Business Updates: Pipeline Company Ends Keystone Project
The oil giant is likely to appeal the judgment, the company’s chief executive said, but it also felt “a determination to rise to the challenge” posed by the court.,
The Canadian pipeline company that had long sought to build the Keystone XL pipeline announced Wednesday that it had terminated the embattled project, which would have carried petroleum from Canadian tar sands to Nebraska.
The announcement was the death knell for a project that had been on life support since President Biden’s first day in office and had been stalled by legal battles for years before that, despite support from the Trump administration.
On the day he was inaugurated, Mr. Biden, who has vowed to make tackling climate change a centerpiece of his administration, rescinded the construction permit for the pipeline, which developers had sought to build for over a decade. That same day, TC Energy, the company behind the project, said it was suspending work on the line.
On Wednesday, the company wrote in a statement that it “will continue to coordinate with regulators, stakeholders and Indigenous groups to meet its environmental and regulatory commitments and ensure a safe termination of and exit from the project.”
Environmental activists cheered the move and used the moment to urge Mr. Biden to rescind the Trump-era permits granted to another pipeline, the Enbridge Line 3, which would carry Canadian oil across Minnesota. Hundreds of protesters were arrested earlier this week in protests against that project.
“The termination of this zombie pipeline sets precedent for President Biden and polluters to stop Line 3, Dakota Access, and all fossil fuel projects,” said Kendall Mackey, a campaign manager with 350.org, a climate advocacy group. “This victory puts polluters and their financiers on notice: Terminate your fossil fuel projects now — or a relentless mass movement will stop them for you.”
On Capitol Hill, Republicans slammed Mr. Biden. “President Biden killed the Keystone XL pipeline and with it, thousands of good-paying American jobs,” said Senator John Barrasso of Wyoming, the ranking Republican on the Senate Energy committee. “On Inauguration Day, the president signed an executive order that ended pipeline construction and handed one thousand workers pink slips. Now, ten times that number of jobs will never be created. At a time when gasoline prices are spiking, the White House is celebrating the death of a pipeline that would have helped bring Americans relief.”
The 1,179-mile pipeline, which would have carried 800,000 barrels a day of petroleum from the Canada to the Gulf Coast, had became a lighting rod in broader political battles over energy, the environment and climate change. After environmental activists spent years making the case to President Barack Obama that approval of the pipeline would be a devastating blow to his efforts to fight climate change, Mr. Obama in 2015 announced that his administration would reject its construction permit.
Two days after his inauguration in 2017, President Donald J. Trump, who during the campaign promised to overturn Mr. Obama’s environmental legacy, signed an executive order rescinding Mr. Obama’s decision and allowing the pipeline to go forward. But in 2018, after some portions of the pipeline had been built, a federal judge blocked further construction of the project on the grounds that the Trump administration did not perform adequate environmental reviews before rescinding the Obama decision. The project had been largely stalled since then.
The Biden administration is invoking provisions in a new trade agreement to ask Mexico to look into accusations of labor violations at an auto-parts plant near the U.S. border.
The action, announced Wednesday by the Labor Department and the Office of the United States Trade Representative, follows a complaint by groups including the A.F.L.-C.I.O., the nation’s largest federation of unions, that workers were being denied the rights of free association and collective bargaining.
The A.F.L.-C.I.O. said workers at the Tridonex plant in Matamoros, across the border from Brownsville, Texas, had been harassed and fired over their efforts to organize with an independent union in place of one controlled by the company. Tridonex is owned by Cardone Industries, an aftermarket auto-parts manufacturer based in Philadelphia.
It is the second time that the United States has sought Mexican review of a labor rights matter under the United States-Mexico-Canada Agreement, which took effect last summer. The accord has a “rapid response” mechanism that provides for complaints to be brought against and for penalties to be applied to an individual factory.
“This announcement demonstrates our commitment to using the tools in the agreement to stand up for workers at home and abroad,” Katherine Tai, the U.S. trade representative, said in a statement, noting that Mexico has 10 days to agree to conduct a review and, if it agrees, 45 days to remedy the situation.
Last month the United States asked Mexico to review whether labor violations had occurred at a General Motors plant in the central state of Guanajuato in connection with a recent vote on a collective bargaining agreement. Mexico agreed to the request the same day.
— The New York Times
General Motors on Wednesday told the Biden administration that it would agree to tighter federal fuel economy and tailpipe pollution rules, along the lines of what California has already agreed to with five other auto companies.
The move is a step by the nation’s largest automaker away from its position during the Trump administration, when G.M.’s chief executive, Mary Barra, asked President Donald J. Trump to relax Obama-era auto pollution rules.
President Biden is seeking to reinstate those restrictions as part of his efforts to cut climate-warming pollution, and he hopes to propose new draft auto pollution rules as soon as next month.
Ms. Barra stopped short of endorsing Mr. Biden’s desire to fully reimpose or strengthen the Obama-era auto pollution standards, which to date stand as the strongest policies ever imposed by the federal government to fight climate change. And she also asked the administration to augment the federal rules with provisions that would give incentives to auto companies that are investing in electric vehicles, although she did not specify what those incentives should be.
Just weeks after Mr. Biden’s election, Ms. Barra dropped her company’s support of the Trump administration’s efforts to nullify California’s rules on tailpipe emissions. And days after the new president’s inauguration, she announced that after 2035 her company will sell only vehicles that have zero emissions, a target in line with Mr. Biden’s pledge to cut the United States’ emissions 50 percent from 2005 levels by 2030.
This week, in a letter to Michael S. Regan, the head of the Environmental Protection Agency, Ms. Barra wrote, “G.M. supports the emissions reduction goals of California through model year ’26,” adding, “the auto industry is embarking upon a profound transition as we do our part to achieve the country’s climate commitments.”
The Obama-era climate rules, which G.M. sought to loosen, required automakers to build vehicles by 2025 that achieve an average fuel economy of 54.5 miles per gallon. The rules would have eliminated about six billion tons of planet-warming carbon dioxide pollution over the lifetime of the vehicles. Mr. Trump rolled back Mr. Obama’s standards from 54.5 miles per gallon by 2025 to 40 miles per gallon and revoked California’s legal authority to set its own state-level standard.
California reached a separate deal with Honda, Ford, Volkswagen, BMW and Volvo under which they would be required to increase their average fuel economy to about 51 miles per gallon by 2026.
Ms. Barra said her company would now support those standards at the federal level — alongside a program to give some form of credit or incentive to electric-vehicle manufacturers like her own company.
Negotiations on the new auto pollution standards are ongoing alongside White House talks to reach a deal on infrastructure legislation, which Mr. Biden hopes will include generous spending on tax credits for electric vehicle manufacturers and consumers, as well as direct government investments in 500,000 new electric vehicle charging stations.
Nick Conger, an E.P.A. spokesman, said in an email that Mr. Regan had spoken this week with leaders from auto manufacturers and that the “conversations have been constructive as the agency moves forward on actions to address emissions from cars and light-duty trucks.”
After 15 years as the executive director of the Committee to Protect Journalists, Joel Simon said on Wednesday that he would step down by the end of the year.
Founded in 1981, the Committee to Protect Journalists is a nonprofit organization that defends the rights of journalists around the world. Mr. Simon, 56, joined in 1997 and has been in charge since 2006.
In an interview, Mr. Simon said that, when he joined the group, he was hopeful about the ability of journalists to do their jobs safely. But after more than three decades of helping to secure the releases of hundreds of imprisoned or detained journalists around the world, he has lost some of that optimism.
“Governments are increasingly taking aggressive action toward journalists, and there are very few consequences,” Mr. Simon said. “During the Trump administration, we saw a connection in governments appropriating ‘fake news’ and use it to justify imprisoning journalists. We’ve also seen governments brazenly use violence.”
Record numbers of journalists have been jailed around the world in recent years, according to the Committee to Protect Journalists, with 274 imprisoned in 2020. That same year, 22 journalists were murdered for doing their jobs, up from 10 in 2019. At least seven have been killed in the line of duty this year, according to the committee.
As evidence of “violent and repressive forces” that have chilled news coverage, Mr. Simon cited the 2018 assassination of the Washington Post columnist Jamal Khashoggi, a writer who was critical of Crown Prince Mohammed bin Salman of Saudi Arabia and whose murder was approved by him, according to a recent United States intelligence report; and the recent forcing down of a plane carrying a dissident journalist, Roman Protasevich, by President Aleksandr G. Lukashenko of Belarus.
A threat to journalists in the United States was aggressive policing during demonstrations, Mr. Simon added.
“When journalists get arrested at protests in the United States, those images echo around the world and they send a message to so many places that this is the way police behave even in democratic countries,” he said. “And therefore, arresting journalists at protests in Moscow or covering protests in Myanmar, which we’re seeing now, is less shocking and generates less attention.”
Kathleen Carroll, the committee’s board chair, will lead the search for Mr. Simon’s successor, along with the executive search firm Spencer Stuart.
“Autocrats who feel they can kill people and harassment through technology and monitoring through technology — all of that is a new threat,” Ms. Carroll said. “Whoever is going to get this job needs to be able to think ahead about where new threats will be coming from and how to organize the staff and resources.”
Volkswagen said on Wednesday that its former chief executive, Martin Winterkorn, would pay the company 11.2 million euros (about $13.7 million) for “breaches of due diligence” that led to the company’s emissions cheating scandal as part of a settlement with other former executives totaling EUR288 million.
The announcement came the same day that prosecutors in Berlin charged Mr. Winterkorn with lying to the German parliament about his knowledge of the carmaker’s emissions scandal, raising fresh questions about his role in a cover-up.
Mr. Winterkorn was once one of Germany’s most powerful men, but what he knew about of the emissions cheating has remained a crucial question for Volkswagen, even though he resigned in 2015, when the scandal first broke. Overall, the scandal has cost Volkswagen tens of billions of euros in fines, settlements and legal fees.
Prosecutors in Berlin said Wednesday that Mr. Winterkorn knew far earlier than he had acknowledged to a parliamentary panel in 2017 that the company had secretly equipped millions of diesel-powered VW cars with special software, known as a defeat device, to cheat on emissions tests. The gimmick made the vehicles appear environmentally friendly and attractive to ecologically conscious consumers.
“In his testimony, the accused falsely claimed to have been informed of the defeat devices only in September 2015,” Berlin prosecutors said in a statement.
“According to the indictment, he had since May 2015 been aware that the engine control software of some VW vehicles had been equipped with a function to manipulate the exhaust values in testing,” prosecutors added.
The latest legal salvo against Mr. Winterkorn came as Volkswagen announced on Wednesday that it was facing fresh charges from French authorities for cheating on emissions tests.
Volkswagen’s decision to seek settlements from former executives is a turnaround for the company, which had previously been reluctant to publicly accuse former top managers of complicity in the emissions fraud.
In addition to Mr. Winterkorn, Rupert Stadler, the former chief executive of the Audi luxury car division, has agreed to pay EUR4.1 million. Most of the rest of the payments will be made by insurance companies providing directors’ and officers’ coverage. The settlement must be approved at the annual shareholders’ meeting next month.
Mr. Winterkorn, who still faces criminal charges in Braunschweig, a town near VW’s headquarters in Wolfsburg, on accusations of fraud related to the case, has long contended that he was not aware of any wrongdoing.
In early 2017, Volkswagen pleaded guilty in the United States to criminal charges that included conspiracy to defraud the government, violations of the Clean Air Act and obstruction of justice. The company paid $20 billion to resolve civil and criminal charges related to the scandal.
That burrito fix is going to get a bit more expensive.
Executives at Chipotle said on Tuesday that the fast-food chain had raised menu prices by about 4 percent to cover the cost of the increased employee wages.
In May, in an effort to hire 20,000 employees in a tight labor market, Chipotle said it was raising wages and would pay workers from $11 to $18 an hour.
“We really prefer not to” raise prices, Chipotle’s chief executive, Brian Niccol, said Tuesday at the Baird Global Consumer, Technology and Services conference. “But it made sense in this scenario to invest in our employees and get these restaurants staffed and make sure we had the pipeline of people to support our growth.”
Job openings in the United States surged to record levels in April, the Labor Department said on Tuesday, the latest sign that businesses were struggling to hire workers as the economy reopens. Employers added hundreds of thousands of jobs in May, but the road to recovery for the labor market is bumpy.
The labor market has forced other restaurant chains to increase wages to attract job candidates. That’s a stark contrast from earlier this year, when Congress was debating raising the minimum wage to $15 an hour, and the restaurant industry argued such a move would imperil the economic recovery.
But Chris Kempczinski, the chief executive of McDonald’s, said on a call with Wall Street analysts in January that the company was doing “just fine” in the more than two dozen states that had phased in higher minimum wages. In May, McDonald’s said it was raising hourly wages for current employees by an average of 10 percent and that the entry-level wage for new employees would rise to $11 to $17 an hour based on the location of the restaurant. The pay increases apply only to its 650 company-owned restaurants; the vast majority of its nearly 14,000 restaurants in the United States are independently owned.
Even with the price increases, Chipotle executives argued that the price of their food items remained reasonable. Excluding higher-priced markets like New York, the price of a chicken burrito remains below $8, Mr. Niccol noted. He said a price increase of 3 to 4 percent equates to “quarters and dimes that we’re layering in.”
One of the nation’s biggest solar-energy companies said on Wednesday that it would double production in the United States by opening a third plant in Ohio by the middle of 2023.
The company, First Solar, said it would invest $680 million to build a new plant in Lake Township, Ohio, which is about an hour south of Cleveland, where it already has a plant. The project is expected to add 500 jobs to the company’s roster of 1,600 employees in the United States.
“We have said that we stand ready to support President Biden’s goal to transition America to a clean, energy-secure future, and our decision to more than double our U.S. manufacturing capacity with this new facility is First Solar making good on that commitment,” Mark Widmar, the company’s chief executive, said in a statement. “This facility will represent a significant leap forward in photovoltaics manufacturing, a true factory of the future.”
Mr. Biden wants to eliminate greenhouse gas emissions from the electric grid by 2035, an ambitious goal that would involve remaking the energy industry. The president has promised that the transition to cleaner energy would create millions of new jobs, a claim that some critics have said is far-fetched.
Over the last decade or so, most solar panel manufacturing has moved to China and other Asian countries where labor costs tend to be a lot lower than in the United States. That has been frustrating to Democratic lawmakers who have embraced solar power but also want more domestic manufacturing jobs.
But First Solar, which is based in Tempe, Ariz., and a couple of other companies have in recent years expanded production in the United States. In 2019, the Korean company Hanwha Q CELLS opened a plant in Dalton, Ga., and the Chinese firm JinkoSolar opened a factory in Jacksonville, Fla.
In addition to the operations in Lake Township, First Solar also has a plant in the Toledo area. The company’s panels are different from the more widely used silicon crystalline models. First Solar’s panels are made from a thin film semiconductor (not a thin film silicon material as was earlier reported here) and are typically used in large solar farms that supply power directly to the electric grid rather than on residential rooftops.
First Solar said its new plant should help it further reduce costs and allow American-made panels to compete more effectively with those produced in China. A sharp drop in the cost of solar panels over the last 10 years has made them one of the least expensive ways to generate electricity, far cheaper in some cases than power plants that burn coal and natural gas.
Royal Dutch Shell will respond to a recent defeat in a Dutch court by accelerating its efforts to reduce its carbon dioxide emissions, the company’s leader said Wednesday.
Ben van Beurden, the chief executive of Shell, said that he was “disappointed” by the ruling requiring the oil company, Europe’s largest, to move faster in slashing greenhouse gases, but added that the company was planning to do just that.
“For Shell, this ruling does not mean a change but rather an acceleration of our strategy,” Mr. van Beurden said in an article published on LinkedIn. “We will seek ways to reduce emissions even further in a way that remains purposeful and profitable,” he added.
On May 26, the District Court in The Hague ruled that Shell must reduce its global net carbon emissions by 45 percent, by 2030 compared with 2019. The court said that Shell owed a duty of care to the citizens of the Netherlands, where the company has its headquarters, to protect them from the consequences of global warming like rising sea levels.
Mr. van Beurden said his first reaction to the ruling was “surprise” because Shell had been in the forefront among oil majors in setting out targets to reduce emissions including those of the customers who burn the company’s products in their cars or jet engines. He also said that if Shell decided to stop selling gasoline and diesel today, people would just turn to other providers for fuel. “It would not help the world one bit,” he said.
Mr. van Beurden said that Shell still expected to appeal the judgment.
After reflection, though, Mr. van Beurden said he and his colleagues also felt “a determination to rise to the challenge” posed by the court.
The Shell executives may have realized that the ruling is a harbinger of increased pressures to come and that Shell, which has a long history dating to the 19th century, needs to do more on climate change if it wants to thrive in future decades.
President Biden on Wednesday revoked a Trump-era executive order that sought to ban the popular apps TikTok and WeChat and replaced it with one that calls for a broader review of a number of foreign-controlled applications that could pose a security risk to Americans and their data.
The Trump order had not been carried out “in the soundest fashion,” Biden administration officials said in a call with reporters, adding that the new directive would establish “clear intelligible criteria” to evaluate national security risks posed by software applications connected to foreign governments, particularly China.
Mr. Biden’s order reflects a growing urgency among American officials, both Republican and Democrat, to aggressively counter what they see as a growing threat posed by China’s military and technology sectors. In a rare show of bipartisanship, U.S. lawmakers have also sought to reduce America’s dependence on China for supply chain technology like semiconductors, rare minerals and other equipment. On Tuesday, the Senate approved a $250 billion spending package to bolster American technology research and development.
The order is the first significant step Mr. Biden has taken to approach the saga between TikTok and the Trump administration, which tried to ban the app over national security concerns but was immediately challenged in federal court.
Analysts said the new executive order is meant to create a process that could withstand such a challenge.
The Biden administration has worked to reassess several directives Mr. Trump made to curb China’s influence, and in several cases has taken a more aggressive approach. Last week, Mr. Biden expanded a Trump-era order by barring Americans from investing in Chinese firms linked to the country’s military or engaged in selling surveillance technology.
It is unclear how effective either order will ultimately be at stopping the spread of Chinese espionage technology, and does not fully resolve the future of TikTok, a wildly popular app with 100 million American users.
James Lewis, a senior vice president of the Center for Strategic and International Studies, said the Biden administration has shown no easing of the government’s strong stance against China. But the new executive order lays out much more precise criteria for weighing risks posed by TikTok and other companies owned by foreign adversaries like China.
“They are taking the same direction as the Trump administration but in some ways tougher, in a more orderly fashion and implemented in a good way,” Mr. Lewis said. Mr. Lewis added that Mr. Biden’s order was stronger than the Trump-era directive because “it’s coherent, not random.”
On Wednesday, administration officials would not go into specifics about the future of TikTok’s availability to American users or say whether the U.S. government would seek to compel ByteDance, which owns the app, to transfer American user data to a company based in the United States.
GameStop announced that two former Amazon executives will become its next chief executive and chief financial officer this summer, as the retailer continues to shift its traditional bricks-and-mortar business toward gaming technology. The announcement came as the company — which was at the epicenter of a retail trading frenzy in late January — reported first-quarter earnings results that were better than Wall Street had expected.
Lordstown Motors, an electric vehicle start-up that aimed to revive a shuttered General Motors factory in Ohio, said on Tuesday that it did not have enough cash to start commercial production of its electric pickup truck and might have to close its doors. In a regulatory filing, Lordstown said it would not be able to begin “commercial scale production” without raising more money from investors and lenders. It added that there was “substantial doubt regarding our ability to continue as a going concern” — a legal phrase companies often use to alert investors that they might not survive.
Ohio’s attorney general, Dave Yost, filed a lawsuit on Tuesday in pursuit of a novel effort to have Google declared a public utility and subject to government regulation. The lawsuit seeks to use a law that’s more than a century old to regulate Google by applying a legal designation historically used for railroads, electricity and the telephone to the search engine. If Google were declared a so-called common carrier like a utility company, it would prevent the company from prioritizing its own products, services and websites in search results.
Small-business owners were hit hard by the pandemic. But they are still feeling pretty optimistic, according to a new survey of 10,000 businesses conducted by Goldman Sachs and reported first by DealBook.
That positive outlook comes even as entrepreneurs stare down three big concerns:
Inflation. Eighty-two percent of small-business owners are concerned about inflation, and 83 percent have experienced an increase in operating costs in the past few months.
Hiring. Seventy-one percent of small businesses are hiring full-time or part-time employees, and 81 percent of those hiring say they are finding it difficult to recruit qualified candidates. (Why is it so hard to hire right now? Reasons include coronavirus fears, low wages, child care issues and expanded unemployment benefits.)
Access to capital. The majority of small businesses that took a rescue loan from the Small Business Administration (82 percent) expect to exhaust their funding this summer, and less than a quarter are very confident that they will be able to maintain payroll without additional government relief. “If you have a bad financial statement from last year, which most do, you’re not able to qualify for an S.B.A. loan,” said Joe Wall, a managing director of government affairs at Goldman Sachs. “So that’s the immediate crisis that we see coming.”
Even with those worries, 67 percent of business owners think things are moving in the right direction. “People aren’t wearing their masks,” Mr. Wall said, a sign that vaccinations have helped business conditions improve, especially compared with this time last year. “So I think there’s a reason for them to be optimistic.”
Stocks on Wall Street fell on Wednesday as traders awaited more data on inflation.
The S&P 500 ended the day down 0.2 percent after three days in which the benchmark U.S. was essentially unchanged.
Momentum in the stock market has stalled recently as investors try to gauge whether consumer price increases are temporary hiccups as businesses reopen or if the increases point to persistent problems, which central banks will have to address by easing stimulus measures.
A big jump in prices was reported in China on Wednesday, as the government said that prices charged by factories, farmers and other producers had soared 9 percent in May compared with a year earlier, when the pandemic held down expenses. But consumers remain largely unaffected: China’s Consumer Price Index was only 1.3 percent higher in May than a year earlier.
More light will be shed on Thursday, when the closely watched U.S. Consumer Price Index is released with the latest figures for May. Its previous monthly report showed prices rising at the fastest rate in a decade.
Ahead of that report, yields on U.S. government bonds fell, reflecting easing concerns in the bond market. The yield on 10-year Treasury notes dropped to 1.49 percent.
Also on Thursday, the European Central Bank will weigh in on this debate, as it will announce whether it will continue its accelerated pace of buying up bonds, a tool to reduce the cost of borrowing in the eurozone economy.
Today in the On Tech newsletter, Shira Ovide talks to Sapna Maheshwari about the jump in the number of Americans skipping the supermarket to order online, and how stores and their workers are navigating the unknown future of groceries.