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International Firm Hired to Help Off-Ballot GOP Senators with Messaging on WV Teacher Strike

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West Virginia Senate President Mitch Carmichael and other Senate GOP leaders hold a press conference on March 6, 2018, on the signing of a bill calling for pay raises for all state employees, including teachers. Photo: Will Price, WV Legislative Photography

As the 2018 midterm election approaches, some West Virginia Senate Republican leaders are making use of a large and influential worldwide public relations firm to aid in messaging about this year’s teacher strike and the economy. The politicians making use of the public relations services, which an independent expenditure political action committee is paying for, are not on this year’s ballot.

Campaign finance experts say promoting off-ballot politicians is very unusual for independent expenditure political action committees, or PACs, such as the one paying for these services. The public relations firm that’s been hired has made national headlines for its possible connection to the FBI special counsel’s probe of Russian interference in the 2016 presidential election.

Emails from employees of public relations firm Mercury, LLC, sent to West Virginia Public Broadcasting reporters — and others in news media who cover state government — have recently solicited interviews with Senate President Mitch Carmichael.

Those emails — which were sent by Mercury employees Katya Myagkova and Brent Petrone throughout the month of August — sought to have reporters speak with Carmichael regarding the federal Tax Cuts and Jobs Act and federal legislation attempting to curb the country’s opioid crisis. The emails included a banner image with “West Virginia’s Future PAC” and signatures identifying Petrone and Myagkova as Mercury employees.

Emails between Carmichael, Sen. Craig Blair and Mercury employees — obtained by West Virginia Public Broadcasting through a public records request under the state’s Freedom of Information Act — also indicate the firm was helping GOP Senate leadership tailor messaging around a number of issues and craft a “proper narrative” regarding this year’s teacher strike and West Virginia’s economy leading up to the 2018 midterm elections, despite neither Carmichael nor Blair being up for re-election this year.

Emails Show Mercury Helped Carmichael, Blair Craft Messaging on Teachers, Economy

While records show that West Virginia’s Future PAC spent a total of $21,731 in August on digital advertising services from Pittsburgh-based company Fifth Influence in support of Republican Senate incumbents Ryan Ferns, Ed Gaunch and Tom Takubo in the general election cycle, $37,500 the committee spent this reporting period was paid to Fulcrum Campaign Strategies, for consulting and PR services mostly used by Carmichael.

In a July 19 email sent at 8:24 a.m. with the subject “Thank you,” Carmichael contacted Mercury employees Nicole Flotteron, Chapin Fay and Dan Bank — all of whom hold the title of senior vice president.

“Thank you for conducting the on-site meeting/training yesterday. Our team was very impressed with all aspects of Mercury. The outside entities that we invited and that gained further exposure to your team were equally impressed,” Carmichael wrote in the first of two emails sent to Mercury employees July 19. “We look forward to working with you to craft the proper narrative as to the West Virginia comeback story and Republican commitment to education.”

Parry Casto, from Huntington W.Va., leads a rally outside the Senate Chambers in the West Virginia Capitol in Charleston, W.Va., Monday, March 5, 2018. Hundreds of teachers from 55 counties are on strike for pay raises and better health benefits. Photo: AP

Another email sent July 19, this one with the subject line “Response to local AFT leaders agreeing with our statement” and sent at 8:37 a.m., Carmichael seeks advice from Flotteron, Fay and Bank in messaging related to teacher unions.

“What do you think of crafting a message in which we commend Christine Campbell, WV-AFT, and Dale Lee, WVEA, for agreeing with us and rejecting the socialist agenda of the national AFT?” Carmichael wrote. “The message could give credit to the WV Teachers for recognizing that the socialist policies of the left wing union bosses is not good for our state and would damage the economic recovery that is occurring under Republican leadership. Your thoughts……”

Days earlier, on July 17, Carmichael drew attention for a thread of eight tweets in which he criticized the American Federation of Teachers’ adoption of a platform at the union’s national conference in Pittsburgh.

Teachers in West Virginia — backed by the West Virginia Education Association and the American Federation of Teachers-West Virginia — went on strike for nine days during the 2018 legislative session demanding better wages and a permanent fix to the health care program for state employees, the Public Employees Insurance Agency.

With the Republican Senate majority once rejecting a 5 percent pay increase for teachers, the strike ended with the passage of a bill doing just that — but adding raises for all state employees — and the creation of a task force on the health care issue. The bill was passed only after being sent to a conference committee between the House and Senate, where members finally agreed to the 5 percent raises.

In the interest of full disclosure, the Educational Broadcasting Authority, which does business as West Virginia Public Broadcasting, is an independent state agency. As such, its employees also received the pay hike.

During and since the strike, leaders of teacher unions and their members have taken aim at GOP Senate leaders — particularly Carmichael — promising an education-focused takeover of the Legislature in the 2018 midterms. Through their political action committees, the unions have supported candidates they see as promoting a pro-public education agenda. The unions have largely supported Democratic candidates.

Carmichael and other top Republicans in the Senate have taken credit in recent months for the pay raise for teachers and all other public employees, despite the caucus’ holdouts that drew out the strike. Some of the messaging around teacher issues has taken place under the consultation of Mercury.

“I’m not up for re-election,” Carmichael said when asked about his use of Mercury for help with messaging on the aftermath of the teacher strike and its potential impact on the upcoming election. “I just want to make sure that the proper narrative is spoken as it relates to the teacher issue, because I think I’ve not — in my years of public service — seen anything have so much misinformation about a particular issue.”

Despite not being on the ballot for the 2018 midterms, Carmichael has been a target — with his name and face being placed on billboards and other campaign materials reading “Ditch Mitch!” and “Ditch the Mitches And Their Candidates,” referring to Carmichael and U.S. Senate Majority Leader Mitch McConnell. The latter of those two advertisements also states that Carmichael was “attacking teachers and public schools.”

Carmichael argues that those efforts, funded by the West Virginia Democratic Party, have mischaracterized him in terms of what unfolded during the teacher strike.

“The press, in large measure, does a good job, but some of those opposing — the people that want to just create havoc — are distorting that message and, so, I think it’s important for the people to know the truth and to hear it as it really occurred,” Carmichael said about the narrative surrounding the strike.

CREDIT WEST VIRGINIA DEMOCRATIC PARTY

“The West Virginia’s Future PAC – which is an entity outside the legislative purview — contracted with Mercury to develop that messaging and make sure the story is told in a way that, you know, is sort of what we believe is the truth about the story and cut through all the different aspects of distortions and so forth. So, they’re working with West Virginia’s Future PAC to develop that message and make sure it gets out,” he added.

Other emails show Carmichael forwarded a June 8 email newsletter from the West Virginia Chamber of Commerce to Flotteron. A June 14 email from Carmichael to Flotteron detailed state employment numbers from May sent to members of the West Virginia Legislature from West Virginia Chamber president Steve Roberts. “I’m compiling more data and will forward in a string of emails,” Carmichael wrote to Flotteron.

An Aug. 8 email from Carmichael with the subject line “Fwd: Strikes Again?” included a newsletter forwarded to Mercury employees from The Center for Education Reform sent to Carmichael the day before. The newsletter detailed the possibility of teacher strikes by union members in Puerto Rico and Los Angeles.

More recently, Carmichael sought advice in responding to an email newsletter from the West Virginia Center on Budget & Policy. That Sept. 17 email newsletter from the West Virginia Center on Budget & Policy included the headline “New Census Data Shows Lack of Progress in West Virginia.”

“Help me craft response…..” Carmichael wrote in regard to the newsletter from the West Virginia Center on Budget & Policy.

As for Blair, who serves as chairman of the Senate Finance Committee, emails from Aug. 7 between he and Mercury staff show he asked for help when he forwarded a solicitation from D.C.-based website The Washington D.C. 100 — asking him to author a piece of writing on West Virginia’s economy for the website. According to the email forwarded by Blair to Mercury employee Nicole Flotteron, The Washington D.C. 100 is “a bi-weekly publication consisting of 100-word long stories covering key policy issues and current events.”

“Is this useful?” Blair wrote to Flotteron.

“We will write it for you. Standby,” Flotteron replied.

On Aug. 16, The Washington D.C. 100 published a short piece with Blair’s bylinetitled “Economic Growth in West VA.”

About West Virginia’s Future PAC & Mercury, LLC

A campaign finance report filed recently with the West Virginia Secretary of State’s office shows the independent expenditure political action committee West Virginia’s Future raised $320,250 from May 21, 2018 through Sept. 23, 2018. Contributors to that committee during that time period include a $15,000 donation from DuPont spin-off company Chemours as well as a list of more than 200 names of people who donated funds following a Wheeling dinner event on June 28, where the group raised $284,655.

The first general report from West Virginia’s Future PAC was due Friday, Sept. 29, but wasn’t received by the Secretary of State’s office until Oct. 1. According to the state’s campaign finance reporting system, the organization has been late in filing two of its three other reports that have been due. There is no penalty for a filing campaign finance reports after a deadline.

This image was at the top of news releases and interview solicitations Mercury employees sent to West Virginia reporters.

Among the $149,685.19 in expenses the committee paid during the first general election period from May 21 to Sept. 23, two payments totaling $37,500 were paid to Fulcrum Campaign Strategies for “strategic / communications consulting.” According to the District of Columbia’s Department of Consumer and Regulatory Affairs, Fulcrum Campaign Strategies has been used as a trade name for Mercury, LLC. Company officials also confirmed Mercury does business under that name.

According to Mercury’s website, the company is a “global public strategy firm” that handles public relations, public opinion research, crisis management and mergers and acquisitions. The company’s clients include AT&T, Airbnb, eBay, The Ford Foundation, Hyundai, Pfizer, Tesla and Uber. Mercury also lobbies on behalf of foreign governments.

Mercury has come under scrutiny during the past year for possible connections to President Donald Trump’s former campaign manager Paul Manafort. In September, Manafort agreed to plead guilty to charges in the indictment and cooperate with FBI special counsel Robert Mueller’s investigation into Russian interference in the 2016 election.

In Manafort’s indictment, two companies identified as “Company A and Company B,” were named as having done work under the direction of Russian-friendly former Ukrainian President Viktor Yanukovych. Manafort spent nearly a decade as a consultant to Yanukovych and his country’s Party of Regions. A report from NBC News identified “Company A” as Mercury and “Company B” as the Podesta Group.

According to reports from various news outlets citing court filings from Mueller, Mercury could face legal trouble for their connections to Yanukovych.

“We worked for an [non-government organization] based in Brussels that supported Ukraine’s entry into the European Union, which would have driven Ukraine closer to the west and further from Russia’s influence. The project started more than six years ago and ended more than four years ago,” Mercury partner Michael McKeon wrote in an email when asked about the company’s connections to Yanukovych and the the FBI special counsel’s probe of Russian interference.

“We hired lawyers to advise us on proper disclosure, reported our work to Congress in 9 different public lobbying reports and later voluntarily filed a FARA. Any questions you may have about the work is all in the public filings,” McKeon added.

FARA is the acronym for Foreign Agents Registration Act, federal legislation requiring “persons acting as agents of foreign principals in a political or quasi-political capacity to make periodic public disclosure of their relationship with the foreign principal, as well as activities, receipts and disbursements in support of those activities,” according to the U.S. Department of Justice.

McKeon also said none of the Mercury employees on the project in West Virginia worked for the non-government organization and most current employees were not with Mercury at that time of the company’s work linked to Yanukovych.

Carmichael said he was unaware of Mercury’s connections to Manafort’s indictment in the Russian probe when he began working with the firm. He said he later became aware of those ties, but has no concerns about the company.

“I’ve just heard, anecdotally, somebody say, ‘You know, hey, this or that’ about Mercury. I don’t have anything other than just a cursory [understanding of those allegations],” Carmichael said.

Asked about Mercury’s work with Carmichael or anyone else in the West Virginia Senate, McKeon deferred to West Virginia’s Future PAC.

Chris Asbuy, an attorney for West Virginia’s Future PAC, provided a statement to West Virginia Public Broadcasting noting pay raises for state employees, reported economic growth, implemented regulatory reforms and other efforts by the Republican majority in recent years. He attributed those accomplishments to the GOP takeover of the Legislature in 2014.

“West Virginia’s Future PAC hired Mercury to cut through the election year political chatter and help tell this remarkable comeback story directly to West Virginians,” Asbuy wrote.

Independent Expenditure PACs

Independent expenditure political action committees, like West Virginia’s Future, are created to expressly advocate for the election or defeat of a particular candidate — but not in cooperation with or at the request of that candidate. Typically, independent expenditure political action committees would not raise money for services such as polling or public relations services, according to campaign finance experts.

Dan Weiner of New York University School of Law’s Brennan Center for Justice said promoting non-candidates and paying for services like public relations is atypical of independent expenditure political action committees.

“I would say that is quite unusual,” Weiner said. “Bottom line, it is deeply troubling that a PAC would be funneling unlimited money for sitting office-holders, regardless of whether or not they are on the ballot. That raises quite obvious concerns.”

Weiner said political action committees funding politicians not on the ballot -—or services for them — should raise questions about the possibility of political favors being returned in exchange for that help.

Why Mercury, When the Senate Has Its Own Communications Director?

While Mercury’s services have provided public relations support for Carmichael and Blair, the Senate employs its own communications director who works with news media. Jacque Bland currently holds the title of communications director of the Senate, under the supervision of Carmichael in his role as Senate president.

In the position of communications director, Bland works as a liaison between all members of the Senate — regardless of party — and the news media. According to the state auditor’s office, Bland was paid $73,640.01 for her work in 2017.

Asked whether Mercury’s work has affected her job as communications director of the Senate, Bland declined to comment for this story.

Carmichael said the work performed by Mercury — particularly that which is focused on issues related to the teacher strike — is politically motivated and is inherently different than the work Bland does. He said the political messaging should be outsourced to an entity outside the Legislature.

“West Virginia legislative announcements and so forth get published on the Legislature’s website. These recently, on both sides of the aisle, have become very political — they have become too political,” he said.

Carmichael said he has had conversations with Democratic minority leaders Sen. Roman Prezioso and Del. Tim Miley about trying to limit the scope and use of the Legislature’s public information office and get politics out of the equation. Prezioso and Miley confirmed those conversations.

“If it becomes political, you need to use an outside entity to craft that. That message needs to get [put together] outside of here. Jacque does a phenomenal job of getting this messaging — the informational pieces — out to the public. But in terms of it, if it’s going to turn political at all, it needs to be done by a separate political arm outside of this Legislature. And, so, that’s what Mercury’s purpose is,” Carmichael said.

Teacher Strike Still in Focus Ahead of Election with Plans for Additional Raises Announced by Gov. Justice

As the November midterms get closer — and with teachers issues remaining on the minds of voters — Gov. Jim Justice announced this week plans for another 5 percent pay raise for teachers and all other public employees and a promised dedication of $100 million to funding PEIA.

During a news conference Tuesday announcing those plans, Justice touted Republican accomplishments in terms of this past year’s teacher raises and economic growth in general, citing a nearly $120 million budget surplus three months into fiscal year 2019. He also downplayed the role of the unions and the strike.

“Over and over and over, you can say what you want. But, at the end of the day, the teachers’ pay raise last year — the teachers’ pay raise — that all happened not because of people that were ‘rah-rah-ing’ and everything upstairs,” Justice said. “It happened because the good work of the Republicans, the Republicans are the ones that passed it. Your Republican governor is the one came up with the idea of the five percent. Nobody but your Republican governor. The Republican House followed suit.”

Gov. Jim Justice is joined by Republican legislators to announce plans for additional pay raises for public employees in the 2019 legislative session.
Photo: credit office of Gov. Jim Justice.

Justice acknowledged holdouts by Senate Republicans, but also gave credit to the majority caucus in the upper chamber.

“It took a little while to get the Senate on board. But when they came on board, what did they do? They came on board for not only the teachers — they came on board for everybody. Everybody got the five percent,” he said.

In a news release dated Oct. 2 — the same day as Justice’s announcement of plans for another round of raises for state employees — Carmichael released a statement through the Legislature’s public information office. Bland is listed as the contact on the release.

“Thanks to pro-growth policies that have been implemented by the Legislature in recent years, our economy continues to expand, while tax revenue continues to increase, leading to historic budget surpluses,” Carmichael said in the release. “In turn, we are able to use that growth to deliver our teachers the pay increases they need and deserve.”

How much the teacher strike and issues related to public education will impact the 2018 general election remains to be seen.

This article was originally published by West Virginia Public Broadcasting

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A Regional Focus on Health Care, Community by Community

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Understanding Appalachia requires coming to grips with the complexities and challenges of rural healthcare.

It means understanding that addiction isn’t just an opioid issue, as methamphetamines make a comeback in our communities. It means understanding that health goals reflect a Maslow’s Hierarchy of Needs chart from one community to the next, and that how we define wellness is as diverse and place-based as other forms of Appalachian culture. It means understanding that there are no one-size-fits-all solutions in the creative ways that our communities tackle addiction, vaccines, mental health, access and affordability.

With support from Jim and Alexis Pugh, we hired a part-time editor/reporter for developing this beat. We’d like to introduce him to our readers and invite story pitches for tackling this topic together.

— 100 Days in Appalachia

Introduce yourself to the 100 Days audience. How does your background inform your perspective on health and health care issues in Appalachia?

I’ve been covering rural health throughout the Southeast for some years now. Appalachian born, in the mountains of Western North Carolina. I began writing about health care on a regular basis in 2008 with a series of articles on the breakdown of the mental health care system in North Carolina. I then began to more fully appreciate the complexity of health care issues and the range of repercussions of the decisions we make societally about health care.

I worked for a couple of years under a grant to cover rural health issues in North Carolina, and that job allowed me to spend a lot of time on two-lane roads – those roads William Least Heat-Moon coined the “blue highways” for the color in which they appeared on old Rand McNally maps. I’ve since been doing the same work as a freelancer, from the Finger Lakes region of New York to the Mexico border. I love driving those roads, realizing that I’m now somewhere I’ve never been before, then arriving at my destination and exploring how the issues this particular community is grappling with are the same and different as others elsewhere.

I’m looking forward to now returning my focus to Appalachia. I divide my time between Nashville, Tennessee, and Carrboro, North Carolina. I make the trek between those two cities every couple of weeks, and whenever I’m headed west and begin the climb up Old Fort Mountain or headed east and hit Pigeon River Gorge, I feel the tug. It’s less than a hundred-mile stretch, but it’s so distinctly Appalachia.

With 100 Days, I’m psyched to reorient along a roughly north-south axis, unfolding this region that ambles from Schoharie County, New York, to Kemper County Mississippi. Granted, much of this work will be done from my desk in Nashville or Carrboro. But I’ll always be looking forward to that next excursion.

Of course, not all of Appalachia is rural. I do enjoy Appalachia’s metropolitan areas, love discovering them anew, and look forward to further delving into their particular health care issues and successes.

Urban or rural, I’m intrigued by the role that place plays in the health care issues communities face and in their outcomes. I’m so looking forward to witnessing Appalachia.

When people see that we’re launching a health vertical, it might seem like we’re late to the game, that any number of outlets already have a strongly established focus on issues in this area. In what ways do you hope to lead the conversation about health in Appalachia?

Appalachia is facing some considerable health care challenges. In addition to the rising costs of care, rural communities are experiencing diminishing access to services, including hospital closures, and difficulties in recruiting health care professionals. Rural and urban communities alike have been particularly hard hit by opioids.

But Appalachia isn’t a monolithic region, and there are nuances to these issues from one sub-region to the next, from community to community. While underscoring shared concerns, I intend to draw out those distinctions. I most especially want to bring attention to the particular ways in which communities are finding solutions

When I write that I’m from Western North Carolina, I capitalize the “W,” as those in the region commonly do – because beyond identifying the region geographically, “Western” is an integral part of a proper noun, denoting cultural distinctions. I could ramble on about what those distinctions are – the libertarian instinct, etc. My point is that place matters. Murphy, North Carolina, in the far southwestern corner of WNC, is 355 miles from Raleigh, the state capital.

There are four other state capitals closer to Murphy. To assume that all North Carolinians share a sense of place, an identity, would be a mistake. I want to explore the contours of geography and culture, and how they shape health, health care, attitudes, practice and policies.  

I intend to report on the challenges individual communities are facing and their responses to those challenges, and on decisions that the federal and state governments make and the outcomes of those decisions – whether to expand Medicaid coverage, for example, and the implications of that decision.  

Are there any specific topics you think media outlets outside of the region do a bad job of covering here or that have perpetuated stereotypes of the people in Appalachia? In what ways do you hope to challenge those views?

I think there’s a perception that Appalachia is waiting for a handout, that people in the region are expecting the federal government to solve all their problems. I hope to help counter that narrative.

The first piece I wrote for 100 Days was titled “New Report Cites Economic Woes, Addiction and Optimism in Appalachia.” It was about the results of a survey conducted by the Robert Wood Johnson Foundation, National Public Radio and the Harvard T.H. Chan School of Public Health titled “Life in Rural America.” Those results underscored the loss of jobs and the scourge of addiction. But the researchers also found that rural Americans are largely optimistic about their future, placing their faith in a shared sense of community. I described how that sense of community is expressed in Moorefield, West Virginia.

I strive to take a solutions-oriented approach to my work. I’ve written about the closures, mergers and acquisitions of hospitals and the ripple effects they have on communities. That’s certainly an issue today in Appalachia. In reporting on these transactions, I’ve described how communities have responded – at times, rebelled.

I intend to tell the stories of ground-level, multi-fronted responses to the health care challenges Appalachian communities are experiencing.

The focus outside, and inside, the region, in terms of covering health in Appalachia, is largely focused on the opioid epidemic. In what ways do you hope to shine a new light or further the conversation around this topic?

I refer to my answer to the previous question: solutions. Whenever possible, I intend to report on solutions.

Recently, I attended a listening session hosted by the Appalachian Regional Commission in the small town of Wilkesboro, North Carolina. The objective was to discuss workforce issues related to the opioid epidemic. Participants brainstormed job-placement strategies and how communities can engage substance-abuse treatment programs, recovery initiatives and other services. They shared information on available resources in the community. People had driven up to three hours to attend – health care professionals, business owners, social workers, elected officials, academics, law-enforcement officers and plain-old concerned citizens. It was an impressive display of solution-oriented community resolve.

I’ve reported on naloxone initiatives, needle-exchange programs, law-enforcement assisted diversion programs and health care professionals assisting mother and child in alleviating the effects of neonatal abstinence syndrome, addressing the stigma attached to medical-assisted treatment. I’ve ridden along with a peer support specialist who helps former inmates in recovery and others who assist those exiting the criminal justice system.

I intend to remain attentive to programs focused on the treatment, care and recovery of those with substance-use disorders and on the prevention of addiction, but with an eye toward how we are solving these problems in our communities.

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Distress Grows For Ohio Valley Farmers As Trade Deals Stall

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Barry Alexander with a handful of yellow soybeans. Photo: Liam Niemeyer/Ohio Valley ReSource

This story was originally published by the Ohio Valley ReSource.

West Kentucky Farmer Barry Alexander doesn’t have an answer on when the Trump administration will reach a trade deal with China, now a year into tariffs that have hamstrung some Ohio Valley industries.

Listen to the story from the Ohio Valley ReSource.

Alexander is optimistic these continued negotiations will be worth it, but his plan in the meantime lies in massive, silver storage bins on Cundiff Farms, the 13,000-acre operation he manages.

He pulls a lever, and out tumbles a downpour of pale yellow soybeans.

Video: Liam Niemeyer/Ohio Valley ReSource

“These beans have been in here since Halloween day,” Alexander said. “The large bin on the right, that’s 350,000 bushels. The next-size bins down, that’s 180,000 bushels. To give reference, a thousand bushels is one semi-truck load.”

He’s been trying to hold onto about half of his soybean and corn bushels, waiting to see if he can sell for a better price before he’s forced to start planting again in early April.

Crop prices have crashed partly because of Chinese tariffs, and the losses have put a strain on some farmers he knows.

Barry Alexander, a lifelong west Kentucky farmer, in his small office. Photo: Liam Niemeyer/Ohio Valley ReSource

“There are farmers that have decided to retire because they didn’t want to work through these things now. We’re to that point,” Alexander said.

Alexander said he’s survived in part because his sprawling farm has resources to work with: eight full-time employees, two new $550,000 combines he traded up for, and the storage bins to help ride out bad crop prices.

“Our large structures are not cheap, but financially for our farming operation, they’re a necessity for us to do what we do,” Alexander said.

Farmers like Alexander are coping with losses from tariffs and a continuing trade war, and it’s not clear when it will end. A March 1 deadline for negotiations with China was delayed indefinitely by President Trump, and an agreement with Mexico and Canada that Trump signed in November has yet to be ratified by Congress. The retaliatory tariffs on U.S. crops and dairy remain, compounding problems caused by overproduction and low crop prices, and small farmers are suffering the most.

Massive, steel storage bins, half-full with grain, on Cundiff Farms in west Kentucky. Photo: Liam Niemeyer/Ohio Valley ReSource

Size Matters

“If you look at all the large farmers, these guys have the storage facilities to wait out bad prices,” Kent State University-Tuscarawas Agribusiness Professor Sankalp Sharma said. “For a lot of these small guys…they couldn’t actually store their commodity, they still had to deal with those lower prices.”

Sharma and others argue grain prices have been low for five years because farmers are overproducing, and tariffs are only making the situation worse.

“The United States soybean harvest this year in general was just crazy. There was a bumper crop, and prices were down because of that,” Sharma said. “This was just your classic demand and supply situation.”

Both Ohio and Kentucky set records for soybean harvests in 2018: 289 million bushels and 103 million bushels, respectively. This is up significantly compared to two decades ago, when Ohio harvested 162 million bushels and Kentucky harvested a little over 24 million bushels in 1999.

Farmers are also becoming more efficient than ever before — Ohio set records in 2018 for most corn and soybean bushels produced per acre.

Oversupply problems haven’t been limited to grains, though. Small dairy farmers are also dealing with excess supply and tariffs, with hundreds of cases of extra milk being dumped at Ohio Valley food banks.

Farms At Risk

Greg Gibson’s operation is small, but his family has made it work for decades. He milks 80 cows at his dairy farm in Bruceton Mills, West Virginia, and he took over the operation in 2002. The past year of tariffs hasn’t been easy.

“Everything’s down. Historically, if milk price is down you can sell some corn or you could sell some replacement animals are something,” Gibson said. “But nothing has a lot of value to sell right now, so it’s really hard to generate any additional revenue. And a lot of that is because of the trade problems we’re having.”

Like many Ohio Valley farmers, Gibson is receiving payments from the $12 billion in federal relief from the Market Facilitation Program intended to to help those who suffer losses from tariffs.

Small farms are squeezed by the dairy crisis. Photo: Nicole Erwin/Ohio Valley ReSource

Gibson appreciates Trump’s efforts to renegotiate trade deals, and like Alexander, is cautiously hopeful about the prospects of new trade deals.

But he said he’s also disappointed in Trump because the payments are not nearly enough to recoup his losses. He says milk’s price has plummeted nearly a dollar per hundred pounds of milk sold and the payments only reimburse 12 cents of that.

“I would have rather him said ‘I got to do this. You’re going to take the hit. Sorry.’ Don’t promise me you’re going to take care of me and then don’t,” Gibson said.

Some commodity associations including the National Corn Growers Association and the National Milk Producers Federation have called on the Trump administration in past months to bolster what they call lackluster relief payments.

Gibson’s squeezed budget has had him extend paying off his farm loans and put off paying several repair bills. He’s also had to put up his 150-year-old family farm as collateral for his loans.

Farm lenders say Gibson’s situation isn’t unique right now. Senior Vice President of Agricultural Lending Mark Barker helps oversee lending for Farm Credit Mid-America, which serves most of Ohio and Kentucky.

“Are we doing things differently? Well, sure,” Barker said. “Because we have customers coming in now and telling us ‘I’m struggling at this point. I’m challenged.’”

Barker said while most people are making their loan payments right now, the rapidly increasing amount of debt farmers are taking on to deal with depressed prices is concerning, especially for smaller operations.

“It seems like the larger producers, you think about their equipment and everything else, they’ve got some added advantages,” Barker said. “It doesn’t mean the smaller producer is necessarily ‘out,’ but I do think they got more challenges in this current environment.”

U.S. Department of Agriculture economists predict nationwide farm debt will reach $263.7 billion in 2019, levels of debt not seen since the 1980s farm crisis, when thousands of farm families defaulted on their loans amidst a trade embargo with the Soviet Union and high loan interest rates.

New Farmers

Tom McConnell leads the Small Farm Center at West Virginia University’s Extension Service and tries to help small farms succeed, in a state that has the highest proportion of small farms in the nation. He’s lived through the 1980s farm crisis and saw many dairy and beef farmers lose their farms.

He said one solution for small farmers to withstand these depressed prices is to switch to crops that bring a higher value, like vegetables. But those can be more labor-intensive, and the transition can be difficult.

“If you’ve been in a family that has milked cows or grown row crops for three generations, and I suggest you grow three acres of sweet corn and five acres of snap beans, there will be some resistance to that,” McConnell said.

McConnell said it might take a new generation to redefine what a successful small farmer business model can look like.

One of those younger small farmers is Joseph Monroe, who moved from Indiana to central Kentucky to raise beef cattle and grow tomatoes and greens. Monroe believes a way forward for smaller farms is to find ways to work together to sell products and have a greater market impact.

“I think there needs to be some pioneers and some examples out there of how to draw up a contract to work together,” Monroe said. “I think we need to throw all the darts and see what hits.”Share on Twitter

This story was originally published by the Ohio Valley ReSource.

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Plastics: The New Coal in Appalachia?

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Gas processing plants like this MarkWest plant in Butler County, Pennsylvania, separate natural gas liquids from natural gas. Photo: James Bruggers

With the natural gas fracking boom, plastics production is spreading in the Ohio River Valley. But at what cost to health and climate?

MONACA, Pennsylvania — Along the banks of the Ohio River here, thousands of workers are assembling the region’s first ethane cracker plant. It’s a conspicuous symbol of a petrochemical and plastics future looming across the Appalachian region.

More than 70 construction cranes tower over hundreds of acres where zinc was smelted for nearly a century. In a year or two, Shell Polymers, part of the global energy company Royal Dutch Shell, plans to turn what’s called “wet gas” into plastic pellets that can be used to make a myriad of products, from bottles to car parts.

Two Asian companies could also announce any day that they plan to invest as much as $6 billion in a similar plant in Ohio. There’s a third plastics plant proposed for West Virginia.

With little notice nationally, a new petrochemical and plastics manufacturing hub may be taking shape along 300 miles of the upper reaches of the Ohio River, from outside Pittsburgh southwest to Ohio, West Virginia and Kentucky. It would be fueled by a natural gas boom brought on by more than a decade of hydraulic fracturing, or fracking, a drilling process that has already dramatically altered the nation’s energy landscape—and helped cripple coal.

But there’s a climate price to be paid. Planet-warming greenhouse gas emissions from the Shell plant alone would more or less wipe out all the reductions in carbon dioxide that Pittsburgh, just 25 miles away, is planning to achieve by 2030. Drilling for natural gas leaks methane, a potent climate pollutant; and oil consumption for petrochemicals and plastics may account for half the global growth in petroleum demand between now and 2050.

Map: Ethane Cracker Plants on the Ohio River

Despite the climate and environmental risks, state and business leaders and the Trump administration are promoting plastics and petrochemical development as the next big thing, more than three decades after the region’s steel industry collapsed and as Appalachian coal mining slumps.

“We have been digging our way out of a very deep hole for decades,” said Jack Manning, president and executive director of the Beaver County Chamber of Commerce.

“When Shell came along with a $6-to-$7 billion investment … we were in the right spot at the right time,” he said.

Everyone wants jobs and economic growth, said Cat Lodge, who works with communities in the Ohio River Valley affected by the shale gas industry for the Environmental Integrity Project, a national environmental group. But not everyone wants them to be based on another form of polluting, fossil fuels, she said.

“While the rest of the world is dealing with global warming, Pennsylvania and Ohio and West Virginia are embracing developing plastics, and that just appalls me,” Lodge says. “It’s just not something I see as the future and unfortunately that seems to be the push to make that the future. And that’s upsetting.”

Lodge and her husband moved from Pittsburgh to the countryside 18 years ago in search of fresh air and open land. They have a small farm in a corner of rural western Pennsylvania, where winding roads trace the contours of Appalachian hills and a stark transition fueled by a shale gas boom is underway.

“We still love it, but little by little, and quickly over the last several years, we have become totally surrounded by the oil and gas industry,” she said.

Rising Demand, but Also Pushback on Plastics

The natural gas that’s pulled from deep underground in the Utica and Marcellus shale formations has done more than outcompete coal for electricity generation.

Drilling companies have also extracted a lot of natural gas liquids, particularly ethane, also called wet gas. It’s used to produce ethylene, which then gets turned into plastics, providing an additional revenue stream for the oil and gas industry. It’s the industry’s latest play, and it comes at a time when industry analysts and the federal government say the demand for plastics is skyrocketing.

Illustration: Plastics: From the Gas Plant to Your Home

“These materials are hooked into just about every part of the economy, from housing to electronics to packaging,” said Dave Witte, a senior vice president at IHS Markit, a global data and information service. “Today, the world needs six of these plants to be built every year to keep up with demand growth.”

IHS Markit calls the Appalachian or upper Ohio River region “the Shale Crescent.” Last year, it reported that the region’s gas supplies could support as many as five large cracker plants, like the one Shell is building. The plants “crack” ethane molecules to make ethylene and polyethylene resin pellets and would be in close proximity to a number of manufacturers that use those products to make everything from paints to plastic bags.

Chart: 3 States' Natural Gas Boom

IHS does see some headwinds, including an international backlash against plastics. It published a report last summer that found that worldwide pressure to reduce plastic use and increase recycling was one of the biggest potential disruptors for the plastics industry and was “putting future plastics resin demand and billions of dollars of industry investments at risk.”

The oil and gas industry might find themselves with stranded assets, needing to abandon Ohio River valley communities, said Lisa Graves-Marcucci, a Pennsylvania-based organizer for the Environmental Integrity Project.

“Do they really care,” she asked, “if they can make money for the first 10 years or 20 years of their operation, but then plastic goes away in the world? What happens to the communities that are left behind?”

She said she is also worried about such a major investment in oil and gas as the world grapples with the effects of climate change.

Visions of an Appalachian Plastics Hub

The idea for a plastics hub in Appalachia got a lift in December with a reportto Congress from the U.S. Department of Energy. It described a proposal for the development of regional underground storage of ethane along or underneath the upper Ohio River.

Storage is needed to help provide a steady and reliable stream of ethane to ethane cracking plants, and it would be important for the development of a regional petrochemical complex in the upper Ohio River valley, the report concluded.

Storage is another growing part of the plastics pipeline as natural gas is turned into natural gas liquids and eventually into plastics. Credit: James Bruggers
Storage is another growing part of the plastics pipeline as natural gas is turned into natural gas liquids and eventually into plastics. Credit: James Bruggers

A West Virginia business, Appalachia Development Group LLC, has proposed developing storage for ethane, possibly in mined salt or limestone cavernsdeep underground. It’s in the second phase of an application process for $1.9 billion in loan guarantees from the Department of Energy for the project, according to the department.

“We have sites of interest in Pennsylvania, Ohio and West Virginia,” said Jamie Altman, a representative of Appalachia Development Group. “We are aggressively pursuing private capital.”

The Energy Department is thinking big, too.

Its report projects ethane production in the Appalachian basin would continue rapid growth through 2025 to a total of 640,000 barrels per day, more than 20 times greater than five years ago. By 2050, the agency said ethane production in the region is projected to reach 950,000 barrels per day.

China Energy signed an agreement with West Virginia in 2017 to potentially invest $84 billion in shale gas development and chemical manufacturing projects in the state. Late in January, West Virginia’s development director, Mike Graney, told state senators that China Energy was looking at three undisclosed “energy and petrochemical” projects. An announcement could be made later this year, he said, though President Donald Trump‘s trade war with China was causing delays.

Other experts see a natural gas industry that’s subject to booms and busts and question whether the region is headed down another unsustainable path, like coal.

“We are less optimistic than the industry that this will really boom out,” said Cathy Kunkel, an energy analyst with Institute for Energy Economics and Financial Analysis, an environmental think tank that just published a reportdetailing how the natural gas industry in West Virginia hasn’t lived up to earlier expectations for jobs and tax revenue.

There is a huge amount of international competition for plastic production, she said. “All of the major oil exporting countries in the Middle East are talking about making massive investments in petrochemicals over the next five years or so,” she said. “That contains the risk that you will be exporting into a market that would be oversaturated with products.”

Increasing amounts of plastic waste are ending up in streams and oceans. Credit: Rosemary Calvert via Getty Images
IHS Markit, a global data and information service, published a report last summer that said worldwide pressure to reduce plastic use and increase recycling was one of the biggest potential disruptors for the plastics industry and was “putting future plastics resin demand and billions of dollars of industry investments at risk.” Credit: Rosemary Calvert via Getty Images

The Energy Department report also cited “security and supply diversity” as a benefit of developing a new plastics and petrochemicals hub in Appalachia. The bulk of U.S. plastics and petrochemical plants are currently along the Gulf Coast, where they face supply disruptions caused by hurricanes, it said.

Vivian Stockman, the interim director of the Ohio Valley Environmental Coalition based in West Virginia, called that a “hugely ironic” justification for an Appalachian plastics hub, since science is showing that global warming can intensify hurricanes.

Economic Benefits, with Health Concerns

The Shell plant was lured to Beaver County by Pennsylvania officials with some $1.65 billion in tax incentives. It’s scheduled to open “early next decade,” company spokesman Ray Fisher said. This year, as many as 6,000 construction workers will be working on it, and Shell says it plans 600 permanent jobs to run the plant.

It’s in Potter Township, a community with fewer than 700 residents. Rebecca Matsco, who chairs the township commission that gave Shell the local zoning permits, said she sees the plastics plant as an industrial upgrade from a dirty zinc smelter that had stood on the property for about a century, and that Shell cleaned up.

“It had become a real environmental burden, and we do feel like Shell has been a real partner in lifting that burden,” Matsco said.

Others, however, see the cracker plant as its own environmental burden—a new source of emissions that cause lung-damaging smog and heat the planet.

People in Pittsburgh were sad to see so much of the steel industry go, but they don’t miss the dirty skies, said Graves-Marcucci, an Allegheny County resident. The economic resurgence that followed was centered around health care, academic institutions and cleaner industries, she said.

Pittsburgh has been brushing off its sooty steel city past and is now pledging to slash its carbon emissions. But the Shell cracker plant alone, just 25 miles away, would emit 2.25 million tons of carbon dioxide a year, effectively wiping out nearly all the gains in carbon reduction that Pittsburgh plans to achieve by 2030, said Grant Ervin, Pittsburgh’s chief resilience officer.

The Shell plant will also emit as much smog-forming pollution as 36,000 cars driving 12,000 miles year; that would equate to about a 25 percent increase in the number of cars in Beaver County, said James Fabisiak, an associate professor and director of the Center for Healthy Environments and Communities at the University of Pittsburgh.

The environmental and health threats will only increase with a plastics hub buildout, and no regulators are looking at those potential cumulative impacts, Graves-Marcucci said.

Two More Communities Could Get Cracker Plants

About 70 miles southeast of the Shell plant, another community waits for news about what could be the region’s second major ethane cracker plant, in Belmont County, Ohio.

PTT Global Chemical, based in Thailand, and its Korean partner, Daelim Industrial Co., Ltd., could announce any day whether they intend to proceed with an ethane cracker plant after getting state permits in late December. That plant would be along a section of the Ohio River in Belmont County where hulking old manufacturing plants and shuttered businesses paint the very picture of the nation’s Rust Belt.

Bellaire, Ohio, is a few miles from another proposed cracker plant. Belmont County officials are waiting to hear whether PTT Global Chemical and its partner are going to invest $6 billion to build the facility. Credit: James Bruggers
Bellaire, Ohio, is a few miles from another proposed cracker plant. Belmont County officials are waiting to hear whether PTT Global Chemical, based in Thailand, and its Korean partner are going to invest $6 billion to build the facility. Credit: James Bruggers

“Do you know what the biggest export is from Belmont County? Our youth,” said Larry Merry, an economic development officer with the Belmont County Port Authority, overlooking the Ohio River bottomlands where the cracker plant would be constructed on the cleared-away site of a former coal-fired power plant.

Merry, who has been working to secure the plastics plant, called the oil and gas industry “a great employer for us that’s provided a lot of investment that’s helped.”

But it’s not fully made up for losses in steel and coal, and this cracker plant “is about jobs and opportunities so people can make the most of their lives,” he said.

He brushed aside any concerns about climate change or too much plastics. “How are we going to live and have products? Until you come up with a solution, don’t expect the world to shut down,” he said.

A spokesman for PTT American said he could not say when an investment decision will be made.

A third potential cracker plant is planned for Wood County, West Virginia, but it has been delayed because of unspecified “challenges” with its parent company, the Department of Energy report said.

“It just blows my mind that there could be three or four cracker plants, or even one,” said Steve White, a western Pennsylvania builder. “That’s some serious investment. It just shows you where everything is headed and how much development is coming.”

White is also a pilot, and he said he has observed from the cabin of a Cessna 3,000 feet aloft the spread of oil wells, pipelines and processing plants across shale drilling zones in Pennsylvania, Ohio and West Virginia, slicing up farms and encroaching on homes, schools and businesses.

“We are just in the way,” he said.

This article was originally published by Inside Climate News.

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