By Brendan Doherty

APRIL 27, 1998: 

Intel Says it Puts a Lot Into New Mexico's Economy--But What is it Putting Into Our Environment?

Acetone removes paint from surfaces. Like mineral spirits and gasoline, it is a solvent capable of unlocking the chemical bonds that hold varnishes, finishes and plastics together. It is called a volatile organic compound, and it is flammable. It takes green nail polish off in a breeze. And, on a not-so-breezy day, acetone and any number of 50 other solvents, along with 48 acids, are put into the air over Rio Rancho and Corrales courtesy of the Intel plant.

Intel is applying for a "minor source" of air emissions permit. The minor source status would exempt Intel, already exempted from a number of taxes, from paying levees on its pollutants. The recent exclusion of acetone from the pollutant calculations enables Intel, currently permitted to release more than 300 tons of volatile organic compounds into the air yearly, to calculate itself putting out closer to 50 to 100 tons yearly. It was an exclusion that Intel lobbied heavily in Congress to achieve. The difference in the permit is immense, and the responsibilities for Intel would significantly decrease. The application is three and a half years in the making, being written by employees at the New Mexico state environment department. It is a process that is coming toward its end.

"The minor source permit is not quite done, but I'll be sure to let you know when it lands," says Intel spokesperson Terry McDermott. "This thing has been going on for a long time, and so it takes a long time for it to be finished."

It is the latest in a string of enormous breaks the chip maker has been given by the state government. In the world of private-public partnerships, Intel is playing with the store's money. Intel made news all across the country when it received a record $8 billion Industrial Revenue Bond (IRB) from Sandoval County in September of 1995. It was the largest bond of its kind in the history of the United States for a company whose revenues last year exceeded $1.5 billion. Intel received a number of tax breaks in the deal (see sidebar). To manage such, Intel played states against each other. Competing for the expansion with IRBs of their own were Arizona, Oregon and California.

New Mexico was quick to calculate some of the monetary benefits but didn't bother to figure out how much the added burdens on schools, city services and utilities would cost. Intel didn't bother to help the governmental entities struggling with a problem on a scale they hadn't ever faced before.

"I frankly don't understand present value money calculations," said one of the writers of the state's fiscal report, which influenced the vote. The county overestimated benefits and double-counted the state income tax that employees paid to the state as yet another tax benefit, an illegal multimillion dollar mistake. An outside party pointed out the mistake before any legal action was taken.

Not long after, Manny Aragon, state Senate president pro tem, admitted that the calculations were faulty and that the state, counties and cities around the plant would have to pay for utility hook-ups and a number of secondary infrastructure roads around the plant due to increased traffic. Illustrating the influence of Intel contracts and the highly prized Intel salary, Bill Garcia of the state's Economic Development Division prepped the Intel deal and then became an Intel employee, lobbying the same agencies he once worked for.

For a state 47th in the United States in per capita income, New Mexico did everything but build Intel for itself. Depending on who's talking, Intel is the state's great hope of jobs and preventer of social ills, or it's the loathed destroyer of the rural beauty of the Village of Corrales, the industrial drinker of precious water and polluter. The semiconductor plant in Rio Rancho is the world's largest plant of its kind, using 4 million gallons of water a day, building approximately 3 million chips per year, employing more than 5,500 people and sub-contracting even more to fill the volatile and fast-moving world computer market.

"What's happening here is we are subsidizing the most profitable company in the world," says Eric Schmeeder, economist for the Southwest Organizing Project (SWOP), an independent watchdog group that keeps files on Intel's every move. Schmeeder has openly challenged Intel in several published books that criticize the company's economic and environmental assertions, point for point. "Their impacts are costing our government. The growth and the other costs of those expansions are costing us. They staff their positions with people the state has paid to train. They want the best deal, but I think even Intel would have to be embarrassed that they have a negative impact on our government," Schmeeder says. "We just can't keep getting our businesses deals like this and have our communities prosper. The businesses that come here solely for tax breaks are gone when they dry up." He cites Intuit and others that have received IRBs in New Mexico with city or state incentives, only to leave.

"Incentives weren't invented for us," says Intel spokesperson Richard Draper. "We are also the largest single corporate taxpayer in the state. We put computers in a Corrales community center that came from Intel money, and we donated $400,000 to the N.M. state road 528 upgrade. We are a good neighbor, and we want to stay."

The plant used the money saved from IRBs to remodel its Fab 11 photographic silicon chip processing units, which need expensive retooling for new products roughly every 18 months, according to Intel. It's a very capital intensive process, and products that are viable today are designed to be entirely obsolete within 10 years. The process, which involves using gold-coated silicon wafer chips, uses principles of photolithography. The chips are exposed to light-sensitive acids that chew their way through the metals creating tiny wires and resistors only a few microns thick, mere fractions of the size of a human hair. They are filled with transistors and resistors, and their size makes personal computing, cell phones and other "flash" memory products possible.

Their process is water-intensive, and the remaining volatile organic compounds are burned in oxidizers. But the process puts chemicals out into the air that are causing problems with people in the immediate vicinity--annoying odor, headaches, rashes and, consequently, difficulty selling homes. Larger fears persist about the company's heavy use of the shared water table, fueled by Intel's past record of contributing pollution to three Superfund waste-dumping sites in California and another in Arizona.

In Corrales, which is downwind from the Intel plant, many would consider the chip plant to be anything but minor when it comes to effluents.

"A minor source permit is ridiculous. It just shows how New Mexico is a colony for Intel. They treat us like the Third World," says Barbara Rockwell, former director of Corrales Residents for Clean Air and Water (CRCAW), a group that has successfully fought Intel, forcing them to spend hundreds of thousands of dollars on new oxidizer scrubbers. Rockwell herself grew tired of the smells coming from the plant into her garden--and the stonewalling she was getting from Intel--and chose instead to move to Placitas. She has not lost her dislike for Intel.

"Acetone is not a benign solvent, and it has substantial impacts. For them to get that taken off of the list in Washington shows just how much clout they have there. They have been met by an understaffed Economic and Environmental Department in the state, and those people there don't know how to deal with something as big and powerful as Intel. Most people don't care if the fumes aren't in their yard, but the water issue? That's everyone's problem."

Rockwell was one of several people who stepped up and challenged Intel. She knows people who got rashes, headaches and worsening health as a result of the solvents and acids being pumped into the air. Rockwell and others in CRCAW have seen real drops in the amount of effluents and water discharge, but the problem remains very real. The years of '94-'96, before the big scrubbers, exposed people to plenty, giving them a healthy fear of Intel.

"My son has seizures, and he has lost his vision," says Corrales resident Carol Merrill. "My mother is losing her memory. I called Mr. Westmoreland of the plant and complained of the smell, and he said, 'You're smelling the water works in Rio Rancho.' It turned out that there had been a spill, and they had evacuated Fab 9. I'm not sure I can attribute their health problems to Intel, but my son might be a canary in a coal mine--a barometer as to whether or not Intel is doing their job. The story is that we are trading health for jobs."

"Periodically, the house would fill up with fumes from Intel," says Sue Hettmansperger, another in the CRCAW group. "One time, I got up at 3 a.m. to find out where they were from. I saw which way the wind was blowing. I'm northeast of them, only a mile away. It smelled like solvents. I know what solvents smell like; I'm an artist. I have a low threshold for this. It smelled like lacquer thinner. They used large amounts of acetone, and the smells would wake you up at night, giving you a headache. They have become better, but long term? This is a farming community. What if this stuff gets in the farming system? I think you're going to see higher rates of cancer as a result of that plant."

The distrust of Intel continues. Despite years of hearings with the community and its leaders, however, there is no evacuation plan for the plant and no method to warn nearby residents of spills or accidents.

"You have a company that big, and with that big a stake, it's hard to get the truth," says Jeff Radford, editor of the Corrales Comment, a newspaper that has kept its eye on the community for years. "When people started having problems, the environment department contended that there was no odor. They contended there was none, but there was definitely a problem. Our concern isn't odors, but the things that you don't smell. Over the years I have come to realize that officials say they can't smell things. Maybe they're right. Maybe they have become so inured to the smell; maybe they're right. They have to smell it all day long every day."

But the plant is no coal-burning smelter. All things considered, there are many away from the winds near Intel who think of chip-making as a clean industry. Among them: gubernatorial candidate and former Albuquerque mayor Martin Chavez, former Rio Rancho mayor Tom Swisstack and Gov. Gary Johnson (whose firm, Big J Construction, was involved heavily in the building of Fab 11). All of them are happy for the economic boom that the jobs have created. Chavez discredits SWOP and claims that the industry is clean and that Intel has done everything that they said they would.

"We've done a lot about the complaints we've received," says Intel's Richard Draper. "I think with some of these people, their problem is that we exist."

"I wouldn't be concerned from a health standpoint (with) living nearby, based on the information that I have," says Lovelace Respiratory Research Scientist Joe Mauderly. Mauderly wrote the advisory report to Intel based on the chemicals they reportedly used in a 1995-96 independent panel. The report evaluated wind scenarios, worst-case explosions and highly unlikely chemical combinations and their release on the public in several conditions. "Some people just freak out when they hear the word 'chemical.' You could have a 55-gallon drum of acetone open in your yard, and I don't think you'd smell it. Science has little to say about headaches and problems from perceived smells. Odor nuisances are out of the scientific realm. I don't live up there, actually. I live in the Heights. I think, however, based on the information that they gave me, I would be more concerned with driving on Montgomery Boulevard on Friday night than living very near Intel."

Intel's Tax Breaks

Property Tax Breaks: $441 million over 30 years from Sandoval County

Sales Tax Breaks: $70 million over five years from the state

Investment State Tax Credit: $55 million over three years, 1995-1998

Employee Training Funds: $2 million over two years from the state coffers

Corporate Income Tax Breaks: Unknown

Total Tax Breaks: Not counting corporate income tax breaks, $568 million over 30 years in raw dollars and $289 million over 30 years in dollars discounted to reflect inflation

Sources: 1993 Industrial Revenue Bond, The Albuquerque Tribune

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