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Detroit automakers were caught flat-footed last year as new car sales stalled, leaving dealer lots overcrowded and manufacturing plants idle. Now it appears Washington policymakers are at risk of falling victim to overly optimistic sales forecasts.
The White House finalized new auto fuel economy standards late last month that assume annual new car sales will rebound to levels unseen in the past two years, and will do so in as little as 18 months.
Likewise, congressional lawmakers pushing for more flex-fuel vehicles -- cars and trucks capable of running on high blends of ethanol and gasoline -- may watch the effects of the proposed legislation fall flat as a result of the significant drop in the sale of new vehicles that is dragging down the cash-strapped industry.
New cars and trucks rolled off dealers' lots last month at a seasonally adjusted annual rate, or SAAR, of 9.86 million units, according to the sales-tracking firm Autodata. That number represented a slight uptick from the previous two months but was still nearly 500,000 units below last December's lackluster SAAR and 3.4 million less than last year's U.S. sales total.
Last week, as President Obama announced the latest government steps aimed at shepherding General Motors Corp. and Chrysler LLC back toward profitability, he pointed to the historic downturn in sales as one of several factors dragging down the industry. "We must also recognize that the difficulties facing this industry are due in no small part to the weaknesses in our economy as a whole," the president said as he signaled his support for new federal efforts to boost auto sales.
Only three days earlier, the Transportation Department finalized new corporate average fuel economy, or CAFE, standards that are based on government estimates that the total number of passenger cars and light trucks likely to be sold during model year 2011 through 2015 would be roughly 83 million, or more than 16.5 million cars and trucks annually (Greenwire, March 27).
Those numbers exceed many industry predictions. Analysts at IHS Global Insight and J.D. Power & Associates do not expect U.S. annual sales to reach 16.5 million until 2013, and a third firm, Detroit-based CSM Worldwide, does not expect the sales total to reach DOT's estimates at any point during the five-year window.
"In that time frame, our expectations peak at a level just surpassing the 16 million threshold," said Joe Barker, a senior sales forecaster at CSM Worldwide. "There are going to be a lot of headwinds facing the industry."
He said that the auto industry will not rebound until after the housing and credit markets do. "Until then, we will likely not see sustainable growth in the auto industry," Barker said.
But with model year 2011 autos expected to arrive in dealer showrooms in late 2010, DOT is giving the new car market about a year and a half to rebound from its current rate of less than 10 million units per year to more than 16 million. If the model year 2011 rebounds to only the 2008 level of 13.2 million, the following three years would need to average 17.4 million units each year.
For comparison, the industry sold roughly 17 million units annually from 1999 to 2006, and 17.4 million light units in a single year is the U.S. high-water mark, set in 2000.
While accurately predicting the future when it comes to the new car market will be integral to the Obama administration's efforts to restructure GM and Chrysler, it will also play a role in accurately forecasting the environmental and energy gains from federal policies aimed at curbing fuel consumption and greenhouse gas emissions.
For example, in issuing the CAFE rule, DOT estimated it would save 887 million gallons of fuel and reduce carbon dioxide emissions by 8.3 million metric tons. But if sales stay at more than a third below the level predicted by DOT, the actual gains would likely fall well short of what the agency is predicting will result from the 8 percent bump in fuel economy.
Likewise, congressional efforts to create a federal mandate to require a fixed percentage of each carmakers' fleet to be flex-fuel capable would have significantly less impact on spurring demand for ethanol and other alternative fuels if car sales remain weak.
There have been several different proposals floated in both the House and the Senate in the past year, but, generally speaking, the mandates would require half of new fleets to be flex-fuel capable by 2012, with the percentage climbing in subsequent years.
Based on sales rates observed earlier this decade, the 50-percent mandate would put roughly 8.5 million new flex-fuel cars and trucks on the road in 2012, more than doubling the current number of flex-fuel vehicles in the United States. But at the current sales rate, the number of new flex-fuel cars and trucks would fall below 5 million in 2012.
Supporters of flex-fuel mandates argue that the technology is relatively inexpensive to add to fleet offerings and that an increase in the number of flex-fuel vehicles on the road will create the market incentives needed to spur growth of alternative fuel production and distribution, helping to break the nation's dependence on foreign oil.
But E85, the most common form of flex fuel in the United States, can currently be found at only 1,600 filling stations and is not available in five states, according to the Energy Department, leaving a lot of ground to cover for the nation to reach a congressional mandate to expand overall biofuel use to 36 billion gallons annually by 2022.
In the CAFE rulemaking, DOT acknowledged that current sales were well below the agency's sales forecasts but said the sales slump was only an aspect of the current economy, much like the current gasoline prices, and not a long-term indicator of the prospect for U.S. car sales. "Just as the agency currently expects fuel prices to return to high levels, it expects vehicles sales to rise well above today's rate," the agency wrote.
But Steven Rattner, the former Wall Street financier who is leading Obama's auto task force charged with restructuring the domestic industry, has criticized GM and Chrysler for basing their restructuring plans on overly optimistic sales rates. In plans submitted to Treasury in February, GM forecast 14.3 million new cars and trucks to be sold in the United States in 2011 and did not predict the total to exceed the 16.5 million mark until 2014.
Rattner has said that prior to the downturn, the industry was experiencing a car bubble -- not unlike the housing and credit bubbles -- and cautioned that sales would not necessarily return to the levels the industry had grown accustomed to. Even once credit markets begin to thaw, consumers and lenders will likely be more cautious, with the current economic turmoil fresh in their minds.
"You had a huge number of cars being sold, so I don't think it is prudent to assume the sale levels are going to go back to those levels," Rattner said in an interview with the Washington Post last month.
The CAFE rule, which governs model year 2011 autos, was based on the "best internally consistent information available," according to the National Highway Traffic Safety Administration. The agency will update the forecasts in future rulemakings and said the follow-on rulemaking for model years 2012 and beyond will be set only after a host of new information and methodology is considered, things it said were not possible to consider for the 2011 rule because of the requirement that the standard be set 18 months before the vehicles affected by it are due in dealer showrooms.
The rule says that it is "reasonable to anticipate" that the new analyses may lead to changes and that ongoing review will include many new concerns, including both the "financial health of the industry" and the nation's "energy and climate change needs."
Both the White House and Congress have made it a priority to boost sales, largely as a way to boost revenues at Detroit's Big Three to help the carmakers stay afloat and prevent the failure of one from dragging down the industry's vast network of suppliers.
In the $787 billion stimulus package, lawmakers provided tax breaks for the purchase of new cars and trucks -- allowing consumers to deduct sales and excise taxes from their purchases -- and provided additional incentives for the purchase of plug-in hybrid and electric autos.
Obama also has requested that lawmakers review the stimulus to find federal cash to fund a scrappage plan -- often called a "cash for clunkers" program -- that would allow consumers to trade in an old, gas-guzzling car for a new, more fuel-efficient one. It is a move supporters say will boost auto sales while speeding up the market penetration of advanced, fuel-saving technology.
"In the short term, the incentives that are currently in place will do very little to prop up auto sales," CSM's Barker said. "But what is currently under consideration, a national scrappage program, is something that we think will have an immediate impact on auto sales."
The modernization programs have been used in a handful of European nations to bolster sagging new car sales. In Germany, February sales jumped by more than 20 percent after the country offered car buyers roughly $3,000 in rebates.
The concept behind the program was considered by lawmakers last summer during the run-up in fuel prices that left Congress searching for ways to boost domestic energy production while curbing fuel consumption. The programs again received attention late last year as the new car sales slide continued and lawmakers looked for ways to entice Americans to buy more cars to help prop up the ailing industry.
The value of the vouchers would range from $2,500 to $5,000, depending on the specific program and the model years of the trade-in and replacement vehicles.
Ford Motor Co. has estimated that such a scrappage program could result in an additional 500,000 cars and trucks being sold in 2009, while GM has predicted the bill could generate as many as 2 million additional units.
Other analysts have taken a more conservative approach.
IHS Global Insight predicted sales rates will remain stagnant at roughly 9.5 million for the rest of the year. Its analysts wrote in a note to investors that while they had considered the impact of new federal incentives such as the scrappage program, they were "giving more weight to the ongoing economic recession and the still-oppressive effects of dismally low consumer confidence levels on new car sales this year."
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Several legislatures of states with nuclear power plants are considering stopping or reducing payments to the federal government for nuclear waste management until the proposed Yucca Mountain, Nev., repository opens or another solution to the waste problem emerges.
Since the February release of President Obama's budget blueprint, which signaled the likely demise of the Yucca Mountain plan, pro-nuclear lawmakers in Congress have grumbled about the uncertainty such a move would bring. Sen. John McCain (R-Ariz.), for one, threatened to promote a measure to return waste-removal fees paid by electric ratepayers.
But at least four states are trying now to take matters into their own hands.
Maine lawmakers passed a resolution yesterday asking the federal government to immediately reduce fees paid by electricity customers for managing spent nuclear fuel. The resolution also urges the expedited establishment of two federally licensed interim storage facilities that would take possession of the waste and create an independent panel to assess the long-term prospects for handling military and civilian nuclear wastes.
Since 1982, U.S. nuclear-power ratepayers have paid a tenth of a cent per kilowatt-hour into a federal fund that now holds about $30 billion. The fund can be used only to build the repository.
The Department of Energy has spent about $13.5 billion on the Yucca Mountain project since 1983 and had contracted with utilities to begin taking spent fuel in 1998. The partial breach of contracts leaves DOE liable for about $11 billion based on plans for the repository opening in 2020. That liability would escalate for each year the waste is not removed from nuclear plant sites, DOE says.
So far, Maine has paid $65.5 million of its $185 million obligation for its only nuclear plant, the Yankee Nuclear Power Station, which the state closed in 1997. There are currently 64 casks of used nuclear fuel on the decommissioned site awaiting disposal, says the Nuclear Energy Institute (NEI), the nuclear industry's policy arm.
NEI said Maine's frustration may be just the beginning of a national revolt.
"We were pleased to see this resolution adopted by the Maine Legislature. It clearly recognizes the important issues now facing the country in light of the situation with the Yucca Mountain repository," said John Keeley, an NEI spokesman.
"We hope Maine calling for a reduction of the waste fee and movement on interim storage will incentivize the administration and Congress to take up those issues," he said. "It's easy to understand the frustration that led to this resolution."
Other states, which are obligated to pay much more than Maine, are considering even stronger measures to pressure the Obama administration and Congress. There are about 55,000 tons of civilian high-level waste in more than 120 locations in 39 states waiting for disposal.
Minnesota state Rep. Joe Atkins introduced legislation that would hold Minnesota waste-fee payments -- about $13 million per year -- in escrow until DOE "can show that a federal repository is operating and currently accepting such material." Minnesota has paid about $659 million, including interest, into the fund.
Atkins' proposal has passed the energy committee and is awaiting consideration by the state House of Representatives.
Atkins wants all lawmakers in nuclear states and the National Conference of State Legislatures to support similar measures. "If enough states follow suit, we might finally get an answer on Yucca Mountain -- moving 55,000 tons of nuclear waste to a safe and permanent storage place we've been waiting on for decades," he said in a statement.
The Michigan Senate also has a bill that would establish a nuclear waste escrow account. The state Senate has another resolution urging DOE and the Nuclear Regulatory Commission "to do everything necessary to allow the Yucca Mountain repository to begin accepting high-level nuclear waste." Michigan has paid $656 million into the waste fund.
"The construction of new nuclear power plants, which are needed to provide clean and reliable baseload power, is being hampered by the unresolved issue of spent nuclear fuel," the Michigan bill, S.R. 9, says. "In order to realize the many benefits of nuclear power, the nation must address the issue of high-level nuclear waste."
A proposed South Carolina resolution, meanwhile, supports the qualification of a repository at Yucca Mountain.
South Carolina currently holds commercial waste and defense high-level waste at the Savannah River Site -- a DOE laboratory specializing in the nuclear fuel cycle -- and the Mixed Oxide Fuel Fabrication Plant is being built there. The state could be a prime candidate for an interim or long-term repository if Yucca is abandoned.
The Treasury Department's new energy and environment office will play a critical role in designing the auction scheme for federal greenhouse gas emission allowances in any climate regulation, according to the office's chief.
William Pizer, Treasury's deputy assistant secretary for energy and environment, told a carbon market conference in Washington, D.C., yesterday that his team is trying to learn from mistakes made in the European Union's bold launch of its Emission Trading Scheme.
While the European Union should be credited for taking the initiative and for making adjustments and enhancements, Pizer said, crafters of the trading scheme should have thought "a little bit more about design."
At the start of the E.U. program, Brussels grossly overallocated credits to polluters, causing the price of emission allowances to plunge to almost zero before tighter allocations and auctioning of pollution permits were phased in.
"Thinking about how you create a system that's pretty stable and resilient early is important," Pizer said.
President Obama, meanwhile, has proposed auctioning 100 percent of U.S. carbon emission allowances, a sale that is projected to net the government about $150 billion over 10 years.
Treasury's job will be crafting an auction system for industrial emissions of carbon dioxide, methane and other potent greenhouse gases, Pizer said. That means planning the sequencing of a series of auctions similar to the periodic auctions conducted by the Northeastern states' Regional Greenhouse Gas Initiative, or RGGI.
Pizer defended the administration's plans to use the revenue from the proposed allowance programs to help fund tax cuts and social programs alongside energy enhancement initiatives. That stands in contrast to the RGGI system, where auction revenue is supposed to be earmarked for energy efficiency enhancements and the development of alternative energy sources.
The administration's goal, Pizer said, is to help people who bear the cost of climate regulations, "namely, consumers at the end of the day and other vulnerable populations." He noted that the administration also intends to divert a significant revenue cut to research and development for clean energy technology and infrastructure.
Pizer also dismissed claims by those pushing for a tax on carbon dioxide emissions in lieu of cap and trade, suggesting that a tax would be as cumbersome to administer as a trading regime.
"Almost everything you might or might not do under cap and trade, you're also going to have to make the same decisions under a tax," he said. "The only thing you don't have under a tax is a market."
Carbon tax boosters say a tax would be easier and cheaper to implement than a carbon allowance trading system outlined in draft legislation written by Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.). But Pizer countered that tax policy has been anything but simple in Washington.
"When people ask me about the complexity of cap and trade, I kind of say, 'Well, look at all the people on K Street who are kind of lined up to think about how they can adjust the tax system in a particular way,'" Pizer said. "I think it's very unlikely that you'll get a tax system that is any simpler than cap and trade in a lot of ways."
Pizer declined to say where regulatory authority for a cap-and-trade system should be placed. The Waxman-Markey bill calls for oversight by the Federal Energy Regulatory Commission, but carbon market players attending this week's Carbon TradeEx America conference at the Washington Convention Center are almost unanimously opposed to FERC regulation. They insist that emission trading be overseen by the Commodity Futures Trading Commission.
He also urged conference participants not to expect the administration to go too far in offering concessions at ongoing international climate change treaty talks set to conclude this December in Copenhagen.
The administration is well aware that it must bring something to the table in Copenhagen, Pizer said, but the president is also mindful that a new treaty must pass muster in Congress, where conservative lawmakers could scuttle a deal.
Oil giants worldwide are skeptical that President Barack Obama's plans to move the economy away from petroleum will be successful.
While Obama talks of reducing oil consumption, increasing renewable capacity and reducing carbon dioxide emissions, many of the oil companies are sticking to their hydrocarbon business model and some are backing away from commitments to renewable power.
Royal Dutch Shell last month said it would freeze research in wind, hydrogen and solar power to devote all its renewable energy efforts to biofuels. The company had already sold much of its solar business and last year pulled out of a project to build the largest offshore wind farm near London.
BP has been trimming its renewables program, and U.S. oil companies, which have traditionally been more lukewarm to renewables than their European peers, are not budging either.
"In my view, nothing has really changed," Rex W. Tillerson, the chief executive of Exxon Mobil, said after Obama's election. "We don't oppose alternative energy sources and the development of those. But to hang the future of the country�s energy on those alternatives alone belies reality of their size and scale."
Despite advertising campaigns describing their interest in renewables, the build of the companies' new investments involve petroleum resources such as tar sands and natural gas from shale. That balance has not shifted under Obama.
"The scale of their alternative investments is so mind-numbingly small that it's hard to find them," said Nathanael Greene, a senior policy analyst at the Natural Resources Defense Council. "These companies don't feel they have to be on the leading edge of this stuff."
Others predict the companies will change in years to come, noting that their scale makes change a cumbersome process. "Many of these companies see the world is changing," said Daniel Yergin, the chairman of Cambridge Energy Research Associates and a historian of the industry. "But the challenge for a very large company is to get critical scale. People tend to forget the scale of the energy business."
"Don't lose heart with Big Oil," said Alan Shaw, the chief executive of Codexis. "They aren't at a point where they are ready to invest yet, but they are getting there. I think in the next 10 years, they will invest hundreds of times more than they have in the past 10 years" (Jad Mouawad, New York Times, April 8). -- PR
A Democratic, reform-minded Cook County commissioner trounced the competition in a special election for the high-profile congressional seat vacated by White House chief of staff Rahm Emanuel.
"I recognize in many respects I will be compared to him and that's a tough, tough task. It's extraordinary," said Mike Quigley at an election night party in a Chicago bar. "For a while I will be the guy in D.C. that's recognized as that's the guy taking Rahm Emanuel's seat. We will fight very hard to set our own ground, to establish our own credentials."
The seat is the same one once held by impeached Illinois Gov. Rod Blagojevich (D) and former House Ways and Means Chairman Dan Rostenkowski (D). It is in a district that is a Democratic stronghold, covering parts of Chicago's wealthy North Side lakefront, ethnic neighborhoods on the northwest side of the city and neighboring Cook County suburbs.
Quigley will complete the remainder of the two-year term Emanuel won in November before leaving Congress for the White House (Deanna Bellandi, Associated Press, April 8). -- TL
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The nonprofit research group funded by the electric utility industry has been picked by a Commerce Department agency to write plans for standardizing components of the "smart grid."
The Electric Power Research Institute's goal in the $1.3 million contract is identifying priorities for streamlining the nation's electric grid system. A smart grid is expected to save energy, improve grid reliability and bring online more renewable power.
"EPRI is in a unique position to launch this effort quickly and efficiently because our research and development programs have been focusing on a number of key aspects of the smart grid," said Arshad Mansoor, vice president of the institute's power delivery section. "We are already collaborating with many of the key players in smart grid in our R&D, and we understand who must be involved and the direction in which we must move."
The Palo Alto, Calif.-based institute's contract with the National Institute of Standards and Technology, or NIST, calls for consultation with industry stakeholders to develop a consensus for smart-grid priorities and an action plan for carrying out recommendations.
EPRI has a May 28 deadline for producing the interim report. It has already lined up three subcontractors: EnerNex Corp. of Tennessee, Hypertek Inc. of Maryland and Xanthus Consulting International of California.
"The smart grid is a cornerstone of national efforts to achieve energy independence, save consumers money and curb greenhouse gas emissions," said NIST Deputy Director Patrick Gallagher in a statement today. "This contract is a significant step in the urgent effort to identify and develop standards that will ensure a reliable and robust smart grid."
Funding for smart-grid work comes from $10 million given to NIST by the economic stimulus package.
NIST will soon announce a three-phase plan for the smart grid with an end-of-the-year submission of proposed standards to the Federal Energy Regulatory Commission, which has jurisdiction over interstate electricity sales and distribution. That plan will outline how to establish a public-private partnership and develop a certification and accreditation process for smart-grid technology.
Chinese and Russian cyberspies have been tampering with the U.S. electric grid and have left behind software programs capable of disrupting the entire system, according to current and former national security officials.
A clear motive for why the spies would want to infiltrate the electrical system and its controls remains unclear, but security officials warn the spies would have the power to damage the grid during times of crisis or war.
"The Chinese have attempted to map our infrastructure, such as the electrical grid," said a senior intelligence official. "So have the Russians."
A former Department of Homeland Security official said the intrusions are growing but do not appear to target a specific electric utility or region. Some intelligence officials worry that cyber attackers could gain access to nuclear power plants or financial networks by way of the Internet.
Water treatment systems, sewer lines and other infrastructure systems are also at risk, officials said.
It is difficult to determine whether the attacks were authorized by foreign governments or were the work of individuals. China, as an example, has little to gain from disrupting the U.S. economy due to its reliance on American consumers and its possession of large amounts of U.S. government bonds (Gorman/Smith, Wall Street Journal [subscription required], April 8). -- PT
Two environmental groups will ask Canadian government officials to yank approval of Royal Dutch Shell PLC's plans to expand oil sands production in Alberta after the energy company flip-flopped on promises to reduce greenhouse gas emissions.
The group says that government approvals issued to Shell for two projects in Alberta were based on the company's pledges to reduce emissions.
"They made a commitment in writing to reduce their greenhouse gas emissions from these two projects by approximately 900,000 tons of carbon dioxide a year," said Roland Lines, a spokesman from The Pembina Institute, a Calgary-based environmental think tank joined by Ecojustice in opposing the project approvals. "They have been telling us they are not going to follow through on that."
The two groups will issue requests to the federal government and the Alberta Energy Resources Conservation Board to reconsider permits granted for Shell to expand its Athabasca Oil Sands Project. Shell's Canadian affiliate owns 60 percent of the project, while Marathon Oil Corp. and Chevron Corp. each own 20 percent.
A spokesman for Shell Canada Ltd. declined to comment until the company could review details of the complaints.
Canada's oil sands contain the largest reserves of oil outside of Saudi Arabia, but require much more energy to extract (Russell Gold, Wall Street Journal [subscription required], April 7). -- PT
A large public pension fund that holds $1 billion in Chevron Corp. shares is raising serious concerns that a court judgment in the Ecuadorian Amazon could hold the company responsible for environmental damages that could cost as much as $27 billion.
The case being tried in Lago Agrio, Ecuador, accuses Texaco, which Chevron acquired in 2001 for $30 billion, of polluting waterways and wells across a swath of Ecuador by dumping billions of gallons of oil into leaking pits over the course of the company's 20 years operating there.
The judgment could well exceed the $3.5 billion Exxon Corp. was ordered to pay for the 1989 Valdez oil spill.
"This is an epic case," said Sean Hecht, director of the University of California at Los Angeles's Environmental Law Center (Neil King Jr., Wall Street Journal, [subscription required], April 8). -- PT
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SunPower Corp. is planning to build a 17-megawatt solar photovoltaic array in southern Colorado -- one of the largest such projects in North America.
San Jose, Calif.-based SunPower (Nasdaq: SPWRA) plans to complete the Alamosa County solar array by the end of 2010, pending project financing and regulatory approval. The project -- which would consist of PV panels that track the sun's daily trek across the sky -- would be second-largest of its kind in North America.
SunPower would own and operate the system. Minneapolis-based Xcel Energy Inc. (NYSE: XEL) would buy all of its output over 10 years, per a power-purchase agreement.
Company officials declined to disclose financial terms of the deal.
Xcel, which ranks as the nation's fifth-largest utility provider of solar power, serves about 70 percent of the Colorado market. The state's newly augmented power portfolio standard requires Xcel and other large utilities to derive 20 percent of their sales from renewable resources by 2020; 4 percent of the electricity sold must come from solar PV or concentrated solar power projects.
Xcel's current solar portfolio consists of about 32 megawatts from homes, offices and an existing Alamosa County solar farm, noted Mark Stutz, a company spokesman in Denver. Xcel has bids out for at about 200 megawatts of concentrated solar power generation, in an effort to comply with the Colorado law, he said.
Nellis Air Force Base in southern Nevada is home to the nation's largest operational PV array, with 14 megawatts of capacity. SunPower aims to complete construction of a 25-megawatt PV array in DeSoto County, Fla., by the end of the year.
Florida Power & Light, a subsidiary of FPL Group (NYSE:FPL), would own the Sunshine State project.
Landowners, environmentalists and outdoor enthusiasts asked a federal appeals court yesterday to issue a temporary injunction against miner J.R. Simplot Co.'s plans to expand a phosphate mine in southeastern Idaho.
The group, represented by a lawyer from the environmental law firm Earthjustice, claims the expansion of the Smoky Canyon phosphate mine would cause "massive environmental disturbance" without adequate scientific review.
The group said the company's plan to use a limestone and topsoil cover to prevent selenium runoff has not received adequate scientific review. The mine has historically sent large amounts of the naturally occuring chemical into local waters, poisoning or causing birth defects in wildlife and livestock, the group says.
A U.S. District Court judge last fall refused to halt to mine's expansion in the the Caribou-Targhee National Forest, about 100 miles south of Yellowstone National Park.
The environmental group in the case, known as the Greater Yellowstone Coalition, said scientific modeling failed to consider what would happen during abnormally heavy spring rains and snowmelt. A U.S. Forest Service scientist agreed that more computer modeling should be conducted before approving the plan (Gene Johnson, AP/Casper [Wyo.] Star-Tribune, April 8). -- PT
General Motors Corp. and Chrysler LLC are currently not eligible for $25 billion in Energy Department loans for automakers and suppliers intended to prompt building of more fuel-efficient cars.
President Barack Obama's administration said last week the firms are not "financially viable," a prerequisite for the loans that will begin flowing in May.
Obama gave GM 60 days to modify its restructuring plan by getting concessions from its bondholders and the United Auto Workers union. Chrysler has 30 days to do the same, as well as complete a proposed alliance with Fiat.
GM has applied for $10.3 billion to develop its Chevrolet Volt, its plug-in electric car, and other projects. Chrysler is asking for $8 billion to build hybrids and other battery-powered vehicles.
Ford, which applied for $5 billion in direct loans by 2011, may be the only domestic automaker to qualify.
"We don't see this as a denial of our application," GM spokesman Kerry Christopher said. "Until the determination that we're a viable company can be made, we're not going to be given the loans."
Department of Energy spokeswoman Stephanie Mueller said she could not comment on individual loan applications. She added the department was still on track to meet its time line of offering loans within the next few weeks (Kendra Marr, Washington Post, April 8).
Chinese consumers bought 1.03 million automobiles in March, topping U.S. sales for the third consecutive month, state media reports said today.
Americans bought 857,735 new cars in March, down 37 percent from the same month in 2008. March sales were up 25 percent from February, prompting hopes that the industry may be on its way to recovery.
Full industry data due in upcoming days could push March auto sales in China to a monthly record. Chinese consumers bought 1.06 million autos in March 2008 (Elaine Kurtenbach, Associated Press, April 8). -- PR
The world's largest car-sharing company, Zipcar Inc., plans to announce today that it will be entering a partnership with Zimride, an online carpooling service that employs social networking sites like Facebook Inc. to connect potential riders and drivers.
Zipcar, which declined to offer financial details of the partnership, will begin offering the combined service at Stanford University, with plans to expand to other universities across the country.
"The intent here is to go big," said Scott Griffith, CEO of Zipcar. "I would guess in the next couple of months, you will see dozens of these things rolling out."
The partnership means Zipcar members who reserve a car will automatically post the date, time and destination of the rental on the Zimride Stanford Web site. Zimride will locate users whose ride requests match those posted by Zipcar, and will also encourage its users to book Zipcars for other trips (Sarah Nassauer, Wall Street Journal [subscription required], April 8). -- PT
President Barack Obama is planning to assign Vice President Joe Biden the challenging task of winning Senate support for the Comprehensive Nuclear Test Ban Treaty, administration sources said.
Biden led the Clinton administration's unsuccessful attempt to ratify the treaty in 1999, when he was ranking minority member of the Senate Foreign Relations Committee. The treaty fell 19 votes short of the necessary 67 in the Republican-controlled Senate.
The Obama administration will make its "first order of business" conducting a thorough review of the issues, including the two that helped defeat the treaty last time, a senior White House official said. Those include the ability to verify that nobody is conducting underground nuclear tests and that the U.S. nuclear weapons stockpile will remain reliable without further testing.
To attain 67 votes, the administration would have to win the support of all 56 Democrats, the two independents, eight Republicans and the winner of the open U.S. Senate seat representing Minnesota (Walter Pincus, Washington Post, April 8). -- TL
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President Obama announced plans today to nominate a veteran Senate Appropriations Committee staff member to lead the Federal Transit Administration.
Peter Rogoff has spent 22 years with the Appropriations Committee, including 14 years as Democratic staff director for the Transportation, Housing and Urban Development Appropriations Subcommittee. He has worked on the last three reauthorizations of the surface transportation law that provides federal cash for highways, transit and rail projects.
Lawmakers are currently drafting the successor to the current authorization, which expires this September.
The White House said Rogoff has played an instrumental role in advising lawmakers on the capital and operating needs for Amtrak and dozens of light-rail and bus systems.
In addition to transit and rail financing, Rogoff focused on safety initiatives. He was the principal staff strategist for two drunk-driving laws and has been involved in a host of inspection efforts for trucks, cargo vessels and pipelines.
He has received the U.S. Coast Guard Distinguished Public Service Award and the Lester P. Lamm Memorial Award, given for outstanding leadership and dedication to U.S. highway programs. He has a master of business administration degree from Georgetown University's McDonough School of Business and a bachelor's degree from Amherst College.
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The National Nuclear Security Administration received awards for project management excellence from the Energy Department yesterday.
The Microsystems and Engineering Sciences Applications project at Sandia National Laboratories in New Mexico was awarded the Energy secretary's excellence award for being $50 million under budget and three years ahead of schedule, NNSA said.
A renovated NNSA building that houses 400 employees in Las Vegas was also given the same award for coming in 10 percent under budget and on time. The building also earned a "silver" rating from the U.S. Green Building Council's Leadership in Energy and Environmental Design certification program, NNSA said.
Scott Samuelson, project director of the National Ignition Facility, which opened last month, was named DOE's project director of the year for opening that "unique facility" within budget. The facility aims to create fusion ignition in the laboratory -- creating a new source of energy generation and other breakthroughs in astrophysics and materials science, NNSA said.
The awards are a highlight for the independent nuclear weapons agency under DOE, which, along with the Environmental Management Office, has been heavily criticized by the Government Accountability Office and Congress for lax project management.
Large projects in NNSA and the Environmental Management Office have been targets of 12 GAO reports since 2006. Those reports document consistent problems with project management, resulting in 18 of 20 large cleanup or construction projects lagging behind schedule by between 68 and 111 years and for exceeding cost estimates by between $25 billion and $42 billion.
The nine-member board of the Tennessee Valley Authority -- the nation's biggest government utility -- will have four vacancies to fill this year, leaving the Obama administration room to put its mark on the agency.
The board currently has two vacancies and will have two more for the White House to fill in May as those board members reach the end of their terms.
But for now, the board of the New Deal agency created by President Franklin Delano Roosevelt in the 1930s will remain Republican-leaning. Most of the current TVA board were donors to President George W. Bush and other Republicans.
The White House is considering at least two Chattanoogans for one of the vacant seats: Middle Tennessee State University Dean Barbara Haskew and Jim Hall, an attorney and former chairman of the National Transportation Safety Board.
Other Tennessee Democrats under consideration are real estate investor and environmentalist John Noel, former U.S. Senate candidate Bob Tuke and state Rep. Mike McDonald, the Nashville Tennessean reported. Board members must pass an FBI background check and be confirmed by the U.S. Senate (Dave Flessner, Chattanooga Times, April 7). -- TL
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Businessman and former journalist Peter Barnes for years has been pushing an idea for developing climate change legislation that would be popular among average Americans.
His plan, which he calls "cap and dividend," would make companies pay for their greenhouse gas emissions by buying allowances in auctions, and then would divide the proceeds from the auctions among Americans. Alaska uses a similar plan for sharing oil royalties with residents.
Barnes' idea may be catching on: Rep. Chris Van Hollen (D-Md.), co-chairman of the Renewable Energy and Energy Efficiency Caucus, introduced a version of it as legislation last week.
"When you put a price on something that wasn't priced before, you're creating a whole new money flow," said Barnes, who has written about how the economic system fails to protect human resources. "Over the years, it could come to trillions of dollars. So every interest group in America is interested in that. So the idea of giving the money back to the people is unpopular here in Washington, but outside Washington I think it's very popular."
Fred Krupp, head of the Environmental Defense Fund and an architect of a detailed cap-and-trade program, disagrees. Pricing carbon emissions will target coal-intensive regions more than others, he said. "I think you have to have at least a transition period of many years, a decade or so, to give regions of the country the opportunity to move to non-polluting sources," Krupp said (Steven Mufson, Washington Post, April 8). -- TL
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Ahead of a critical international meeting on the regulation of dangerous chemicals, environmental groups are asking the Obama administration to press for the banning of a pesticide linked to neurological disorders.
The pesticide at issue: lindane.
Representatives of 158 countries meet next month to debate whether lindane should be added to a list of chemicals targeted for a global phaseout under the 2001 Stockholm Convention on Persistent Organic Pollutants. The United States has signed but not ratified the treaty.
Environmentalists are asking the administration to push governments to add lindane to the treaty's list of restricted chemicals. The treaty currently targets 12 chemicals -- the so-called Dirty Dozen -- for restrictions that would lead to an eventual ban. When treaty members meet, they will discuss whether nine chemicals, including lindane, should be added to the treaty.
Because it has not ratified the treaty, the United States participates as an observer -- a powerful one.
"Even though the U.S. is not party to the treaty, it definitely influences the conversation," said Kristin Schafer, associate director for advocacy with the Pesticide Action Network, which sent a letter to the State Department and the Food and Drug Administration last week asking for support on a complete ban on the pesticide.
So far, the State Department and FDA have favored a ban on lindane in agriculture -- U.S. EPA banned agricultural lindane use in 2006 -- but have pushed for an exemption for pharmaceutical uses to treat lice and scabies. India is the only other country that is pushing for an exemption for lindane, Schafer said.
Lindane is a neurotoxic organochlorine pesticide linked to seizures, developmental disabilities and hormone disruption. Environmentalists say safer alternatives exist and that bans in at least 52 countries have not resulted in outbreaks of lice or scabies.
A State Department official said in an e-mail that the department is working with FDA to "review the U.S. position with respect to a potential public health exemption" for lindane.
FDA has approved lindane's use for lice and scabies as a "second-line therapy," for when alternative treatments fail. The agency said most adverse effects from the pesticide occur when it is misused, so products are limited to 1- and 2-ounce packages.
"While FDA believes that the benefits of lindane outweigh the risks when used as directed, given the potential for neurotoxicity, patients should only be treated with these medications if other treatments are not tolerable or other approved therapies have failed," the agency says on its Web site. An FDA spokeswoman said the agency has not changed its position.
Morton Grove Pharmaceuticals manufactures shampoos and lotions with lindane for lice and scabies treatment.
"We think there is an appropriate use for lindane," said Jerry Jabbour, spokesman for Wockhardt USA, which purchased Morton Grove in 2007. "There are not environmental issues associated with it in the small amounts that are used, and there's a real need for it."
He acknowledged that there are risks associated with lindane because it is a pesticide, which is why FDA has strict labeling and application requirements.
"Lindane is a pesticide that works when it is used properly," Jabbour said. "There's a reason it's a second-line therapy, and it needs to be used according to labeling requirements."
In 2002, California banned the pharmaceutical use of lindane because of concerns about water quality. In the years following the ban, scientists surveyed 400 California pediatricians and found that eliminating pharmaceutical lindane improved water quality and did not adversely affect public health, said Ann Heil, supervising engineer for the Sanitation Districts of Los Angeles County.
Schafer said California's experience should serve as a model for the United States as it formulates its position.
"Up to now, their argument has been that they didn't want to lose this as a tool in the toolbox because it's important in particular uses," Schafer said. "Our argument is very clear. It has been banned in California since 2002, so there are clearly alternatives, because there haven't been huge outbreaks of lice or scabies. It's been a seven-year experiment."
But Jabbour said lindane concentrations are so low in water that it is not a health concern and that the company is considering a possible challenge to the California ban.
Even if the international community decides to ban lindane, the United States would not be required to regulate because it has not signed onto the treaty. Such a move could put pressure on Congress to ratify the treaty, Schafer said. Lawmakers must amend the Federal Insecticide, Fungicide and Rodenticide Act and the Toxic Substances Control Act to allow U.S. participation.
"It would increase the pressure in international arenas if the United States is the only country continuing to use lindane by making it difficult to maintain that position," Schafer said.
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Florida's proposed purchase of U.S. Sugar Corp. land to restore water flows to the Everglades has been cut in half, but it contains a provision that allows more land to be acquired in the future.
The $533 million, 72,500-acre deal was originally proposed to cost twice as much and buy double the acreage, but it includes provisions to allow the South Florida Water Management District to buy more land in the next decade when or if the economy and property tax revenues improve.
However, the provisions were coupled with restrictions that put a quarter of the land off-limits to Everglades projects for at least 20 years unless water managers commit to purchasing U.S. Sugar's remaining 107,500 acres at an amount yet to be negotiated. Of the 40,500 acres of cane fields up for negotiation, 13,000 could be used for restoration efforts in the first decade and 10,000 in the second.
Environmentalists say the deal is still a good one for the Everglades. Even if it is cut in half, it would still secure half the land they say is needed for 120,000 acres of reservoirs and pollution treatment marshes necessary to deliver enough clean water to restore one of the world's largest wetlands.
"Most people are optimistic enough to believe our state's finances are not going to be in the same position four or five or six years from now," said Kirk Fordham, CEO of the Everglades Foundation. "This is really a down payment on future acquisitions that need to take place" (Curtis Morgan, Miami Herald, April 8). -- PR
The National Park Service has decided to acquire the mineral rights on a major portion of land in Pennsylvania where Flight 93 crashed during the Sept. 11, 2001, attacks.
The service, which has already bought a key parcel of the 275 acres after reaching an agreement with its owner, said it decided to purchase the mineral rights to ensure a proposed memorial to the deceased passengers and crew would not be delayed. Officials in February vowed to dedicate the memorial by the 10th anniversary of the attacks.
The service has asked a judge to decide the value of the mineral rights. It remains unclear who owns the oil and gas rights (AP/Boston Globe, April 8). -- PR
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(All cites April 6 unless noted.)
CALIFORNIA: A San Francisco International Airport plan to build a refueling station for cars and buses that run on hydrogen won a $1.7 million state grant. The station will serve the small percentage of zero-pollution vehicles powered by fuel cells, which combine hydrogen and oxygen to create electricity (David R. Baker, San Francisco Chronicle, April 7).
IDAHO: Idaho Power Co. is abandoning plans to build a high-voltage transmission line near Parma after residents protested, according to state Sen. Melinda Smyser. The utility "recognized the need for more citizen involvement," she said (John Miller, Associated Press).
WASHINGTON: Columbia Land Trust bought 305 acres in southwest Washington from the Hancock Timber Resource Group, spending $950,000 to protect what the group says is one of the most significant chum salmon spawning sites in the Columbia River basin. The salmon were listed as threatened in 1999 under the Endangered Species Act (Portland Oregonian).
WEST VIRGINIA: Five coal companies have reached an agreement with the Boone County families that say their well water has been contaminated by coal slurry. The companies will contribute $45,000 to a nonprofit group to provide drinking water to residents in the Seth-Prenter area, and the companies will not inject coal refuse slurry into the ground in the area (Rick Steelhammer, Charleston [W.Va.] Gazette). -- TL
A Brazilian court has ordered that an Amazon rancher be arrested and retried for masterminding the killing of Dorothy Stang, an American nun and rainforest activist.
Para state's top court voided a verdict reached last year that found Vitalmiro Bastos de Moura not guilty of shooting the 73-year-old Stang. Prosecutor Edson Souza said he was convinced the new trial would end in a conviction.
Stang was shot six times at close range in 2005 in Anapu, a small jungle city, after working for three decades to protect the Amazonian wilderness and help settlers who lost their lands to powerful ranchers.
Stang's death reinvigorated Amazon activists -- more than 1,000 of whom have been killed in the past 20 years -- to demand Brazil's government crack down on the illegal seizure and clearance of the rainforest for grazing, agriculture and timber.
Fewer than 100 cases of activist killings have gone to court. About 80 convicted suspects were hired by ranchers and loggers, according to the Catholic Land Pastoral, a Brazilian watchdog group. Fifteen of the men who hired them were found guilty, but none is serving a sentence.
"I am excited that perhaps Dorothy will find justice," said David Stang, Dorothy's brother. "All of us who love Brazil today are so proud of this great country, as Dorothy would be proud today" (David Batty, London Guardian, April 8). -- PR
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