Is GE Mightier Than the Hudson?
Jack Welch is the darling of American capitalism, an Irish kid up from Salem, Massachusetts, who with salty tongue and a take-no-prisoners ferocity toppled the staid bureaucracy of the General Electric Co. As its CEO since 1981, he has engineered more than 600 acquisitions and increased GE's market value from some $13 billion to more than $550 billion. The Financial Times has decreed GE the world's most respected company; Fortune anointed Welch the greatest manager of the twentieth century; to Talk magazine he is simply "a legend." As this 65-year-old miracle worker heads toward retirement at year's end, he is writing a book that eager executives hope will divulge the secrets of his mythic administrative wizardry. Time Warner Books has paid him $7.1 million for this instruction; Colin Powell and the Pope settled for smaller advances.
All this confetti tends to obscure the fact that for twenty-five years Welch has worked overtime to dodge GE's responsibility for cleaning up the upper Hudson River, the biggest toxic site on the Superfund list of the Environmental Protection Agency. The company's latest strategy has been to bombard residents of the region with television and radio commercials, full-page newspaper ads and billboards demonizing the EPA for its position, announced formally on December 6, that dredging is the best way to rid the river of the PCBs that GE heedlessly dumped into it over a thirty-year period. This slick PR blitz does not dwell overlong on the fact that Superfund law puts the company on the hook for the cleanup tab, which the EPA estimates at some half a billion dollars, a figure that could well balloon by several billion.
GE began using PCBs in the late 1940s as a dielectric fluid in the housings of the transformers and capacitors it manufactured in plants at Hudson Falls and Fort Edward, on the east bank of the river north of Albany. By the mid-1970s the company had dumped some 1 million pounds of the toxic, man-made chemicals into the river. A growing number of studies by then had demonstrated that these polychlorinated biphenyls caused cancer in laboratory animals and probably humans, and that they were also linked to premature births and developmental disorders. When PCBs are consumed, directly or through eating fish, they are not excreted but bioaccumulate in fatty tissue; the EPA continues to rank them among the chemicals most toxic to human health. Despite strong opposition from GE, the federal government banned PCB use in 1977. New York State had demanded a cleanup even before the ban, and in 1976 GE dispatched its rising star to reach a settlement. With the same kind of hard-nosed tactics that would win him the nickname "Neutron Jack" after he laid off 100,000 employees in the early 1980s, he bulled through a deal that stated that GE had done nothing illegal and that limited the company's liability to $3 million--0.6 percent of what the EPA now says it will cost to dredge the river. This history is spelled out in some detail in At Any Cost: Jack Welch, General Electric, and the Pursuit of Profit (1998), whose author, Thomas O'Boyle, and publisher, Alfred A. Knopf, received several threatening letters from GE after Welch managed to obtain O'Boyle's book proposal, which made plain that the work would not be the kind of valentine the CEO had come to regard as his due.
Welch's triumph in the 1976 negotiations played no small role in his elevation to GE's executive summit, and once on that peak he may well have assumed that he had buried the issue, as GE scientists insisted--and continue to insist--that the PCBs are buried in the river's sediment and are thus now harmless. But the science only grew more damning, and in 1983 the EPA declared 200 miles of the majestic river--from the two plants south to New York Harbor--a Superfund site. After almost two decades, the New York State Health Department still advises women of childbearing age and children under the age of 15 not to eat any fish from this entire stretch and urges that no one eat any fish from the upper Hudson, where the cancer risk from such consumption is 700 times the EPA protection level. The river's once-thriving commercial fishing industry has been moribund since the mid-1980s, and sports fishing is on a catch-and-release basis for the indefinite future.
Once GE stopped dumping, its scientists began arguing that natural biological mechanisms were eliminating the PCBs from the river or reducing them to nontoxic form. When the company's own research demonstrated that this wasn't true, its new battle cry became: "Don't worry, the PCBs have been buried in the sediment." Then, in 1991, GE discovered that PCBs were still seeping into the river from a long-abandoned mill just below the plant at Hudson Falls. Under a consent decree with New York State, GE agreed to clean up the site and to date has spent some $200 million on the project, which the company claims has reduced seepage from five pounds to three ounces a day. The mill finding was a setback for GE, but the company soon scrambled to turn this debit into an asset: by maintaining that the seepage is responsible for the continued presence of PCBs in the river, that stanching it will solve the problem and that dredging the river is unnecessary and courts ecological disaster. "Let Nature Clean Up the Hudson, Not the EPA," announce signs on Albany bus shelters and big, blue highway billboards throughout the upper Hudson River region. "EPA can dredge literally until doomsday, and it won't make the fish any better than natural recovery," insists Stephen Ramsey, GE's vice president for corporate environmental programs, in a half-hour infomercial that has aired on several network outlets in the area. Ramsey may be a company suit, but with his open collar, salt-and-pepper beard and earnest promise to "spend whatever it takes" to save the Hudson, he comes across as someone who might jump out of the frame at any moment to hug a tree. This is the least of the campaign's deceptions:
§ In the infomercial and in full-page newspaper ads that have appeared in such dailies as the Albany Times Union, the Poughkeepsie Journal, the Glens Falls Post-Star and in many weeklies, GE states that PCBs in the Hudson are down 90 percent and that the river is cleaner than it has been in years. This is true, but hardly cause and effect, as implied. The river is cleaner because the Clean Water Act of 1972 required that communities begin treating their sewage before sending it into the river; the PCB level is down because the ban on the chemical's use has now been in effect for almost twenty-five years. Neither fact has any bearing on the remediation needed to rid the Hudson of some 100,000 pounds of PCBs that remain in the sediment and continue to poison fish, wildlife and humans. "This river needs to be cleaned! It will not clean itself," said a frustrated Carol Browner, head of the EPA in the Clinton Administration, at the December 6 news conference. "We've been studying this issue in some ways for sixteen years. The PCB contamination is not being buried by sediment...but in fact continues...to add to the ongoing pollution of the river."
§ Ramsey says in the infomercial that GE's dumping was at all times legal, that the company always had state permits. In fact, GE discharged PCBs into the Hudson for more than twenty-five years before obtaining a state permit in 1973, four years before the federal ban forced the company to stop dumping. Nor, points out Peter Lehner, head of the Environmental Protection Bureau of the New York State Attorney General's office, has GE ever obtained permits for the PCB seepage from the bedrock and soil at the Hudson Falls site, which dates back many years and is ongoing.
§ Ramsey also says that dredging will "disrupt life on the river for a generation...[that] it will be like having an off-shore drilling rig in your backyard twenty-four hours a day." This fearmongering is accompanied by shots of huge clamshell dredges drooling great gobs of sediment and of trucks carrying backfill, with an ominous voiceover suggesting that they will lumber through local living rooms 57,000 times if the EPA gets its way. Given GE's three decades of defilement, the cleanup will hardly be accomplished by toddlers with pails and shovels. However, residents along the upper Hudson are not faced with GE's scary scenarios. The dredging would be concentrated in a forty-mile section of the river just below the two plants where some forty PCB "hot spots" have been identified. For some of the work, the EPA plans to use the latest hydraulic technology, which sucks up sediment and leaves the water calm enough so the process can be monitored with underwater cameras. Some clamshell dredging will be required, but nothing like the mud bath depicted in the infomercial.
§ "There's huge local opposition to this project," Ramsey assures viewers. By way of proof, he says that sixty towns (the newspaper ads say fifty) have passed antidredging resolutions. In fact, these votes reflect only the (not always unanimous) view of town boards in each of the communities, some of which have benefited from GE largesse, for example, $125,000 to Hudson Falls public schools for upgrading technology, and $30,000 for renovations at a park on the river at Schuylerville. Many other local governments up and down the river have yet to take a position, like Saratoga Springs, or are prodredging, like Croton-on-Hudson, which in December sent letters to the antidredging town boards urging them to reconsider their opposition.
Environmentalists and pushy reporters have been trying for months to find out how much GE is spending on its propaganda onslaught. When I put the question to Mark Behan, GE's spokesman in the region, he delivered a polite lecture on how we journalists should be less interested in GE's public relations budget and more attentive to the misguided policies of the EPA and the company's sincere desire and remarkable efforts to rescue the Hudson "the right way." A shareowner proposal on GE's proxy statement for the past two years has called on the company to reveal not only its PCB-related PR expenses over the past decade but its fees for attorneys, experts and lobbyists. This effort is led by Patricia Daly, a sister in the Order of St. Dominic in Caldwell, New Jersey, and executive director of the Tri-State Coalition for Responsible Investment, a group of about thirty-five Roman Catholic dioceses and congregations that vote the holdings in their pension funds to try and bring corporations to heel. Daly has been prodding GE for twenty years. At its annual meeting in 1998 she compared the company's insistence that PCBs are harmless to Big Tobacco's claim before Congress that nicotine wasn't addictive; an enraged Welch shouted that she owed it to God to start telling the truth. At this year's annual meeting, on April 25 in Atlanta, the proxy proposal seeking budget figures for the anti-EPA campaign gathered 10.4 percent of the shares. This is a major hit, not least because for the second year in a row Alan Hevesi, New York City comptroller and a candidate for mayor, and Carl McCall, New York State comptroller and a candidate for governor, voted the millions of GE shares owned by the city and state in favor of the proposal.
Under questioning at the meeting, Welch said that GE is spending between $10 million and $15 million on its Hudson River PR campaign. The company has likely pulled much more than that out of its deep pockets, but even Welch's numbers overwhelm the opposition. Scenic Hudson, an environmental group that has been fighting the company for more than a decade (www.scenichudson.org), will scrape together some $500,000 this year to rebut GE's propaganda. For the coming fiscal year, the budget request of the EPA, which GE ever paints as an intrusive, big-spending federal behemoth, is $7.3 billion, one-quarter of GE's profits last year.
Several newspapers in the upper Hudson region have tried to counter GE's obfuscation with solid reporting, among them the Times Union, the Post-Star and the Journal. The Post-Star's Thom Randall has traveled to PCB sites in Plattsburgh and Massena, New York, and Little Chute, Wisconsin, where he found that residents generally felt cleanup efforts had not proved overly disruptive. The Journal has taken a prodredging stand editorially, arguing that the EPA's decision is "the right one--and the agency should let nothing stand in the way of cleanup." But all this gray type tends to get lost amid GE's steady march of full-page ads, whose inch-plus-high headlines trumpet: IS THE EPA DESTROYING THE HUDSON TO SAVE IT? and WILL THIS BE THE LAST DIVE FOR TEN YEARS? (over a shot of a boy happily leaping into what is putatively the Hudson, a river known for decades as a particularly uninviting swimming hole south of Hudson Falls). At the websites of the Post-Star and Times Union (www.poststar.com; www.timesunion.com), buttons invite visits to the papers' considerable coverage of the dredging debate. Before you get to it a GE zipper ad sometimes appears, warning, "Don't let dredging destroy the Hudson," and urging you to "Click Here." The click whisks you away from the journalism to GE's website (www.hudsonvoice.com), where the company continues its EPA bashing and offers free copies of the infomercial plus antidredging lawn signs and bumper stickers.
Coverage by NBC, the media jewel in Welch's diadem, has ranged from wan to nonexistent. When the EPA recommended dredging in December, the Today show, CNBC, The Nightly News and WNBC-TV in New York City tiptoed through the story; Dateline, the network's twice-weekly, hourlong magazine program, has yet to touch it. And all eyes at NBC shut tight when Robert Wright, the network's president and vice chairman of GE's corporate board, met privately with New York City Council members in April to try to persuade them to oppose a bill that endorses the dredging project. (The New York Times, ever thorough, called on not one but two "journalism ethics experts" to enlighten its readers on the propriety of Wright's foray. Both of these worthies, it turned out, were former Times reporters; neither one thought the NBC president had done anything wrong in bringing his media clout downtown to the pols' chamber. Tom Goldstein, dean of the Columbia University Graduate School of Journalism, where impressionable novitiates are prepared for the high calling of the Fourth Estate, avowed that Wright was just "a corporate citizen" doing his job.)
General Electric has mounted its near-hysterical fight against dredging the Hudson because it knows that the half-billion-dollar bill may be just the beginning. The company could also be forced to pay for cleaning up the PCB contamination in landfills along the banks; New York State's Department of Environmental Conservation has designated thirteen of these sites a "significant threat to the public health or environment." But it's the precedent that GE fears most if it loses to the EPA, because the agency could then require it to dredge at at least forty other sites around the country where the company has dumped PCBs. Already GE has reluctantly signed a consent decree that compels it to purge the PCBs it discharged into the Housatonic River at Pittsfield, Massachusetts, at a cost that could run to several hundred million dollars. And lurking in the background is the natural resources damage claim provision of the Superfund law, which holds polluters responsible for devastation not addressed by cleanups--for example, the destruction of commercial fisheries, the contamination of the biota, the loss of recreational use. After the Exxon Valdez oil spill in 1989, the Interior Department established an explicit method of calculating such damages: the lost use of the natural resource from the time of the pollution until it recovers, plus money for restoration and replacement. For the Hudson alone, this could cost GE hundreds of millions of dollars on top of the cleanup bill, and possibly billions more at the company's other PCB sites.
In August the EPA is scheduled to hand down a Record of Decision (ROD) on the Hudson that, after sixteen years of studies and GE stalling, may finally require dredging. Usually in such cases, a company will sit down and work out a cleanup agreement with the agency, which is embodied in a consent order. "Almost every other major corporation in the United States has recognized that it makes no sense economically, and from a public relations viewpoint, to fight to the death about Superfund cleanup," says Gordon Johnson, who as a lawyer in the New York State Attorney General's office has tracked GE's Hudson maneuvering since the mid-1980s. If an unfavorable ROD does come this summer and the company continues to fight, the EPA can order it to dredge under Section 106 of the Superfund law; if GE still balks, it is liable for penalties of $25,000 a day and damages of three times the final cost of the cleanup. With Harvard law professor Laurence Tribe as its point man, the company filed suit last fall attacking the power of the EPA to issue 106 orders, saying they denied due process and were therefore unconstitutional.
In April President Bush said he would sign an international treaty negotiated during the Clinton Administration that would ban or curtail production of the so-called dirty dozen lethal chemicals, PCBs among them. Christine Todd Whitman, Bush's EPA Administrator, supported dredging when she was governor of New Jersey. These favorable straws, however, may not stand up to the hurricane of GE's propaganda campaign and its formidable Washington lobby, which includes the services of former Senator George Mitchell and right-wing zealot Gerald Solomon, who was GE's slavish water carrier while a congressman from the Albany area in the 1980s and '90s. Their voices are doubtless finding receptive ears in the corporate-friendly Oval Office, whose occupant received generous support from GE for his campaign last year, with a fillip of $100,000 for the inaugural. However this drama plays out, Jack Welch won't have to stint on golf balls when he retires. He owns 22.3 million shares of GE stock, which are now worth almost $1 billion.