Tuesday PM December 21st, 2010
by: Ed Mayberry, December 21, 2010 9:12:00 pm
A divided Federal Communications Commission has approved new rules meant to prohibit broadband companies from interfering with internet traffic flowing to their customers. The 3-2 vote marks a major victory for FCC Chairman Julius Genachowski, who has spent more than a year trying to craft a compromise. The FCC's three Democrats voted to pass the rules, while the two Republicans opposed them, arguing that they amount to unnecessary regulation. The new rules are likely to face intense scrutiny on Capitol Hill once Republicans take over the House. Meanwhile, public interest groups decried the regulations as too weak, particularly for wireless systems. Known as “net neutrality,” the rules prohibit phone and cable companies from favoring or discriminating against internet content and services, such as those from rivals.
U.S. Senator John Cornyn of Texas warns that the FCC action could lead to further delays in America’s innovation and economic recovery. Last week, Senator Cornyn co-sponsored an amendment by Senator Kay Bailey Hutchison which would prevent the FCC from regulating the internet. Senator Hutchison calls the FCC action “an unprecedented power grab by unelected members of the commission.” She says the new regulations will raise uncertainty about the methods and practices communications companies may use to manage their networks.
Sales tax collections are up in Texas in what state officials see as another sign of a strengthening economy. Texas Comptroller Susan Combs reported sales tax collections in November topped $1.8 billion, up 8.7 percent over November 2009. Combs says that pushes the string of consecutive year-over-year sales tax gains to eight months. Last month's sales tax figure marks the highest collections total since January 2009. Combs also says the state's combined natural gas and oil production tax collections, in the first three months of fiscal 2011, were 108 percent higher than the same period in fiscal 2010.
The world's biggest gas-guzzling nation has limits after all. After seven decades of mostly uninterrupted growth, U.S. gasoline demand is at the start of a long-term decline. By 2030, Americans will burn at least 20 percent less gasoline than today, according to experts, even as millions more cars clog the roads. The country's thirst for gasoline is shrinking as cars and trucks become more fuel-efficient, the government mandates the use of more ethanol and people drive less. This isn't the first time in U.S. history that gasoline demand has fallen, at least temporarily. Drivers typically cut back during recessions, then hit the road again when the economy picks up. But this time looks different. Government and industry officials say U.S. gasoline demand has peaked for good. It has declined four years in a row and will not reach the 2006 level again, even when the economy fully recovers.
A credit reporting agency says demand for new cars will likely spike next year among consumers who lenders will be happy to do business with--those with very high credit scores. Transunion says more than 60 percent of the leases expiring in 2011 are held by borrowers in the “super prime” category, meaning they have credit scores of 720 or better, which reflects excellent on-time payment histories. A Transunion official says those people will either have to buy their current car, or get something new, which will be good news for lenders.
Toyota has agreed to pay the government a record $32.4 million in extra fines to settle an investigation into its handling of two recalls at the heart of its safety crisis. The Transportation Department says the civil penalties will settle investigations into how Toyota dealt with recalls over accelerator pedals that could get trapped in floor mats, and steering relay rods that could break and lead to drivers losing control. The latest settlement, on top of a $16.4 million fine Toyota paid earlier in a related investigation, brings the total penalties levied on the company to $48.8 million.
A newly revealed U.S. diplomatic cable portrays diplomats in the Caribbean as being so concerned about bribery and money-laundering rumors related to Texas financier R. Allen Stanford that they warned embassy officers to avoid him as early as 2006. The behind-the-scenes diplomatic assessment appears in a May 2006 cable marked “confidential” and apparently written by the top diplomat in the U.S. embassy in Barbados. The cable first appeared on the Guardian newspaper's website late Monday. It was written three years before U.S. regulators announced they were investigating Stanford and his Caribbean bank. Stanford is accused of bilking investors out of $7 billion in a massive ponzi scheme.
Prosecutors are doubting claims by defense attorneys that R. Allen Stanford is incompetent to stand trial and are asking a federal judge for a second opinion. In a court motion, prosecutors asked U.S. District Judge David Hittner to order that Stanford undergo a second competency exam. In court documents filed earlier this month, Stanford's attorneys claimed their client was found incompetent by a psychiatrist working for the defense. Hittner has yet to rule on the request from prosecutors. Stanford's trial is set to begin January 24th. Stanford has pleaded not guilty to various charges, including money laundering and wire and mail fraud.
DynegySeneca Capital says it opposes billionaire investor Carl Icahn’s $665 million bid to buy the Houston-based power producer, according to Bloomberg. New York-based Seneca says Dynegy may be worth more than three times that amount. Dynegy will continue looking for better offers until January 24th. Independent producers like Dynegy sell power in wholesale markets.
A judge in Chicago says he will not stop American Airlines from pulling its flight listings from the travel website Orbitz. American wants to end its flight listings on Orbitz and have Orbitz connect directly to the airline's reservation system. A company called Travelport, which owns almost half of Orbitz Worldwide, got a judge to block the airline's move temporarily. The judge said he would not grant the preliminary injunction that Travelport wants. Travelport also runs two of the biggest global distribution services, Worldspan and Galileo. Those are the kinds of services that American is trying to cut out of the reservations process. The judge's ruling says Orbitz can sue American later to sort out whether it breached its contract with Orbitz.
Health insurers will have to justify rate increases at or above ten percent starting next year under a new proposed rule from the Department of Health and Human Services. The federal government will not have the authority to reject the rate increases. But an HHS official says it will help states review premium hikes and then highlight any deemed unreasonable. Insurers will then be asked to submit a final justification for them. This rule only affects policies sold in the individual and small group markets. Steep hikes in those markets have been a hot topic since early this year, when reports of Anthem Blue Cross rates rising as much as 39 percent in California helped reignite stalled health care overhaul legislation. The insurer later withdrew the increase.
Lead plaintiffs attorneys in lawsuits over the Gulf oil spill say BP is calling the shots on handling of the $20 billion Victims Compensation Fund and fund administrator Ken Feinberg is doing the company's bidding. Now they want a federal judge to step in. They asked the judge to order changes to the release form people must sign if they accept a final payment from Feinberg. The lawyers say the release should only apply to BP, and claimants should be allowed to sue other responsible parties. They also want claimants reminded that BP is paying Feinberg's firm $850,000 a month to administer the fund. BP and Feinberg did not immediately respond to requests for comment. A January 5th hearing is being sought.
Offshore drilling activity continues, even with the down time that followed the Gulf of Mexico explosion earlier this year. Houston-based Noble is contracting the construction of two jackup rigs for about $440 million. That follows Transocean’s recent deal to buy a new jackup rig for $195 million. Noble says their two new rigs will be able to operate in depths up to 400 feet and drill to depths of 30,000 feet. The contract has options for up to four additional rigs.
Houston-based StratITsphere is investing $15 million to renovate a Katy warehouse into a new company headquarters and state-of-the-art data center. The company will move from its offices in Humble to the facility on Primewest Parkway in January. The data center will provide a secure off-site location for companies to store their most important computer equipment and data. The site will have generators, showers, kitchens and other amenities that allow it to operate independently from the outside world for up to six days.
A Houston-based company is seeking permission to build a small natural gas pipeline in Wyoming's Jonah natural gas field. The Casper Star-Tribune reports that most of the proposed 14.5-mile-long, 30-inch pipeline would run through the Bird Canyon corridor. Enterprise Jonah Gas Gathering wants to build the pipeline starting from its existing compressor station to another compressor on state land. The Jonah Gas Gathering System is located in the Greater Green River Basin in southwest Wyoming. It gathers gas to be delivered to regional gas processing plants and to major pipelines that carry the gas out-of-state.
ITT says it's received a NASA contract worth up to $1.26 billion for communications services with orbiting spacecraft. Under the contract, ITT will provide communication and tracking services with the international space station, the space shuttle, the Hubble telescope and satellites. The contract has a base period of just over five years. The deal would be worth $1.26 billion if all options were exercised.
The struggling economy is blamed for a slide in the percentage of people playing Texas lottery games. The Austin American-Statesman reports that the percentage of Texans playing has slipped to about one-third. A Texas Lottery Commission study says that's the lowest level ever measured by the agency. Fiscal 2010 saw a decline from 41.7 percent of Texas residents taking their chances with lottery games, to 33.8 percent playing. That's the second-largest year-to-year decrease since the Texas lottery started in 1993. The rate of participation fell nine percent between 2003 and 2004. Lottery Commissioner J. Winston Krause blames the decline on the poor economy. The commission on December 14th announced a new nine-year contract with lottery operator GTECH.