LOS ANGELES (Reuters) - A 15-year tax break that
secured Intel Corp.'s ongoing investment in the state of New Mexico
has rekindled a heated debate over the ability of a poor U.S. state to
regulate the world's largest chip maker.
Critics charge that New Mexico, which in
September granted Intel a landmark $2 billion tax concession, has
jeopardized public health in order to keep its largest private
industrial employer from leaving. They also question whether the state
can stand up to a company so important to its economy.
"They've got to keep Intel happy,"
said Jim Shively, a retired 22-year veteran of New Mexico's
environmental agency who oversaw, and opposed, Intel's most recent
application for an emissions permit for its plants. Intel, he said,
has "just got a stranglehold on the agency."
Intel's two New Mexico factories on a bluff
outside of Albuquerque are some of the most advanced semiconductor
plants in the world, producing Pentium chips that power most personal
computers. Like all such plants, they also produce noxious chemicals
that must be filtered out of exhaust fumes.
Some residents of Corrales, which sits on a
valley below the factories, complain that emissions equipment failures
send fumes wafting over their homes, causing headaches and rashes.
At the same time, officials call Intel an
economic foundation of the state, whose per-capita income is the
"If we don't act as a partner with Intel,
and if we don't help to make them competitive and they decide to take
these 5,300 jobs to another part of the world, the economy of New
Mexico would be devastated," said Rick Homans, New Mexico's
secretary of economic development.
New Mexico Environment Department Secretary Ron
Curry acknowledged that regulating big industries was a challenge. But
he said Intel is a minor emissions source and its violations have
mostly been paperwork mistakes. The department has studied Intel's
plants more than any others, he said.
"There could be an argument that they're
almost over-regulated," he said.
FUMES AND CITATIONS
Since 2002, the state has cited Intel for at
least 11 violations of wastewater and air emissions equipment rules,
according to state and company records. In each case, the state
accepted Intel's proposals to alter training and procedures, and
levied no fines.
"The state environment department strikes
no fear in Intel," said Robby Rodriguez, an organizer with the
SouthWest Organizing Project, an Albuquerque-based activist group.
The terms of Intel's state-issued air permit
leave regulators heavily reliant on Intel's own calculations, said
Shively, the retired environment department manager. He said Intel
repeatedly rejected his proposals for a stronger permit, and
eventually got its way after appealing to higher-ups.
Intel spokesman Chuck Mulloy said the permit has
passed rigorous reviews by the government and courts. He also said
Corrales residents' complaints were investigated by a state task force
for nearly two years, and no evidence supporting the claims was found.
But for many in Corrales those conclusions
"didn't settle anything," said Gary Kanin, the town's mayor.
Even before the task force concluded its work in
June, Intel approached county officials about a new tax break, said
Daymon Ely, the outgoing Sandoval County Commission chairman who
brokered the deal. Only during tax negotiations did Intel say it would
install $7 million worth of backup emissions control equipment, he
said, addressing years-old complaints.
Mulloy said that decision was not part of any
quid-pro-quo with the state, and had been drawn up in late 2003.
The $214-billion semiconductor industry has
faced complaints for decades about air and groundwater pollution.
California's Silicon Valley is dotted with toxic cleanup sites
formerly owned by electronics companies.
At the same time, the economic importance of the
industry to small towns like Rio Rancho, New Mexico and Chandler,
Arizona -- where Intel has facilities -- keeps states playing off one
another to attract investment.
In September, county officials, supported by the
governor's office, signed the tax incentive package, a $16 billion
industrial revenue bond that allows Intel to invest in Sandoval county
and avoid certain taxes. The deal saves Intel about $2 billion in
taxes, said Ely, the county commissioner.
In return, the county gets up to $95 million for
badly needed public works projects, he said.
Shively, the retired manager, said the state
remains afraid to go after the chip maker, a charge the department
denies. "They were known as that big, bad ugly animal up on the
hill and they didn't want to stir them up," he said.