When it comes to gambling, there has never been a shortage of opinion amongst the masses. Either people favor it or they feel strongly that it accompanies some of society's more depraved behaviors, along with attracting crime, and is a negative temptation for our youth.

Regardless of what side of the table you are on, most folks can agree that they would like less government regulation when it comes to indulging in their leisure activities of choice. But such becomes far less clear when the government jumps in.

As hard as we might try to understand the present United States federal laws on the books when it comes to gambling, and especially with the advent of constantly evolving computer technology, legislation has not kept pace.

Additionally, lawmakers are too often wont to ignore a problem, lest it detract from their popularity, and more importantly, when it might interfere with receiving campaign cash from certain lobbying industries.

So they drag their proverbial feet until an issue reaches a fever pitch and it simply must be addressed; even if it is not in a cohesive manner or in the best interests of their constituents.

Also, with respect to gambling, I have previously documented in several previously published 2010 articles that many state governments in the U.S. have already started to craft legislation in hopes of feeding their depleted coffers by further relaxing their laws to allow more access to gambling.

Everything from expanding brick and mortar gambling casinos to advancing racinos and adding slot machines at horse race tracks to allowing intrastate and interstate online gambling are seen collectively as a potential bonanza that will cure all ills for the empty tills lining their budgets. And it is estimated by the federal government that there could be as much as a $42 billion windfall over a 10-year stretch in taxable revenue.

It is quite interesting, but not by virtue of coincidence, that most of this seeming rush to pass such legislation by U.S. states comes at the same time that the U.S. Congress is plotting ways to overturn the only recently implemented the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), through a proposed law by Congressman Barney Frank (D-MA) that he originated in 2009.

It just won its initial approval in the U.S. House of Representatives through its Committee on Financial Services on July 27, 2010, on which Rep. Frank is the Chairman. Known as the House Resolution 2267 (H.R. 2267) Internet Gambling Regulation, Consumer Protection and Enforcement Act the House Financial Services Committee's approval is but the first phase of its passage, required by both houses of the U.S. Congress.

In short, the UIGEA was a nice way for the U.S. government to keep offshore online betting casinos at bay from the American consumer. It was initially enacted in October 2006, but was never implemented until June 1, 2010, after many long delays by the federal government's U.S. Department of the Treasury in compelling U.S. banking institutions to honor its rules.

However, the main problem, which will continue to haunt H.R. 2267 is the actual legal definition of "illegal online gambling," thus creating all kinds of loopholes and wiggle room, from the living room gambler to organized crime, to skirt the law.

And also of concern in the presently active UIGEA is that banks remain the only legally accountable parties subject to penalty and prosecution for furnishing offshore online gambling to U.S. residents, while the U.S. gambler placing the bet remains safe. And to date, banks and payment processors are still unclear as to which transactions are actually required to be blocked.

Due to the difficulty in deciphering a non-finite system for the processing of legal U.S. based online gaming transactions, consumers' credit cards and debit cards cannot only be blocked or frozen, but accounts are often cancelled.

Furthermore, a consumer, ignorant of the UIGEA could innocently go to a gambling site, not even knowing from where it emanates and later find that their credit line or checking account is in peril, simply by clicking on an illicit site.

So for now, that is the best that the U.S. government has served up, as concerns online gaming. But not shy to out-do itself, even if it compounds a dysfunctional process even more so, the federal government has plans to muck it up again through a poorly framed H.R. 2267 almost immediately setting it up to fail.

H.R. 2267 is overly broad and murky, yet will intrinsically involve the U.S. Department of the Treasury and the U.S. Internal Revenue Service (IRS), amongst other U.S. federal agencies, for starters.

It is merely a wish list without the necessary mechanisms in place to not only generate the hoped for tax revenue, but for enforcing the law itself. And it stands to open the floodgates for illicit online gaming, incongruous with what it should be designed to do.

It would leave online gambling sites left to police themselves, merely under the purview of the U.S. federal government.

And like most other large pieces of U.S. legislation that has been conveniently rushed through to final Congressional passage, H.R. 2267 is another boiler plate document of mandates to be fulfilled at a date certain after it is already signed into law.

But due to its ambiguity, which seemingly appears by design, H.R. 2267 calls for provisions and assorted amendments that cover a wide array of issues. And it is worth noting several of them here, in order to show how arduous it will be for its desired compliance.

Firstly, it authorizes the U.S. Secretary of the Treasury to create a licensing program for regulations and enforcement of the law, issuing licenses to online gambling entities, effective for a period of five years.

Thus, it prescribes the licensing requirements for such internet gambling entities and prohibits operation of an Internet gambling entity that knowingly accepts bets or wagers from persons within the U.S. without the necessary license issued from the U.S. Department of the Treasury.

The law would prohibit a person, deemed prohibited from gambling with an online gambling entity, from collecting any winnings. Such a system to screen a gambler's veracity must be created by each gambling entity, and to be overseen by the federal government. And such is pure folly at this juncture.

H.R. 2267 would require that an online gambling entity pay required taxes to the IRS. And most curiously of all, each gambling entity, itself, would need to implement safeguards against fraud, money laundering, and terrorist financing.

In addition, each online license would require that gambling sites have strong protections in place to prevent minors from gambling online, and to prevent inappropriate online advertising targeted to underage gamblers or specifically aimed at compulsive gamblers.

Not only must the gambling site maintain a list of compulsive gamblers, but must block them from site access. And it cannot allow access to its site for those individuals who are delinquent on child support payments. These are just some amongst many other illusory imperatives.

Enforcement of U.S. law for the prevention of and tracking of electronic transactions of funds sent to terrorist organizations abroad has been weak at best through the U.S. Department of the Treasury, nine years since September 11, 2001. And to essentially require online websites to take on such a task is laughable.

Other proposed mandates include that debit cards only be used for transactions, to the exclusion of credit cards. Offshore online gambling operations such as PokerStars.com, FullTiltPoker.com and UltimateBet.com, which allowed U.S. players to access their sites after the UIGEA went into effect, will be banned from acquiring a U.S. license, as well as other entities that intentionally violated this U.S. law.

Each state and Indian tribe may opt-out of the federal legislation during the first year after its enactment, requiring that their residents abide by respective local laws.

And sports betting, with the exception of U.S. based horse racing and para-mutuel betting, would be disallowed, much to the delight of the professional and college sports industries. U.S. state lotteries, should they eventually become accessible online, would also be exempt.

But perhaps falsely anticipated with this new law is the notion that gamblers will be allowed much freedom to do as they wish in the privacy of their own homes. However, given the bevy of requirements for oversight, nothing could be further from the truth. Deadbeat dads need not log on, as previously noted.

But more realistically, beginning with Internet Service Providers or ISPs, one would expect that they would have to be the gatekeeper for gathering initial information as to whether the gambler is even eligible to gamble, based upon their state of residence, if that state has opted out. And the banks would be the second line of defense, cutting off the gambler's funds if need be, should the online gambling site find that it is a documented compulsive gambler placing the bet.

And should a player gain access to a legitimate site, then the process begins as to whether they are of majority age, has been flagged as a delinquent parent, or has a criminal background. Without such due diligence, the individual gambling site is subject to losing its license.

Certainly none of these entities are law enforcement agencies, so for the federal government to expect legitimate oversight to be realized at these levels seems more than silly.

The purpose of this report was to give a glimpse into what lurks ahead for U.S. online gaming and is not intended to disparage the gambling consumer nor the gambling industry. Rather, the intent is to highlight some of the future changes in law which may not best serve the public or the industry.

And contrary to the online gaming industry's millions of lobbying dollars spent in Washington, D.C. in order to help initiate this latest planned legislation, it might be best for it to restrain its glee, at this time.

For one only needs to look at the present economic condition of Las Vegas, NV. It has now been proven, going back to the onset of the current recession in 2008, that the gambling industry is indeed no longer recession proof. Yes, in time Vegas and its hurting East Coast counterpart, Atlantic City, NJ, will both rise again.

However, with a 14.5% unemployment rate that Las Vegas presently owns, it is evidence for when entire economies are dependent upon the gambling industry for the creation of jobs and funding municipal programs, disaster can ensue. Therefore, for entire U.S. state and federal programs' very survival to be based upon discretionary income from gambling has lawmakers living in a fool's paradise.

Hopefully, in the coming weeks and months, prior to the entirety of the U.S. House of Representatives approving H.R. 2267 and before it is sent on to the U.S. Senate, that not only will cooler heads prevail, but that a better proposed outcome will exceed before everyone's chips are cashed in.

Cheers!

Copyright ©2010 Diane M. Grassi

Contact: dgrassi@cox.net

With the melt down of the global economy over the past 2 years, multi-national brokerage firms and trusted financial institutions bore the brunt of accusations of gambling away the financial health and futures of investors, primarily through the sale of toxic mortgages with credit default swaps as the vehicle in doing so.

Yet, it is the mainstreaming of gambling on many levels that has created a culture whereby it has become an acceptable norm for not only corporations but governments in the United States, on both the federal and state levels, to literally invest in the gambling industry, with the recession as the excuse for its necessity.

Yet, for years prior to the current recession, brokerage firms such as Goldman Sachs & Co., Merrill Lynch & Co. and Fidelity Investments were already investing their clients’ stocks and mutual fund portfolios, in financing offshore casinos.

The question remains as to whether they skirted U.S. federal law, which prohibits offshore online gambling for Americans, as well as to whether they made reliable investments on behalf of their clients, many of whom remain unaware that such financial instruments are involved in such volatile industries. So, Wall Street was already in on the game.

Fast forward to 2010, where many U.S. states are on the precipice of bankruptcy and are desperate for that magic bullet to increase tax revenues without continually cutting services for their already over-taxed residents. And to that end, many state governors and state legislators are clamoring to push through laws in anticipation of overturning the federal law in place, prohibiting sports betting on both professional and amateur sports, otherwise known as the Professional and Amateur Sports Protection Act of 1992 (28 U.S.C. §3701) (PASPA).

To wit, the state legislature of New Jersey passed State Resolution No. 19 on January 12, 2010, which authorizes its President of the Senate to “take legal action concerning certain federal legislation prohibiting sports betting.” It would repeal the federal ban on sports betting, in all other U.S. states, with the exception of Nevada, Delaware, Oregon and Montana, already permitted to offer parlay-type sports betting. Nevada, however, exclusively enjoys all types of sports betting, statewide, on any professional or amateur sports games, in any capacity.

Basically, New Jersey, and specifically Senator Raymond Lesniak, who originally launched a lawsuit on his own in March 2009 against the federal government, claims that the 1992 law violates the 10^th and 14^th Amendments to the U.S. Constitution, in that “It establishes a selective prohibition on sports betting in the U.S.” The argument is that it violates the 10th Amendment to the United States Constitution by regulating a matter that is reserved to the States. And that it violates the 14th Amendment to the United States Constitution by being unconstitutionally discriminatory against the Plaintiffs and the people of the State of New Jersey.

Lesniak’s case presently resides in the U.S District Court, District of New Jersey, seeking declaratory relief. But the upshot is that New Jersey believes that it “Would benefit significantly from lifting the federal ban and legalizing sports betting in this state, as increased revenues would be generated and numerous jobs would be created for New Jersey residents as a result of sports betting activities at Atlantic City casinos and New Jersey’s racetracks, further enhancing tourism and economic growth,” according to Resolution No. 19.

Prior to PASPA, the Wire Act was enacted in 1961. It was intended exclusively for prohibiting the placement of bets by telephone to bookmakers for sporting events, and was largely put in place by then U.S. Attorney General, Robert F. Kennedy, in order to discourage organized crime and bookmaking. But gaming and its technology has come light years since 1961, and it would appear that the Wire Act’s shelf life has thus expired.

Meanwhile, in the U.S. Congress, House Representative Barney Frank (D-MA), Chairman of the House Financial Services Committee, has promoted a federal resolution to legalize and regulate the internet gambling industry in the U.S. (H.R. 2667). That proposal falls on the heels of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). It proscribes that offshore internet gambling is a violation of federal law.

Furthermore, legislation was passed by the New Jersey legislature in its state Senate to amend the New Jersey State Constitution, allowing legalized sports betting, which the New Jersey voters would ultimately vote on in a referendum as early November 2010.

But this constant back and forth between drafting new law and upholding existing legislation on a federal level to regulate gaming, runs in direct conflict with those states introducing new laws, geared to open up the flood gates for a variety of legalized gaming platforms, including sports betting. In addition, the National Indian Gaming Association, with respect to state Indian gaming contracts, originally authorized by the U.S. federal government, presents other conflicts on both state and federal levels.

Therefore, with the rights of gamblers continually in flux, the question must be asked what about the rights of non-gamblers and the resources that will be expended towards the downside that accompanies a gambling culture, upon which states will necessarily become dependent?

In the state of Nevada alone, with unemployment approaching 23%, for those presently receiving extended unemployment benefits as well as those no longer receiving such benefits, it is the gaming industry specifically that is responsible for such a jobs freefall which accompanies a nearly $1 billion state budget shortfall. Add to that the highest mortgage foreclosure rates in the entire U.S. and there arises a recipe for disaster.

And as gaming drives all other industry including construction, conventions and tourism, primarily in Las Vegas, it would make one wonder what other state officials are thinking when gaming revenues in Las Vegas went down over 20% between 2008 and 2009, and it has yet to come out of its funk.

Las Vegas Strip properties’ construction is at a virtual standstill with over leveraged multi-national conglomerates also reeling from the worldwide mortgage crisis. It appears that it was not only the little guys at the slot machines who gambled with their fortunes over the past few years.

With respect to sports betting on the National Football League’s (NFL) Super Bowl, Las Vegas betting revenues for the past 2 seasons of 2008 and 2009 were down considerably from years past. Nevada casino sports books in 2008 lost $2.6 million on the Super Bowl and in 2010 a total of $82.7 million was wagered with a net gain of only $179,000.00 more for casino sports books than in 2009. In contrast, $94.6 million was wagered in 2006, prior to the recession.

Yet, New Jersey is convinced and presupposes that sports wagering will generate hundreds of millions of dollars in state revenue over the course of a 5 year period, for its state alone. And it remains dedicated to also expand casino gambling in spite of its own realized massive decline in profits over the past 2 years.

But the state of New Jersey is hardly alone in its desire to gamble on gambling with many states introducing legislation and campaigning for both intrastate and interstate forms of gambling, both online and throughout casinos and racetrack locales throughout the U.S.

Currently, 48 states enjoy some form of legalized gambling and/or state lotteries, with the exception of Hawaii and Utah which do not presently permit any type of gambling, wagering or lotteries. However, Hawaii is presently weighing legislation for a stand-alone casino in Waikiki.

States in addition to New Jersey proposing sports betting and some type of expansion of casino gambling, including online gaming, with some states already preparing such legislation regarding sports betting in the event that PASPA is overturned includes: Iowa, Delaware, Massachusetts, California, Texas, Alabama, Missouri, Georgia, Florida, Pennsylvania, Indiana, Maine, New Hampshire, Connecticut, , Michigan, Kentucky, Illinois, amongst others.

In the case of Delaware it won the right in 2009 to offer 3-game parlay style sports betting at its 3 racetracks or racinos for NFL games only, as states that previously offered lottery style or legalized sports betting from 1976-1990 were exempt from PASPA. Yet, after its well fought challenge in federal court in 2009 for Delaware to be permitted to bet on all professional sports a la Las Vegas style without restrictions, it was defeated. But Delaware has not yet given up its fight and its case has been appealed to the U.S. Supreme Court.

Iowa is also leading the charge in crafting legislation to allow legalized sports betting. However, Iowa State Senator, Jerry Behn (R-Boone), thinks that gambling is a “Tax on the people who can afford it the least.” Yet, his colleague, State Senator, Jack Kibbie (D-Emmetsburg), on betting on professional sports says, “People say I would love to do what they can do in Las Vegas.”

Perhaps those with the same sentiments as those of Senator Kibbie will not be so game, so to speak, when there remains little discretionary income for such sin taxes to generate anticipated windfall profits.

With respect to California’s new plan there comes an additional rub. It plans to introduce an online gaming network. Yet, it potentially could be in violation of Indian Gaming licenses or compact agreements that California entered into in 1999 with Native American tribes in its state. The compacts gave the tribes exclusive rights to any gambling that involved gaming devices including slot machines, roulette tables and video poker machines, etc.

Furthermore, it took 5 years for California to get the tribes to honor the payment of taxes due to the state of California by virtue of the compacts. The tribes withheld tax payments until 2004. However, the state of California still gives such exclusive rights to the Indian tribes through 2030, which remains a binding agreement to date.

Now, the California tribes have threatened to once again withhold paying the government of California its share of taxes due for gaming revenues, should California proceed with its online poker network plans. The state’s position is that the compacts do not include poker and cover only games of chance. Yet, the tribal councils deem gaming devices to include computers used for online gaming, and thus negating California’s plan.

Such a dust-up could resonate through the Native American community, with its 442 tribal casinos operated by 237 tribal governments and Alaska native villages in 28 states. Revenues translate into a nearly $30 billion a year industry for them.

And Congressman Frank’s legislation to regulate internet poker would also be a direct threat to Indian gaming casinos, unless the Indian Gaming Regulatory Act of 1988 is somehow amended.

Ideally, California wants its poker network to go nationwide, raising revenues by ultimately licensing interstate networks and thereby generating additional profits through the ownership of such various licenses between states. The hope is that it could eventually trump PASPA.

Everything is politics, it would seem. But complicated legislative loopholes aside, basing entire economies – and California’s alone is the six largest in the entire world – on games of chance is quite the risky proposition itself.

And how taxpayers can be expected to trust their state governments to invest in struggling enterprises, already in the red, in order to prop up their cash-strapped states, many nearing junk-bond status due to irresponsible governing, remains the $64,000.00 question.

Time was when Vegas thought gambling was recession proof. And there should be little doubt that Las Vegas now serves as the poster child for that which results when gamblers stop gambling and traveling to destination resorts.

And for public officials to abandon all reason and principles, looking for a quick fix, rather than by relying upon ingenuity for the creation of jobs and revenue outside of the gambling sector, could very well come back to bite them, in the end.

Copyright ©2010 Diane M. Grassi

Contact: dgrassi@cox.net

In this third chapter of this ongoing discussion and analysis of United States energy policy and its ramifications both realized directly and indirectly from the U.S. Energy Policy Act of 2005, (EPAct 2005) it would be irresponsible not to include U.S. nuclear energy policy in such analysis.

As such, the EPAct 2005 and its previously referenced and unprecedented mandates, in prior chapters of this report, play a role with the reformulation of the regulation of U.S. nuclear energy and its projected and rather overwhelming imminent comeback.

The nuclear energy industry has become a global proposition given the changing geographic demands of energy needs in newly industrialized nations such as India and China. And it would be foolish for the U.S. to assume that it operates in a vacuum and that its future energy needs and demands will not be impacted by such changes in a global economy; one in which the U.S. is now primarily at the receiving end of offshore manufactured goods, including more and more of America's food supply.

But the global economy has but given the U.S. government and in particular in this case, the U.S. Department of Energy, (DOE) an excuse to take the proverbial lid off of sound national security policy which has necessarily dictated U.S. energy policy for decades, until now, for the safety of the American people and the integrity of its critical infrastructure.

Although the first large scale civilian nuclear plant started providing electricity in 1957, it was basically between that time and the late 1970's when all of the current operating nuclear reactor facilities were constructed. And with an average lifespan up to 60 years for each, most of the currently operating 104 U.S. nuclear plants are either in or have applied for their 2nd 20-year licensing period extensions.

Since the last U.S. nuclear reactor was ordered in 1973, those handful that were completed, after 1978 and post-3 Mile Island, were ordered prior to 1973. To wit, in 1996, the last U.S. plant constructed, the Tennessee Valley Authority's Watts Bar 1 reactor in Tennessee, was the result of a revived dormant license from 1970. And there are plans to build the Watts Bar 2 from another previous license from dating back to1973.

Since U.S. nuclear energy policy has nearly come full circle today, it is important to take stock of its history. The Atomic Energy Commission, (AEC) was formed through the Atomic Energy Act of 1946, originally to specifically oversee the military's and civic atomic energy programs. And it was given the expanded responsibility, for the first time, to assume dual oversight and regulation of atomic energy both militarily as well as commercially through the Atomic Energy Act of 1954.

But it was through the Energy Reorganization Act of 1974, that created the Nuclear Regulatory Commission (NRC), the present U.S. nuclear regulatory agency, to assume the oversight authority from the AEC. It now regulates most U.S. commercial nuclear activities, including nuclear power reactors and the use of radioactive materials in industry, medicine, agriculture and scientific research as well as fuel cycle facilities and nuclear waste management.

The 1974 law was seen as an opportunity to put trust back into the oversight agency which took on the dual task of both promoting nuclear power while safeguarding the American people, initially in 1954. And it was after that point in time that the American people had already begun to lose trust in the agency's ability to do so. Apparently, the U.S. government thought that changing the acronym of the agency would calm the public's displeasures.

But it was during the late 1960's and early 1970's when the nuclear plant construction boom was in full gear and simultaneous reassurances from the federal government to keep safeguards in place fell on the deaf ears of energy consumers. Most importantly, the agency was designated to walk a fine line of both promoting commercially viable nuclear energy as well as handling all of the required licensing for new construction of nuclear power plants.

And in this global economy, at a time when the U.S. is seeing extraordinary growth in the foreign direct investment and acquisition in U.S. critical infrastructure, it appears reaped with conflict for the licensing agency to also be able to independently assess potential security risks both civilly and criminally.

Unfortunately, the notorious Browns Ferry Nuclear Plant fire in 1975 in Decatur, AL could have been avoided and was the result of human error rather than an unexpected meltdown. A mechanical technician foolishly was looking for reported air leaks within the reactor with a lighted candle which ultimately started the fire. But
Three Mile Island Unit 2 (TMI-2) nuclear power plant near Middletown, Pennsylvania, on March 28, 1979, was the most serious nuclear plant fiasco in U.S. history. The reactor sustained the melting of half its core, which was later found to be a combination of technical and human error and allowed for released radioactive gases into the atmosphere and putting its employees immediately at risk.

The 3 Mile failure was followed in 1986 by the misfortune of Unit 4 of the nuclear power station at Chernobyl, Ukraine in the former USSR. It emitted radioactive material, far more deadly an accident that 3 Mile Island, affecting 52,000 people in the vicinity, immediately killing 30 people and possibly impacting up to 5 million others. Nevertheless, it was 3 Mile Island that provided the final nail in the coffin for skittish investors in U.S. nuclear technology, although nuclear facilities throughout the U.S. still provide 20% of electrical power generation. It remains very low in greenhouse emissions and is considered a form of clean energy.

In spite of the NRC's own damage control to restore safety measures in nuclear plant facilities over the past 30 years, its ill-repute remains along with remnants of trepidation in reinvesting in nuclear energy. Therefore, the apparent overnight reverse course by the DOE in lining up investors to submit license construction applications for nuclear energy plants, with some 20 expected by mid-2009, has set off alarm bells of another sort.

And that brings us back to the EPAct of 2005 which provides for a vast assortment of givebacks, subsidies and federally subsidized loan guarantees including risk insurance packages to the brokers and investors who come a-callin', totaling billions of dollars worth of incentives. And once again, foreign owned holding companies, foreign government-owned entities and foreign-U.S. joint ventures, acquisitions and mergers will be the recipients of these U.S. taxpayer provided benefits.

The nuclear energy industry not only remains a hot-button issue because of its sullied past, but because of a heightened internal as well as public awareness of its ever-present national security risks it now poses in a post-9/11 world. In addition, there is the issue of the failing power grid infrastructure, which has not been improved in decades, and minimally maintained, along with a continued U.S. deregulation policy from which the American economy may never recover.

All of the aforementioned but creates for a perfect storm, all the while U.S. foreign policy dictates to other nations and regions on the ways in which they may engage or use nuclear material, whether for weaponry or for electrical power distribution.

The first step in trying to comprehend this multi-faceted and current energy policy, based upon both its history as well as current law, is to understand the revised NRC application process. Although the regulation revisions date back to 1989, the most recent and final rules were not certified and published in the Federal Register by the NRC until August 2007 (10 CFR Part 52).

The revisions have changed the entire regulatory review process and framework for the construction of new nuclear reactors and facilities. And over the next 18 months, such changes in the regulation process, with ink barely dry, will be tested in a paint-by-numbers fashion.

The EPAct 2005 while not intrinsic to the actual changes in NRC rule making, has played a consequential role in incentives for investors and ultimately the NRC's seeming rush to finalize regulation revisions over a matter of months, after many years they were held in virtual abeyance.

And now the one time 2-step licensing process created for its thoroughness and for compliance with the Environmental Protection Agency (EPA) as well as providing enough time to have the appropriate number of public hearings, has been whittled down to a 1-step process; one that appears less investigative in scope and more equivalent to drive-through governance.

In order to supposedly bring an improved regulatory model for U.S. nuclear energy construction, which the NRC believes to be more efficient, the COL, or combined license application, early site permits (ESP), and standard design certifications pushes the process along more quickly. However, also cut in the process will be preoperational hearings on plant construction qualification that would be limited and not required by the NRC, and minimizing public input.

The ESP procedure includes site safety issues and emergency plans apart from the plant design. The NRC's and nuclear industry's reasoning is that the new process will cut down on delays, cost overruns and reduce the application process down to 42 months. In that regard, there is some speculation that the next nuclear plant could break ground in the U.S. by the end of 2010 and perhaps be completed by 2015.

In the final part of this series, the actual players or investors in new U.S. nuclear plants construction will be addressed as well as who and from where from these entities hale. And the mechanisms mandated in the EPAct 2005 for lucrative financial rewards to these corporations will be discussed. Whether or not such investors will be even remotely close to ensuring the fiscal as well as environmental health of the American people is an important question which will be asked.

And finally, that which is most crucial in this entire changing energy landscape, that being the national security of the U.S, was etched into law in the Atomic Energy Act of 1954 in 42 U.S.C. Sec. 2011 (1954) as follows: "Aliens and entities owned, controlled or dominated by aliens or foreign governments may not engage in operations involving the utilization of energy. This restriction applies primarily to nuclear reactors and reprocessing plants extracting plutonium."

Yet, as will be analyzed in Part 4 of this series, we will see that through the use of joint ventures, foreign holding companies, license transfers and majority subsidiary investment mergers, rubber-stamped by virtually all branches of the U.S. government, historically held energy law no longer remains the watchdog it was once meant to be. Therefore, the best interests of the American people are now marginalized and the future national security interests of the U.S. may be forever compromised.

Copyright ©2008 Diane M. Grassi
Contact dgrassi@cox.net

In this third chapter of this ongoing discussion and analysis of United States energy policy and its ramifications both realized directly and indirectly from the U.S. Energy Policy Act of 2005, (EPAct 2005) it would be irresponsible not to include U.S. nuclear energy policy in such analysis.

As such, the EPAct 2005 and its previously referenced and unprecedented mandates, in prior chapters of this report, play a role with the reformulation of the regulation of U.S. nuclear energy and its projected and rather overwhelming imminent comeback.

The nuclear energy industry has become a global proposition given the changing geographic demands of energy needs in newly industrialized nations such as India and China. And it would be foolish for the U.S. to assume that it operates in a vacuum and that its future energy needs and demands will not be impacted by such changes in a global economy; one in which the U.S. is now primarily at the receiving end of offshore manufactured goods, including more and more of America's food supply.

But the global economy has but given the U.S. government and in particular in this case, the U.S. Department of Energy, (DOE) an excuse to take the proverbial lid off of sound national security policy which has necessarily dictated U.S. energy policy for decades, until now, for the safety of the American people and the integrity of its critical infrastructure.

Although the first large scale civilian nuclear plant started providing electricity in 1957, it was basically between that time and the late 1970's when all of the current operating nuclear reactor facilities were constructed. And with an average lifespan up to 60 years for each, most of the currently operating 104 U.S. nuclear plants are either in or have applied for their 2nd 20-year licensing period extensions.

Since the last U.S. nuclear reactor was ordered in 1973, those handful that were completed, after 1978 and post-3 Mile Island, were ordered prior to 1973. To wit, in 1996, the last U.S. plant constructed, the Tennessee Valley Authority's Watts Bar 1 reactor in Tennessee, was the result of a revived dormant license from 1970. And there are plans to build the Watts Bar 2 from another previous license from dating back to1973.

Since U.S. nuclear energy policy has nearly come full circle today, it is important to take stock of its history. The Atomic Energy Commission, (AEC) was formed through the Atomic Energy Act of 1946, originally to specifically oversee the military's and civic atomic energy programs. And it was given the expanded responsibility, for the first time, to assume dual oversight and regulation of atomic energy both militarily as well as commercially through the Atomic Energy Act of 1954.

But it was through the Energy Reorganization Act of 1974, that created the Nuclear Regulatory Commission (NRC), the present U.S. nuclear regulatory agency, to assume the oversight authority from the AEC. It now regulates most U.S. commercial nuclear activities, including nuclear power reactors and the use of radioactive materials in industry, medicine, agriculture and scientific research as well as fuel cycle facilities and nuclear waste management.

The 1974 law was seen as an opportunity to put trust back into the oversight agency which took on the dual task of both promoting nuclear power while safeguarding the American people, initially in 1954. And it was after that point in time that the American people had already begun to lose trust in the agency's ability to do so. Apparently, the U.S. government thought that changing the acronym of the agency would calm the public's displeasures.

But it was during the late 1960's and early 1970's when the nuclear plant construction boom was in full gear and simultaneous reassurances from the federal government to keep safeguards in place fell on the deaf ears of energy consumers. Most importantly, the agency was designated to walk a fine line of both promoting commercially viable nuclear energy as well as handling all of the required licensing for new construction of nuclear power plants.

And in this global economy, at a time when the U.S. is seeing extraordinary growth in the foreign direct investment and acquisition in U.S. critical infrastructure, it appears reaped with conflict for the licensing agency to also be able to independently assess potential security risks both civilly and criminally.

Unfortunately, the notorious Browns Ferry Nuclear Plant fire in 1975 in Decatur, AL could have been avoided and was the result of human error rather than an unexpected meltdown. A mechanical technician foolishly was looking for reported air leaks within the reactor with a lighted candle which ultimately started the fire. But
Three Mile Island Unit 2 (TMI-2) nuclear power plant near Middletown, Pennsylvania, on March 28, 1979, was the most serious nuclear plant fiasco in U.S. history. The reactor sustained the melting of half its core, which was later found to be a combination of technical and human error and allowed for released radioactive gases into the atmosphere and putting its employees immediately at risk.

The 3 Mile failure was followed in 1986 by the misfortune of Unit 4 of the nuclear power station at Chernobyl, Ukraine in the former USSR. It emitted radioactive material, far more deadly an accident that 3 Mile Island, affecting 52,000 people in the vicinity, immediately killing 30 people and possibly impacting up to 5 million others. Nevertheless, it was 3 Mile Island that provided the final nail in the coffin for skittish investors in U.S. nuclear technology, although nuclear facilities throughout the U.S. still provide 20% of electrical power generation. It remains very low in greenhouse emissions and is considered a form of clean energy.

In spite of the NRC's own damage control to restore safety measures in nuclear plant facilities over the past 30 years, its ill-repute remains along with remnants of trepidation in reinvesting in nuclear energy. Therefore, the apparent overnight reverse course by the DOE in lining up investors to submit license construction applications for nuclear energy plants, with some 20 expected by mid-2009, has set off alarm bells of another sort.

And that brings us back to the EPAct of 2005 which provides for a vast assortment of givebacks, subsidies and federally subsidized loan guarantees including risk insurance packages to the brokers and investors who come a-callin', totaling billions of dollars worth of incentives. And once again, foreign owned holding companies, foreign government-owned entities and foreign-U.S. joint ventures, acquisitions and mergers will be the recipients of these U.S. taxpayer provided benefits.

The nuclear energy industry not only remains a hot-button issue because of its sullied past, but because of a heightened internal as well as public awareness of its ever-present national security risks it now poses in a post-9/11 world. In addition, there is the issue of the failing power grid infrastructure, which has not been improved in decades, and minimally maintained, along with a continued U.S. deregulation policy from which the American economy may never recover.

All of the aforementioned but creates for a perfect storm, all the while U.S. foreign policy dictates to other nations and regions on the ways in which they may engage or use nuclear material, whether for weaponry or for electrical power distribution.

The first step in trying to comprehend this multi-faceted and current energy policy, based upon both its history as well as current law, is to understand the revised NRC application process. Although the regulation revisions date back to 1989, the most recent and final rules were not certified and published in the Federal Register by the NRC until August 2007 (10 CFR Part 52).

The revisions have changed the entire regulatory review process and framework for the construction of new nuclear reactors and facilities. And over the next 18 months, such changes in the regulation process, with ink barely dry, will be tested in a paint-by-numbers fashion.

The EPAct 2005 while not intrinsic to the actual changes in NRC rule making, has played a consequential role in incentives for investors and ultimately the NRC's seeming rush to finalize regulation revisions over a matter of months, after many years they were held in virtual abeyance.

And now the one time 2-step licensing process created for its thoroughness and for compliance with the Environmental Protection Agency (EPA) as well as providing enough time to have the appropriate number of public hearings, has been whittled down to a 1-step process; one that appears less investigative in scope and more equivalent to drive-through governance.

In order to supposedly bring an improved regulatory model for U.S. nuclear energy construction, which the NRC believes to be more efficient, the COL, or combined license application, early site permits (ESP), and standard design certifications pushes the process along more quickly. However, also cut in the process will be preoperational hearings on plant construction qualification that would be limited and not required by the NRC, and minimizing public input.

The ESP procedure includes site safety issues and emergency plans apart from the plant design. The NRC's and nuclear industry's reasoning is that the new process will cut down on delays, cost overruns and reduce the application process down to 42 months. In that regard, there is some speculation that the next nuclear plant could break ground in the U.S. by the end of 2010 and perhaps be completed by 2015.

In the final part of this series, the actual players or investors in new U.S. nuclear plants construction will be addressed as well as who and from where from these entities hale. And the mechanisms mandated in the EPAct 2005 for lucrative financial rewards to these corporations will be discussed. Whether or not such investors will be even remotely close to ensuring the fiscal as well as environmental health of the American people is an important question which will be asked.

And finally, that which is most crucial in this entire changing energy landscape, that being the national security of the U.S, was etched into law in the Atomic Energy Act of 1954 in 42 U.S.C. Sec. 2011 (1954) as follows: "Aliens and entities owned, controlled or dominated by aliens or foreign governments may not engage in operations involving the utilization of energy. This restriction applies primarily to nuclear reactors and reprocessing plants extracting plutonium."

Yet, as will be analyzed in Part 4 of this series, we will see that through the use of joint ventures, foreign holding companies, license transfers and majority subsidiary investment mergers, rubber-stamped by virtually all branches of the U.S. government, historically held energy law no longer remains the watchdog it was once meant to be. Therefore, the best interests of the American people are now marginalized and the future national security interests of the U.S. may be forever compromised.

Copyright ©2008 Diane M. Grassi
Contact dgrassi@cox.net

As previously chronicled in this series of reports subtitled, MLB Goes to Harlem Seeking Welfare, on the public financing of the new Yankee Stadium in Bronx, NY, a borough of New York City, the issues it encompasses and the various impending outcomes may have a broad impact for cities across the United States.

Moreover, public-private partnerships have become intentionally blurred when it comes to taxpayers ultimately funding of Major League Baseball (MLB), the National Football League (NFL), the National Basketball Association (NBA) and other professional sports' stadiums and venues.

Balance sheets, land assessments, funding arrangements via questionable ethical relationships if not borderline illegal ones between public officials and corporate entities are now being revealed as more than troublesome with respect to the new Yankee Stadium. And it may eventually take an act of the U.S. Congress to unravel that which appears to be an egregious violation of the public trust on behalf of NYC and the New York Yankees.

As last reported here in July 2008 in NYC, Yankees Redefine Crookery in Part 2, the NY Yankees a/k/a/ Yankees Global Enterprises LLC, had requested that an additional $366 million in tax-free bonds be appropriated, to the already ballooning $1.3 billion cost of the new Yankee Stadium tallied thus far, and financed primarily through such funding instruments.

But in order for any new approval for any such new appropriations, the process must be cleared again by a host of multiple New York City, New York state and federal agencies. However, unanticipated by the NY Yankees is that not only could such a request be denied but that they have opened up a proverbial Pandora's box of quagmires now being given scrutiny with a fine tooth comb by both the State of NY and a powerful Congressional committee.

On July 4, 2008, during the NY Yankees game at Yankee Stadium versus the Boston Red Sox and broadcast on the YES cable network , the NY Yankees own broadcast outlet, play-by-play announcer, Michael Kay, was speaking about how the current stadium would be replaced starting with the 2009 season. And he stated at the top of the 2nd inning that "And across the street they're building a new ball park which the Steinbrenner family is paying for."

Perhaps Kay should go to Capitol Hill and testify under oath and relay such news to those investigating the suspicious circumstances under which the NY Yankees obtained all of their dough. He may get a chance in September 2008 when additional hearings will be held by the House Committee of Oversight and Government Reform's Sub-Committee on Domestic Policy. After all, Kay would be in good company along with notable others associated with MLB who have been less than forthright before Congress.

But sadly, most New Yorkers either already believe that which Kay and others have reiterated or have no idea about anything going on in Yankee Land. Yet, such may set important precedents for future building projects and land takings both in NYC and other municipalities.

But far more importantly, and at a time when NYC and NY state are both eliminating important public services due to budget shortfalls, it is incumbent for taxpayers to know far more comprehensively, than that which the local tabloids have recently and but occasionally provide, about this complex web of wheeling and dealing.

For the new Yankee Stadium is no longer a house that Ruth built but one that New Yorkers citywide and statewide will be paying for and for generations to come. And in that regard a brief context of the back-story is in order and to understand in the interest of public policy.

Prior to the NY Yankees' initial approvals required from public agencies, the last of which were not completed until 2006, the Yankees put into motion key lobbyist law firms and former public officials who had prior governing positions from City Hall to the Internal Revenue Service to the U.S. Department of Treasury. And it was through such seemingly conflicts of interests that have driven the realized stadium.

Initially, the NY Yankees had to clear a hurdle by the IRS, which many now consider questionable, for the $941 million gain in triple tax-exempt bonds with a favorable low interest rate. Such will save the Yankees close to $150 million in saved interest alone.

Bond buyers get a considerably less lower set interest rate of return, when exempt from federal, state and city income taxes and therefore the NY Yankees benefit from an interest rate approximately 25% lower than taxable bonds.

Bruce Serchuk, a partner at the law firm, Nixon Peabody LLP, was retained by both the NYC Industrial Development Agency, and the NY Yankees to lobby the IRS. Serchuk was a former lawyer in the Office of the Chief Counsel at the Internal Revenue Service (IRS) and in the Office of Taxation Policy at the Department of the Treasury. He was instrumental in providing NYC lawyers help with submitting the request that allowed such payments-in-lieu-of-taxes (PILOTs).

In June 2006 the IRS granted that request to NYC in a private letter ruling. In spite of regulations that changed that very year which further restricted publicly financed stadiums using tax-exempt bonds, it got the attention of the Committee on Oversight and Government Reform's Sub-committee on Domestic Policy and precipitated a March 2007 hearing.

Yet, instead of putting a cap on spending by the NY Yankees and NYC's Industrial Development Agency (IDA), an arm of the NYC Economic Development Corporation, which operates at the Mayor's behest, NYC was granted another $190 million in tax-exempt financing for the new stadium's 3 parking garages.

But in order to get this increased financing, the garages were termed by NYC officials as "Civic Facility Projects." Additionally, the IDA created a specious not-for-profit organization, referred to as the Bronx Community Initiative Development Corporation as a "special purpose LLC" that was needed as a bridge to complete the garage financing.

Tishman Speyer Properties, now a global multi-national conglomerate, was hired by the NY Yankees for the construct of the new stadium. Anthony Mannarino, who now is in charge of Tishman's stadium development, was previously the Executive Vice President of the NYC Economic Development Corporation from 1990-1994 and its acting President in 1994.

None other than former Mayor Rudolph Giuliani and one of his former NYC Police Commissioners, Howard Safir, are both listed in court documents as security consultants for the new stadium project as Giuliani Security & Safety Partners, a division of Giuliani Partners, LLC and Safir-Rosetti Security, respectively.

There are far too many lobbying interests and reciprocal relationships to detail in this one report, but suffice it to say that the NY Yankees and NYC officials have easily spent upwards of $500,000.00 of taxpayer dollars in lobbying costs for their back-scratching stadium behemoth.

Most of the lobbying expenses were accorded in a final deal which Mayor Giuliani had ratified prior to his departure from City Hall in 2001. It allocated $25 million over a 5 year period from 2002-2007 to be used by the NY Yankees in any way they saw fit for the planning stages of the new stadium on the taxpayer's dime. And unfortunately far more than new stadium expenses were charged to the taxpayers, which had nothing whatsoever to do with stadium planning. But the NY Yankee organization could not help itself and applied for every last dime of that $25 million.

The puppet master of the whole deal is former NYC Deputy Mayor of Economic Development, Planning and Administration, Randy Levine, from 1997-2000, and now President of the NY Yankees. Prior to Levine's leaving his office in 2000, he was given the primary responsibility to craft a financing structure document for Mayor Giuliani and the new Yankee Stadium.

And prior to becoming Deputy Mayor, Randy Levine was a chief labor negotiator for MLB Commissioner Bud Selig. To make matters worse, Levine was granted a waiver from the NYC Conflict of Interest Board which oversees NYC's Conflict of Interest Law. And as a direct result of that waiver, throughout Randy Levine's term as NYC Deputy Mayor, he maintained a consulting contract with MLB.

In September 2008 the House Committee on Oversight and Government Reform's Sub-Committee on Domestic Policy whose Chairman is Congressman Dennis Kucinich (D-OH) will concentrate on those federal agencies formerly involved in the previous financing approvals and the newly requested $366 million in additional funding requested by NYC and the NY Yankees in June 2008.

Those agencies include the U.S. Department of the Treasury, the IRS, and the National Park Service of the U.S. Department of the Interior along with the NY Yankees, the NYC Department of Finance, and the NYC Economic Development Corporation. Those involved agencies have all been required to submit specific documentation to Congressman Kucinich's committee by August 6, 2008 in preparation for the atest hearing which took place on September 18, 2008 on Capitol Hill.

The issue that will continue to be explored will be the conflicting land value assessments which were supplied and used as a basis for the original $941 million tax-free bonds. It has come to the attention not only of Rep. Kucinich but New York State Assemblyman, Richard Brodsky, that the unjustified land assessment valuations may be the smoking gun in the now $1.3 billion house of cards which may bloat to upwards of $2 billion before all is said and done.

The NY Yankees claim that the land upon which the new stadium sits is worth $275.00 per square foot, more than most lots on waterfront property on Manhattan Island, the heart of NYC. The NYC Department of Finance claims that the land is worth $204 million versus NYC's commissioned independent assessors who value it at $21 million. And land just across the street from the new Yankee Stadium, according to the NYC Department of Finance's latest assessments and the latest average market value of such land in that area of the Bronx, is but $36 per square foot.

According to NY State Assemblyman, Richard Brodsky, who heads the NY State Committee on Corporations, Authorities and Commissions and who is also holding hearings on this issue on the state level has said that, "This issue goes to the heart of whether it is a public project or a private project…There is substantial discrepancy on a whole host of levels that we are going to proceed to investigate thoroughly and fairly, but we are going to get to the truth."

And as the ongoing story of this slippery slope of either trickery or merely free market big business, depending on one's point of view, this journalist will pick up the case in September 2008 and report back in Part 4 of this series.

And just in case you were wondering, "Everything is politics."—Thomas Mann (1950)

Copyright ©2008 Diane M. Grassi
Contact: Dgrassi@cox.net

Part 1 of a Series

"Energy independence from foreign sources." A mantra repeated over and over again by Al Gore, by the Hollywood elite and by candidates running for the 2008 Presidential nomination. But rarely is it ever pointed out how this phrase is but an oxymoron with respect to United States energy policy, which becomes ever more vulnerable, not just as the result of its failing infrastructure, but from misguided public policy decisions.

And never is the topic broached publicly in how much of the U.S. energy infrastructure and lines of transmission have been consumed by a constant stream of foreign direct investors and diversified holding companies. Also unbeknownst to most consumers is that such activity was hailed from Wall Street to Capitol Hill as the answer to resolving U.S. energy woes.

And now those very foreign investors have been granted even greater leeway as now realized by such mandates of the Energy Policy Act of 2005 (EPAct) which essentially eliminated the Public Utilities Holding Company Act (PUHCA) of 1935.

And in 2007, barely after the ink dried from EPAct 2005, the Energy Independence and Security Act (EISA) of 2007 was passed by federal lawmakers and signed into law. EISA conveniently serves to obfuscate critical issues that continue to stress the U.S. electrical power grid, its energy generation and transmission capacity. Yet, EPAct 2005 has continually escaped public scrutiny and a lack of accountability in both houses of the U.S. Congress.

But U.S. energy policy and the generation of power is a complex web of public policy, law, economics, infrastructure and ever-present globalization. So for purposes of this report, and in order to best comprehend current U.S. energy policy, it will be helpful to take stock of the more recent evolution of such and to examine its many and varied elements which have changed again post-2005.

In addition to the repeal of PUHCA 1935, EPAct 2005 amended Section 203 of the Federal Power Act (FPA) which will have an unprecedented and profound impact of its own on how future transactions in the energy industry will be handled by the federal government, impact matters of states' sovereignty and regulating costs to consumers.
For over 70 years, federal laws have played a vital and critical role in the operation, production, distribution and protection of the U.S. electrical power grid. Federal laws in concert with state laws and regulations have necessarily dictated that the power grid be shielded from market manipulation and criminal behavior.

But as the nearly 100 year old power grid has aged, facing a growing population and higher load demands for power, the industry has simultaneously become more and more deregulated by mandate. And deregulation has led to less and less necessary preventative maintenance, upgrades in technology as well as necessary investment in research and development. And the poorly maintained grid in many of the areas of the country, predominantly the mid-Atlantic and northeast states, has but put even more stress upon its transmission lines.

The basic structure of the North American transmission system is made up of over 140 control centers and approximately 3500 utility providers covering over 200,000 miles. Utility generating plants, transmission and sub-transmission systems, distribution systems and customer loads travel over a two-part power grid; one in the east and one in the west. Texas has its own grid.

Compounding the vast network and intricacy of the grid is the interconnectivity and delivery of power that in many cases is incompatible with widely varying levels of equipment integrity, data systems and personnel training. It is the secondary system which supplies the distribution of electricity to consumers, where most of the power failures occur, and that which require time to repair. And the network of sub-stations feeding electricity to neighborhoods, via feeders which flow to transformers, is where supposed problems arise during local outages, further exacerbated by non-maintained equipment.

But although deregulation of the utility industry began over two decades ago, it was the 1992 Energy Policy Act which changed the way electricity was sold to local consumers for the first time. Energy companies were permitted to install their own plants and sought customers throughout the country, but not necessarily in the same geographic region. Energy brokers then entered into the picture and utilized the open market to buy and sell power. And thus began the potential unreliability of energy delivery.

Purchasing power from plants hundreds of miles away from a respective region put unprecedented burdens upon the transmission system, raising the likelihood of power failures at the local level. Most importantly, the electrical grid, as it was originally envisioned, was never designed to absorb the transmission of high voltage capacity across the continent, and especially in absence of comparable and upgraded systems in place.

Although Enron became the poster child for electrical power market manipulation, which came to light after the rolling blackouts of California in 2000 and 2001, U.S. public policy and lawmakers must be held responsible for even further erosion of federal regulations and mandates now realized in EPAct 2005.

The initial most striking change that EPAct 2005 provides is the repeal of PUHCA 1935, now amended as PUHCA 2005, and now administered by the Federal Energy Regulatory Commission (FERC). PUHCA 1935 became law after the height of the Great Depression and after the stock market crash of 1929 and was a cornerstone of President Franklin D. Roosevelt's New Deal industry legislation.

It called for the prohibition of market manipulation, specifically to prevent then super-sized utility conglomerates, to prevent mega-mergers and to prevent monopolies from overtaking geographic regions. And just as importantly, PUHCA 1935 made it unfeasible for non-energy corporations to purchase a public utility.

Such abuses led to severe problems in the electric and gas industry in the 1920's and in the 1930's when three utility holding companies owned one-half of the electric utilities in the entire U.S. Thus, the emergence and formation of the Securities Exchange Commission (SEC) in 1934, which preceded PUHCA1935, and together became essential in safe-guarding the public trust and in protecting consumers and investors alike, as PUHCA 1935 delegated multi-state utility ownership regulation to the SEC.

Fast-forward to February 8, 2006, six months to the day of the enactment of EPAct 2005, when the official repeal of PUHCA 1935 was realized. As a direct result, the SEC vacated its regulatory authority over multi-state utility ownership by holding companies and only retains the ability to protect investors, not utility consumers or to prevent mega-mergers from consolidating. And now the FERC will assume cursory merger authority over generating plants and holding companies.

The repeal of PUHCA 1935 will not only allow multi-state transactions but also mergers of distribution facilities, utilities merging with non-utility corporations, and including foreign ownership over domestic utilities. Furthermore, oil companies may now own electricity and natural gas utilities, paving the way, yet again, for the formation of cartels. In addition, construction and infrastructure companies, especially those from abroad, are eager to partake in being afforded carte blanche in the acquisition of U.S. public utility operations.

In the post-PUHCA 1935 era, no individual state or federal agency will have the jurisdictional teeth to effectively regulate the finances of U.S. public utility assets totaling more than one trillion U.S. dollars. Nor will there be required oversight of such holding or parent companies such as investment banks from speculating and investing in far riskier businesses, with utility rate-payer revenues. ‒ We have already seen evidence of such with the current sub-prime mortgage loan crisis.‒

At cost? The reliability standards of U.S. public utilities, which could have grave ramifications on U.S. national security, the U.S. economy and the well-being and safety of the American people; all with the blessings of the U.S. Department of Energy, the U.S. Congress and the global stock market.

To be continued in Part 2 of a Series.
Next Up: Energy Department Uses Power to Trump States' Rights

Copyright ©2008 Diane M. Grassi

Contact: dgrassi@cox.net

The announcement on May 21, 2007 that the largest public company in the Middle East, by market value, would be acquiring a division of the world's second-largest corporation, by market value, and based in the United States, could not have been any less publicized. But in the world of corporate governance, the largest transaction ever completed in the Persian Gulf, seemingly trumps all laws of reason.

However, there is little precedence established for a foreign owned totalitarian government controlled corporation acquiring a corporate entity in the U.S. Such brings us to the General Electric Co. and the sale of its GE Plastics, based in Pittsfield, MA. It has been one of its most successful divisions for over half a century. It includes numerous U.S.-based manufacturing plants and research and development offices, with additional locations spanning 20 countries. Employees total nearly 11,000 worldwide, with several thousand located in the U.S. New operational control, however, will be via offices in Saudi Arabia.

The Saudi Basic Industries Corporation, known in the Middle East as SABIC, is one of the world's 10 largest petrochemical manufacturers and is 70% owned by the Saudi Arabian government, controlled by the Royal Saudi Kingdom and 5 other states of the Gulf Cooperation Council, including private Middle Eastern investors.
It employs approximately 17,000, worldwide, and shortly expects to be the new owner of GE Plastics in the U.S.

After GE Plastics was put on the market in January 2007, it got bids from Apollo Management, Inc., a U.S.-based private equity firm as well as Bassell, a Netherlands-based Access Industries plastics maker. Both proposed bids of GE Plastics were upwards of $10 billion. But it was the Saudi Arabian's offer of $11.6 billion in cash and the promise of future energy ventures with its parent company, GE, which gave SABIC the upper hand in the acquisition of GE Plastics.

Wall Street portfolio managers will liken those opposed to this deal, still pending approval by the U.S. government through the Committee on Foreign Investments in the U.S. (CFIUS), as protectionist, nativist and alarmist. And the U.S. has seen propositions like this before recently, such as the Bush Administration's desire in 2005 to allow foreign ownership of U.S. airlines; the proposal by the People's Republic of China's state-owned CNOOC in the summer of 2005 to acquire UNOCAL of California, the ninth largest oil company in the U.S.; Dubai Ports World, of Dubai Holding, a United Arab Emirates (UAE) government-owned corporation, and its buyout of the United Kingdom corporation, Peninsular and Oriental Steam Navigation Co. (P&O), for its port operations of six major U.S. East Coast ports in early 2006.

All of the aforementioned never came to pass, after much Congressional and public opposition, although the Bush Administration promises to revisit foreign airline ownership. However, Dubai Holding, the same UAE controlled company yearning to takeover U.S. ports was successful just months later in 2006 in acquiring the U.S. operations of Doncasters Group Ltd., a UK company based in Connecticut, and a manufacturer of precision aircraft engine parts for U.S. military and commercial aircraft engine parts manufacturers, like its competitor, GE Aviation.

GE claims that the prohibitive cost of petroleum, especially over the past year, has necessitated its sale if its plastics division, as it requires petrol for the manufacture of plastics and its various composites and resins. And although GE made a fair profit in 2006, it fell short of its 10% projected goal.

Less important to GE Plastics, however, is that there has been nothing firmly documented by SABIC, other than through verbal overtures, that they will continue to maintain GE plants in the U.S. According to SABIC CEO, Mohamed Al Mady, "We have no other plans at this time." On the other hand he notes, "SABIC's intention is to grow globally." At least one of the U.S. plants is non-union, that being the one located in Selkirk, NY and over the long haul questions remain as to whether or not SABIC will move all operations to Saudi Arabia, closer in proximity to its oil fields, or to China where it currently has petrochemical operations.

Questions must also be asked when it comes to the rights and wages of American workers, who will take directives not just from a Chairman of the Board but from the Saudi Royal Kingdom, which presently restricts the rights of women in the workplace in Saudi Arabia. They are only allowed to work, and in limited industries, provided permission is granted by a male relative. And although technically Saudi Arabia must obey U.S. laws pertinent to ownership of a corporation located in the U.S., cultural differences steeped in a totalitarian regime practicing Shariah law may not properly translate to the American way of life.

Additionally, SABIC would have to adhere to the regulations of the Environmental Protection Agency (EPA), such as the 1980 Superfund Law, holding corporate toxic waste polluters accountable. Such requirement is non-existent in Saudi Arabia or China. GE Plastics was mandated to clean up the PCB's in the Housatonic River in Massachusetts and GE the Hudson River years ago, both fighting the federal government for years until a settlement was reached with the EPA and the U.S. Department of Justice in 2005. Ongoing completion and monitoring of said cleanup still remains in both bodies of water. But will SABIC fulfill GE Plastics' obligations?

Founded in 1930 as a division of GE, GE Plastics arose from the initial results of Thomas Edison's experiments with the use of plastic filaments in the electric light bulb as early as 1893, followed by the success of its Bakelite® synthetic plastic created in 1909. The plastics industry, however, primarily blossomed after former GE CEO, Jack Welch, assumed control of the plastics division in 1960 and with the birth of its world famous patent Lexan ® polycarbonate.

GE Plastics specializes in plastic polymers, plastic composites and insulating resin polycarbonates, among others, used in both government and commercial sectors in nearly every industry including building and construction, transportation, aviation, auto body manufacture, defense, law enforcement, healthcare, telecommunications and computer and semi-conductor technologies. And it is doing business in such lucrative and specialized areas which SABIC opines. While its consumer product contracts are extensive, they are but part of GE's vast plastics' business portfolio.

SABIC was established by Royal Decree in 1976 as instituted by King Khalid Bin Abdulaziz, and the present Saudi Kingdom or government claims it has a hands-off approach to the business operations it owns. SABIC was originally set up to operate the hydrocarbon and mineral-based industry in the Kingdom of Saudi Arabia. It has had an operation named SABIC Americas in Houston, TX, for many years, which employs 200 and where it houses the SABIC Technology Center. Details on its exact business operations in the U.S. presently, however, remain scant.

Although the polycarbonate and plastic resin composites industry has been gaining steam over the past 10 years, in light of continual rising oil costs in the U.S. and continued U.S. dependence upon oil, primarily in the Middle East, it has quickened the pace of growth over just the past two years. And with less U.S. oil refineries expected to come online in the near future, in order to mitigate high fuel costs, lighter weight components are desired for automobiles, and commercial, transport and military aircraft in their manufacture.

GE commercial and military aircraft engines have long utilized polycarbonate composites for fan blades and fan cases, since 1995 with the GE90 engine, and the soon to be released GENX engine for commercial wide-bodied jets. Composites are not only light in weight, but corrosion resistant, heat resistant and their longevity and reduced maintenance, as opposed to metal parts, are preferable. Semi-conductor technology as well as use in watercraft, such as submarines, are other examples of the use of plastic composites. The historical integration of composites used in both military and commercial aircraft engines however, originally stemmed from military aircraft engine use of polycarbonate components.

Nevertheless, financial market experts as well as political prognosticators have already decided that CFIUS will give the SABIC-GE Plastics deal its seal of approval with no national security issues at all to arise. Therefore, the deal is expected to close in the 3rd quarter of 2007. And while GE Plastics may not be a direct contractor or supplier to either government or commercial entities, it still could have national security implications.

And it does not completely dismiss the fact that the U.S. government will be dealing with the Saudi Royal Kingdom-state government as it assumes the laws and regulations of the U.S. Any contracts which GE Plastics previously had and which remain active, with either its parent company GE or directly with other corporations or government agencies, would supposedly transfer to SABIC. Such government agencies for which GE Plastics could have existing contracts with are the Department of Transportation (DOT), the Department of Defense (DOD), the Department of Homeland Security (DHS), the Federal Emergency Management Agency, (FEMA), the Federal Aviation Agency (FAA) and the National Aeronautics and Space Administration (NASA), to name but a few.

And based upon the lack of underlying history of this more than unusual corporate arrangement, a more thorough review might be warranted by CFIUS, which is an inter-agency committee chaired by the Secretary of Treasury. Rather than its routine 30-day investigative period, it could self-impose the more thorough 45-day review process. For as much as the U.S. government as well as the government's industrial complex wishes to favor the promotion of global trade above that of national security, in an age of political correctness, the fact is, the U.S. military is engaged in two simultaneous wars in the Middle East. And it would perhaps be better to use more deliberation and discretion rather than to rubber-stamp such an acquisition.

The Exon-Florio Amendment, which emerged in 1988, amended Section 721 of the Defense Protection Act of 1950, as part of the 1988 Omnibus Trade and Competitiveness Act of 1988. The statute authorized the President of the U.S. to block or suspend a merger, acquisition or takeover by a foreign entity if there is credible evidence that a "foreign interest exercising control might take action that threatens to impair the national security" in the event existing law does not provide "adequate and appropriate authority for the President to protect the national security in the matter before the President."

Equally deceptive in the process, whereby foreign governments or foreign owned corporations purchase a U.S. owned entity is that they then become indirect stakeholders in U.S. public policy as well. They not only access capital gains but gain political clout on Capitol Hill too. Such opportune objectives of a foreign nation do not just begin during the corporate bidding process, however, but requires a methodology of lobbying dealmakers otherwise known on Capitol Hill as the U.S. Congress. To wit, the Saudi Arabian government spends $20 million annually to lobbying organizations and law firms representing them in order to gain exclusive access to lawmakers in advancing such financial interests or specific foreign trade policy agendas.

For example, former Secretary of State, James Baker, a senior partner in the law firm, Baker Botts, LLC, of Houston, TX, is legal representative to Saudi Prince Sultan bin Abdul Aziz, one of several Saudi persons, entities, Islamic foundations and financial institutions named as defendants in a pending lawsuit brought by the 9/11 Families to Bankrupt Terrorism.

And lastly, but no less important, in the last frontier of U.S. fire sale economics, concerns the type of financial instruments which will be used for the SABIC-GE Plastics transaction promising GE $9 million in cash, after taxes. In mid-2006, SABIC set up an Islamic finance arm to oversee its domestic Islamic bond issues. Since the United Kingdom is home to two Islamic banks, sukuks, or asset-based Islamic bonds, are readily marketed to international investors. SABIC plans to finance $2.2 billion of the GE Plastics deal by issuing bonds. The finance group and underwriters for the SABIC-GE transaction are the combined CitiGroup, Inc., HSBC Holdings Plc, Amro Holding NV and GE Capital, a division of GE, GE Plastics' parent company. Bonds are expected to be sold in Europe and in the U.S.

Of note, is that in April 2006, Dow Jones and CitiGroup launched the first Islamic Bond Index, created specifically to assess global bonds' compliance with Shariah investment guidelines. Shariah law dictates that such money be used for only those purposes compatible with Islam. But there are potential difficulties with such transactions in that they are specifically Shariah law compliant instruments and may conflict with U.S. law.

Presently, it has not yet been decided by SABIC if in fact it will exclusively issue Islamic bonds for the purchase. But the complexities involved in the GE Plastics sale is anything but straight forward and for that very reason is deserved of more scrutiny, analysis and caution from not only CFIUS but from the U.S. Congress.

And U.S. Congressional representatives should be far less mindful about critics' scorn and far more concerned with their dutiful obligation to govern in the best interest of the American people and their responsibility to use foresight in order to best preserve America's future and its assets.

Copyright © 2007 Diane M. Grassi
Contact: dgrassi@cox.net

The tragic explosion of the Sago Mine in West Virginia on January 2, 2006, which took twelve lives and permanently disabled another, still begs for a rational explanation over 1 year later. The disaster captured the interest of the American public and fostered outrage on the part of lawmakers and bureaucrats alike, while coal mining operators ran for cover.

For not only did the International Coal Group, Inc., which owns and operates the Sago Mine, become the poster-child for unsafe mining practices, it became the source of questions which had not been publicly exposed for decades, while miners' lives remained in peril.

And questions linger as to why existing federal and state safety laws were overlooked by government agencies and regulations bypassed by the coal industry. Still, there was a knee-jerk reaction for more federal legislation rushed through the halls of Congress and various state houses where new laws were enacted in those mining states which lost miners in 2006.

The direct cause of the Sago Mine explosion has yet to be confirmed by the state of West Virginia, the federal Mine Safety and Health Administration (MSHA), the United Mine Workers Association (UMWA) and independent commissions with reports supposedly forthcoming. 2006 saw the largest percentage increase in U.S. coal mining deaths in 107 years, the industry's highest number since 1995, and more than double that of the 22 in 2005. Yet, explanations for such an increase are varied, depending upon which interested party provides them.

This writer wrote an extensive report one year ago regarding background on federal regulation of the mining industry, its lack of government enforcement, the industry's deregulation over the past several decades and the industry's accelerated recent growth which are all contributing factors to the decline in mining safety.

And although such may help give a historic context of the dysfunction, it offers no confidence whether or not coal mining is functionally in a better place 1 year after Sago. Heightened awareness of negligence, whether blind or intentional, is the first step to increased improvement, but there are many more required to assure miners and their families that their lives are in less danger and remain a priority.

Preliminary reports by the West Virginia Office of Miners' Health, Safety and Training (WVMHST), the International Coal Group, Inc., the MSHA and independent commissioned studies such as the Mine Safety Technology and Training Commission cite contributing factors to the loss of life in Sago Mine.

But without substantial scientific evidence, 3 bolts of lightning strikes remain the official cause for igniting methane gas causing the explosion. And such remains mere speculation and without foundation to mining experts and scientists alike. At issue, is how lightning could travel over two miles and 900 feet underground through twists and turns on its way to a closed-off section where the miners were located and cause the eventual explosion.

Additionally, the underground mine seals used for the walls were manufactured with materials unable to withstand the minimally mandated 20 pounds per square inch (psi). However, the sustained blast of Sago was 95 psi. Engineers are now experimenting with new composites able to handle over 95 psi. To date, there exists no credible material to handle such an explosion although the MSHA amended the requirement for mine seals to be 50 psi in 2006.

It was the loss of life at Sago Mine as well as the two subsequent West Virginia coal mining deaths but weeks after Sago on January 19, 2006 in a fire at Aracoma Mine, followed by the disaster at Darby Mine No. 1 in Harlan County, Kentucky which took 5 more lives on May 20, 2006, that resulted in the expedited federal Mine Improvement and New Emergency Response Act of 2006. President George W. Bush signed it into law on June 15, 2006. And just weeks after the Sago Mine explosion, West Virginia Governor Joe Manchin executed new mining laws on January 26, 2006 which followed his order for a special investigation by the state of West Virginia into causes of the Sago disaster.

By February 7, 2006 the WVMHST announced the provisions of its emergency regulations mandated by the legislature. They included providing emergency shelters within 1,000 feet of where miners are digging coal; inspection of air supplies daily and reporting results to the state; installation of caches of emergency air supplies equal to 30 minutes of walking time; wireless communication devices capable of reaching the surface through text, voice and by location.

Similarly, Kentucky passed legislation which became effective July 12, 2006 as it suffered a total loss of 16 miners in 2006. The law includes such changes as requiring mine managers to report a serious injury or fatality to state officials within 15 minutes, requires 2 air packs for each miner and provides for escape drills to be conducted every 90 days. Kentucky also now has the power to fine mine operators for violations and to increase from 2 to 3 the number of underground inspections annually.

Meanwhile, the U.S. Congress swiftly cobbled together its own revised mine safety regulations, the first since 1996, after its hearings on Capitol Hill in January 2006, following the Sago Mine explosion and the Aracoma Mine fire fatalities.

The federal law revisions include providing 2 hours of emergency air supplies per miner, plus caches of air packs with an additional 2 hours of air per miner. Previously, only 1 hour of air per miner was required. Mine operators must report a disaster within 15 minutes whereas previously there was no time limit. Two separate and protected communications systems are required. Previously only one was required. Wireless communication and miner tracking systems are required to be operational within three years of June 15, 2006.

Additionally, two experienced rescue teams must respond to mining accidents within 1 hour as opposed to the previous 2 hours and the development of training of emergency response and evacuation plans have been enacted. The MSHA has also added approximately two dozen more federal mining inspectors and mandates a change in its violation fee structure. Unfortunately, there remain less federal inspectors than the U.S. had in 1997.

The federal government is also now given the authority to request an injunction to shut down those mines which have refused to pay final violations. But the appeals process remains lengthy and during such process mines may remain open indefinitely, regardless of aggravated negligence. And the aggregate fines remain benign or seemingly small for an industry which set historic revenue records in just the first nine months of 2006.

"Dramatic changes in our mine safety laws will only protect our miners if MSHA is displaying real teeth in carrying out and enforcing our new requirements," this according to Senator Jay Rockefeller (D-WVA) on Capitol Hill with the MSHA in the first week of December 2006. He and Senator Robert Byrd (D-WVA), both predominantly responsible for the amended federal mining law of 2006, met with the MSHA and a bi-partisan committee in order to ensure industry compliance of the new law and to ask the agency if it has enough funding to implement the provisions of the new Mining Act and its safety measures.

As of January 2007, there are no new air packs available. Yet, mine operators believe they have satisfied the new regulation as the law only requires purchase orders, not receipt of air packs, as proof of compliance. Mine operators have been told that air packs are on back-order for 1 more year, although a German manufacturer has 6,500 units readily available. And the Self-Contained Self-Rescuers (SCSR) are the same type of devices used since 1977, when the first major underlying changes in mining safety laws were enacted.

But strengthening seals, improving breathing technology, building refuge chambers and creating communications and tracking technologies have thus far only been appropriated $10 million for the necessary research and engineering evaluations and thus remain to be implemented. And again, a new round of Congressional hearings on mining safety has been called for in 2007, this time by Congressman George Miller (D-CA), the new Chairman of the House Committee on Education and the Workforce.

Idly standing by waiting for the federal government to fund the necessary changes in the law or waiting for mine operators to police themselves in the meantime are both unrealistic and foolish premises. J. Davitt McAteer, former had of the MSHA (1994-2000) and now an expert advisor to West Virginia Governor Manchin, believes that, "Default steps or common sense while the industry waits for technology to be improved have not been taken." What caused the explosion and what caused the disaster, according to McAteer, are distinct.

The lack of explosion proof seals, defective air packs, lack of communication devices, delay in rescue response and non-existent tracking capabilities were preventative measure which could have been put in place long ago. And Cecil E. Roberts, President of the UMWA, has called upon the MSHA to regulate evacuations during the approach of electrical storms, as long as questions remain as to the exact cause of the Sago Mine explosion.

Sadly, on September 7, 2006, Sago Mine's operator, ICG, Inc., was again cited by the WVMHST for providing its miners with defective SCSR breathing apparatus. The devices had faulty heating indicators. 6 out of 50 had been exposed to temperatures over 130° F. Disturbingly, said violations only became public knowledge three months after they were served.

And already in this young 2007, two miners in West Virginia lost their lives on January 13, 2007 as the result of a roof collapse at the Brooks Run Mining Co.'s Cucumber, WVA mine. The Brooks Run mine had been cited by federal inspectors 65 times in 2006 with penalties totalling only $5,000.00. Although mine operators notified authorities immediately in compliance with the new mining law, little else has changed in 1 year's time. For as Cecil Roberts continues to preach, "When you put production ahead of safety, tragedies like this are all too often the result."

Copyright ©2007 Diane M. Grassi
Contact: dgrassi@cox.net

The ravages of war are hell and collateral damage that includes loss of life, permanent disability and war-related illness in both military and civilian populations is expected. But too often American soldiers have been stung by the treatment they have received with respect to their healthcare upon returning stateside.

Unanticipated by the United States Department of Defense (DOD), healthcare services provided returning soldiers from the War in Viet Nam and more recently the Gulf War were grossly under-funded, and the criticism that endured thereafter was a lesson thought to be learned for future U.S. military engagements. And in that effort, the U.S. military has been sure to launch continual public relations campaigns to project an image that active duty troops deployed to Operation Iraqi Freedom and Operation Enduring Freedom in Afghanistan receive the best healthcare that money can buy.

The Department of Defense's Deployment Health Clinical Center website reads, "Fostering a trusting partnership between military men and women, veterans, their families and their healthcare providers to ensure the highest quality care for those who make sacrifices in the world's most hazardous workplace." But when it comes to the mental healthcare status of troops during deployment and upon their return to the U.S., it is woefully lacking.

There is no longer a shortage of laws and regulations in place as existed during Viet Nam or during the Gulf War with respect to mandated healthcare screenings for returning soldiers. But a lack of political will by the Department of Veterans Affairs in concert with the DOD added to a lack of oversight by a lethargic U.S. Congress, has made life extremely difficult for soldiers with acute mental health problems or those hoping to avoid them by seeking help.

Multiple administrative dilemmas at play at once have impacted the quality of life for troops serving in Iraq and Afghanistan and upon their return. Immediately, due to a shortage of manpower, troops are now being re-deployed to battle as many as five times with less and less time to decompress between tours of duty. Were there not a need for so many bodies in the field, troops displaying emotional problems would be a liability and sent home for treatment.

Colonel Elspeth Ritchie, an expert in psychiatry for the Army's Surgeon General has insisted that the DOD still prioritizes the mental health of service members. But she admitted that, "Some practices, such as sending service members diagnosed with Post-Traumatic Stress Disorder (PTSD) back into combat had been driven in part by troop shortage." Absent of outwardly exhibiting symptoms of mental disorders such as PTSD, many troops fail to report their problems due to fear of retribution or are not aware there is a problem until they start acting out in other ways such as through drug or alcohol abuse.

Public Law 105-85, Section 762-767 enacted as part of the 1998 Defense Authorization Act was presented in 1997 in order to force the DOD to comply with both pre-deployment health assessment and post-deployment health assessment for returning soldiers as the result of healthcare problems them after the Gulf War. Through the filing of forms 2795 and 2796 respectively, their purpose is to trigger physical as well as mental health evaluations of troops. However, oversight of such examinations is spotty and the way in which the mental health assessment is recorded, if at all, is based upon the troop's own self-evaluation by way of answering 4 questions concerning PTSD symptoms.

The 1998 law requires evidence that face-to-face interviews are done upon demobilization, but the DOD has refused to turn over such documentation to the Congress, for the past four years, in order to verify that it has been adequately done. Therefore, all of the regulations in the world are of little use unless there is implementation of said regulations.

And leaving the care of returning soldiers up to themselves or their families is hardly the way system was set up to work. There are nearly 70 stories of soldiers who have committed suicide either in Iraq, Afghanistan or stateside since the inception of the War on Terror. There could be more since suicides are considered part of non-combat related casualties and such statistics remain sketchy. And in most of these cases, either the families of these soldiers had pleaded for help for their loved ones, fellow soldiers reported abnormal behaviors, or soldiers themselves confided in their superiors about their troubles. Unfortunately, too many never came forward at all, fearing stigmatization.

The military subscribes to the "watchful waiting" concept with respect to mental health problems. But when it concerns PTSD, symptoms often take 6 months to a year to manifest during which time a person may have already resorted to self-medication through illicit drugs or alcohol accompanied by violent or other self-destructive behaviors. Such presents more need for preventative assessments, not less.

For those troops who have requested face-to-face evaluations there are some areas of the country which have a waiting list up to a year and then there is often dispensing of anti-depressants, often by clinicians without any psychiatric training, without any accompanying counseling or therapy of follow-up. There is even a highly touted "telemental" therapy which troops can eventually utilize which is basically counseling by e-mail or instant messaging on the internet. It is hardly adequate for a person experiencing severe anxiety, night sweats, flashbacks, or bouts of paranoia.

A May 2006 Government Accountability Office (GAO) report found that four of five returning troops, potentially at risk for PTSD, were not referred for further mental health evaluation. Half of those eventually got help on their own but less than 10% were referred through the military. A September 2006 GAO report highlighted that the VA underestimated the cost of serving veterans upon return from Iraq and Afghanistan due to pre-war budget figures, yet still failed to report such problems to the Congress.

In December 2006 the GAO released an additional report which shows that the funds allocated to the VA for mental health have not been spent on mental health care accordingly. The report discloses that the VA has no system in place to track spending on mental healthcare and that funds may have gone to other resources instead. But such an indictment of the VA does not alleviate lawmakers of their oversight responsibilities, either.

Dr. Frances Murphy, Undersecretary for Health Policy Coordination at the VA said in March 2006 that there is a need for improvement for mental healthcare for an increasing number of veterans seeking help. She said, "VA clinics do not provide mental health or substance abuse care, or if they do, waiting lists render that care virtually inaccessible." "The VA needs more capacity so that vets can get treatment and don't have to wait," according to Paul Sullivan, a former senior analyst at the VA prior to April 2006 and now Director of Programs for Veterans for America, an advocacy organization.

Furthermore, while waiting to see a VA doctor, veterans with severe symptoms of PTSD are often denied disability benefits should they turn to illegal substances as a way to cope. They are then vulnerable to the categorization of "willful misconduct" since the military has a zero tolerance policy for drug abuse. And those who have received benefits are subject to losing them should they be found abusing drugs. Ironically, the VA is tolerant of alcohol abuse, just not illicit drugs. But even then, only if a medical doctor finds that the veteran also has been diagnosed with PTSD may they then continue to receive their disability benefits.

Veterans from the present and ongoing wars have been the best advocates for those presently active duty soldiers, reservists still on call and those now discharged. Such organizations and grassroot efforts have successfully lobbied lawmakers, attended and testified in hearings on Capitol Hill and in doing so have unearthed the inadequate access to mental healthcare for troops. And as typical of U.S. medical insurance plans, mental healthcare always takes a back seat to physical medicine. And it continues to remain the biggest hidden cost as the result of the War on Terror.

Yet through their plight for their brethren in uniform, former brothers in arms have proven that it is not always just a matter of throwing money at a situation to solve a crisis, as inadequate access to mental healthcare presents a crisis of its own. Certainly the invisible front line and a deceptive enemy have made for a war unlike any other that the U.S. military has previously fought.

Yet, much like prior wars fought by the U.S. armed forces, present and future veterans of the Wars in Iraq and Afghanistan will have not only fought for their health and survival on the battlefield but many must continue to fight to an ineffectual government for their continued survival. Certainly, it was to suppose to have been better by now, but sadly it is but another testament to benign neglect by those with the power to affect change.

Copyright ©2006 Diane M. Grassi
Contact: dgrassi@cox.net

For the last quarter of 2006 United States Army bases stateside face a funding deficit of $530 million while troops active in Iraq and Afghanistan will not see the promised replacement levels of military equipment previously committed. Additionally, payroll for active-duty troops is short $1.4 billion while the Army Reserve and National Guard face a $500 million deficiency.

The Installation Management Agency is responsible for overseeing the funding for 117 Army posts in the U.S., Europe and Asia. Garrisons of the posts administer the services the post receives such as mail delivery, garbage removal and firefighting while contracting services for dining halls and grounds maintenance. In order for many services to be provided, both temporary and term personnel are sub-contracted by the garrisons. However, in early June 2006, Installation Commander, Col. Kenneth O. McCreedy, mandated major cuts in services on all Army bases at least until September 30, 2006, when the 2006 fiscal year ends.

The reduction in services includes a 100% civilian hiring freeze; the release of temporary and term employees as quickly as possible unless vital for the support of life, health, safety and the Global War On Terrorism; development of spending plans by commanders for Fiscal Year 2007 based upon such reduced services; cancelling or reducing contracts until October 1, 2006. Garrisons have also reduced vehicle usage by as much as 20%, and cut cell phone and paging services.

However, other costs simply cannot be deferred or eliminated such as electric bills. Fort Sam Houston of San Antonio, TX has not paid its monthly $1.4 million electric bill since March 2006, with many of its administrative buildings receiving disconnect notices. Fort Bragg in North Carolina has a moratorium on buying pens, paper and other office supplies and equipment. Fort Knox, Kentucky closed one of its eight dining halls. Other bases shut down swimming pool facilities, due to chlorine costs, used for training and exercise by troops and their families. Even pest control has been considered a non-essential expenditure at some posts.

President Bush signed the Emergency Supplemental Appropriations Act for Defense, the Global War on Terrorism and Hurricane Recovery 2006 on June 15, 2006, in the amount of $94.5 billion for such emergency spending. Although it provides the Department of Defense with $66 billion, most of it is allocated for military expenditures for the ongoing costs of the War in Iraq and Afghanistan.

Out of the defense funding in the supplemental act, $43.5 billion is for military operations, with $17.6 billion designated for replacing worn out equipment on the battlefield including night-vision equipment, vehicle armor, mortar and rocket jamming devices and other counter insurgency measures. Heavy trucks and Humvee replacements are to be factored in as well. $4.9 billion is for the training and equipping of Iraq and Afghanistan security forces, $1.6 billion is for strengthening the Iraq and Afghanistan economies, $66 million is for promoting democracy in Iran and $393 million is for peacekeeping efforts and humanitarian aid in South Sudan and Darfur.

Also included in the authorized supplemental spending is $19.8 billion in aid for the U.S. Gulf Coast rebuilding effort, $2.3 billion goes to anti-avian flu programs and $1.9 billion is for border security including sending 2,500 National Guard troops to the southern border by August 1, 2006. But what was not clear when $1.9 billion was allocated for border security was that $1.6 billion of it was taken from funds specifically reserved for military equipment replacement.

The Office of Management and Budget (OMB) requested the change upon such directive from the White House but without consulting the Army or the Marine Corps. In a last minute amendment sponsored by Senator Bill Frist (R) TN and Senator Judd Gregg (R) NH, $1.9 billion was transferred from the emergency war supplement to the Department of Homeland Security. However, not realized by most in Congress is that the $1.9 billion is to be reimbursed by the Pentagon's very own budget for the war. That very funding was earmarked for the replacing of trucks, jammers and radios on the battlefield as dictated not by the Pentagon but rather the OMB.

For the Marine Corps alone, yearly costs in Iraq are about $5 billion. But the Marines will get little help in the $11.7 billion in "reset" costs to restore all of the equipment which has become worn out or lost over the past four years. According to its records, in order to replenish its equipment to pre-9/11 levels even if all of the costs were provided in 2006, would take over two years to do so. The Marine Corps over the past three years, has seen its war reserves depleted, however, necessary in order to keep deployed troops fully equipped.

The Marine Corps has lost 3,500 pieces of ground equipment as well as 27 aircraft in Afghanistan and Iraq. In Iraq, trucks and Humvees age four to nine times faster than during peacetime. Roadside bombs, heat, and weight of the Humvee armor kits all contribute to vehicle aging. And lack of equipment has left little in reserve in order to properly train deploying troops on weapons, on types of radio devices to the very vehicles they will actually drive upon reaching the battlefield. That puts U.S. troops at far greater risk.

At present, the Marine Corps is in need of more than 3,000 trucks, 5,000 high-powered jammers, 3,500 radio sets and 1,000 armor kits. And that does not include the needs of the Army which has the largest number of troops deployed. But due to the large amount the Army spends on personnel, making up 24% of the entire Pentagon budget, it leaves less and less funding for weapons.

There are plenty of reasons for costs restraints, starting with the growing cost of fuel, lower exchange rates on the U.S. dollar, bonuses and incentives to attract new recruits and discourage officers from retiring. In addition, more healthcare costs have arisen for more and more disabled troops returning home and Veterans' escalating healthcare costs. Costs incurred due to the mandated and ongoing reorganization of the Army into a smaller, more flexible force with more frequent deployments adds to the shortfalls. And the proposed closing and reorganization of National Guard and Reserve bases is expected to cost billions of dollars with some of those costs realized starting in 2007.

The Congress in both houses has postured that fighting a war while simultaneously maintaining combat readiness throughout the armed forces through a series of supplemental emergency funding bills cannot go on much longer. For in fact such bills usually include other areas of government spending which have nothing to do with funding supposed emergencies. And side deals or amendments to legislation arising at the 11th hour when most of the Congress is not aware, is no way to treat troops when lives are on the line.

Mere belt tightening is not the answer in the middle of a crisis, such as a war, with other hot spots and threats to the U.S. across the globe. And the U.S. Congress is far from a good example of abiding by budget constraints. The time for addressing shortfalls is not after men are dying on the battlefield and suffering from equipment shortages, nor when it just happens to be politically expedient, but on a timeline which mitigates the loss of life by proper preparation for the long term. Perhaps if we had a more modular Congress these shortfalls would be far more uncommon. And perhaps emergency supplemental bills would be reserved for what they were intended: true emergencies only.

Copyright ©2006 Diane M. Grassi
Contact: dgrassi@cox.net

The United States Department of Transportation (DOT) on February 8, 2005, presented its decision before the U.S. House of Representatives House Aviation Sub-Committee, to change a rule which would clear the way for foreign corporations to own and control U.S. airlines. But members of the House Aviation Sub-Committee were all in agreement that the DOT may lack the legal authority to unilaterally make such a change. Yet it does not begin to reveal all of the implications of such a historic shift in policy in bypassing the U.S. Congress in order to do so.

Trade negotiations with the European Union to loosen up regulations in ownership of U.S. airlines is seen as a tradeoff by the DOT in order for the U.S. to gain greater access to landing at London's Heathrow Airport, where presently only American Airlines and United Airlines have limited service there. Known as the Open Skies Agreement, lawmakers in both parties believe that this proposition transcends 'free trade' or globalization as it becomes an issue which directly impacts labor and national security.

Currently, U.S. law requires that U.S. airlines must be under the "actual control" of U.S. citizens in order to be licensed for operation. And for corporations, 75% of the voting interest must be held by U.S. citizens and 66% of its board of directors and officers must also be U.S. citizens. But Secretary of Transportation, Norman Mineta, in a statement in November 2005 said that the rule change would be an "historic opportunity to increase travel, reduce fares, expand commerce and bring two continents closer together than ever before. It provides new opportunities for U.S. and European airlines, healthier competition for a growing travel market and greater connection between cities and towns of all sizes on both sides of the Atlantic."

But the President of the Air Line Pilots Association, Intl. has a much different opinion. Captain Duane Woerth testified before the House Aviation Sub-Committee claiming, "Changes of this magnitude should be undertaken not be an administering agency but by the legislative branch. Pilots spend their entire careers accumulating the seniority required to gain access to international flying opportunities. In an era when the career expectations of pilots and other airline workers already have been repeatedly frustrated by airline bankruptcies, furloughs, wage concessions, pension plan terminations, and the like, it would be a crowning blow for the U.S. government now to adopt a policy that would tend to eliminate international flying by U.S. carriers."

Should the new rule be adopted, with exception of few areas, all airline operations, including prices, scheduling markets, fleet structure, marketing and alliances have the option of being controlled by foreign investors. Additionally, U.S. labor law protections could be compromised and employees forced into losing out by being replaced by foreign employees. Aviation safety could be jeopardized as foreign-controlled management need meet only minimum FAA standards, far short of the present programs and practices U.S. airlines presently accord.

Surprisingly, the Department of Defense as well as the State Department have agreed with the DOT on this issue. But for several Congressmen, it does not pass muster and especially as concerns the Civilian Reserve Air Fleet (CRAF) which is used to transport U.S. troops including in times of war. The Open Skies Agreement would have to be redrafted to accommodate such. According to Rep. Peter DeFazio (D-OR), "During the Gulf War a European Union member didn't supply us with a type of carrier we needed when we ran out because they didn't support the war."

Should the Congress fail to create legislation to block the proposed rule it would take effect, even though most U.S. airlines with the exception of cargo carriers, FEDEX and UPS as well as United Airlines, having recently reemerged from bankruptcy, are opposed to it. John Byerly, Deputy Assistant Secretary of State has maintained that in order for the EU to approve the Open Skies Agreement it is conditional on easing foreign ownership rules. But according to the Government Accountability Office, airport capacity limitations such as at Heaththrow would not be corrected by a deregulated agreement.

Rep. James Oberstar (D-MN), ranking Democrat on the House Transportation and Infrastructure Sub-Committee, in order to counter the proposed rule change introduced legislation that would require the rule be put on hold for one year, allowing the Congress to review its ramifications on national defense and homeland security, which are primary issues which must initially be addressed.

And while possible ownership of U.S. airlines may be permitted within a year, control of operations and security of six U.S. ports will be given to the United Arab Emirates and based in Dubai. The London-based Peninsular and Oriental Steam Navigation Co. was purchased on February 13, 2006 by Dubai Ports World. The deal is expected to be finalized on March 2, 2006. Peninsular and Oriental Steam Co. is the world's fourth largest ports company and the sale affects the commercial U.S. ports of New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

The Committee on Foreign Investment in the U.S. (CFIUS) is a secretive government panel comprised of designees from the Department of Treasury, the Department of Defense, the Department of Justice, the Department of Commerce, the Department of State and the Department of Homeland Security. In January 2006, the Bush administration appointed a former Director of Operations for Europe and Latin America for Dubai Ports World as the new Maritime Administrator within the Department of Transportation, raising more than a few eyebrows.

But most puzzling to lawmakers is how Dubai, which provided most of the financing for the 19 hijackers on 9/11/2001, will now be overseeing the very port where nearly 3,000 lives were claimed that day. And Dubai was the base for much of the terrorist planning and operations for the attacks in New York and Washington, according to the FBI.

Since the Bush administration considers Dubai and the UAE a vital ally in the war against terrorism, it approves of the sale. However, it raises vital questions of U.S. national security and homeland security policies at ports where presently less than 5% of all cargo is inspected. And having an Islamist nation in charge of U.S. ports arguably makes little sense in allowing it to dictate port operations, given that U.S. ports remain top terrorist targets.

With the Department of Homeland Security still struggling to implement systems and operations to secure U.S. ports, allowing Dubai to run the ports could be a gateway for contraband, weapons of mass destruction and arsenals, as well as hiring practices without proper scrutiny, including the quality of security which would have to conform to U.S. law. Steve Coleman, Port Authority of New York/New Jersey spokesman stated, "We need to take a real close look at security before we approve such a company."

James Lewis, a former State and Commerce Department contractor, sums it up by saying, "It's in Dubai's interest to make sure this runs well." And unfortunately, it will take an act of Congress to prevent the finality of the sale in what will become the world's second largest port operator. Hopefully, cooler heads in the Congress will prevail in the best interests of the U.S. in order to supercede those of foreign interests, all in the name of globalization. For the greatest asset to the U.S. is the American people, who not only deserve the protection of their government but one which vows to do its best to prevent terrorism on its shores ever again. Anything less is just unacceptable.