for mines” and make the taxes on mineral extraction in Michigan “more simple, fair and efficient,” replacing property tax, corporate income tax, sales tax and use tax with a single “severance tax” of 2.75 percent on the gross value of minerals extracted — once the mine went into production. That works out very nicely for Rio Tinto, which never took Eagle into production; and it would be worth finding out whether the company is now entitled to a tax credit on property taxes paid before the passage of HBs 6007-12. That retroactive credit — the opposite of paying it forward — is one provision of Hukki’s bill.

Tax relief and regulatory easing are no doubt some of the things Conibear had in mind when he described the Upper Peninsula as a “mining-oriented jurisdiction.” It’s a piece of industry jargon that is used to talk about whether conditions are favorable or unfavorable — a way of assessing risk. Among US states, Michigan has never ranked very high in the annual survey of mining jurisdictions by the Fraser Institute [pdf]; but generally, writes Aaron Mintzes, “jurisdictions within the United States rank very well in large measure because we have stable and transparent democratic institutions, courts that enforce contracts and resolve disputes, and generous mining policies (like the 1872 Mining Law)”. This is another unappreciated provision of the social contract: strong public institutions and the rule of law reduce the risks companies take as much as if not more than mine-friendly policies.

You would think that companies, in turn, would be obliged to do everything they can to reduce the risks they pass on to society. That has rarely been the case, and it has not been the case when it comes to the Eagle Mine. Rio Tinto and now Conibear and Lundin are requiring communities around the mine and all around Lake Superior to assume an enormous risk. It goes beyond legitimate fears of environmental damage due to subsidence or acid mine drainage. When Eagle goes into production in 2014, it will signal the start of a new mining boom in the Lake Superior region. Over the next several years, one of the world’s largest mining operations will be staged around one of the world’s largest freshwater lakes. Just look at the map of mines, mineral exploration and mineral leases published by the Great Lakes Indian Fish and Wildlife Commission. It is difficult even to imagine the environmental hazards and the social costs that the mining boom and the inevitable industrialization of Lake Superior will entail. I am still wondering whether Mr. Conibear appreciates that.

Liability? Responsibility? No, Sustainability.

I’ve been looking for a transcript of the remarks Johan Lubbe made yesterday, on behalf of the National Retail Federation — a trade association representing about 9000 American retailers and the chief and most vocal proponent of an “alternative” to the legally-binding global pact to ensure the safety of clothing factories in Bangladesh. The global pact has won pretty widespread support in Europe, but so far there are only two American signatories. The Americans won’t sign up because, they say, the global pact would expose them to litigation, or what one spokesperson for The Gap called “unlimited litigation,” should something go wrong at one of the factories they use.

Yesterday they brought out Lubbe. Here is how today’s AP report summarizes his remarks:

On Friday, the retail trade group made available for the media an international labor lawyer who rebuked the global pact and said that it is too vague for retailers to sign. At the heart of the criticism: the contract would expose retailers to legal liability for the failure of factories to comply with the set standards even though merchants don’t own the facilities.

In rejecting the global pact, Lubbe and the NRF are trying to limit the scope of legal liability to ownership — in this case, brick and mortar property ownership. I can’t tell if the claim here is that with outsourcing comes immunity, or that liability does not extend in any way down through the global manufacturing supply chain. For the moment, however, I’m less interested in all that than in knowing whether Lubbe or the NRF have made any kind of statement acknowledging their responsibility for conditions in the Bangladesh garment factories.

Responsibility is a word that applies, or should apply here, no matter how the debate about liability gets resolved. It is not a “vague” word of the sort that the NRF would reject. It’s a word that entails specific human rights commitments, which have been carefully enumerated and articulated in connection with the UN’s Guiding Principles for Business and Human Rights. It comes with ownership, but it also extends beyond ownership to business partnerships and relationships — all the way to Bangladesh.

I imagine there is anxiety that acknowledging responsibility might be misconstrued as admitting liability. The word and the idea of responsibility are certainly nowhere to be found in the statement the National Retail Federation issued on Wednesday. Instead, the NRF focused on how applying “a legal standard” would limit the ability of retailers and brands “to respond” to an “ever-changing environment.”

Given the global nature of the apparel and retail industry, applying a legal standard is a very complex proposition. The Safer Factories Initiative understands that flexibility is required to address a broad array of worker safety issues and enables brands and retailers to respond swiftly and effectively to an ever-changing environment.

Let’s forgive the sloppy confusion (“flexibility is required to…enables”?) of the second sentence, and hope that in future the NRF hires a PR firm with grammarians in its employ. Just have a look at the language they’re floating here. These are such well-worn business tropes that we barely notice them: complexity, flexibility, responding swiftly to an ever-changing environment. Here, the big, giant brand, the multinational with suppliers and partners all around the world, is both powerful agent and vulnerable patient: capable of responding, at least if not bound or restricted by law, but subject to forces far beyond its control.

Sidestepping obligations and commitments, the NRF statement opts for “flexibility” and (as the statement continues) “sustainability,” an already-overused and much-abused word that appears in nearly every statement the Federation makes. Talk about vague. The NRF want “sustainable solutions” to make the Bangladesh garment industry “a sustainable manufacturer.” They offer a “sustainable action plan” now and “will continue to pursue a sustainable industry-wide solution,” and so on. The word and its variants appear 9 times in the course of a single statement.

You get the idea. As companies respond to rapidly changing conditions — or flee from one disaster to the next — they need flexibility to fashion a sustainable way forward. Otherwise they might be engulfed by their own blunders, or held responsible or liable for their part in the whole mess before they can run to the next country.