Tuesday PM January 4th, 2011

METRO receives initial 50 million federal grant for light rail projects…Unemployment rates rise in most metro areas…Shares in BP jump after published report saying Royal Dutch Shell interested in merger…

The Metropolitan Transit Authority of Harris County has received an initial $50 million grant from the U.S. Department of Transportation to help fund METRORail’s North and Southeast Corridor Light Rail projects. The north line will extend 5.28 miles with eight stations. The southeast line will extend more than 6.5 miles with ten stations.

METRO has been canceling scores of contracts after being notified by the Federal Transit Administration that it violated purchasing rules for a $900 million grant. One rule requires that rail cars be assembled in the United States. METRO rebid $330 million in contracts it canceled with the Spanish firm Construcciones y Auxiliar de Ferrocarriles. METRO has received a formal notification, or “Letters of No Prejudice,” to begin work on the lines. The FTA will pay about half the cost of construction of the second and third rail lines–slated to open in October 2014, more than ten years after the launch of the first line along Main Street.

Unemployment rates rose in more than two-thirds of the nation’s largest metro areas in November, a sharp reversal from the previous month and the most since June. The Labor Department says unemployment rates rose in 258 of the 372 largest cities, fell in 88 and remained the same in 26. That’s worse than the previous month, when the rate fell in 200 areas and rose in 108. Houston’s unemployment rate increased from 8.1 to 8.6 in the past year, as measured in November. Some areas typically lag behind, and some do very well, traditionally. Ken LeVasseur is a senior economist with the Bureau of Labor Statistics.

“Along the Mexican border and the central valley of California, we’ve got some areas that almost always have double-digit rates. There are some parts of the country that have historically very low rates—the Dakotas, that part of the country, down to Nebraska—tend to have very low rates.”

Many laid-off workers are giving up. In states such as Michigan, unemployment rates are falling because more people have stopped looking for work. Once they do, the government no longer counts them as unemployed.

Intuit Payroll’s Small business Employment Index for December shows that 57,000 new jobs were created last month at small businesses with fewer than 20 employees. That’s a 0.3 percent increase in employment, equating to an annual growth rate of about 3.4 percent. Texas is seeing a 0.5 percent increase. Hours worked are up slightly, and wages are flat, according to the poll of some 60,000 small businesses. Economist Susan Woodward, who worked with Intuit to create the index, says small business is still the most vigorous sector of the employment picture. Small businesses comprise 87 percent of the total U.S. private employer base, employing nearly 20 million people. Payroll processor Intuit is the company behind Quicken and TurboTax.

An Associated Press tally shows the growth in bankruptcies around the country slowed significantly in 2010 from its breakneck pace in recent years. About a dozen states recorded a decline in filings from consumers and businesses. Filings collected from the nation’s 90 bankruptcy districts showed 113,000 bankruptcies in December, down three percent nationwide from the same month a year ago. That followed a similar year-over-year decline for October. It had been four years since an individual month showed such an improvement. In total, the nation recorded 1.55 million filings in 2010, an increase of 8 percent from 2009. That’s a far slower growth rate than the 32 percent jump recorded in the year before and the 33 percent jump the year before that.

Taxpayers will get an extra three days to file federal tax returns this year, and they can thank the nation’s capital for the extra time. The filing deadline is delayed because the District of Columbia will observe Emancipation Day on Friday, April 15th. The Internal Revenue Service says local holidays in the nation’s capital impact tax deadlines the same way federal holidays would. Taxpayers will have until midnight Monday, April 18th, to file their 2010 returns. Emancipation Day marks the occasion when President Abraham Lincoln signed into law a bill ending slavery in the District of Columbia. Lincoln signed the bill on April 16th, 1862, more than eight months before he signed the Emancipation Proclamation, which eventually led to all slaves being freed.

Businesses ordered more factory goods in November, responding to stronger demand from consumers. Excluding a drop in demand for airplanes and autos, factory orders jumped by the largest amount in eight months. The Commerce Department says that total orders rose 0.7 percent in November, rebounding from a 0.7 percent drop in October. Excluding transportation, orders were up 2.4 percent. The November increase left total orders at $424.5 billion. Economists consider that a healthy range for manufacturing activity. That’s 20.4 percent above the recession low, hit in March 2009.

The oil industry’s chief trade group wants the Obama administration to reconsider its decision not to pursue offshore drilling in the eastern Gulf of Mexico or along the nation’s East Coast. Jack Gerard, president of the American Petroleum Institute, said the group will press lawmakers and administration officials to expand drilling along the Atlantic Coast and in Alaska. If agreement cannot be reached, Gerard said he would support language favored by some Congressional Republicans to mandate expanded drilling. Obama’s decision to scale back offshore drilling reversed an earlier plan to expand drilling. It was prompted by the Gulf oil spill. Gerard said the decision “sends job creation elsewhere. And closes the door on economic growth.” He spoke as the group released its annual “State of American Energy” report.

Meanwhile, depositions for civil lawsuits stemming from the Deepwater Horizon accident get underway in New Orleans this month, starting with 18 BP employees from Texas, Alaska and the UK. BP had hoped to host the depositions of its workers in Houston, but U.S. District Court Judge Carl Barbier ruled Monday that they must travel to New Orleans.

Shares in BP have jumped after a published report saying Royal Dutch Shell is interested in a tie-up with the London-based company. The Daily Mail, citing unidentified people close to the company, reports that Shell considered a takeover bid when shares in BP reached a nadir after the Gulf of Mexico oil spill. It adds that Netherlands-based Shell is still interested in a merger. BP stock is up 4.8 percent at 4.88 pence ($7.63) in midmorning trade on the London Stock Exchange. Shell could not immediately be reached by phone for comment on the report. London-based BP spokesman Mark Salt declined to comment.

Alaska native and conservation groups have succeeded in challenging clean air permits granted to Shell Oil to drill exploration wells in the Beaufort and Chukchi Seas. Numerous groups alleged that Shell’s permits granted by the Environmental Protection Agency would allow the company to emit tons of pollutants into the Arctic environment from a drill ship and support vessels. The federal environmental appeals board reviewed the permits, and last week found that EPA’s analysis of the impact of nitrogen dioxide emissions from the ships on Alaska native communities was too limited. The board remanded the permits so the analysis could be fixed by the EPA. Shell spokesman Curtis Smith said without the permits the company can’t proceed with its drilling plans in 2011.

Federal prosecutors say they won’t object to a delay of this month’s scheduled trial of former high-flying Texas billionaire investor R. Allen Stanford but argue the two-year postponement sought by Stanford’s lawyers is far too long. Assistant U.S. Attorney Gregg Costa said in a filing with U.S. District Judge David Hittner that defense lawyers should have additional time to prepare but said Stanford’s attorneys already have filed motions covering most conceivable legal issues in the case. Costa said a two-year delay would be inconsistent with a speedy trial for Stanford. Hittner has scheduled a hearing for Thursday on claims from Stanford’s lawyers that their client is mentally incompetent. Stanford, accused of bilking investors out of $7 billion in a ponzi scheme, was supposed to go on trial January 24th.

A report by the Legislative Budget Board recommends the state’s comptroller–not local school districts–be in charge of negotiating school property tax breaks for businesses to attract big investments. The Austin American-Statesman reported, for its Tuesday editions, that examples of large-scale investments are wind farms or manufacturing plants. The report says: “school districts should not be made responsible for economic development.” Texas lawmakers who convene next Tuesday face a projected budget shortfall of as much as $20 billion. Current Texas law allows school boards to negotiate and approve the deals, which the state then reviews. The 2001 legislature passed the Texas Economic Development Act because the state’s heavy reliance on property taxes was making it difficult to attract large industrial projects, for which property taxes are a major expense.

A Texas commission will guarantee Vermont 20 percent capacity in a nuclear dump should it approve a plan to allow 36 states to bring low-level radioactive waste to a site in west Texas. The Texas Low-Level Radioactive Waste Commission approved the space for Vermont. Environmental groups oppose expanding the dump in Andrews County, which currently only accepts waste from Texas, Vermont and the federal government. Dallas-based Waste Control Specialists owns the dump. The company says the facility is a secure option for permanent disposal. Waste Control spokesman Chuck McDonald says Vermont wants the guaranteed space because the state plans to phase out one facility in the next 30 to 40 years.

General Motors says sales of cars and trucks in the U.S. rose 6.3 percent last year as a strong line-up of new models helped the company make a comeback from its 2009 bankruptcy. GM sold 2.2 million cars and trucks, even though it got rid of four brands to focus on Chevrolet, Buick, Cadillac and GMC. Ford says its sales rose 15 percent in 2010 thanks to strong demand for its pickups and sedans. The company sold 1.9 million cars and trucks and grabbed market share from rivals. Ford says 2010 was the second year in a row it gained U.S. market share, its first back-to-back increase since 1993. Chrysler says its sales rose 17 percent in 2010, helped by purchases from rental car companies and strong demand for its new Jeep. The company sold 1.1 million cars and trucks as its four brands notched large increases. Much of the sales increase early in the year came from low-profit sales to rental companies. Toyota continued to struggle, with flat sales in 2010. The company is still feeling the effects of its recalls of more than ten million vehicles for various issues including sticky gas pedals. Industry analysts expect overall sales for the industry to rise ten percent for the year. Consumers are buying again as the economy slowly recovers.

Federal Reserve officials stuck with the pace of their $600 billion Treasury bond-buying program last month because the economy wasn’t improving fast enough to make a noticeable dent in unemployment. Spending by consumers and businesses had improved heading into the final month of 2010, and Congress was on the verge of enacting a tax-cut package that would bolster the economy, Fed officials said. That made them more confident the economic recovery would gain momentum, according to minutes of the Fed’s closed door meeting on December 14th. Risks still loomed, the minutes said, particularly a weak housing market and spending cuts and layoffs from state and local governments. So the Fed voted 10-1 to stick with its plan to buy the bonds through June to try to lower interest rates, spur spending and lift stock prices.

Continental Airlines has a tentative agreement for a new contract with its flight attendants. The International Association of Machinists and Aerospace Workers announced the deal. Continental flight attendants had voted down a previous agreement in October, saying it didn’t do enough to restore concessions they had made. The new agreement would run for 20 months and cover Continental’s 9,500 flight attendants. The union says the deal includes a 2.5 percent pay increase for last year, with another 2.5 percent increase on September 1st, 2011. Continental is run by United Continental Holdings in Chicago. Continental and United flight attendants have different unions with different contracts.

American Airlines says it’s talking to Orbitz and Expedia about resuming the listing of American flights on the travel websites. But an American Airlines official says there are no immediate plans to restore listings on Orbitz. American pulled its flight listings from Orbitz when the two companies couldn’t agree to a new contract. Expedia made American flights harder for consumers to find, then dropped them completely over the weekend. Expedia did not immediately respond to requests for comment.

Interclick says it’s being sued for allegedly violating electronic privacy laws by creating demographic profiles of internet users for ad-targeting purposes. The company defended its actions, saying it “continually endeavors to be sensitive to the privacy concerns” of customers and the general public. It did not identify the plaintiff in the lawsuit. Recent research from the University of California, San Diego found that Interclick engaged in “history sniffing,” a technique that allows websites to spy on their visitors’ browsing histories.

Apple’s popular iPad is getting its strongest competition so far as consumer electronics manufacturers unveil tablet computers with bigger screens, front-facing cameras for video chatting and more. Rivals are making a bigger push at this week’s International Consumer Electronics Show in Las Vegas, betting they can challenge Apple with such features as Android, the popular smart phone software Google developed to compete with the iPhone; high-definition touch screens and cameras for video chatting and taking photos. Analyst Richard Semenza estimates that a hundred different tablet models are in development, though not all of them will reach store shelves.

Brownsville effort at going greener begins this week with a ban on most plastic shopping bags commonly handed out to customers by retailers. The ban takes effect Wednesday. A voluntary ban has been in effect since the Brownsville City Commission on January 5th, 2010, approved the measure. Commissioner Edward Camarillo says the goal is fighting pollution and reducing litter. Plastic bags of a certain thickness, meant for reuse, are allowed. Also allowed are single-use plastic bags meant to prevent contamination from meat, fish and poultry. Shoppers can pay $1 to have their items placed in remaining single-use bags that a store might have. Lone Star public benefits cards cannot be used to pay the surcharge.

Subscribe to Today in Houston

Fill out the form below to subscribe our new daily editorial newsletter from the HPM Newsroom.

* required