Updates and commentaries on Federal and State statutes, standards and regulations as well as tax updates and suits filed that affect business.
Including Consolidated news snippets from various sources and/or publications.
11/11/13 GENE PATENTS (60 min CNBC)
According to current law a persons genes can be patented and remain the sole property of said company. It was noted that women with certain gene makeups can be 5x more susceptible to breast cancer and 40x more disposed to ovarian cancer. A typical test for these inferior genes can cost upwards of $3200. One third of human genes are now patented.
Proponents claim that these patients are justified to recover costs from the many failed attempts. Critics claim that these patents prevent other companies from improving on the research. It will be interesting to see what trend these laws take in the future.
7/1/13 Canada’s bid for export approval of oil taken from the bitumen sand fields via the proposed Keystone pipeline is currently underway as their oil companies race to develop “Greenhouse” technology. Companies such as Cenuvus, Canadian natural resources and Shell Canada are exploring various new techniques.
New research into Redesigning boilers and valves, deriving fuel using algae and carbon dioxide, a common by-product from extraction; as well as developing techniques to safely bury remaining waste deep into the ground. President Obama is expected to rule on the Keystone Pipeline sometime within the next few months. Oil taken from bitumen sand is very expensive to extract using strip mining and steaming.
Some companies propose using helicopters to drop in parts rather than constructing roads which would contribute to deforestation; but will these promises be kept amid continual competition? The situation is similar to the environmental problems faced with fracking. In any event, companies will be reluctant to engage in further development until a secure market is available.
It will be interesting to see how well the courts would support a positive decision from the president. More research into companies affected by these decisions is necessary.
6/29/13 The storage of spent nuclear fuel is costing American tax payers billions of dollars. Since the 1980’s approx. 120 sites now house spent nuclear fuel in concrete and steel casks. These sites are nothing more than retired nuclear plants. The US government has paid billions of dollars in fines to these facilities for failure to honor its promise to take on the permanent disposal of the waste. The Yucca mountains in Nevada, the original planned storage site that was recently declared dead by President Obama but has recently been revived.
Unfortunately it will take many decades to prepare this area for the waste, in the meantime the senate introduced a bill to find a temporary site or sites to at least consolidate the waste. At present there is not a safe way to transport the waste.
It was alternatively suggested that a consent based process be used to determine a permanent site, but as Mark Lumbard stated, in charge of fuel storage and transportation at the nuclear regulatory commission “We’re pretty good at solving technical issues. It’s the consent-based process that’s a little bit squishy.” It’s the “Not in my backyard” dilemma. If a temporary site is declared and made feasible it will cap the government’s losses in this matter.
Either way this does pose opportunities for private R&D in the resolution of these matters since we will continue to retire plants in the future. I’m sure our government is seeking solutions especially when considering the cost savings mode it’s in.
Unfortunately, some of the spent fuel is degrading especially fuel from plants that used more refined versions that were recycled in the reactors. This will only make the answer that much more difficult.
6/6/13 A patent case against Vernon Hugh Bowman has been filed by Monsanto stating that the 75 year old farmer has found a way to take advantage of the weed resistant GM soybean crop without paying their prices.
Proponents including the present administration along with scores of universities, researchers and other seed developers are jumping on board in fear that such poaching techniques could sabotage future profits of the new technologies being developed.
Opponents of the suit claim many farmers are being hurt by the high cost of these seeds which have become the staple seed for many corn, alfalfa, sugar beats, wheat and soybean fields that are planted.
6/6/13 Attorneys for the oil and gas industry and the Federal government will square off this week asking Judge Sam Haddon to cancel a lease for 80000 acres in Montana for drilling.
They claim that no consideration was given as to the possible harm caused by the release of greenhouse gasses.
Industry reps say that there is no proof that the wells will cause significant greenhouse gasses which would contribute to global warming.
4/27/13 Here is a run down of retirement friendliness on a state by state basis in regards to taxation
10 States exclude federal, military and in-state government pensions from taxation: Alabama, Hawaii, Illinois, Kansas, Louisiana, Massachusetts, Michigan, Mississippi, NY, Pennsylvania.
7 States have no personal income tax on retirement income: Alaska, Florida, Nevada, S.Dakota, Texas, Washington, Wyoming.
The 3 worst states are California, Rhode Island and Vermont.
27 States and DC don’t tax social security: Ohio, Oklahoma, Pennsylvania, Alabama, Arizona, Arkansas, California, Delaware, S. Carolina, Georgia, Hawaii, Idaho, Illinois, Indiana, Virginia, Wisconsin, Kentucky, Louisiana, Maine, Maryland, Michigan, NJ, NY, N.Carolina, Kentucky, Iowa and Mississippi.
In the quest for better fuel efficiency the government is putting forth goals in fuel effeciency standards of the future. This is yet another good case for developing and utilizing lighter and stronger materials. The true cost effectiveness of such measures has yet to be fully worked out. New more efficient manufacturing processes could be the key to keeping costs down.
U.S. Sets Higher Fuel Efficiency Standards
1/10 /13
By BILL VLASIC
DETROIT — The Obama administration issued on Tuesday the final version of new rules that require automakers to nearly double the average fuel economy of new cars and trucks by 2025.
The standards — which mandate an average fuel economy of 54.5 miles per gallon for the 2025 model year — will increase the pressure on auto manufacturers to step up development of electrified vehicles as well as sharply improve the mileage of their mass-market models through techniques like more efficient engines and lighter car bodies.
Current rules for the Corporate Average Fuel Economy, or CAFE, program mandate an average of about 29 miles per gallon, with gradual increases to 35.5 m.p.g. by 2016.
The new rules represent a victory for environmentalists and advocates of fuel conservation, but were attacked by opponents, including the Republican presidential nominee Mitt Romney, as too costly for consumers.
While the regulations have been in development for more than a year, the White House’s decision to make them final on the first full day of the Republican National Convention seemed intended to highlight one of President Obama’s proudest accomplishments at a time when Mr. Romney has laid out a different energy and environmental agenda.
The administration called the new rules “historic,” and estimated that Americans would reduce their oil consumption by 12 billion barrels over the course of the program. “These fuel standards represent the single most important step we’ve ever taken to reduce our dependence on foreign oil,” Mr. Obama said in a statement.
But the Romney campaign has criticized the new rules as “extreme” and said the standards would limit the choices when consumers shop for a new car. “The president tells voters that his regulations will save them thousands of dollars at the pump, but always forgets to mention that the savings will be wiped out by having to pay thousands of dollars more upfront for unproven technology that they may not even want,” said Andrea Saul, a spokeswoman for the Romney campaign.
The transportation secretary, Ray LaHood, said the standards would save Americans $1.7 trillion in fuel costs, resulting in an average savings of more than $8,000 a vehicle by 2025.
The fuel savings, he said, would easily exceed the estimated $2,000 to $3,000 that the more efficient vehicles would cost consumers to buy.
“You put better technology in the car and the price is going to go up,” Mr. LaHood said in a conference call with reporters. “But it goes up a fraction of what you save on gas.”
The administration also said the rules would cut greenhouse gas emissions in half by 2025, eliminating six billion tons over the course of the program.
Proponents of the rules contend that they could also generate hundreds of thousands of jobs by increasing the demand for new technologies.
“Our nation will be more secure, our environment will be cleaner, and consumers will have more money in their pockets as a result of the new rule,” said Phyllis Cuttino, director of the Pew Clean Energy Program, an environmental organization based in Washington.
Thirteen major automakers, including General Motors, Ford and Chrysler, endorsed the new standards during lengthy negotiations last year.
The companies fought for and won inclusion of a critical midprogram review period in the final rule. The review, to be conducted at the end of the decade, is meant to assess the progress made toward achieving the 54.5 m.p.g. goal. The standard could then be altered if the manufacturers are struggling to meet the new guidelines.
One industry trade group, the Alliance of Automobile Manufacturers, said a “rigorous midterm review” was necessary to determine how consumers reacted to new models that had better mileage but might be more expensive.
“Compliance with higher fuel-economy standards is based on sales, not what we put on the showroom floor,” the alliance said in a statement.
Auto dealers also expressed concern that higher prices for new cars might exclude some consumers from the market. “This increase shuts almost seven million people out of the new car market entirely,” said Bill Underriner, chairman of the National Auto Dealers Association.
Auto companies are expected to take different approaches to meeting the more stringent guidelines.
Some, like the Japanese automaker Nissan, are counting on consumers gravitating to all-electric models like its Leaf. Others, like Chrysler, will focus their efforts on improving engines and transmissions on traditional gasoline-powered cars.
Ford is offering its new Focus compact car with a variety of power sources, ranging from an electric version to a regular gas engine.
Still, American consumers have so far been slow to buy electric cars, despite gas prices that are near $4 a gallon. General Motors is planning to shut down production temporarily of the Chevrolet Volt plug-in hybrid to reduce a backlog of unsold inventory.
For the most part, automakers will have to accelerate their efforts to improve mileage by reducing the weight of vehicles, using more aerodynamic designs and decreasing engine size without sacrificing power.
“The vast majority of vehicles will be more efficient without using electric or hybrid powertrains,” said Daniel F. Becker, director of the Safe Climate Campaign, a Washington-based environmental advocacy group. “These cars won’t look any different than today unless you check under the hood.”
Even if the 54.5 m.p.g. goal is reached, most cars and trucks will get lower mileage in real-life driving. Credits for air-conditioning units in vehicles will reduce the average mileage to about 49 m.p.g., and actual driving conditions could reduce it further.
John M. Broder contributed reporting from Washington.
F.D.A. Offers Broad New Rules to Fight Food Contamination
The proposed rules represent a sea change in the way the agency polices food, a process that currently involves taking action after contamination has been identified. It is a long-awaited step toward codifying the food safety law that Congress passed two years ago.
Changes include requirements for better record keeping, contingency plans for handling outbreaks and measures that would prevent the spread of contaminants in the first place. While food producers would have latitude in determining how to execute the rules, farmers would have to ensure that water used in irrigation met certain standards and food processors would need to find ways to keep fresh food that may contain bacteria from coming into contact with food that has been cooked.
New safety measures might include requiring that farm workers wash their hands, installing portable toilets in fields and ensuring that foods are cooked at temperatures high enough to kill bacteria.
Whether consumers will ultimately bear some of the expense of the new rules was unclear, but the agency estimated that the proposals would cost food producers tens of thousands of dollars a year.
A big question to be resolved is whether Congress will approve the money necessary to support the oversight. President Obama requested $220 million in his 2013 budget, but Dr. Margaret Hamburg, commissioner of the F.D.A., said “resources remain an ongoing concern.”
Nonetheless, agency officials were optimistic that the new rules would protect consumers better.
“These new rules really set the basic framework for a modern, science-based approach to food safety and shift us from a strategy of reacting to problems to a strategy for preventing problems,” Michael R. Taylor, deputy commissioner for foods and veterinary medicine, said in an interview. The Food and Drug Administration is responsible for the safety of about 80 percent of the food that Americans consume. The rest falls to the Agriculture Department, which is responsible for meat, poultry and some eggs.
One in six Americans becomes ill from eating contaminated food each year, the government estimates; most of them recover without concern, but roughly 130,000 are hospitalized and 3,000 die. The agency estimated the new rules could prevent about 1.75 million illnesses each year.
Congress passed the Food Safety Modernization Act in 2010 after a wave of incidents involving tainted eggs, peanut butter and spinach sickened thousands of people and led major food makers to join consumer advocates in demanding stronger government oversight.
But it took the Obama administration two years to move the rules through the regulatory agency, prompting complaints that the White House was more concerned about protecting itself from Republican criticism than about public safety.
Mr. Taylor said that the delay was a function of the wide variety of foods and the complexity of the food system. “Anything that is important and complicated will always take longer than you would like,” he said.
The first rule would require manufacturers of processed foods sold in the United States to come up with ways to reduce the risk of contamination. Food companies would be required to have a plan for correcting problems and for keeping records that government inspectors could audit.
An example might be to require the roasting of raw peanuts at a temperature guaranteed to kill salmonella, which has been a problem in nut butters in recent years. Roasted nuts would then have to be kept separate from raw nuts to further reduce the risk of contamination, said Sandra B. Eskin, director of the safe food campaign at the Pew Charitable Trusts.
“This is very good news for consumers,” Ms. Eskin said. “We applaud the administration’s action, which demonstrates its strong commitment to making our food safer.”
The second rule would apply to the harvesting and production of fruits and vegetables in an effort to combat bacterial contamination like E. coli, which is transmitted through feces. It would address what advocates refer to as the “four Ws” — water, waste, workers and wildlife.
Farmers would establish separate standards for ensuring the purity of water that touches, say, lettuce leaves and the water used to irrigate soil, which reaches plants only through their roots.
A farm or plant where vegetables are packaged might, for example, add lavatories to ensure that workers do not urinate in fields and post signs similar to those in restaurants that remind employees to wash their hands.
The food industry cautiously applauded the proposals, with most companies and industry groups noting that they would be poring over them and making comments as necessary in the coming weeks.
“Consumers expect industry and government to work together to provide Americans and consumers around the world with the safest possible products,” the Grocery Manufacturers Association said in a statement. The group added that the food safety act and putting it into effect “can serve as a role model for what can be achieved when the private and public sectors work together to achieve a common goal.”
The association noted that the government would have to issue more than 50 regulations to fully carry out the new law.
The businesses that must comply with the proposals may face new costs, but how much remains to be seen. Dr. Hamburg said that the measures might save businesses money in the long run, and that in many cases, they already take such precautions voluntarily.
The agency estimated that it would cost large individual farms as much as $30,000 a year to comply with the new rules, and the food manufacturing industry as a whole as much as $475 million a year. It said it would finance the regulations in part from savings within its budget and from fees for things like reinspections, which Congress has already authorized.
In a conference call with reporters, Mr. Taylor, the deputy commissioner, said some foods would require more attention than others. Fruits and vegetables destined for canning operations, for instance, might be subject to less stringent guidelines because they are processed using heat that would kill bacteria, unlike produce intended for raw consumption. Vegetables that are much more likely to be consumed cooked, like potatoes and artichokes, would be exempt from the rules, Mr. Taylor said.
“We were directed by Congress to establish risk-based standards that are practical, and we think this approach targets what will be significant from a public health standpoint,” he said. “If we get evidence to the contrary, we will make adjustments.”
While such precautions may seem obvious and some food producers and makers may already be taking them, there has not been any legal requirement they even consider doing so.
“We’re not going to relinquish all risk of contamination, but these steps will make us think more about what we can do to reduce it,” Mr. Taylor said.
After a 120-day period for public comment, the agency will complete the rules.
Other rules are pending, including one that would cover importers’ responsibilities for the safety of food products grown or made overseas. About 15 percent of food eaten by Americans — and an even higher percentage of produce — is imported
.
Budget Deal Seals Breaks for Wind Farms, Puerto Rico Rum
Wind farms, motorsports tracks, global banks and other businesses won revived tax breaks in a $75.3 billion package included in a last-minute budget deal passed by Congress and signed by President Barack Obama yesterday.
The tax-break extensions, mostly for companies, made it into the bill past Republican demands for spending cuts and Democratic resistance to business benefits. Both parties have complained for years about some of the special-interest provisions.
The package of tax extensions survived attempts to curb them to reduce the U.S. budget deficit that has exceeded $1 trillion for four years. Their beneficiaries and lobbyists received a reprieve and a chance to bargain for another extension this year.
The breaks are “generally economically useless or harmful,” lowering General Electric Co. (GE)’s tax bill, padding accounting firms’ research-credit business and letting lawmakers repeatedly tap lobbyists and companies for donations, said Bob McIntyre, director of Citizens for Tax Justice. The Washington group favors higher taxes on companies.
“If you make them permanent, you get the campaign contribution once,” McIntyre said. “You do it every year or two, they have to ante up again and again.”
Most of the tax breaks had expired at the end of 2011 and will be continued through 2013. The companies that benefit say the on-again, off-again breaks are important though the uncertainty makes it almost impossible to use them to plan business investments.
Lumped Together
Although they are lumped together, the miscellaneous tax breaks include a variety of items, from multibillion-dollar benefits for big companies to much smaller changes designed to increase Native American employment.
Some are broad, like the credit for corporate research, which is supported by a coalition of technology companies, manufacturers and lawmakers including Representative Kevin Brady, a Texas Republican, and Senator Max Baucus, a Montana Democrat who is chairman of the Finance Committee. The two-year extension of the research credit would cost the government $14.3 billion in forgone revenue.
Some of the tax benefits are specialized, such as a $11.2 billion, two-year extension of the active financing exception, which lets GE, Caterpillar Inc. (CAT) and Citigroup Inc. (C), among others, defer taxes on financing income they earn outside the U.S. That allows their earnings to be treated like the income of non-financial companies with non-U.S. operations.
Tiberi, Neal
The congressional supporters of this provision include Pat Tiberi, an Ohio Republican, and Richard Neal, a Massachusetts Democrat, senior members of the House Ways and Means Committee.
Other breaks are narrow and often ridiculed by lawmakers. They include $78 million worth of accelerated depreciation for motorsports tracks, $248 million in special expensing rules for films and television programs, and a $222 million provision that directs excise taxes on imported rum to Puerto Rico and the U.S. Virgin Islands.
“You can see where Congress’s heart is, perhaps its soul as well,” McIntyre said.
Alex Brill, a former aide to Republicans on the House Ways and Means Committee, said tax breaks that some consider questionable — such as the motorsports benefit backed by International Speedway Corp. (ISCA) and Senator Debbie Stabenow, a Michigan Democrat — are often made temporary as a compromise.
Energy Efficiency
Whirlpool Corp. (WHR) benefits from a $650 million tax credit extension for manufacturing energy-efficient appliances. JPMorgan Chase & Co. (JPM) and other financial institutions are aided by the $1.8 billion extension of the New Markets Tax Credit for investments in low-income areas. That is supported by Representative Jim Gerlach, a Pennsylvania Republican, and Senator Jay Rockefeller, a West Virginia Democrat.
Restaurants such as Cracker Barrel Old Country Store Inc. (CBRL) and McDonald’s Corp. (MCD) benefit from the $1.9 billion extension of the Work Opportunity Tax Credit for hiring workers from disadvantaged groups.
The bill includes a one-year extension through 2013 of the production tax credit for wind power, at a cost of $12.2 billion. That will save as many as 37,000 jobs in an industry that’s expected to stall this year, the American Wind Energy Association said.
Wind Credit
Matthew Kaplan, an associate director at the energy research group IHS Inc., said developers raced to complete projects in 2012 to claim the credit. The projects that are left over probably aren’t far enough along to be completed in 2013, even with the extension of the credit, he said.
“We still anticipate a significant drop-off in wind build” this year, Kaplan said in an interview.
By changing the rules to let companies claim the credit at the start of construction instead of when a project begins producing electricity, Congress ensured that some development will continue this year.
The budget agreement also includes a $1.3 billion, one-year extension of a tax break on write-offs of mortgage debt, a tactic becoming increasingly common as banks seek to move beyond the housing crisis. Borrowers won’t have to pay income taxes on the principal forgiven as part of a loan modification or during a short sale in which they sell their homes for less than they owe.
Real estate agents, homebuilders and consumer advocates pushed for the extension, saying it was needed to avert a wave of foreclosures that could depress home prices.
Bonus Depreciation
The bill includes 50 percent bonus depreciation on capital investments, letting companies recoup their costs more quickly. Taxpayers will continue to be allowed to deduct states sales taxes instead of income taxes from their federal returns, a benefit to people in states such as Texas that lack a state income tax.
The tax breaks have a history of last-minute or retroactive inclusion in legislation. They were one of the sweeteners the Senate added in 2008 to win support for the Troubled Asset Relief Program. Their last extension came in 2010, as part of the agreement to extend the income tax cuts that are largely being made permanent now.
House Republicans, including Ways and Means Chairman Dave Camp, had talked throughout 2012 about dropping some of the extensions. In the end, Camp, of Michigan, never produced a bill and will address the provisions as part of a tax overhaul he is drafting this year.
Finance Committee
Instead, a bipartisan Senate Finance Committee measure from August that kept most of the provisions intact was inserted into the final deal passed by Congress.
“There’s no logical basis for any temporary tax policy, basically, and yet here we are, and they’re all extended again,” said Brill, a research fellow at the American Enterprise Institute in Washington, which advocates a smaller government. “Not including those provisions would have caused a firestorm from the business community and elsewhere at the 11th hour.”
Unrelated to the tax extensions, the bill raises $12 billion by allowing holders of pretax 401(k) retirement accounts to transfer some of their balances into post-tax Roth-style accounts. Those who convert the accounts must pay the taxes up- front.
Not in the bill are tax rises Obama wants, including higher taxes for private equity managers’ carried-interest income, multinational companies’ offshore profits, and oil and gas companies. Those industries remain potential targets as the president searches for revenue to pair with future spending cuts.
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