The announcement by the U.S.-based Rapaport Diamond Trading Network, an industry diamond price and information provider, comes after international regulators declared the stones from the Zimbabwe mines conflict-free, backing off a ban they imposed in November and allowing 900,000 carats of diamonds to be auctioned last week.

“This is the first time that we’ve heard of a large group like the Rapaport group actually taking such a strong stand,” said Tiseke Kasambala, a Zimbabwe specialist with Human Rights Watch.

“Consumers will certainly ask questions” about the stones they are buying, she added.

The international regulators, whose group is known as the Kimberley Process, said the two mines are operating at “minimum” international standards. The Rapaport group, though, said that does not guarantee the stones “free of human rights violations” and vowed to publish the names of members knowingly trading in diamonds from the diamond fields near the eastern city of Mutare.

Kimberley Process officials did not immediately respond to an e-mail seeking comment on the move by Rapaport, which has 10,000 members. Stephane Chardon, chairman of the group, noted that the Kimberley rules apply only to blood diamonds mined and sold by rebel movements or their allies to finance armed conflicts aimed at toppling legitimate governments. It has no provision for punishing governments.

Rapaport said respected human rights groups have documented severe abuses at Mutare diamond fields since their discovery in 2006 — one of the biggest diamond finds in southern Africa in a century. Those allegations include the killing of at least 214 allegedly illegal miners by the military and “rampant abuses of forced labor, child labor, beatings, smuggling and corruption.”

Chardon said last week the Kimberly Process deserves credit for the original ban on Marange diamonds and for ensuring that the two fenced-off mines are being properly run.

The Zimbabwe Ministry of Mines accuses human rights groups of “peddling falsehoods.” The auctioned diamonds are expected to provide millions of dollars in badly needed revenue for the southern African country, which is struggling to recover from years of economic ruin.

Robert Mhlanga, head of diamond mining holding company working alongside the government, told The Associated Press on Monday that offers were made at the first auction Aug. 11 for all 900,000 carats cleared for sale by the Kimberley Process.

Deals with some of the international buyers were completed and buyers left Harare in possession of batches of diamonds. Other deals are still being processed, he said.

A second auction is scheduled in September. Mhlanga said values of the diamonds are still being tallied.

The mines ministry first said it has about 4.4 million carats in storage and that they’re worth $1.9 billion — about one-third of the national debt or almost the government’s entire spending in the national budget.

The party of Prime Minister Morgan Tsvangirai, Zimbabwe’s former opposition leader now in a shaky coalition with longtime President Robert Mugabe, has cautioned against raising hopes of a rapid economic boom.

Finance Minister Tendai Biti, a close Tsvangirai aide, said estimates that last week’s first bids raked in $72 million were too optimistic. He told the state broadcaster the real amount appears closer to about $45 million, out of which just $15 million could end up in state coffers.

Mining experts also have cautioned that only 40 percent of the diamonds are gem quality, with the rest being industrial-quality stones. In any case, Zimbabwe would not be allowed to flood the world market and bring down global prices, they said.

Pearson Mungofa, a mining official in Tsvangirai’s party, said Zimbabwe lacks experience to identify the value of its diamonds and largely relies on “guesses and estimates,” leading to confusion surrounding the economic potential of the diamond reserves.

By: Angus Shaw

By: Nick Monkey

What does Google and Verizon’s net neutrality proposal actually propose? And what does it mean for you?

Google has to be thinking twice about that “don’t be evil” bit permanently lodged in its corporate motto. After meeting behind closed doors with Verizon, the company emerged on Monday with a set of guidelines for allegedly preserving net neutrality, which many of the concept’s most virulent supporters say grinds the principle to dust. How can the two sides see the same language so differently? What are the stakes for the average American? Here’s a quick overview of what Google and Verizon’s net neutrality agreement actually proposes in laymen’s terms – and what it means for you.

Google and Verzion agree to sell you out.

What is net neutrality, anyway?

Remember when Senator Ted Stevens described the Internet as a “series of tubes? More than just a monument to the ignorance of politicians, that was a cantankerous, near-senile old man’s attempt to explain net neutrality. Let’s see if we can do better by stealing Google’s own description from 2006.

Forget the tubes and imagine a highway. When five o’clock hits, everybody sits in traffic as the roads fill up with cars – which represent data, here. With net neutrality in place, every piece of data waits in line the same way the cars do on the highway. It’s fair. The lack of net neutrality is like throwing down cones to make the left lane a high-speed toll lane. Can’t pay? Sit in line with the schmucks.

It’s not a perfect analogy, but it gets across the basic principle: Rather than splitting a public asset (roads or in this case, wireless airwaves) equitably, the guys with the most cash get the rule of the roost.

What did Verizon and Google agree on?

On the surface, the companies agreed that net neutrality was a good thing and that the FCC should be able to enforce fines for companies that don’t abide by it, and that carriers should be forced to share information on how they route traffic for transparency. You can read the exact language here.

They also created a lot of loopholes and exceptions, which is why a lot of folks are all bent out of shape by it.

What loopholes and exceptions?

The document has two major exceptions to net neutrality as it is written.

The first, and most broad, basically exempts wireless carriers from all the rules except transparency. In other words, they can play favorites and route traffic however they want, as long as they tell us how they’re doing it. Only wired carriers would be subject to net neutrality principles, and even they would have some creative leeway.

The second allows for “differentiated managed services” that would be exempt from the neutrality given to other traffic. The document gives the examples of “health care monitoring, gaming, smart grid, and advanced educational services.” Although it explicitly claims these could not be use to circumvent rules, it provides no guidelines for which types of services warrant exemption and which belong in the same stream as everyone else.

What do net neutrality advocates make of it?

They’re enraged, mostly.

Public Knowledge, a public interest group concerned with digital issues, has made “Google sold you out” its war cry. “This agreement would, among other things, allow Verizon to prioritize applications and content at whim over its mobile broadband network,” the group claims.

The SaveTheInternet.com coalition says “Google is about to cut a deal with Verizon that would end the Internet as we know it.” Putting it more bluntly, “this deal puts the company in bed with the devil.”

Why are Verizon and Google making laws for themselves?

The guidelines set up between Google and Verizon aren’t actually laws anyone else has to adhere too – they’re simply a “proposed Internet framework.” The companies hope the FCC will adopt the language and cement it as the law of the land, but for the moment, they’re just words on a page.

Recently, the FCC has been courting telecom companies – including Google and Verizon – for input on net neutrality rules, but it nixed these meetings last week under intense public scrutiny over the lack of public input. Many critics also question why the FCC is asking the companies it should be regulating for input on how they should be regulated – like a parent asking a four-year-old what would be a reasonable bed time.

What will happen if we lose net neutrality?

In practice, this would mean that a service provider like Verizon could charge a company like Google for access to that special high-speed toll lane for data.

As an end user, that might mean that Mapquest and Bing Maps now load much slower than Google Maps. Hotmail and Yahoo mail load slower than Gmail. Yahoo and Bing searches take longer than Google searches. The plethora of choices you take for granted on the Web begin to evaporate when the biggest player in any space is able to pay for priority handling, shutting out competitors.

Internet service providers could also decide to throttle down services they see as threats to their own business. For example, Comcast could choke bandwidth for sites like Hulu in order to force consumers into its own cable TV packages.

Dozens of U.S. billionaires pledged on Wednesday to give at least 50 percent of their fortunes to charity as part of a philanthropic campaign by two of the world’s richest men — Warren Buffett and Bill Gates.

Based on Forbes magazine’s estimates of the billionaires’ wealth, at least $150 billion could be given away.

Among the rich joining The Giving Pledge campaign are New York Mayor Michael Bloomberg, media moguls Barry Diller and Ted Turner, Oracle co-founder Larry Ellison, “Star Wars” movie maker George Lucas and energy tycoon T. Boone Pickens.

A total of 40 of the richest people in the United States, including Microsoft founder Gates and investor Buffett, now have taken the pledge.

Since launching the campaign in June, Buffett, Gates and his wife Melinda have spoken to about 20 percent of the wealthiest people in the United States — 70 to 80 billionaires — in a bid to persuade them to give away their fortunes.

“In most cases we had reason to believe that the people already had an interest in philanthropy,” Buffett said. “It was a very soft sell but 40 have signed up.”

“We’re looking forward to enlisting many of these 40 to go out and make some calls also so we can report an even greater milestone but we’re off to a terrific start,” he said.

The campaign asks U.S. billionaires to give away at least half their wealth during their lifetime or after their death, and to publicly state their intention with a letter explaining their decision.

Gates has an estimated $53 billion fortune, which places him second on the Forbes magazine list of the world’s richest people, and Buffett, who made his fortune with insurance and investment company Berkshire Hathaway Inc, ranks third on the list with $47 billion.

The Giving Pledge does not accept money but asks billionaires to make a moral commitment to give their fortunes to charity.

TAX BREAK NOT A MOTIVATION

“I’ve long stated that I enjoy making money, and I enjoy giving it away,” energy tycoon Pickens, who is worth about $1 billion, said in his Giving Pledge letter. “I’m not a big fan of inherited wealth. It generally does more harm than good.”

Buffett and Gates will hold several dinners later this year to recruit more billionaires, and members of The Giving Pledge also will meet annually to discuss their philanthropy.

Buffett and Gates also are due to meet with some of the wealthiest people in China in September and India in March.

“We … hope that this catches fire in some other countries,” Buffett said. “If they want to take what we think is a good idea and run with it, we will be cheering.”

Forbes said the United States is home to 403 billionaires, the most of any country. Individual Americans gave more than $227 billion in 2009, according to a the Giving USA report by the Center on Philanthropy at Indiana University, down just 0.4 percent from the previous year despite the U.S. recession.

“I have always thought that the best thing to do is to make the world better for your kids and your grandkids rather than just give them some money,” Bloomberg, who is worth $18 billion, told reporters. “Your kids get more benefit out of your philanthropy than your will.”

Buffett said none of the members of The Giving Pledge were driven by tax breaks. “Not one has talked to me about taxes,” he said. “Anybody who is entitled to take a tax deduction takes it but I think the motivation goes far, far beyond taxes.”

Real estate and construction billionaire Eli Broad, venture capitalist John Doerr, media entrepreneur Gerry Lenfest and former Cisco Systems Chairman John Morgridge joined Gates and Buffett when The Giving Pledge was launched in June. Another 34 members were announced on Wednesday.

Buffett pledged in 2006 to give away 99 percent of his wealth to the Bill & Melinda Gates Foundation and family charities. Bill and Melinda Gates have so far donated more than $28 billion of their fortune to their foundation.

The full list of billionaires and their letters can be seen at www.thegivingpledge.org.

Now that BP engineers have managed to place a cap on the company’s bleeding well in the Gulf, the sprawling oil slicks seem to have retreated from the water’s surface, claimed many media reports this week.

“Where is all the oil?” an AFP headline asked. Time magazine ran a piece suggesting that the environmental impact of the spill has been “exaggerated.” The New York Times ran a story that said the “Gulf oil spill is vanishing fast.” And this very news organization ran a story suggesting that oil-gobbling microbes are eating up a lot the oil.

These reports have angered many — particularly those close to the disaster who are still, well, seeing lots of oil.

“There was more oil at South Pass Tuesday than I’ve seen since this whole thing started; it was really discouraging,” Louisiana charter boat captain Mike Frenette told the New Orleans Times-Picayune’s Bob Marshall. “I don’t know where everyone else is looking, but if they think there’s no more oil out there, they should take a ride with me.”

Don Sutton, another charter boat captain, concurred, telling Marshall that he followed a line of floating oil “that stretched from South Pass to Southwest Pass probably two to three miles off the shore,” more than 15 miles. “And that wasn’t all we saw. There were patches of oil in that chocolate mousse stuff, slicks, and patches of grass with oil on them. The Gulf might look clear, but we’re still seeing oil coming ashore.” Recent satellite photos showing large swaths of discolored water seem to back up the claims by Frenette and Sutton.

Likewise, many coastal scientists and other experts insist that the oil hasn’t gone anywhere. Millions of gallons of oil are still beneath the surface, they say, and all that crude probably won’t rise to the surface for some time until it reaches the shallower waters closer to shore. The oil is appearing gradually, mostly because of the steady stream of dispersants that BP has used to break up the oil into tiny patches.

Doug Radar, the chief ocean scientist for the Environmental Defense Fund, told the Times Picayune that millions of gallons of oil remain unaccounted for.

“If you go back and look at the sheer amount of oil dumped — 60,000 barrels a day for 87 days — you get about 220 million gallons,” Radar said. “Of that, 11 million gallons were burned and 30-some million were collected, meaning about 50 million gallons were eliminated. That leaves you about 175 million gallons of oil-based pollution loose in the Gulf. And when it degrades from the thick stuff you can see, that doesn’t mean it’s all gone. There’s still an untold amount of toxins from that oil in the marine environment.”

Scientists worry that the millions of gallons of dispersants have not curtailed the ecological impact of the spilled oil, but rather have effectively transferred the oil from one part of the ecosystem to another. Researchers recently discovered traces of oil/dispersant mixtures in microscopic blue-crab larvae in the Gulf, indicating that the oil spilled into the Gulf has dispersed into a volume small enough to be ingested at the lower ends of the marine food chain.

Nevertheless, BP announced Friday that it is scaling back its cleanup operations in the Gulf, with incoming BP CEO Bob Dudley reiterating a BP theme: “We are going to be here as long as it takes to make this right.”

By David A. Fahrenthold and Leslie Tamura

Back in May, BP’s chief executive told a British newspaper that “the Gulf of Mexico is a very big ocean,” and the vast amounts of oil and chemical dispersants dumped into it were small by comparison. After he said that, BP’s well leaked for two more months. Hayward’s upbeat assessment was cast as one of many gaffes committed on his way to resignation.

Now, 14 days after the well was closed and 100 days after the blowout, U.S. government scientists are working on calculations that could shed some light on Hayward’s analysis (even if they can’t shed light on why he said it). They are trying to figure out where all the oil went.

Up to 4 million barrels (167 million gallons), the vast majority of the spill, remains unaccounted for in government statistics. Some of it has, most likely, been cleaned up by nature. Other amounts may be gone from the water, but they could have taken on a second life as contaminants in the air, or in landfills around the Gulf Coast.

And some oil is still out there — probably mixed with chemical dispersants. Some scientists have described it floating in underwater clouds, which one compared to a toxic fog.

“That stuff’s somewhere,” said James H. Cowan Jr., a professor at Louisiana State University. His research has shown concentrations of oil still floating miles from the wellhead. “It’s going to be with us for a while. I’m worried about some habitats being exposed chronically to low concentrations of toxins. . . . If the water’s contaminated, the animals are going to be contaminated.”

‘The truth is in the middle’

By July 15, when the mile-deep BP well was capped, it had leaked out enough oil to fill the Pentagon more than 10 feet high. The gulf’s total volume is about 880 million times the size of the Pentagon — although the oil’s effects were concentrated in one corner of it.

On Wednesday, National Oceanic and Atmospheric Administration chief Jane Lubchenco said the oil is now much less visible on the surface and present only in microscopic, dilute droplets further down. She said that was a sign that the gulf ecosystem is resilient and processing the hydrocarbons.

But she said that “doesn’t mean the situation is benign, because it is not.”

“There’s so much noise out there now saying the gulf is dead or the gulf will come back easily,” Lubchenco said. “The truth is in the middle.”

The government’s accounting of what became of all the oil will be key to making this final judgment. Officials did not provide a date when that accounting would be ready. For now, government figures allow only a rudimentary estimate of the oil that might still be unaccounted for.

Relying on the latest estimate of the leak’s total volume — 60,000 barrels (2.5 million gallons) per day, at most — then 5.2 million barrels may have escaped over 86 days. Of that, about 1.2 million barrels were either siphoned, burned or skimmed.

The best-case scenario is that much of this amount has been eaten by the gulf’s natural stock of oil-munching microbes. Several scientists have said they are concerned that these microbes could cause their own problems, depleting the oxygen that gulf creatures need in the water.

But Wednesday, NOAA’s Lubchenco said oxygen-free dead zones have not been detected so far. And Ed Overton, a professor at LSU, said he believed the microbial process, supercharged by summer heat, was helping.

“We have made a gigantic biological treatment pond in the gulf,” Overton said. Because of its work, he said, “we’re well, well over the hump. I would say that the acute damage — we’ve seen it, it’s [already] been done. And that the environment is in the recovery stage.”

Air quality concerns

But, in some places, good news from the water has meant bad news in the air. A NOAA report on the air quality downwind of the blowout site — where as much as 10,000 barrels of oil were burned off every day for more than a month — found high levels of hydrocarbons in the air, as much as 10 times what would be detected in the air over Los Angeles. The amount of “particulate matter,” which means microscopic particles suspended in the air, was about twice that found over Los Angeles.

But on Wednesday, Environmental Protection Agency officials said that the pollutants seem to dissipate in the 40-plus miles between the well site and populated places on land. They said they have taken samples of air at more than 400 sites around the Gulf Coast and have found no evidence that pollutants from the BP spill exceed safe levels.

“Probably the only good thing about the BP spill is that it was far away from the coastline,” said Gina McCarthy, the EPA’s assistant administrator overseeing air-pollution programs. “I’m not denying that people are smelling things. But the nose is a much more sophisticated tool . . . than many people realize,” she said, and a bad smell doesn’t mean toxic air.

Some other portion of those 4 million missing barrels of oil has been scooped off gulf beaches, placed into plastic bags and carted away. In total, 35,421 tons of oily waste has been taken to landfills around the gulf region, according to data from the EPA and BP — a total that includes not just the oil itself but also oil-covered seaweed and beach debris, and oil-tainted protective gear worn by cleanup workers.

The EPA says its procedures will keep the oil from leaching out into groundwater. In Louisiana, in particular, the oily waste is kept in plastic-lined “cells,” with a system for capturing leaking oil before it escapes.

In several communities near the landfills, residents have protested that if BP’s cleanup workers need protective suits to get the oily debris off the beach, then the oil doesn’t belong in their neighborhoods. They worry it will escape into the ground.

“It’s like someone dumping something in your front yard, and then you call in and complain about it,” said Marlin Ladner, 64, a member of the Harrison County, Miss., Board of Supervisors. His coastal county is home to Pecan Grove Landfill, which has received at least 1,210 tons so far. “And they come and pick it up and haul it to your back yard.”

The environmental legacy of the spill — the final proof or disproof of Hayward’s optimism — will probably depend on the oil that’s left. NOAA scientists have offered upbeat assessments of the oil that remains below the ocean’s surface, saying they’ve seen significant concentrations only near the wellhead.

But other scientists, working for Gulf Coast universities, have reported finding large “clouds” of oil miles away from the site.

Cowan, the LSU professor, said that two weeks ago his crew had detected a layer of something thick underwater, then sent a remote-controlled submarine down to look at it. They saw BB-size globs, he said, that were the same orangish color as the oil on the surface. He said that, in deeper water, cold temperatures will slow the breakdown of the oil — and it could affect animals such as worms, fish, crabs and corals.

One recent study from a Tulane University researcher found what seemed to be a worrying snapshot of what this missing oil is doing. Professor Caz Taylor looked at baby blue crabs and saw something odd under their translucent shells: orange blobs. She speculates that the crabs may have molted in the midst of oil or dispersant and trapped some of it literally inside themselves.

“We’re so unsure of what’s going on at this point,” including whether the oil might hurt creatures that eat the crabs, Taylor said. “The worrying thing is that we’re seeing these droplets everywhere that we’re sampling,” she said, from Galveston Bay, Tex., to Pensacola, Fla.

Marc Kaufman and Steven Mufson contributed to this report ]]> http://blog.pascofllawyer.com/2010/07/30/majority-of-spilled-oil-in-gulf-of-mexico-unaccounted-for-in-government-data/feed/ 2 http://blog.pascofllawyer.com/2010/07/27/industries-find-surging-profits-in-deeper-cuts/ http://blog.pascofllawyer.com/2010/07/27/industries-find-surging-profits-in-deeper-cuts/#comments Tue, 27 Jul 2010 12:56:31 +0000 admin http://blog.pascofllawyer.com/?p=54 By most measures, Harley-Davidson has been having a rough ride.

Motorcycle sales are falling in 2010, as they have for each of the last three years. The company does not expect a turnaround anytime soon.

But despite that drought, Harley’s profits are rising — soaring, in fact. Last week, Harley reported a $71 million profit in the second quarter, more than triple what it earned a year ago.

This seeming contradiction — falling sales and rising profits — is one reason the mood on Wall Street is so much more buoyant than in households, where pessimism runs deep and joblessness shows few signs of easing.

Many companies are focusing on cost-cutting to keep profits growing, but the benefits are mostly going to shareholders instead of the broader economy, as management conserves cash rather than bolstering hiring and production. Harley, for example, has announced plans to cut 1,400 to 1,600 more jobs by the end of next year. That is on top of 2,000 job cuts last year — more than a fifth of its work force.

As companies this month report earnings for the second quarter, news of healthy profits has helped the stock market — the Standard & Poor’s 500-stock index is up 7 percent for July — but the source of those gains raises deep questions about the sustainability of the growth, as well as the fate of more than 14 million unemployed workers hoping to rejoin the work force as the economy recovers.

“Because of high unemployment, management is using its leverage to get more hours out of workers,” said Robert C. Pozen, a senior lecturer at Harvard Business School and the former president of Fidelity Investments. “What’s worrisome is that American business has gotten used to being a lot leaner, and it could take a while before they start hiring again.”

And some of those businesses, including Harley-Davidson, are preparing for a future where they can prosper even if sales do not recover. Harley’s goal is to permanently be in a position to generate strong profits on a lower revenue base.

In some ways, the ability to raise profits in the face of declining sales is a triumph of productivity that makes the United States more globally competitive. The problem is that companies are not investing those earnings, instead letting cash pile up to levels not reached in nearly half a century.

“As long as corporations are reinvesting, the economy can grow,” said Ethan Harris, chief economist at Bank of America Merrill Lynch. “But if they’re taking those profits and saving them, rather than buying new equipment, it hurts overall growth. The longer this goes on, the more you worry about income being diverted to a sector that’s not spending.”

“There’s no question that there is an income shift going on in the economy,” Mr. Harris added. “Companies are squeezing their labor costs to build profits.”

The trend is hardly limited to Harley. Giants like General Electric and JPMorgan Chase, as well as smaller companies like Hasbro, the toymaker, all improved their bottom lines despite slowing sales in the second quarter. Among the S.& P. 500 companies that have reported second-quarter results, more than one in 10 had higher profits on lower sales, nearly twice the number in a typical quarter before the recession, according to Thomson Reuters.

“Whole industries are operating at new levels of profitability,” said David J. Kostin, chief United States equity strategist at Goldman Sachs. “In the downturn, companies managed to maintain higher profit margins than ever before.”

Profit margins — the percentage of revenue left over after expenses — crumble in most recessions, as overall sales fall but fixed costs like infrastructure, commodities and rent remain the same. In 2002, during the recession that followed the bursting of the technology bubble in addition to the Sept. 11 attacks, margins sank to 4.7 percent. Although the most recent downturn was far more severe, profit margins bottomed out at 5.9 percent in 2009 and quickly rebounded. By next year, analysts expect margins to hit 8.9 percent, a record high.

The difference this time is that companies wrung more savings out of their work forces, said Neal Soss, chief economist for Credit Suisse in New York. In fact, while wages and salaries have barely budged from recession lows, profits have staged a vigorous recovery, jumping 40 percent between late 2008 and the first quarter of 2010.

Harley-Davidson’s profit gain last quarter was helped by a turnaround in its financing unit, as well as more efficient production, but the company is still cutting.

Harley has warned union employees at its Milwaukee factory that it would move production elsewhere in the United States if they did not agree to more flexible work rules and tens of millions in cost-saving measures.

Even if sales do improve, a surge in hiring is unlikely.

“The last thing we’re worried about is when are we going to have to add more capacity, because what we’re really doing is reconfiguring our entire operational system for greater flexibility,” Keith Wandell, the company’s chief executive, said on a conference call with analysts last week.

Harley’s evolution is part of longer-term shift in American manufacturing, said Rod Lache, an analyst with Deutsche Bank.

At Ford, revenue in its North American operations is down by $20 billion since 2005, but instead of a loss like it had that year, the unit is expected to earn more than $5 billion in 2010. In large part, that is because Ford has shrunk its North American work force by nearly 50 percent over the last five years.

“These companies have cracked the code of a successful industrial turnaround,” Mr. Lache said. “They’re shrinking the business to a size that’s defendable, and growing off that lower base.”

To be sure, sales are rising for many companies, albeit at a much slower pace than the increase in profits. Among the 175 companies in the S.& P. 500 that have reported earnings for the second quarter, revenues rose 6.9 percent on average while profits jumped 42.3 percent, according to Thomson Reuters.

Still, even at corporations where both the top and bottom lines are expanding, the focus remains on keeping profits high, not rebuilding work forces decimated by the recession.

When Alcoa reported a turnaround this month in profits and a 22 percent jump in revenue, its chief financial officer, Charles D. McLane Jr., assured investors that it was not eager to recall the 37,000 workers let go since late 2008. “We have a tight focus on spending as market activity increases, operating more effectively and minimizing rehires where possible,” he said. “We’re not only holding headcount levels, but are also driving restructuring this quarter that will result in further reductions.”

Michael E. Belwood, a spokesman for Alcoa, said more than 17,500 of the former workers were employed at units Alcoa has since sold, but added that the company “had to be resized to match the realities of the recession.”

“We’re keeping a close eye on costs because there is still uncertainty about the stability of this recovery,” he said.

For two months earlier this year, Wisconsin dairy farmer Vernon Hershberger let the proposed contract sit unsigned on his desk.

The agreement specified that a nonprofit organization known as Right to Choose Healthy Food, and headed by raw food advocate Aajonus Vonderplanitz, would lease his farm’s 50 cows and dozens of chickens — “the works,” says Hershberger. In exchange, the organization would have access to all the food from the animals: milk, eggs, and meat.

Then, on June 2, agents from the Wisconsin Department of Agriculture, Trade, and Consumer Protection raided his Grazin’ Acres farm near Madison, and placed seals on the refrigerators in his small store. He was operating without a retailer license and a dairy license, the regulators said. The fact that he wasn’t open to the general public, but was selling direct to “members” of his farm, didn’t matter.

The day after the raid, Hershberger cut the DATCP seals and defiantly re-opened for business. His confidence was buttressed by the fact that he decided that day to sign the contract with Right to Choose Healthy Food.

The deal is “simple,” says Hershberger, and besides, “I think Aajonus knows what he’s doing.”

The wizard of raws

Vonderplanitz followed up by sending a letter to Wisconsin’s DATCP explaining that Hershberger

… is not engaged in commerce. His farm animals are leased to Right To Choose Healthy Food’s Grazin’ Acres Farm Coop Club who owns them. Vernon Hershberger is the boarder, caretaker, milker, packager, and deliverer of our animals’ products. Since the private club owns dairy, egg, and meat production, there is no commerce involved. Since no commerce of buying or selling raw milk and our other products to the public is involved, or distributed in public places, government agencies have NO JURISDICTION over the production, labeling and use of the club’s products consumed by its members, nor is any permit required … It is shameful for (DATCP) to try to prevent us from producing and distributing our health-giving raw milk and other farm products to our members by threatening and imposing false warrants, seizures, and arrests of our property. Since you were duly warned that this was a private club and you had no jurisdiction over it, your actions were criminal stealing, kidnap, and trespass.

Though DATCP agents have since been back to his farm twice more with search warrants, the last time taking Hershberger’s computer, checkbook, and other records, there has been no sign of any criminal or other charges being filed against the farmer.

If the experiences of other farmers like Hershberger are any indication, there’s a good chance no charges will come. Over the last eight years, Vonderplanitz has put together lease agreements giving Right to Choose Healthy Food, and its hundreds of consumer members around the country, the rights to the land and produce of about 40 small farms.

While there have been a number of raids, especially in recent months, as I described previously for Grist, there have yet to be any legal challenges brought against the lease arrangements, he says. “If they had jurisdiction, they would have busted us a long time ago,” he told me.

Not only is Vonderplanitz not afraid of a legal challenge, he welcomes one. “I hope they file charges against us,” he says. While the distribution centers in major urban areas, like the one raided in Venice, must comply with fire codes and zoning regulations, they need not comply with food licensing or labeling laws required of foods sold to the public, he argues. Nor must they comply with the federal prohibition on interstate sales of raw milk. There can’t be such a prohibition for member leaseholders, he maintains, since they own the farm products when they are produced.

“If you take your property from Pennsylvania to California, there is no federal jurisdiction,” he says. Vonderplanitz likens the farm lease agreements to automobile leases. “In lease agreements, you have total ownership of the contract and responsibility for the items leased. If you wreck a leased car, you are totally responsible.”

The analogy is important, he says, since lease-related law has a 75-year history of recognition by our legal system. “Herdshare” and “cowshare” agreements, used in many states to give raw-milk drinkers shares in cows and goats, are less legally secure, he says. He likens the rights of a herdshare owner to those of an owner of stock in a major corporation, where shareholders have certain financial rights, but don’t necessarily have right to the corporation’s products, or responsibility for the products. (Though herdshare rights were upheld by an Ohio court in 2006, and the state didn’t appeal the case.)

Vonderplanitz maintains that the lease agreements aren’t just devices to enable foodies to avoid complying with food licensing rules and the federal interstate raw milk prohibition, and has successfully persuaded farmers who’ve considered backing out of the agreements to stand firm.

In a case last winter, a Midwest farmer in the midst of a two-year lease agreement with Right to Choose considered shutting down his raw milk production after the U.S. Food and Drug Administration sought to enforce warning letters maintaining the farmer was violating the federal prohibition on raw-milk sales across state lines. Vonderplanitz says he told the farmer that his group would enforce its lease agreement by taking over the farm and cows to continue producing milk for members. The farmer, encouraged by Vonderplanitz’s commitment, decided to fire his lawyers, who’d encouraged him to accept the FDA mandate, and continue with the Vonderplanitz organization. Vonderplanitz says he notified the FDA, much the same as he did Wisconsin DATCP in the Hershberger case, that the farm was under a lease agreement, and says the farm continues to provide his members with raw milk.

Another farmer who signed on with RTCHF was Daniel Allgyer. He made his decision shortly after agents from the FDA showed up at his Pennsylvania farm last April with a search warrant and a letter alleging he was involved in interstate sale of raw milk. Allgyer continues to supply RTCHF with milk.

Vonderplanitz sees himself as having “rescued” these and other farmers from possibly being thrown out of business by FDA and state agriculture authority actions against private food organizations. “They have left all the people alone since I notified the authorities.”

The raid on the RTCHF warehouse in Venice, Calif., three weeks ago, along with that on Sharon Palmer’s farm in nearby Ventura County, whose goats are under lease to RTCHF, represent payback in Vanderplanitz’s view.

“They are looking for any way they can to break us,” he says. “They’re not going to get away from it.”

He says a number of prominent Los Angeles lawyers have offered legal services, and RTCHF plans to sue the government agencies involved in the raids against Rawesome and Sharon Palmer’s farm for $1 million apiece, for false arrest.

Crackdown habit

It’s hard to know what the government agencies will do. While they have clearly shied away thus far from a legal confrontation over the leasing matter, the various searches suggest officials are seriously considering legal action, such as charges of violating the ban on interstate sale of raw milk. Or else they could continue their harassment actions in hopes of intimidating consumers and farmers, and scaring them away from the increasingly popular leasing arrangement.

Even without government legal action against RTCHF, there is the pending suit against the FDA by the Farm-to-Consumer Legal Defense Fund challenging the federal prohibition on interstate commerce of raw milk.

Clearly, we are moving closer to judicial consideration of how far consumer rights extend when it comes to consumers opting out of the factory food system and arranging for private access to the nutritionally-dense foods of their choice.

Their rationale is paper thin.

First, FHFA (and Fannie and Freddie before it) continue to erroneously call PACE financing a “loan.” PACE uses longstanding benefit assessment powers of municipal government to provide infrastructure improvements for a specific property (e.g. new sewer lines, sidewalks, or street overhauls) and to assess that property its share of the benefits. In many states, the PACE enabling legislation literally tacked energy-efficiency retrofits on to the existing assessment authority. If FHFA has a problem with PACE, they implicate the power of every city and county to invest in public goods and to assess benefitting properties for those goods.

Energy-efficiency retrofits are also public goods, in contrast to Fannie and Freddie’s claims. When a property in a city undergoes a significant energy efficiency retrofit, it reduces (indefinitely) the cost of living in that property and likely increases the property’s value. It also reduces that municipality’s dependence on imported energy sources, its emissions of harmful pollutants (like mercury) from fossil fuel power plants that supply that energy, and greenhouse gas emissions. See if a sidewalk or street (longstanding uses of assessment authority) can do that.

FHFA also falsely implies that PACE poses a significant risk to lenders. This is in stark contrast to the analysis presented in Todd Woody’s July 2 article in the New York Times — Analysis: Energy Lien Is Little Threat to Loan Giants — which suggests that the seniority of a PACE lien would, on average, put the lender behind by $75 per property. If every household in the U.S. participated in PACE and every one of those properties was backed by Fannie and Freddie, that would be a total liability of $8 billion. But if that seems like a lot, consider that Fannie and Freddie back more than $6 trillion in mortgages and that they’ve accepted $145 billion in taxpayer assistance to cover bad bets during the housing bubble.

These spurious concerns with PACE also come as a stab in the back to many PACE advocates. In guidance last fall, Fannie and Freddie suggested that they were simply looking for a framework that would minimize the risk that PACE programs posed to their lending priorities. The White House and Department of Energy issued such a framework in October 2009 and have held recipients of stimulus dollars to those limits. State enabling laws have mimicked them. PACE programs have exercised due diligence.

Despite this, the guidance letters from the lenders have not only completely undermined the program, but have even suggested that the lenders may redline any borrower in a community with a PACE program, whether or not they participate in the program, because of the perceived risks.

Some states and PACE programs are already considering legal action. Congress may take up legislation to override the giant lenders. What’s clear is that the arguments of Fannie and Freddie are paper thin and it’s time for advocates to start punching holes.

This commentary originally appeared on the New Rules Project website. See more on municipal energy financing at www.newrules.org.