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Monday PM December 13th, 2010

Virginia judge questions constitutionality of health care law requirement that people must buy health insurance or pay a penalty…Number of homeowners owing more than worth of home falls again…U.S. airlines collect more than 4.3 billion dollars in baggage and other fees so far this year…


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The White House says a Virginia judge’s ruling declaring a key provision of President Barack Obama’s health care law unconstitutional does not create uncertainty about the implementation of the law’s provisions. Virginia Attorney General Ken Cuccinelli filed the lawsuit challenging the law’s requirement that citizens buy health insurance or pay a penalty starting in 2014. He argues the federal government doesn’t have the constitutional authority to impose the requirement. White House Health Reform Director Nancy-Ann Deparle says that while the Virginia judge struck down the law, the administration is encouraged by two other federal judges that have upheld the law. U.S. District Judge Henry E. Hudson rejected the government’s argument that it has the power under the constitution to require individuals to buy health insurance, a provision that was set to take effect in 2014. But Judge Hudson did not freeze implementation of the law. The case is expected to ultimately be decided in the Supreme Court. Other lawsuits are pending, including one filed by 20 states in a Florida court. Virginia is not part of that lawsuit.

Texas Attorney General Greg Abbott applauds the federal court ruling, saying there are limits to Congressional power, and Congress has overstepped its limits for forcing the purchase of health insurance. Texas is also challenging the requirement as part of a 20-state coalition against the federal health care law. The lawsuit was filed immediately after President Barack Obama signed the bill into law. U.S. Congressman Kevin Brady calls the ruling a positive sign for those states seeking to overturn the law.

RediClinic is opening 20 new clinics in HEB stores in Texas. The retail-based healthcare clinics are based in Houston. That doubles the 21 HEB-based RediClinics currently operating in the state. RediClinic is affiliate with Memorial Hermann Healthcare System in Houston, Methodist Healthcare System in San Antonio and St. David’s Healthcare in Austin.

The number of homeowners who owe more than their houses are worth fell for the third straight quarter this summer. About 10.8 million households, or 22.5 percent of all mortgaged homes, were underwater in the July-September quarter, according to housing data firm Corelogic. That’s down from 23 percent, or 11 million households, in the second quarter. But the decline came mainly because more homes had fallen into foreclosure and not because home prices had increased. The ranks of underwater borrowers will remain high and likely rise because home values are expected to fall through the middle of next year.

A federal regulatory judge has found regional electrical utility Entergy has overcharged customers in four states by the way it has bought electricity. Mississippi Attorney General Jim Hood announced the ruling by an administrative law judge for the Federal Energy Regulatory Commission. The investigation covered subsidiaries with a total of about 2.7 million customers, including for Entergy Texas. Hood says the judge’s order requires Entergy’s shareholders to repay the overcharges to the subsidiary company. But Hood says the money then should be refunded to ratepayers because the overcharges were passed along to them through their monthly electricity bills. A spokesman for Entergy didn’t immediately return a call Monday.

U.S. airlines collect more than $4.3 billion in fees for checking baggage and changing tickets so far this year. New data from the Transportation Department shows that Delta Air Lines collected the most, hauling in $1.26 billion in fees so far this year. That’s more than the $922 million collected by United Continental, which is bigger than Delta by traffic. Travelers paid more than $784 million for baggage and ticket changes to American Airlines. Southwest Airlines does not charge to check the first two bags. But it has still collected $22.5 million in baggage fees this year for additional luggage.

Continental Airlines is introducing the opportunity for customers to hold online reservations and lock-in ticket prices for either 72 hours or seven days with no commitment to purchase a ticket. FareLock fees begin at $5 for a 72-hour hold and $9 for a seven-day hold, varying on itinerary, number of days to departure and length of the hold.

The administrator of a $20 billion fund paying damages from the Gulf oil spill says claimants who want quick resolution can receive a one-time payment worth thousands of dollars, but they would get no more money. Attorney Kenneth Feinberg says that the new option, which would pay claimants within two weeks, is for people who just want to get on with their lives. Feinberg says that individuals who have already received compensation from the fund can now get a $5,000 check, but they would have to relinquish their right to sue BP and would not be eligible for a final settlement. Businesses would receive a check for as much as $25,000. The other options are to seek quarterly interim payments for losses, or file for a lump sum final settlement, also giving up the right to sue BP over its April 20th oil well blowout.

Two judges with the State Office of Administrative Hearings will recommend where an electric line should cross Collin, Cooke, Denton and Grayson Counties either north or south of Ray Roberts Lake. Critics have raised environmental and property rights concerns. The Denton Record-Chronicle reports the proposed Krum-Anna segment of the wind power-related delivery line is part of the nearly $5 billion Competitive Renewable Energy Zone project. The judges’ recommendation goes to the Public Utility Commission, which has the final say. Oncor electric delivery spokeswoman Katherine Cuellar says the company is required to designate a preferred route, which she says is the southern route between Krum and Anna. Cuellar also says there are 96 routes and the PUCc can choose any route or combination.

Fears that whirling wind turbines could slaughter protected golden eagles have halted progress on a key piece of the federal government’s push to increase renewable energy on public lands, stalling plans for billions of dollars in wind farm developments. The U.S. Bureau of Land Management suspended issuing wind permits on public land indefinitely this summer after wildlife officials invoked a decades-old law for protecting eagles, according to interviews and documents obtained by the Associated Press. These and other projects appear unlikely to make the year end deadline to potentially qualify for hundreds of millions of dollars in stimulus funds. If extensions aren’t granted by Congress, the projects’ future could be in doubt.

Dell says it has a deal to buy the data storage company Compellent Technologies for $884 million. The offer price is slightly more than Dell said it would pay last week, before the companies had signed a formal agreement. Dell says it will pay $27.75 per share for Compellent Technologies, up from $27.50. But it is lower than Eden Prairie, Minnesota-based Compellent’s closing price of $28.71 on Friday. Dell, based in Round Rock, is trying to catch up with other tech firms that have branched into the business of storing and organizing data for companies and governments. Providing that sort of back-office technology is shaping up as a more profitable line of business than selling personal computers, which is how Dell still generates most of its revenue.

Sunny Delight Beverage plans to buy a Texas factory, upgrade its U.S. factories and sell its western Europe juice drink business. The Cincinnati-based company says it is investing $70 million to upgrade five U.S. plants, including upgrading and acquiring the Sherman, Texas, factory from J.M. Smucker. Orrville, Ohio-based Smucker produces Folgers Coffee there and has leased space to Sunny Delight since 2004. Sunny Delight says planned automation, data system and other upgrades will increase efficiency and reduce environmental impact. Sale terms of its Western Europe juice business to Orangina-Schweppes weren’t disclosed. Privately held Sunny Delight was spun off from consumer products maker Procter & Gamble in 2004.

The Great Atlantic & Tea Company, best known to grocery shoppers as A&P, says it has filed for Chapter 11 bankruptcy protection. The company, founded in 1859, says it will have access to $800 million in debtor-in-possession financing and that all of its 395 stores are fully stocked and open for business. The Montvale, New Jersey. company says that it determined that it could not complete its turnaround plan without filing for bankruptcy protection.

Toyota says it will recall nearly 100,000 Sienna minivans from the 2011 model year to replace a switch bracket on the brake lamp. The Japanese automaker says a driver’s foot could hit the switch bracket and deform it while applying the parking brake pedal. Toyota says there have been no accidents or injuries related to this issue. Toyota has recalled more than ten million vehicles during the past year to address a number of problems, including faulty gas pedals, floor mats that can trap accelerators, defective braking and stalling engines. The switch bracket is welded on to the left side of the brake pedal assembly. The brake lamp provides a signal to indicate that the brake pedal has been depressed and illuminates the brake lights.

Farmers across the south are dealing with dry conditions that are killing crops. The dry weather started this spring and was compounded by record-setting heat that hurt crops in already dusty fields. The U.S. Department of Agriculture has declared disasters in parts of 16 states, with some of the driest spots in Texas, Louisiana, Arkansas, Georgia and Florida. Aries Haygood says the soil on his southeast Georgia farm appears dustier than last year. He says the roots of vidalia onions planted just days ago aren’t taking hold in the dry dirt. He irrigates his field, but not every grower has that option. Citrus fruit has come in smaller in Florida, while some farmers in Alabama harvested peanuts this summer only to find there were no nuts in the shells.

Ranchers and others are asking what can be done to prevent future fraud after the collapse of a midwest cattle brokerage that owes hundreds of cattlemen in dozens of states as much as $130 million. Some ranchers say an escrow system should be developed to make sure cattle buyers’ checks clear before the animals are delivered. Others say more oversight from the U.S. Department of Agriculture is needed. But Texas rancher John Welch says he thinks such measures are impractical in such a fast-moving business. Cattle brokers can buy and sell thousands of animals a day. Federal agriculture officials filed a complaint last month accusing Indiana-based Eastern Livestock of bouncing checks for livestock purchases and failing to maintain an adequate bond to cover its debts.

This will be a busy week for economic reports, although nothing is scheduled for today. Readings on retail sales, producer prices and business inventories is due tomorrow. The Federal Reserve also releases its statement on interest rates tomorrow. Reports on consumer prices, industrial production and home builders sentiment are set for Wednesday. Later in the week, new jobless claims, housing starts, current account deficit and leading indicators are due.

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