The GlobalFoundries Deal Is Bad, But Maybe Not Quite Terrible

Had a polite conversation (well, it was testy at first) with someone in the Scott administration who’s involved in the talks with GlobalFoundries over its desire to create its own utility exempt from laws and regulations that apply to all other utilities. As a reminder, the Scott administration and GF have signed a Letter of Intent en route to a formal agreement that would allow GF to have its way.

I came away from the chat with a bit more perspective, but my fundamental belief remains: This is a case of government bowing to the demands of an employer that’s too big to deny.

I’m not naming the official because our chat was off the record, and also because this post reflects my own view of the situation and not theirs.

First, a significant correction. I wrote that the Global Warming Solutions Act set a greenhouse gas emission baseline of 1990 while the LOI uses 2005, when emissions were at their peak. In fact, the GWSA also uses 2005 as its baseline for the 2025 target. 1990 applies for other, later targets.

So in the LOI, GF is agreeing to abide by the 2025 emissions target in the Global Warming Solutions Act. But three things are still true: First, GF’s current emissions are only a tick higher than the 2025 target so the company won’t have to do much at all. Second, the letter is riddled with exceptions and exemptions that would allow GF to exceed the target. Third, the LOI would allow GF to exceed its target under a variety of circumstances.

But there is one line in the LOI that leaves the door open for further state action.

It’s the very last line in the document. It says, “Parties reserve rights regarding current or future rulemaking authority.” So the state could, conceivably, impose tougher restrictions on GF. I think that’s a “snowball’s chance in hell” situation because GF is such a big employer, but it is possible.

That sentence cuts the other way, of course. It also reserves GF’s rights regarding rulemaking authority.

The official I talked to insisted that the administration is committed to making GF abide by the GWSA. That may be the case, but (a) as noted above, that’s hardly a tough task for GF, and (b) the agreement ends at the end of 2025. It says nothing about 2030 or later targets — and those will be much tougher for GF to achieve.

Finally, opponents of the deal have argued that there’s nothing in state law that allows for the kind of in-house utility that GF wants. But this seems to go the other way, too — there’s nothing in the law to forbid such an entity. If so, GF wouldn’t have to seek state permission to take its electricity business in-house; it could simply cut the cord with Green Mountain Power and start buying its power on the wholesale market. Therefore, anything the state gets out of the deal is a bonus.

Which makes it seem as if GF is conducting these negotiations out of the goodness of its own heart, which I personally doubt.

This underscores the need for clarity in the law, which would be a job for the Legislature in its 2022 session. Of course, if GF and the administration have their way, the deal will be signed, sealed and delivered by then.

Conclusion, I still think this deal is going to be bad for the state and for our chances of reaching the GWSA goals. But this may be a case where the state doesn’t have a lot of bargaining power. A one-sided deal like this may be about the best that could be achieved. And that means that something is fundamentally out of whack in the state’s (and the nation’s) power structure.

Now, would a hypothetical Democratic governor would try harder than the Scott administration? One would think so, but then the Democratic heartland of Chittenden County relies heavily on all those good-paying manufacturing jobs. How many lawmakers from that county would go to the mat against GlobalFoundries?

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