Pennsylvania’s New Jobs Czar Fought Enviro Regs for Years

Posted by By at 15 April, at 10 : 14 AM Print

by Abrahm Lustgarten ProPublica

For years C. Alan Walker, a coal industry mogul and wealthy donor to Pennsylvania’s Republican Party, clashed with environmental officials who tried to regulate his companies. He described them as “vindictive,” “out of control” and “the most dangerous thing” affecting the country’s welfare.

In 1981 Walker even argued that the state should let someone from industry influence how environmental regulations were enforced.

Now, some 30 years later, Walker himself has been given exactly that role by the state’s new Republican governor, Tom Corbett, who has accepted nearly $184,000 in political donations from Walker since 2004.

In January Corbett appointed Walker [2] acting secretary for the state’s Department of Community and Economic Development (DCED). In March he gave him authority to expedite and influence permits at any state agency, including the Department of Environmental Protection, which regulates drilling in the Marcellus Shale, one of the nation’s most important natural gas fields. Walker was also appointed to the state’s Marcellus Shale Commission, a multi-stakeholder group that will advise the state in developing the shale. The goal, Corbett has said, is to “make Pennsylvania the Texas of the natural gas boom” and “create jobs, not votes.”

A spokesman for Corbett said that Walker’s role is not unprecedented and that his influence will be tightly focused on promoting job growth while preserving environmental enforcement.

Walker’s assignment has raised questions about how a businessman whose coal companies were cited numerous times for polluting streams and drinking water — and who then fought the state’s orders to clean them up — will work with DEP officials who are tasked with carrying out environmental laws.

Walker recently assured state legislators that he will not issue permits or override environmental decisions. “I’m merely here as an expediter to make sure that permits get the proper attention,” he said.

He has also defended his coal companies’ environmental record. “As long as I have run those companies, not one gallon of polluted water went into a Commonwealth stream2014period,” he is quoted as saying in the March 24 edition of the Patriot News, a newspaper in central Pennsylvania. “I wouldn’t want to live in the state of Pennsylvania if it had.”

However, a review of court documents, state records, and of Walker’s own statements since the late 1970s revealed at least 15 cases in which Walker’s businesses polluted the state’s waterways.

State records show that in the 1980s and 1990s Walker’s companies were ordered to treat wastewater that was contaminating residential drinking water wells and nearby streams. In Rush Township mines drained into streams, polluting the municipal water supply for the nearby town of Houtzdale, as well as Mountain Branch, a stocked trout stream.

In an email, a DCED spokesman told ProPublica that mining is a dirty business and that Walker had met his legal responsibilities.

In 2003, Walker told the DEP that his companies, which were winding down operations, could no longer afford to treat wastewater. After he threatened to stop treating the waste sites, he reached a summary settlement [3] with the state: He and his insurance companies contributed to a $7.2 million cleanup trust, and the state released him from his treatment responsibilities. The settlement, which he signed on Oct. 2, 2003, included a statement describing the harm his companies had done to water resources over the years. Walker said recently that he never intended to stop treating the wastewater, and that his stance at the time was merely a negotiating tactic.

“Defendants have allowed discharges of acid mine drainage to the groundwater and surface waters … of the commonwealth,” the agreement states. “Defendants’ discharges of acid mine drainage have impacted adversely and are impacting adversely those surface and groundwaters. … The defendants agree that the findings … are true and correct.”

Both Walker and Corbett declined to be interviewed about the environmental record of Walker’s companies or about his new governmental duties. When asked about Walker’s environmental record, Corbett’s spokesman, Kevin Harley, said it doesn’t pertain to his current responsibilities.

“He’s the secretary for DCED — he’s not the secretary of DEP,” Harley said. “All he can do is ask that the permits that have a significant number of jobs involved get expedited, as long as all the I’s are dotted and T’s are crossed.”

Walker’s appointment has been approved by the state’s Democratic caucus, but no date has been announced for his final confirmation before the full Assembly.

Few people contacted for this article were comfortable talking about Walker on the record for fear that it would affect their careers in state government or their business dealings in the state. Although he is not well known to the general public, Walker is described as a powerful voice in the current administration, a forceful presence in the Pennsylvania business community, and a generous donor to at least three past Republican governors.

In a 1981 interview for a public television documentary [4], Walker said that business leaders needed to proactively insert themselves into the governing process. “You can’t separate politics and business,” he said, “because today our business in particular is so heavily regulated that if you don’t have a way to communicate your problems to the government people that regulate you then you’ve got very serious problems.”

Dick Thornburgh, who was Pennsylvania’s governor from 1979 to 1987 and later became attorney general of the United States, told ProPublica in an interview that in the 1980s Pennsylvania’s economy was suffering, just as it is now. Walker “was pro-business, and we had a desperate need for business leaders to become involved in economic growth.”

Walker answered questions at a state House appropriations hearing on March 24 about how he will carry out his new job. He offered an example of the help he gave a metallurgy company that wants to move to Clearfield County. The company, he said, plans to hire 200 welders and pay them above-average wages. But it had been told it would have to wait six months for DEP permits.

“I asked permission of the secretary of DEP to call the office and ask why the permit was being held up,” Walker told the lawmakers. “I called the office of the DEP. … The person on the phone said, ‘Well, I don’t have anybody here to type the permit.’ So, that’s the type of situation I plan to get involved in. To expedite permits that are being held up for bureaucratic reasons.”

But the case Walker referred to wasn’t quite so straightforward. The company, Oklahoma-based Allied Technology, is part of a Houston-based oil and gas field services conglomerate, Forum Energy Technologies. Allied submitted its permit application to the DEP on Jan. 5 and on Feb. 18 was told there were some “deficiencies” in the materials it had provided. Several people close to the process said that when Walker stepped in, the DEP was running due diligence on the company, exactly as state regulations require.

Allied’s permit was expedited, as Walker had requested, bypassing other permit applications that fell further down in the stack. On March 12 an announcement was published in the Pennsylvania Bulletin, signifying that the process was moving swiftly forward.

“He gave an example of what on the surface appeared to be an absurd withholding of a permit,” said Gregory Vitali, the state representative who questioned Walker in the hearing. “It was not accurate as he described it. It had nothing to do with what he was suggesting. It was legitimate procedure that needed to be followed.”

Historical Resistance

Walker’s family company, Bradford Coal, was founded by his father in 1935. In 1979, when Walker was the company president, Bradford was cited for air pollution violations, and the U.S. Supreme Court ruled that residents had the right to sue the company for failing to comply with regulations. By the early 1980s Bradford was producing more than 1.7 million tons of coal a year, making it one of the state’s largest coal producers. Walker’s holdings grew until, according to disclosure records filed with the state this year, he owned or held a substantial share in at least 13 companies, including a trucking business and a small oil and gas company.

In the years Walker has run these companies, he hasn’t been shy about criticizing environmental regulators, often assailing their influence in speeches, on television and in the state’s newspapers. In one TV interview he said environmental regulators were “constantly throwing more roadblocks and hurdles in.”

In 1980 he told the Pennsylvania Environmental Council, a group of academic, government and industry representatives, that “the coal industry is at the mercy of its natural adversary,” referring to regulators. In the speech, he proposed a new position in state government that could “act as an advocate” for industry, perhaps as deputy secretary for natural resources in the state commerce department, according to an Oct. 18, 1980, article in the Pittsburgh Press.

Walker stated his views again in a 1981 public television documentary called “A Coal Operator’s Turn,” produced by Penn State University. In particular, he complained about the permitting process and said regulators didn’t understand the businesses they were regulating. “That’s where the frustration and the anger comes in, because primarily I think it’s ignorance on the part of the people we are dealing with.”

In the film, Walker faces off with a group of residents from a small central Pennsylvania town called Egypt, near Walker’s Bear Hill mining operation. A 1980 Notice of Violation [5] shows that Bradford Coal had been cited by state regulators for contaminating the residents’ drinking water with acid mine discharge. According to the notice, he was ordered to stop the pollution and provide replacement drinking water for the residents.

“To date the affected residents of Egypt have not been provided with replacement water,” says the state Department of Environmental Resources letter [5]. “Bradford Coal Company has failed to provide treatment for the acid discharges and has failed to submit a plan.”

But more than a year later, when the documentary was produced, the company still hadn’t complied.

“They are using blackmail to force us to put water in there for those people,” Walker says in the film. “It gets back to this: Who are the regulators responsible to? They are supposed to be responsible to the people. But they become an end in themselves, and we’ve got a serious problem because they are out of control.”

Robert Ging was one of those regulators. At the time, Ging was a state assistant attorney general in the environment department working to prosecute cases like the one against Bradford.

After months went by without action, Ging proposed that Bradford Coal forfeit the bonds it had posted with the state. But then he learned the bonds wouldn’t be enough to cover the cost of fixing the contamination.

In February 1981, Ging got a court injunction to compel Walker to replace the water. Still, Walker did not comply.

That September, Ging decided to crank up the pressure. “It was controversial,” Ging said in a recent interview. “Alan Walker was a bigwig in the Pennsylvania Coal Association, and Thornburgh was running for governor. Walker was a big hitter in his campaign and was working for him in Clearfield County.” In fact, Walker had recently hosted and introduced Thornburgh at a campaign event.

Ging pressed on anyway. Fed up with what he described as Walker’s stubborn lack of cooperation, he tried to enforce the injunction against Bradford Coal. That Dec. 4, Ging said he was granted court clearance to file a contempt action against Bradford Coal. He was also planning to deny a mining permit to another Walker company, Al Hamilton Contracting Company, because of the risk of acid mine water pollution.

On Dec. 14, Ging was summoned to his bosses’ office in Harrisburg and fired. He is now an environmental attorney in southwestern Pennsylvania.

In 1983 Ging testified [6] before the Pennsylvania House Conservation Committee, which was investigating the influence of special interests in the state’s environmental enforcement. He told the committee that he had been warned not to push the Walker cases too hard and said state officials had questioned his “loyalty” and warned him not to embarrass the governor. According to his statement at the hearing, Ging’s boss “stressed the governor is trying to portray coal as the energy of the future and some of the recent enforcement efforts which we had taken against surface mine violators had created an aura of overzealous enforcement.” Ging testified he was criticized “for using pressure tactics on the coal company by threatening to go back into court to enforce the injunction.”

Thornburgh told ProPublica that Walker was both a “generous” campaign contributor and a friend but denied favoring Walker during his administration or giving Walker’s companies special treatment. Like Corbett today, Thornburgh said that even while he focused on supporting business growth, his administration’s environment department rigorously enforced state and federal environmental laws.

An Agreement Brings Closure

Records show that Walker’s regulatory troubles persisted throughout the 1980s and 1990s and that state regulators repeatedly pressed his companies to treat acid mine drainage and curb pollution.

When an elderly woman’s basement in Clearfield County filled with muddy red acid mine drainage water and contaminated her water supply in 1991, she complained to the state environment department. Walker’s company sued her, forcing her family to take out a second mortgage and pay some $15,000 in legal fees, according to news reports at the time. The suit was dismissed, but she was left to pay the legal fees. In response to her plight, State Rep. Camille “Bud” George wrote an anti-SLAPP law to protect citizens from retaliatory lawsuits meant to intimidate witnesses. Pennsylvania passed a version of the law in 2000.

In the late 1990s, three of Walker’s companies — the Shannon Land & Mining Company, Al Hamilton Contracting, and Manor Mining and Contracting — entered into a much-publicized deal to sell land to the state for a Pennsylvania National Guard tank training facility. Though the deal collapsed, the contract contained a 5 percent nonrefundable earnest fee, and Walker walked away with more than $326,000 in taxpayer money.

Robert Casey, Pennsylvania’s auditor general at the time and now a U.S. senator, audited the transaction [7] and found that the deal had been skewed to benefit Walker’s companies. Casey did not return phone calls for this story, but his audit found that the property contained “significant, long-term acid mine drainage” and 14 other unresolved title issues “that constitute a further breach of contract.” The audit said that breach of contract should have caused Pennsylvania to ask for its money back.

Walker’s environmental record resurfaced as an issue in 2002. That’s when Walker, who wanted to wind down his businesses, notified the state that he would no longer treat pollutants from at least 15 properties that the state had ordered him to clean up over the years. In effect, he was threatening to send millions of gallons of toxic water into streams.

“That obviously got our attention,” said David Hess, who headed the state environment department at the time. “He was a tough businessman.”

Hess got an injunction to keep Walker from abandoning his treatment facilities. The following year, under then-Governor Ed Rendell, the DEP reached a settlement [3] agreement with Walker to resolve all of his companies’ outstanding treatment responsibilities.

The text of that agreement provides details on how each of Walker’s toxic water treatment sites was handled over the years. In some of the cases, Walker’s companies complied immediately, agreeing to treat the water. But he fought the state on four cases, filing appeals — sometimes repeatedly — and drawing them out for years before a plan was agreed on to treat the water.

The plan stipulated that to cover part of the cleanup costs, estimated at more than $7 million, Walker and his insurance companies would forfeit nearly $3.8 million in bonds that he had posted with the state. The balance would be delivered to the state in the form of 2.34 million pounds of unmined coal at the Manor #44 mine.

A spokeswoman for the DEP declined to answer questions about the mine, the settlement agreement [3], the status of the cleanup trust, or about Walker’s influence on the permitting process. Federal records from the Department of Energy do not show regular production from the mine after 2000, and state documents indicate the mine is part of a remediation program. Pictures show it flooded, and apparently abandoned, raising questions about how difficult it would be for the state to cash in its value.

Hess, the former DEP secretary, said it is not unusual for the state to take assets as compensation, but that it is a last resort. “It happens when the state is party to bankruptcy and those types of things,” he said. “Does it happen every day? No, obviously you prefer cash, and you take whatever bonds or guarantees were posted.”

As part of the 2003 agreement, Walker was personally released from all liability, meaning his assets could not be claimed if the state ran out of money to clean up the mines. Robert Ging said such an agreement ran against the intent of the state’s clean streams laws, which were written explicitly to enable individuals to be held accountable. He said no case he settled during his tenure had that kind of provision.

“It tells me,” said Ging, “that this man received special treatment unlike anybody else that I have ever had to deal with.”

ProPublica’s Nicholas Kusnetz contributed to this report.

Correction (April 11, 2011): This story originally stated that the Pennsylvania governor was Tom Ridge in 2003 when the DEP reached a settlement agreement with Walker to resolve all of his companies’ outstanding treatment responsibilities. In fact, Ed Rendell was governor at the time.

Follow on Twitter: @AbrahmL [8]

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