Crony Capitalism Times Three Comes to Wise County

by Lewis Loflin

contact Wise Co IDA

Virginia Lieutenant Governor Bolling along with local economic development hacks are having a pork party in Wise County. Republicans scream about government waste with President Obama and his failed stimulus plan. They call it waste, but do the very same thing.

The first serving of public largess goes to something called NanoQuantics, Inc. riding the wave of pork-barrel energy research. Yet the goal of both the Virginia Tobacco Commission and VCEDA was to diversify the economy away from coal, a goal they have totally failed at. NanoQuantics is the first company to establish operations in the so-called Appalachia America Energy Research Center.

VCEDA approved $505,000 in funding to the Wise County IDA for equipment for NanoQuantics and $2 million for the development of the research center. The Virginia Tobacco Commission also provided $5 million in funding for the development of the AAERC.

What the hell does NanoQuantics, Inc. have in this? $7.5 million in free taxpayer handouts? Their mission statement is the typical vague green hype:

Our mission is to create and use advanced materials that will reduce the environmental and economic burden of energy production through the development of green, high yield, and sustainable advanced materials. Our products will improve and strengthen the ability for our Nation to compete and produce clean energy as well as other products and services that create value to our clients. Our synthetically produced, naturally occurring materials offer excellent remediation solutions. Our materials are cost-effective, easy to maintain, and eco-friendly.

So why isn't the private sector buying into this nonsense? Why isn't the private sector seeking their "proprietary and sustainable technologies"? How much will this cost to remove sulfur from coal using this "technology"? They "anticipate" 25 jobs with Phase I, with potential for 81. Is the public allowed to monitor this? NanoQuantics is owned by Blacksburg, Va.-based parent company UXB International. According to their website, they are a military contractor. The NanoQuantics website is at

The next example of crony capitalism is Carbonite Corp. of Virginia and they will locate in Blackwood between Norton and Appalachia in Wise County. This is supposed to produce some form of eco-friendly coke used in steel making. The only problem is the US no longer makes much steel. They claim it's "an interim step between coal and coke."

The company gets around the EPA on a technicality: "a key difference for the carbonite plant, which is being created in the old Pace Carbon Fuels building outside Norton, is that it's not classified as a coke oven battery. Instead, it's classified as a coal conversion plant. From a regulatory standpoint...he difference is night and day."

The process mixes coal with "biomass" materials and heats it to 1200 degrees Fahrenheit in the absence of oxygen burning off the mercury they claim. A ton of coal can be converted 70 percent into carbonite, and generate one barrel of coal oil liquids. If it's such a wonderful technology and it seems to be a simple process, then why is nobody already using it? That is going to be lot of energy to process and that cost has been a stumbling block all along.

What makes them think the EPA won't catch on to this? What about the toxic waste such as mercury? If this product is going to depend on government money and government regulations to be profitable, nobody can tell what will happen.

Number three in a our crony capitalism Trio is Lonesome Pine Components that will make "cabinet doors and related wood products." They "anticipate" 25 jobs by year's end, with potential for 150. they got $645,000 in corporate welfare from the Virginia Coalfield Economic Development Authority. (VCEDA) Was this a loan or cash gift?

This company is doing the very same thing in the same location as near as I can tell as the failed Pinnacle Wood Products. Gov. Tim Kaine announced in 2007 Pinnacle Wood Products of Virginia, Inc. will open a products manufacturing operation in Wise County. He says the plant, a $1.4 million investment, will bring 200 new jobs to Southwest Virginia.

April 19, 2010. According to a document obtained under the Freedom of Information Act the Wise County Virginia IDA has released the following statement in regards to Pinnacle Wood Products from Karen Mullins the IDA Attorney: "There were no incentive agreements with Pinnacle. There are presently five (5) employees and the status of the loan from VCEDA to the IDA is past due." That $1.4 million "investment" never panned out, so why should a new company doing the very same thing do any better? So much for those 200 new jobs.

See Pinnacle Wood Products Follies in Wise County.

So let me understand what is going on here. These economic development agencies stated mission was to diversify the region's economy away from mineral extraction, timber, and tobacco. Except for tobacco, they are promoting those very same industries. Government, you just can't fix stupid.

Ranked near the bottom for healthcare, again

As for the healthcare that the tens of millions in Tobacco grants was supposed to go for before they got diverted to pork barrel waste, the Bristol Herald Courier reports (March 31, 2011),

Six Southwest Virginia counties rank among the state's 10 worst localities in terms of their residents' longevity and overall physical and mental health, according to a report released Wednesday by the Robert Wood Johnson Foundation...

According to this year's health rankings report, Russell County ranked 123rd out of the state's 137 counties, Tazewell County ranked 124th, Lee County ranked 125th, Wise County ranked 126th, Dickenson County ranked 127th, and Buchanan County ranked 130th.

This is nothing new as the region has been ranked in the bottom 10% in the nation for years. Perhaps a billion dollars in economic development have produced little return for the average citizen. It does fund a lucrative industry in grant farming for non-profits, consultants, developers, and government hacks.