Wednesday, April 27, 2011

Son of Black Liquor Finally Enters the Limelight

Dead Tree Edition’s long – some would say obsessive – campaign to raise awareness of the Son of Black Liquor giveaway to pulp companies paid off big time today in the form of a major Washington Post article.

Steven Mufson, a Post reporter who helped bring the original black-liquor credits to light in 2009, wrote today of “a new binge of tax breaks” for companies that burn the pulp byproduct to produce energy, as they have been doing since the 1930s.

“It was not the intent of Congress to reward that behavior, but the industry and its accountants persuaded the Internal Revenue Service to allow black liquor to count as an alternative fuel in 2009,” Mufson wrote. “Under that program, the paper industry received more federal money than almost any industry outside the auto sector.”

The new tax breaks come in the form of cellulosic biofuel credits, he noted, which “can be applied in future years, slashing tax bills perhaps as late as 2015.”

Mufson, by the way, did not use the phrase “Son of Black Liquor” as first the The Vancouver Sun and now Dead Tree Edition do in reference to the cellulosic biofuel giveaway. But that’s exactly what today’s article is about. (I should know; I provided him with links to financial reports and other background information for the article.)

The article highlights the odd IRS ruling that made pulp manufacturers eligible for Cellulosic Biofuel Producer Credits and details how some companies have already collected hundreds of millions of dollars.

Mufson cites a Congressional Budget Office estimate that the original black liquor credits were worth $4 billion to the U.S. pulp and paper industry – an erroneous estimate that CBO has never corrected. Publicly traded companies reported more than $6 billion in payouts from that program, and privately held companies probably raked in at least a couple of billion more.

For months, it seemed that only Dead Tree Edition and a couple of environmental groups were writing about the black liquor credits. But the Washington Post article is just the latest in a recent string of mentions from various media, including:
  • Energy Déjà Vu: Obama Must Break with Failed U.S. Policies: The original black liquor credits were the "most scandalous" of pork-barrel energy programs, Yale professor Michael Graetz wrote yesterday, because they "increased, rather than reduced, petroleum use, while bestowing about $8 billion of government largesse on the paper industry from 2007 to 2009."
  • Biorefining deals underway, project financing picks up: "The black liquor and the so-called son of black liquor credits have incentivized pulp and paper mills to burn their spent cooking liquor for energy rather than find other outlets," Biorefining magazine said last week.
  • Pulp, Paper Companies Amend Tax Returns: "The cellulosic biofuels industry might produce a maximum of 17 million gallons this year, but the pulp and paper industry continues to be the biggest benefactor of advanced tax credits meant to spur renewable fuels, with pulp and paper companies working to recoup billions in tax credits by amending prior-year tax returns," DTN/The Progressive Farmer reported last month.
  • Black Liquor Credits Still Flowing: Printing Impressions' environmental columnist (and long-time friend of Dead Tree Edition) Gail Nickel-Kailing, summed up the black liquor credits aptly a month ago: "Suffice it to say, that if there is a loophole to be found, there is someone (or more) lined up to take full advantage of it."
  • And then there's the quotation from a British Columbia newspaper this month about a 1963 boiler explosion at a pulp mill: “The liquid [nicknamed black liquor] inside is a very caustic acid, so they said that it was even hard to identify the dead because they turned black and it started to eat away their flesh.”
If you just can't get enough of this strange, twisted tale of black liquor tax breaks, click here to read all (47 and counting) Dead Tree Edition articles on the subject.

    Sunday, April 24, 2011

    It's Good News, Bad News For USPS and Fed Retirees

    The good news is that the time required to finalize an employee's application to retire from the federal government or Postal Service has recently improved by about 15%. The bad news is that some retirees are still reporting that it's taking them nine months, even longer, to get their full annuity payments.

    The typical time the Office of Personnel Management takes to process a retirement has dropped from 138 days in August to 117 days now, John Grobe wrote recently for FedSmith. But about 10 people submitted comments to the article saying that their own recent applications have been processed far more slowly.

    As Dead Tree Edition has pointed out on several occasions, most recently in Do We Really Need New Laws To Get More Postal Employees To Retire?, the long wait to receive full retirement pay is a stumbling block for efforts to downsize the U.S. Postal Service through attrition.

    OPM beefed up its retirement staff last year and eventually hopes to modernize its paper-based retirement processing system. It has made headway against the backlog of retirement applications, but was overwhelmed by the usual end-of-calendar-year spike in retirement applications, Grobe wrote.

    OPM is also checking with the Postal Service "on current and future downsizings, so that any rush of retirements . . . can be quickly processed," Grobe added.

    Two people who commented on the Grobe article said they retired July 31 of last year and will get their first full annuity checks on May 1.

    Another commenter, who received interim annuity payments for more than six months that were less than half of the final figure, wrote, "I was taking money out of savings to meet the bills. I have a spouse who was contributing to the checking account also. Best be prepared, if you are the sole source of income when planning your retirement."

    Wrote another "I retired 289 days ago and continue to receive monthly payments of $570 -- which is less than 1/4 of my expected annuity."

    Thursday, April 21, 2011

    5 Brutally Honest Green-Themed Promotions I'd Like To See

    It's not even Earth Day yet and already the airwaves, Web sites, and even some print publications are filled with environmentally themed corporate messages. Makes me want to puke.

    It’s fitting that Earth Day falls on Good Friday this year because the mobs of green-themed ads are really crucifying the truth.

    Don’t get me wrong: I admire the sustainability efforts of some companies. But they don’t seem to be the ones that are pumping out the Earth Day propaganda.

    Some of the ads remind me of the window envelope (from a company you have heard of) that had a recycling logo and the words, “Printed on recyclable paper.” Recyclable paper! What will they think of next?!

    There was no note explaining that you should tear off the plastic window before recycling the envelope. Or an explanation of why, if the company was so green, it was using paper that had the bejeesus bleached out of it for an envelope the customer neither wanted nor needed.

    What we need is a dose of reality therapy (despite my stoner friend’s warning that “Reality is a crutch for people who can’t handle drugs.”) How about some truly honest environmentally themed ads and corporate communications, like these five?:

    1) Bank statement insert

    Headline: Go paperless. It’s all about green.

    Copy: Let’s be honest – there’s nothing especially earth friendly about getting your bank statements via the coal-fired Internet rather than printed on something made from renewable resources. And, unlike paper, your home computer is not recyclable -- unless your idea of recycling is some Chinese kid picking through the innards to find some resellable scraps amidst the toxic metals.

    But going paperless really is about green. Yep, green is the color of the money we save on printing, paper, and postage costs every time someone switches to online banking. (Not to mention that we no longer have to worry about them suing us for invasion of privacy from nosy Myrtle in the mailroom peaking at their spending habits.) It’s not like the bank is about to go broke, but the First Quarter really sucked, and unless we can turn things around there won’t be any management bonuses this year.

    That’s right, management bonuses. We deserve them. Here at Community Bank we kept our noses clean and didn’t buy any derivatives we didn’t understand. C’mon, have you read about the size of the bonuses those big-city banks pay their CMO-peddling managers? No wonder they needed the feds to bail them out! It really pisses us off to hear about those big-bank swindlers with their yachts and trophy wives and mistresses when all we can afford are canoes and an occasional lunch at Hooters. Please go paperless so Community Bank can be a little greener.

    2) A TV ad for Starburgers, an imaginary burger chain started by Starbucks

    The scene: A clown figure who looks a lot like Ronald McDonald is talking to a group of kids and their parents.

    Ronald: “… and look, these napkins contain 30 percent recycled fiber.”
    Kid at a table, holding a half-eaten hamburger: “But where do we put them?”
    Ronald: “Whaddya mean?
    Kid: “Where do we put the unused napkins when we’re done with them? And what about the paper bags and the cups and the wrappers?”
    Ronald: “Good question. We want to keep the restaurant clean for other boys and girls, so we always throw our trash into the garbage can.”
    Kid: “Why not into a recycling bin? I don’t see a recycling bin anywhere.”
    Ronald: "But we do lots of recycling. We recycle our menu items, our slogans, and even our spokesclown."
    Kid: "But where do we put the paper? You’re spouting all this Earth Day bullshit and then you tell us to throw our paper into the garbage. (Starts crying) “Wah! Now I’ll be a polluter and feel like I’m drowning polar bears every time Mom brings me here. Wah!”
    Ronald (exasperated): “Kid, gimme a break. You can’t recycle that crap!”
    Kid: “Starburgers does. Starburgers has recycling bins in every restaurant. Starburgers has been recycling drinking cups since back when they were just Starbucks. And their burgers taste like real beef, not this cardboard crap.” (Slams down his burger on the table.)

    Announcer: “Starburgers: Tasty beef. Earth friendly. No bullshit.”

    3) Obama re-election video ad running on green Web sites

    Scene: President Obama speaking from the Oval Office

    Obama's Message: "For almost four years, I’ve done nothing about the environment. That’s right, nothing. No more deregulation of toxic industries. No more weakening of the EPA. No more drilling in environmentally sensitive areas. (OK, so the BP thing happened on my watch, but that was Bush’s fault.) Sure, I wanted to actually do something positive for the environment but just never got around to it. I did talk about cap and trade, but when that ran into some criticism my team just didn’t have the cojones to see it through. Renewable energy? Well, we had to give that money to the paper companies in the form of black liquor credits or our healthcare legislation wouldn’t have passed.

    "But, face it, voting for us is your only option. After all, we’re your kind of people. We shed a tear when we see a polar bear drowning. The other party? They want to serve polar bear burgers for school lunches. (OK, Boehner cries when the polar bear drowns, but he cries at everything.) Half of those nut cases on the other side of the aisle think Google is evil because they heard it was run by Al Gore-isms [accent on the first syllable, like “algorithms”].

    "You certainly don’t want to put those people in charge. So vote for four more years of nothingness."

    4) General Electric message to shareholders

    Our Ecomagination campaign continues to yield healthy growth and huge profit margins. Hell, if we’d known we could rake in so many bucks just by slapping a cute label on what we were already selling and doing, we would never have gotten so deep into the money-laundering – I mean financial services – business.

    Some of you have wondered whether the campaign means we’re going to take responsibility for all those PCBs we dumped into the Hudson River. Ha, ha, ha, you’re ecomagining things.

    We’re not going to waste your money on such do-gooder efforts. After all, not a single share of GE stock is owned by a striped bass!

    5) Magazine ad for “Naturals” baby wipes

    Image: A woman is changing a baby’s diaper. Behind her is an excited-looking man holding a large bottle of laundry bleach that he’s about to pour on the baby’s bottom.

    Quotation: The man is saying, “I know, let’s use this bleach to get the baby’s butt really clean!”

    Copy: Of course you wouldn’t pour chlorine bleach onto your baby’s bottom. So why would you use baby wipes containing chlorine bleach? Naturals is the only brand of baby wipes that hasn’t been bleached. Unlike other baby wipes, they’re made with a process that doesn’t pollute the waterways. And they’re easy on baby’s skin. Yeah, they look a little dingy, but don’t all baby wipes end up looking pretty nasty anyway? Especially yours – my god, what have you been feeding that kid? So do you really need baby wipes that are whiter than a movie star’s teeth when they're going to end up covered in that green slime?

    Naturals Baby Wipes. Good for the fish, good for baby’s butt.

    Now you know why publishers won't let us production people talk to the advertisers.

    If you actually made it through all five of these ads, your sense of humor is so strange that you might actually enjoy last year's offbeat Earth Day message: Condoms to the Rescue, and 5 Other Novel Ideas for Saving the Forests.

    Tuesday, April 19, 2011

    The United States Postal-Online Ordering-eMailbox-Bank Service?

    In a case of unfortunate timing, a bold and creative plan for the future of the U.S. Postal Service in an increasingly digital age was released today.

    The agency is in a unique position to provide electronic mailboxes, take the fear out of online transactions, facilitate international commerce, and help the “unbanked,” the USPS Office of Inspector General report says.

    “The Postal Service Role in the Digital Age: Expanding the Postal Platform” says USPS’s size, level of trust, and experience running a national address system would make it a welcome participant in a variety of Web-based activities. That's because the online world "has a fragility, a susceptibility to viruses and interruptions in service.”


    The Postal Service’s RIBBS (Rapid Information Bulletin Board System) was infected by Blackhole Exploit malware two weeks ago and has been mostly unusable since then. The attack resulted in searchers and visitors getting such warnings as Google’s “This site may harm your computer” notice.

    Worse, Blackhole Exploit can steal confidential data from an infected site's visitors, according to Zscaler.

    “It's alarming . . . that a page belonging to a big-time institution like the USPS could be used as a vector for this sort of attack,” wrote Neil J. Rubenking of PCMag.

    Still, the OIG report contains many interesting ideas for the Postal Service’s future, though it does not attempt any profitability or cost-benefit analyses. Here are some highlights:
    • “Using a foundation that links a physical address to an electronic mail box for every citizen and business, the Postal Service can build a digital platform that facilitates communications and commerce for postal, governmental, and commercial applications that are available to all.” USPS could offer “hybrid and reverse hybrid mail that allow senders and receivers to convert digital documents to physical, and physical documents to digital.” That idea might not sit well with companies like Zumbox and Pitney Bowes that already market electronic mailboxes.
    • “A growing proportion of U.S. citizens are unbanked, including working families, new immigrants, unemployed, homeless, or noncreditworthy individuals. The Postal Service would use its identification verification skills, as it does with passport applications, to facilitate authenticated cash or prepaid debit card disbursements from state and federal agencies to these individuals at local Post Offices.”
    • “Most U.S. websites do not accept orders for delivery to international addresses or payment by foreign credit card. Fewer offer efficient and cost-effective solutions for 'fully landed' or true cost pricing, which includes paid duty, taxes, customs fees, insurance, and residential delivery charges.”
    • “The most significant hurdle to further eCommerce growth is online payment. Fearing identity theft, consumers are reluctant to share personal financial information on the web.”
    • Citizens could use an “eMailbox” for secure communications with federal agencies and to store such personal documents as wills and medical records.“This could be paired with physical kiosks (connected to government department call centers) at Post Offices where needed."

    Tuesday, April 12, 2011

    Here's a Real Postal Service Bailout

    Brian Sheehan at pointed out today that the legislative branch has an appropriation to pay the Postal Service for franked mail. Here is his commentary on the matter. So it looks as if it's the taxpayers, not the Postal Service, who are footing the Welfare for Endangered Congressmen bill. I apologize for the confusion.

    You could call it Welfare for Endangered Congressmen, but it's officially known as the franking privilege.

    The ability to send postage-free mail to constituents was especially popular last year with Congressmen who faced difficult elections. Of the top 10 users of the privilege, including one who sent nearly half a million dollars worth of free postage, eight were involved in difficult elections.

    In fact, six lost re-election bids, Rep. Joe Sestak (D-PA) failed in an attempt to move to the Senate, and Rep. Gerry Connolly (D-VA) won re-election by fewer than 1,000 votes.

    Congress members are supposed to use the franking privilege only for non-political mailings. But as election time rolls around, you can bet you'll get more newsletters from Congressman Blowhard about the wonderful things he's been doing -- especially if the opposing party has put a target on his back.

    $4.87 per vote
    "Some critics of this privilege claim that it gives members the advantage of free publicity in election years," writes Danielle Kurtzleben at in introducing the top 10 spenders. She reports that the Number 1 franker last year was New Jersey Democrat John Adler, whose constituents were blessed with $487,176 worth of mailings from their representative. The ingrates gave him barely 100,000 votes and turned him out of office.

    Congress provides no compensation to the Postal Service for franked mail. That means that either other mailers pay for all those newsletters in the form of higher postage rates or that USPS goes further into the red.

    Some Congress members have falsely accused the Postal Service of seeking a government bailout. But with the Postal Service providing millions of dollars worth of free mail to Congress members and being forced to overpay billions of dollars to the federal government for pensions and retiree benefits, the question is: Who's bailing out whom?

    And here's a question for those Congress members who advocate privatizing the Postal Service: Do you think UPS will send your newsletters for free?

    A 333-Percent Profit Margin at AbitibiBowater? Well, Not Really

    Perennial money-loser AbitibiBowater, North America's largest newsprint producer, finally figured out last year how to turn a profit. All it took was a bankruptcy reorganization.

    The company recently reported 4th Quarter 2010 profit of $4.24 billion on sales of $1.27 billion, for an unheard-of profit margin of 333%. That's right, its profit was three times greater than its sales. (Let’s try that as a word problem for elementary school math students: “If you sold 10 apples for $1 each and made a profit of $33, how much did each apple cost?”)

    Most of the gain was from accounting, not actual sales, though AbitibiBowater’s business did improve enough during the quarter that it recorded operating income of $11 million, versus a $43 million loss the previous year. (Those of you in the newsprint business may not understand the phrase “operating income”. It’s when your revenue actually exceeds the cost of making your products. Believe it or not, operating income is actually quite common in some industries.)

    Most of the huge profit gain came from one-time events related to “fresh start accounting” upon the company’s emergence from bankruptcy protection, which “resulted in the Company becoming a new entity for financial reporting purposes,” according to the recently released annual report.

    The biggest fresh-start item was a $3.448 billion “gain on extinguishment of liabilities subject to compromise”. Translation: “We stiffed our creditors big time.” (Warning: Do not try this at home. If you stop paying your mortgage, the bank will not want to hear about your resulting increase in profitability.)

    The new AbitibiBowater also showed confidence by claiming an income tax benefit of $1.627 billion from “the reversal of valuation allowances against certain deferred tax assets.” Translation: “We built up a lot of tax credits that were worthless when there was no chance of us owing income taxes for the foreseeable future. But now that we expect to be profitable in future years, we will be able to use those credits to avoid paying taxes. Isn’t Chapter 11 wonderful?”

    The company expects its future to be brighter than its recent past because it emerged from bankruptcy protection with “a more flexible, lower-cost operating platform” and debt of only $900 million instead of $6.2 billion.

    It also sees opportunity in the growing newsprint markets of Asia, Latin America, and the Middle East because some of its mills “are on or near deep sea ports”. Translation: "We need to find more customers that pay in currency that is actually worth something, rather than American dollars."

    Other articles about AbitibiBowater include:

    Saturday, April 9, 2011

    Do We Really Need New Laws To Get More Postal Employees To Retire?

    Congressman Darrell Issa complained this week that not enough U.S. Postal Service employees are retiring and hinted at legislation that would force more retirements. But, like USPS executives, he doesn't seem to be looking at the major reason postal employees are reluctant to leave.

    First, consider the California Republican's comments during a House Oversight Committee hearing about the Postal Service on Tuesday (starting at about the 2:31:30 mark):

    "You already have 100,000 too many [employees] today. I've asked my staff to look at a lot of areas that we may legislate." (He seems to be getting soft on the Postal Service: Six months ago, he said USPS had "200,000 people who should be retiring.")

    "What we probably need to do is bite the bullet one time and figure out how we’re going to retire people that are over 55 and have over 20 years of service to help get your number down," he said at Tuesday's hearing. "Voluntary departures aren't working." Citing an attrition rate of barely over 1%, he added, "Any private company would love to have the attrition you have. You still have two people that are 98 years old on the payroll."

    Now consider this recent statement from Roseanne Jefferson, a former USPS human resources manager, in her monthly retirement column for

    Afraid to retire
    "I'm always surprised at the incredible misconceptions that our employees have about their retirement plan. Particularly in the last years of their employment, they are so sure of their retirement benefits, and are so surely wrong. It has always amazed me how our organization is OK with the understanding that employees are afraid to retire, because they don't trust the newly HRSSC to get their retirement correct."

    "Many . . . have said the lack of information given during an on-the-phone seminar is lacking real substance as it relates to the individual employee. Many have stated it sounds scripted and is overly generic when you call and ask questions."

    USPS employees have good reason to fear retirement, including inaccurate pension estimates, inconsistent answers to retirement-related questions, and months-long waits to receive full benefits after retirement.

    Before politicians and postal executives consider new legislation that would push employees into retirement, shouldn't they first fix what's hindering voluntary departures? And if, as widely rumored, many employees will be offered early-retirement incentives in the next few months, wouldn't it make sense to provide retirement counseling without first making them commit to retiring?

    Other articles related to barriers to retirement at USPS include:

    Thursday, April 7, 2011

    Some APWU Contract Savings Would Come at Expense of Other Postal Unions

    So much for "Solidarity Forever": Much of the U.S. Postal Service's projected savings from the proposed contract with its largest union apparently comes from reassigning duties currently performed by members of other postal-employee associations.

    Some tasks typically performed by postmasters, supervisors, and carriers could be shifted to clerks and other employees represented by the American Postal Workers Union -- in some cases, lower-paid non-career employees. Most of the changes would apparently be triggered by attrition of non-APWU employees rather than pushing them out of their jobs.

    New roles for APWU-represented employees would include filling in for absent postmasters, delivering Express Mail and Priority parcels, performing supervisory functions, taking on some "craft" duties now performed by postmasters, and manning corporate call centers.

    USPS claims it would save $3.8 billion during the course of the 4.5-year contract but has not spelled out where those savings would come from or what assumptions go into its calculations. APWU members will start voting on the contract tomorrow.

    "The contract will give the Postal Service the right to employ a substantially larger percentage of temporary workers who will be paid relatively low wages," APWU President Cliff Guffey told a Congressional panel on Tuesday.

    He also noted that a majority of the job cuts at USPS the past five years have involved APWU-represented positions. For more on how the contract might bolster APWU's thinning ranks, see Postal Service Agrees To Big Incentive For Employees Who Join Union and More on the APWU Health Insurance Deal.

    Among the sections that would allow, or require, more duties to be assigned to APWU-represented employees:
    • USPS "shall return duties and responsibilities from Executive and administrative Schedule (EAS) positions within Mail Processing and Customer Service to the APWU bargaining unit based upon an audit" to determine whether they belong with non-supervisory employees.
    • Creation of new positions, Lead Processing Clerk and Lead Sales and Services Associate, "to provide oversight, direction and support, in the absence of Supervisory presence to bargaining unit employees in both Mail Processing and Retail operations." Every facility with at least five clerks would be required to have at least one lead clerk.
    • Stricter limits on the amount of bargaining-unit work that can be done by supervisors and postmasters in facilities with fewer than 100 APWU-represented employees. 
    • Establishment of a new position, Delivery/Sales Services and Distribution Associate (level PS-6), which will combine the existing roles of Sales Services and Distribution Associate with those of Clerk/Special Delivery Messenger. The jobs would be filled by employees in the clerk craft. These employees will apparently deliver Express Mail and parcels on days when the local post office is closed.
    • The Postal Service "shall staff Call Center locations with no fewer than a total of 1,100 Clerk Craft duty assignments during the term of the 2010 Agreement. These duty assignments will be filled by a mix of 70% career and 30% rehabilitation status employees."

    Tuesday, April 5, 2011

    More on the APWU Health Insurance Deal

    The U.S. Postal Service and its largest labor union are reportedly trying to ensure that a new incentive for non-career employees to join the union doesn't run afoul of non-discrimination laws.

    As reported here last week in Postal Service Agrees To Big Incentive For Employees Who Join Union, the proposed contract between USPS and the American Postal Workers Union calls for thousands of non-career employees to be offered only one employer-subsidized health insurance plan -- one sponsored by APWU.

    The current brochure on that health plan says "APWU bargaining unit employees must be, or must become, dues-paying members of the APWU, to be eligible to enroll in the Health Plan." But the APWU has reached a side deal with the USPS to tweak that requirement, according to a source who was briefed on the negotiations.

    Rather than having to join the union, non-career "postal support employees" could pay the APWU a fee in lieu of dues to be part of the union's health plan. It's not clear exactly what the fees would be, but they would be much larger than the $35 associate-member fee that federal and USPS employees outside the bargaining unit have to pay to qualify for the APWU plan, the source said.

    In fact, because APWU agreed to the provision as a way of bolstering its declining membership ranks, it seems likely that the fee would be at least as large as annual union dues.

    There was apparently some concern that offering employer-subsidized health insurance, with an annual value of up to almost $7,000, only to union members would be declared illegal. After all, the National Labor Relations Board slapped the union's and USPS's wrists three years ago for discriminating against non-union members in the way money from a legal settlement was distributed.

    APWU briefings on the proposed contract indicate that having USPS fund an incentive for PSEs to join the union will pass legal muster because those who don't join APWU will still be able to enroll in the health plan, the source said.

    Related items: