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It's all about money/
Dredge Match: G.E. vs. E.P.A. 
The serious implications of 'Footnote 21'

by Susan Denim and G. M. Heller
Albany, N.Y. and Washington, D.C.
General Electric Company probably figures it is better to spend twenty or thirty million bucks (or more -- G.E. won't say just how much, but the group Hudson River Sloop Clearwater estimates G.E. is spending more than $2 million per week) on a radio, television and newspaper ad campaign that will be over and done with in a few months, than spend many hundred millions (or more) over a decade or two to dredge PCB's out of the Hudson River. 

G.E.'s management is trying hard to influence you and other New York State residents to contact elected officials with G.E.'s 'anti-dredging' message so that political pressure will be brought to bear upon the U.S. Environmental Protection Agency. 

By the end of this year, E.P.A. is set to decide whether or not to require G.E. to undertake the task of dredging a section of the upper Hudson River, a 'Superfund' toxic site, between Fort Edward and Troy in order to remove oily sediments containing PCB's (Polychlorinated Biphenyls) that line the riverbed. >>Chemical definitions of PCBs: EPA text; GE text.

Simply put, G.E. does not want to dredge the Hudson River, and wants E.P.A. to rule in its favor.  PCB's are that nasty group of chlorine based chemical compounds which G.E. saw fit over a period of decades to dump into the Hudson in the course of  putting together electric transformers and capacitors at the firm's upriver manufacturing facilities. 

Both E.P.A. and the World Health Organization state unequivocally that: "PCB's are probable human carcinogens and can also cause non-cancer health effects, such as reduced ability to fight infections, low birth weights, and learning problems." 

Yet, just like the tobacco industry's refusal for decades to accept the cancer- causing and other health-affecting properties of cigarettes, G.E. does not now wish to embrace or even acknowledge 'Science' that goes against the Company's financial interests. 

'Be Sincere and Try Looking Into the Camera More': Take #8
G.E. seems desperately trying to wiggle out of any responsibility to clean up this mess it created.  The highly polished advertising spots G.E. is running on local TV and radio throughout the Hudson Valley are being broadcast to persuade residents that the river is better-off long-term just by letting those oily PCB sediments remain on the river bottom. 

Do you find yourself believing the rosy picture painted by G.E.'s advertising agency? There is a school of thought that teaches if one says something loud enough and long enough, then eventually people will come round to believing 'up' is 'down', and 'stop' means 'go'. 

In case you are being swayed by the seemingly sincere, friendly tone of the local folks interviewed in these advertisements, it might put matters into better perspective to know that each interviewee had to repeat his/her lines numerous times in take-after-take before finally getting the sincere image and delivery that G.E.'s ad agency film director wanted. 

Can You Honestly Believe G.E.?
Do you really think that the largest industrial polluter in the history of the United States has at heart your best interests, or those of the Hudson River? 

Do you really believe for an instant that G.E. is telling the truth about matters which to G.E. will mean a difference of hundreds of millions of dollars? 

The out-of-pocket costs and liabilities to G.E. for clean-up work on this Hudson River EPA-designated 'Superfund' site over the course of the next two decades could amount to hundreds of millions of dollars, if not billions.

Added to the money the Company is spending on the current ad blitz--the purpose of which is to sway public opinion, G.E. already employs in Washington, D.C. more than 150 professional lobbyists whose sole job it is to influence the opinions of your U.S. Congressman, your U.S. Senators, as well as E.P.A. and a whole host of other federal agencies.  In Albany, additional lobbyists are on G.E.'s payroll to influence state legislators in New York's capital. 

These 'hired guns' are all part of G.E.'s well-oiled lobbying apparatus the simple goal of which is to obtain favorable treatment for G.E. in all matters governmental and legislative.  The present focus of that well-oiled machine is E.P.A., and how to reduce G.E.'s financial exposure locally and nationally in dealing with literally hundreds of toxic sites across the nation for which G.E. bears some or full culpability. 

Is G.E. Telling E.P.A. What It Tells S.E.C.?--
The Serious Implications of 'Footnote 21'
G.E.'s latest annual report (fiscal 1999) sent to share owners and dated February 11, 2000 was independently audited by KPMG LLP of Stamford, Connecticut, and filed with the U.S. Securities and Exchange Commission.  This federally- required filing contains a revealing statement within its seventy-seven (77) pages.  Towards the back of the report, buried on page 68, within a section entitled "Notes to Consolidated Financial Statements," is a paragraph which succinctly states:

"[Footnote] 21 -- GE All Other Liabilities
........GE is involved in numerous remediation actions to clean up hazardous wastes as required by federal and state laws.  Liabilities for remediation costs at each site are based on management's best estimate of undiscounted future costs, excluding possible insurance recoveries.  When there appears to be a range of possible costs with equal likelihood, liabilities are based on the lower end of such range.  Uncertainties about the status of laws, regulations, technology and information related to individual sites make it difficult to develop a meaningful estimate of the reasonably possible aggregate environmental remediation exposure.  However, even in the unlikely event that remediation costs amounted to the high end of the range of costs for each site, the resulting additional liability would not be material to GE's financial position, results of operations or liquidity." (Emphasis and underline added.)
[To download the G.E. 1999 Annual Report Financials so you can read for yourself Footnote 21 within the Notes to Consolidated Financial Statements, Click here!]

G.E.'s Chairman Questioned
At the annual share owner meeting, held in Richmond, Virginia on April 26, 2000, G.E. board chairman John F. (Jack) Welch was questioned about 'Footnote 21' by a curious share owner.  The share owner summarized the footnote, then read aloud from the Annual Report to the gathered assemblage the last sentence that starts with the words: "However, even in the unlikely event....."  The share owner placed special emphasis on the phrase: "...would not be material..."

The share owner's question to Dr. Welch was simple.  He asked if Footnote 21 were true, then why did not G.E. simply proceed with cleaning-up various hazardous sites around the country for which the Company was being held liable by E.P.A., and the Company could then be done with the matter?

The share owner also asked why not "just go ahead and do a Cadillac job -- do the best job possible" on these sites, and not get bogged down with disputes with E.P.A., since according to Footnote 21, even in the 'unlikely event' that costs for these clean-ups were in 'the high end of the range of costs', the effect on the Company's bottom line 'would not be material'? 

Dr. Welch's reply was immediate and sharp, "We are not just going to throw money at the problem!"  The chairman went on to say that any decisions G.E. would make regarding clean-up of hazardous sites would be based on the best 'Science' available.  He emphasized the word 'Science'.

sci-ence \'si-en(t)s\ noun 
Judging by G.E.'s reticence though, to accept as valid, the extensive research done on PCB's by numerous national and international health- protector organizations (E.P.A., World Health Organization, Agency for Toxic Substances and Disease Registry--an arm of the U.S. Public Health Service, etc.), it appears that G.E.'s definition of the word 'Science' means whatever G.E. deems is scientifically 'valid' at any point in 'G.E. time', whether or not the bulk of the world's scientific community agrees with G.E.'s assessments.

G.E. Logic 101
The skewed logic behind Dr. Welch's reply plainly exposes to the public the warped way the Company views its responsibility for cleaning-up its toxic sites.

Given the rosy financial picture painted by the Annual Report, and specifically the content of Footnote 21, G.E. also appears to be talking out of both sides of its corporate mouth.  This is especially so when the Company argues cost-to-benefit analyses of various clean-up methods.

G.E.'s attorneys argue forcefully before E.P.A. that little relative benefit is gained by cleaning toxic sites to standards E.P.A. considers safe compared to levels G.E. considers adequate, and that E.P.A.'s determinations of what represents permissible standards of 'clean' in the Hudson River and at G.E.'s other Superfund sites forces G.E. to sustain burdensome expenses the environmental benefits of which are indeterminate, of little benefit, or as the lawyers like to say, 'diminimus'. 

G.E.'s attorneys argue this way because E.P.A.'s standards, being relatively stringent, will require G.E. to spend a lot more money in order to attain those higher standards.

G.E. also argues that remediations favored by E.P.A. (like dredging PCB's out of the upper Hudson River and dredging PCB hot spots out of the lower Hudson) are not only too expensive for the environmental benefit received, but are simply not based on good 'science'.

G.E.'s attorneys argue this way because dredging means Really Big Bucks, and G.E. would rather frighten the public, and seek-out and popularize every researcher in the world who hypothesizes leaving the PCB-contaminated muck sitting at the bottom of the river, rather than spend those Really Big Bucks to remove the stuff that they dumped in the river in the first place.  So much for good 'science'. 

Moon-Sized Chink in G.E.'s Legal Armor
Given the admission in Footnote 21 though, it would seem disingenuous, if not bad faith (or simply out-and-out lying), for G.E. to argue that costs are excessive to attain any E.P.A. standard.  This is because the Company's own auditors have already discounted those high end scenarios and determined the extra liability would not be material to the Company's bottom line.

It remains to be seen whether E.P.A. acts on this moon-size chink in G.E.'s legal armor.  It is plain though, that G.E. has forfeited any fiscal or cost-to-benefit argument that does not favor E.P.A.'s standards, whether expensive or not. 

Foot Dragging, But No Dredging
What is damning from an ethical and moral perspective (as though these were ever a consideration in any G.E. decision), is that given its admission in Footnote 21, G.E. still insists on dragging its corporate feet on 'Superfund' clean-ups such as the Hudson River.  Instead of cost being the publicized motive though (as if the world's most profitable corporate entity could publicly complain about cost), G.E. avoids that issue by raising as excuse for its delay the rationale that remediation favored by E.P.A. does not meet G.E.'s own determination of what constitutes good 'science', or what, in G.E.'s wisdom, is viewed as 'good' for the river.

Another device which serves G.E. long and well is to use litigation delaying tactics, threats of legal action against the Agency, as well as time-wasting appeals of Agency decisions.  This is done purely for tactical reasons and to extract ultimately from E.P.A. agreements more favorable to G.E. than would be obtained by a polluter of lesser means and fewer lobbyists in Washington. 

To show just how excessive G.E.'s foot-dragging has been and what real delay it has caused, one need only look across New York's border to Massachusetts.  Endlessly drawn-out negotiations have literally delayed for decades the clean-up of PCB's in the Housatonic River.

PCB's Out of Chairman Welch's Past
Only recently has G.E. agreed to clean-up the initial half-mile stretch of river running beside its Pittsfield plant where knowledgeable former G.E. employees estimate more than 150,000 gallons of PCB's have been spilled into the river.  G.E. acknowledges spilling just 3,900 gallons of that amount.

Pittsfield is well known to G.E.'s senior corporate management. In 1971, G.E.'s present chairman John (Jack) Welch was then the newly-appointed general manager of G.E.'s Chemical and Metallurgical division at the Pittsfield plant.  In his position, Mr. Welch had direct jurisdiction and supervision over the plant's handling of various chemicals including Aroclor and Pyranol.

Aroclor is made up of nearly 100% PCB compounds in a chemical mixture that Monsanto Chemical Company supplied to G.E. through the late 1970's.  G.E. processed Aroclor further by filtering and purifying it, then mixing it with other ingredients (chemical solvents, etc.) to produce the G.E.-branded product Pyranol, which was then used by G.E. as an insulating fluid, fire preventative, and heat transfer agent in the Company's line of electric transformers and capacitors.

Thus far, the Housatonic clean-up has yielded thousands of cubic yards of heavily PCB-contaminated sediments, some with the highest contamination levels ever recorded, ie., over 300,000 parts per million.  Meanwhile, a recent report in The Berkshire Eagle claims G.E. has now filed with E.P.A. attempting to redefine the parameters of what the Company must do to clean up the next one and one-half miles downriver in that remediation project. 

Lying to Which Agency--S.E.C. or E.P.A.?
On the one hand, G.E. and its auditors insist to share owners and to S.E.C. that money for even the most expensive remediations of toxic sites is not a problem, for now or for the foreseeable future.

Yet to E.P.A., G.E. insists that cost-to-benefit analyses show that cleaning-up Superfund sites--like the Hudson River--is too expensive if done to E.P.A.'s stringent standards and using E.P.A.'s methods--like dredging.

PCB's Calling New York City: 'Here I Come!'
Further, G.E. insists that E.P.A. is all wrong anyway when it comes to disturbing the river, and that good 'science' precludes dredging, and that it is better long-term to do essentially nothing and in essence, just let the 'goo' stay put along the river's bottom and let the river 'cleanse' itself.

If one follows this line of G.E.'s 'scientific' reasoning, it also follows that the goo will be covered gradually by other sediments--a natural but temporary 'cap'.  Eventually though, as a result of the relentless power of constantly moving water--the same power which ultimately brings mountains to the sea (and which makes it not a matter of 'if', but rather only a matter of 'when'), this capped goo will ever-so-slowly work its way downstream either to be trapped behind the next man-made obstacle like the Troy dam, or to pass 'un-capped' and in suspension over that barrier on its inevitable trip to the mouth of New York City's harbor and the Atlantic Ocean.

Poughkeepsie, NYC Water Supplies At Risk
Though G.E. never mentions it, we must assume that the goo most assuredly will know somehow to avoid not only the intake pipes that are the primary feed to the City of Poughkeepsie's water supply, but also those separate intakes located just nine miles further south near the town of Chelsea which during periods of drought channel Hudson River water into New York City's water supply via the massive underground Delaware Aquaduct.

Hydraulic Dredgers Limit Dispersion
G.E. likes to scare people with the notion that dredging will stir up a lot of PCB-contaminated silt into surrounding waters, thus increasing the amount of PCB's thrown back into suspension and allowing that mixture of particles to disperse downstream.  That scare tactic is an example of G.E.'s corporate brand of 'science'. 

The solution: hydraulic dredgers, which have been in use for years, and were invented to tackle this precise concern about kicking-up polluted material back into the water environment.  Essentially these devices act as efficent underwater 'vacuum cleaners' sucking in more water than sediment specifically in order to limit particulate dispersion in an area immediately surrounding the dredging. 

Is G.E. Lying to the Public?
So the list of possibilities is as follows:
G.E. is lying to share owners and to the S.E.C. about its financial condition; and/or

G.E. is lying about the costs associated with cleaning-up the Company's 'Superfund' and other toxic sites; and/or

G.E. is lying to E.P.A. about cost-to-benefit ratios (where such ratios are now mathematically moot in light of G.E.'s admissions in Footnote 21); and/or 

G.E. is lying to E.P.A. and to the public at large about the primacy of G.E.'s brand of 'science' (versus E.P.A.'s and the rest of the world's) to cure the Hudson River's ills.


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