Washington Watch

July 2008

Supreme Court Rulings Seen as Favorable to Business Community

The Washington Times reported that the "Supreme Court's final week of decisions set precedents" but "also revealed fractures on the court." The business community may have "emerged with the most victories...though some of the key victories also came on narrow votes." For example, a "single vote determined that ExxonMobil could have its punitive damages for the 1989 oil spill at Prince William Sound in Alaska reduced from $2.5 billion to $507 million, and determined that bankers, accountants and their lawyers were not liable to investors for fraud when their investments drop in value." The Times commented that this case may "shap[e] up as one of the most important business decisions in years." According to Amar Sarwal, the U.S. Chamber of Commerce's general litigation counsel," in its holdings, the "Supreme Court recognized 'that a lack of clarity in the lower courts on business issues causes a lack of predictability for American business.'" That "makes it harder for a national or international business to operate," Sarwal said.
       
The AP noted, however, that "[o]ne exception to the trend in the increasingly busy business docket was in the area of employment law, where the court reaffirmed employee rights to sue over alleged civil rights violations."

EPA Not Expected to Issue New Greenhouse Gas Regulations This Year
The CBS Evening News reported, "The Bush administration...said it will not issue new regulations on greenhouse gas emissions, essentially leaving that to the next administration and Congress." NBC Nightly News added, "The head of the EPA says new regulations would be what he called 'an unprecedented expansion of the agency's authority,' and would cripple the U.S. economy."
       
According to the Wall Street Journal, the administration published an EPA "blueprint to reduce the U.S. output of global-warming gases, but at the same time rejected the document out of hand – saying it relied on 'untested legal theories' and would impose 'crippling costs' on the U.S. economy." Susan Dudley, administrator of the White House Office of Information and Regulatory Affairs, in a letter accompanying the blueprint, "bluntly disavowed the EPA's analysis, saying it...'cannot be considered Administration policy or representative of the views of the Administration.'" Dudley added, "There is strong disagreement with many of the legal, analytical, economic, science and policy interpretations in the draft.'"

Georgia Court Imposes CO2-Emission Limits on Coal Power Plant
A state court in Georgia ruled June 30 that a proposed coal-burning power plant can't proceed unless its carbon-dioxide (CO2) emissions are limited, according to an article in the Wall Street Journal.

The ruling may have "significant ramifications for power companies and the national debate over global warming." The court decision "against a proposed 1200-megawatt power plant in Early County, Ga., marks the first time that a judge has applied a landmark U.S. Supreme Court decision on global warming to emissions from an industrial source, environmental groups said." Dynegy, Inc., which is developing the project with LS Power Group, expressed disappointment and added that "we're planning an appeal."

The New York Times noted that carbon dioxide "is not now regulated, and the Bush administration has signaled that it would not issue such regulations before the President leaves office." Yet the Georgia court "said that federal air pollution control laws required pollution permits to cover all pollutants that could be regulated under the Clean Air Act, not just those for which there is 'a separate, general numerical limitation.' "

U.S. Healthcare Experiencing Rising Costs, Inadequate Coverage
The Financial Times reports that "hard numbers explain the sense of crisis" involving U.S. healthcare, with the country experiencing "rising costs and shrinking coverage." U.S. health insurance "premiums have risen 91 percent on average" since 2000, "while wages have risen 24 percent, and there are now 47 million people – 16 percent of the population – without insurance for all or part of the year."

In addition, the ranks of the underinsured "have risen by a startling 60 percent in five years, according to the Commonwealth Fund." This is despite the fact that the U.S. has "much of the best medicine" and cutting-edge research. The U.S. is at the bottom of 19 countries for deaths in those aged under 75 for conditions potentially preventable by timely and efficient healthcare." The Times indicates the U.S. needs healthcare reform, calling the system "broken," but "there is no agreement on the shape of the reforms."

ISM Index Shows U.S. Manufacturing Expanded in June
The Wall Street Journal reported earlier this month that, according to the Institute for Supply Management's (ISM) manufacturing index, "U.S. manufacturing expanded in June, snapping a four-month string of declines."

The "index of factory activity rose to 50.2, just above the 50-mark that signals expansion. The reading was 49.6 in May." However, the ISM's "measure of prices paid by manufacturers shot up to the highest level since 1979, reflecting surging energy costs that may drive prices even higher, potentially depressing consumer demand."

"The prices paid index reached 91.5, up from 87 in May," the AP noted. Still, the "weak dollar and robust growth in Europe boosted exports, which were the main factor in the sector's growth."

According to MarketWatch, "Norbert Ore, who oversees the ISM survey, said manufacturing seems to be holding up 'amazingly well.' But he cautioned that it was not wise to read too much into June's gain and said rising energy prices were putting pressure on manufacturers."

Unemployment Likely to Worsen in Coming Months
The New York Times reported that automaker sales reports on July 1 "reinforced the gloom spreading across the economy, and the troubles confronting American workers seemed to intensify." The numbers mean manufacturers are "more likely to cut production and impose more layoffs. Until recently, the weak labor market has been marked more by the reluctance of employers to create new jobs than by mass layoffs."

Among economists, "the sense is broadening that the troubles dogging the economy will be stubborn, leaving in place an uncomfortable combination of tight credit and scant job opportunities perhaps well into next year." The Times noted that the "national unemployment rate climbed a full percentage point over the last year to 5.5 percent in May," and now Goldman Sachs is "forecasting that the unemployment rate will peak at 6.4 percent late in 2009 before the picture improves, meaning that the painful process of shedding jobs may be only half-way complete."

U.S. Economy Shed 62,000 Jobs in June
In a front-page story, the New York Times on July 4 reported that the Labor Department said the U.S. economy lost 62,000 jobs in June as "the average weekly wage of most ordinary workers was up 2.8 percent in the 12 months through June, and the Consumer Price Index was up more than 4 percent." The Times called the numbers evidence of "the sixth consecutive month in a steady chipping away of the workforce that seems likely to leave the economy very weak through Election Day." The Los Angeles Times noted that the report brought "total losses for the year to 438,000," while showing that "job losses in April and May were significantly deeper than initially thought."

Bush, Republicans Renew Push for Expanded Offshore Oil Drilling

The Washington Post reported that "President Bush, Republicans in Congress and big oil companies want to reopen [waters off the Atlantic and Pacific coasts of the U.S.] to oil and gas exploration." Bush said, "technological advances have allowed us to explore oil offshore in ways that protect the environment" and "that outer continental shelf areas now off limits 'could produce enough oil to match America's current production for almost 10 years.'" The Post calls opening U.S. waters for oil drilling "a daunting political task."

USA Today highlighted what offshore drilling has done to Louisiana and California. "Louisiana has had offshore drilling since 1947," and now "172 active rigs [in the Gulf of Mexico], produc[e] about 79 percent of the oil and 72 percent of the natural gas that comes from drilling off the nation's coastlines." That has brought the state "$1.5 billion annually in oil and gas revenue, a figure that will grow when it starts receiving part of oil companies' royalty payments in 2017 under federal law." California, meanwhile, has "26 oil and gas drilling platforms...and 1,500 active wells." They "have produced more than one billion barrels of oil and 1.5 trillion cubic feet of natural gas since the 1960s." While geologists "estimate an additional 10 billion barrels of oil and 16 trillion cubic feet of natural gas are under the sea floor in areas where drilling is banned," public opinion has been strongly against new oil drilling since a spill near Santa Barbara in 1969.

Focusing on states surrounding the Gulf of Mexico, NPR 's Morning Edition reported that Republicans from those states have traditionally supported the federal moratorium on offshore drilling. Recently, however, some Florida Republicans, like Gov. Charlie Crist have reversed their support. For instance, Crist now "says he would support production off Florida's coast as long as it was 'far enough, safe enough, and clean enough.'" Notably, "some Democrats in Congress...are bucking their leadership and now support legislation to lift the offshore moratorium."

The AP noted that "Democrats say they are for drilling, but argue" against opening new, protected areas while "oil companies aren't going after the oil where they already have leases." They "say there are 68 million acres of federal land and waters where oil and gas companies hold leases, but aren't producing oil." Last week the Wall Street Journal reported, "House Democrats moved Thursday to counter a Republican push for more domestic drilling." They introduced "a proposal that would increase oil production from areas of Alaska already open to drilling." The proposal calls for "speed[ing] up production in the National Petroleum Reserve, an area in Alaska already approved for drilling but where so far much of the land hasn't been leased." The Journal adds, "Democrats are also considering ways to encourage the construction of both an oil and a natural-gas pipeline to speed delivery from Alaska to the lower 48 states."