Wednesday PM June 27th, 2007

Citgo found guilty of Clean Air Act violations at Corpus Christi refinery...Federal Reserve cuts jobs to reduce check-processing workforce...Waste Management to build facilities at more landfills to convert methane gas to electricity...

Citgo Petroleum has been found guilty in a Corpus Christi federal court of operating two open-air storage tanks at its refinery there without proper emission controls. But it was not found guilty of knowingly violating federal air quality laws by releasing benzene. The split verdict means the Houston branch of the Venezuela state-owned oil company would face about $1 million in fines for violations of the Clean Air Act. Sentencing has been set for October 18th. Citgo returns to court on July 9th to face other alleged violations at its corpus Christi refinery.

The Federal Reserve plans to cut more than 1,700 jobs as it consolidates and reduces its check-processing work force. It's part of a move by the Fed to move all check-processing work to four regional sites: Atlanta, Cleveland, Dallas and Philadelphia. Check processing is now done at all of the Federal Reserve's 22 locations, down from 45 locations in 2003. Check processing in Los Angeles, Denver and Seattle will be consolidated in Dallas. The bank said the move is needed because more people are using online bill payments, credit cards and debit cards instead of checks. The cuts are expected to begin next year. Banks pay the Federal Reserve to clear checks written on accounts in other banks. According to the bank's most recent study, 37 billion checks were used in the United States in 2003. That's down from 42 billion in 2001 and 50 billion in 1995. In the announcement, the bank said some cuts would be made through attrition and some employees may be reassigned. Separation packages, career transition help, extended medical coverage and other programs will also be offered.

Houston-based Waste Management plans to spend about $400 million over the next five years to build facilities at 60 landfills to convert methane gas to electricity. The nation's largest garbage hauler and landfill operator says it'll start building landfill gas-to-energy facilities this year in Texas, as well as in Virginia, New York, Colorado, Massachusetts, Illinois and Wisconsin. Waste Management operates 281 landfills in North America, and 100 already have some form of methane-to-energy capabilities. Officials say the next 60 will be at the remaining landfills in Waste Management's portfolio with enough gas flow for such projects. Already, Waste Management has gas-to-energy plants in places like Ferris, Texas, which generates about six megawatts of energy. That's enough to power about 6,000 homes. The additional 60 projects are expected to add 230 megawatts of generation capacity to Waste Management's portfolio, bringing the total to 700 megawatts. The company sells the power to retail power providers, municipal utilities and other users. The Environmental Protection Agency notes that landfills are the largest source of methane emissions in the U.S., and that methane is the second-biggest man-made contributor to global warming behind carbon dioxide.

Based on a survey of 243 small businesses, a new study by Florida-based human resources outsourcing firm Gevity and Cornell University shows that employee turnover in the retail industry is nearly 75 percent lower when management incorporates three specific human resources strategies. They include: hiring employees based on person-organization fit; using a self-management strategy; and implementing a family-like atmosphere. The study is the fifth part of a two-year study building on previous research that showed that companies experienced 22 percent higher sales growth, 23 percent higher profit growth and 67 percent lower employee turnover by adopting those three strategies.

The Commerce Department says orders for durable goods fell 2.8 percent in May. The biggest drop in four months came as demand for aircraft, heavy machinery and metals all declined. It's a larger-than-expected drop. Weakness was led by a nearly 23 percent drop in orders for commercial aircraft, an extremely volatile category.

Southwest Airlines' top official said the Dallas-based discount carrier plans to reduce the number of planes it'll add to its fleet by next year. Chief Executive Gary Kelly's announcement came in a meeting with analysts and investors in New York. He says that instead of the previous goal of adding 34 aircraft by next year, Southwest will add 19 by then. That would bring the Southwest fleet of Boeing 737s to 539 aircraft. The announcement comes as the airline industry is faced with a slowing U.S. economy and high fuel costs. Kelly said the slower growth would give Southwest time to evaluate several new business initiatives scheduled to begin in the fourth quarter of 2007. He offered no specifics, but said the changes would affect Southwest's fare structure and frequent flyer program. It also would influence a new ad campaign and a new method of boarding and seating passengers. Kelly said that with the planned changes, Southwest financials would stay on target with more than $1 billion in incremental revenue over the next few years.

British Airways will shift its five daily Texas flights to London's Heathrow Airport from the British capital's Gatwick Airport in March. The shift includes three daily London-bound flights from Dallas-Fort Worth and two a day from Houston. The change is being made under the "Open Skies'' accord between the United States and European Union. The deal freed airlines to fly from any U.S. or European city. British Airways Chief Executive Willie Walsh says the 224-seat Boeing 777s that BA flies between London and DFW are often about 70 percent full. He says he expects that to change with the move to Heathrow--which is closer to the center of London. Walsh says BA's considering other U.S. route changes under Open Skies.

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