Euro falls on grim economic outlook, U.S. data eyed

LONDON (Reuters) – The bleak outlook for the European economy knocked the euro and stalled gains the region’s share markets on Friday, as investors waited to see if nonfarm payrolls data in the United States might affect its monetary policy plans.

A day after the European Central Bank cut its forecasts for growth across the 17-nation euro area next year, Germany’s Bundesbank said there was a chance the region’s debt crisis could send Europe’s biggest economy into recession.

The euro dropped 0.25 percent to a low of $ 1.2932 after the Bundesbank statement, extending losses of over one percent seen on Thursday in reaction to the ECB‘s new forecasts which have heightened speculation of a early rate cut.

“It is unusual that a negative growth projection for the next year is offered before the end of the current year, but with such a view, markets are naturally pricing in an interest rate cut,” said Daisuke Karakama, market economist for Mizuho Corporate Bank.

The main March 2013 German government bond futures contract, which had rallied sharply on the talk of an early ECB rate, was about 3 ticks lower at 145.66, with traders cutting back positions ahead of the U.S. jobs data.

European shares were fractionally higher in early trading, but mainly consolidating around the 18-month highs reached on Thursday on hopes of an improving economic performance in the global economy.

The FTSEurofirst 300 index <.fteu3> of top European shares traded up 0.2 percent at 1,133.95 points, with Germany’s Dax <.gdaxi> up 0.1 percent after the Bundesbank’s announcement.</.gdaxi></.fteu3>

London’s FTSE 100 <.ftse>, and Paris’s CAC-40 <.fchi> opened flat to slightly higher, while a slight dip in U.S. stock futures hinted at a cautious Wall Street open. <.l><.eu><.n></.n></.eu></.l></.fchi></.ftse>

Investors are focused on U.S. non-farm payrolls data, which is expected to show an addition of 93,000 jobs in November, probably dented by superstorm Sandy, against October’s gain of 171,000. The figures, due at 1330 GMT, are also likely to show the unemployment rate holding steady at 7.9 percent.

Federal reserve policymakers are scheduled to meet Dec 11-12 to review monetary policy.

Brent crude meanwhile was steady above $ 107 per barrel, but prices were headed for their biggest weekly loss in more than a month on the worries about the euro zone’s economy and on-going concerns about the looming fiscal crisis in the United States, the world’s top oil consumer.

Brent rose 0.1 percent to $ 107.14. while U.S. crude futures inched up 0.2 percent to $ 86.41 a barrel.

(Reporting by Richard Hubbard; editing by Philippa Fletcher)

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WiLan sues Apple, HTC, Sierra Wireless

(Reuters) – Canadian patent licensing company WiLan Inc filed patent lawsuits against Apple Inc, HTC Corp and Sierra Wireless Inc‘s U.S. unit.

The company filed three suits claiming infringement of its fourth-generation LTE wireless technologies against all three companies in a federal court in Florida.

The other two suits, related to 3G HSPA handset products, were filed against Apple and Sierra in Texas.

(Reporting By Neha Dimri in Bangalore)

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AP Interview: Jackson, cast discuss ‘The Hobbit’

WELLINGTON, New Zealand (AP) — Many fans are eagerly anticipating a return to the fictional world of Middle-earth with next week’s general release of the first movie in “The Hobbit” trilogy. Director Peter Jackson and the film’s stars speak to The Associated Press about making “The Hobbit: An Unexpected Journey“:

— Jackson on shooting at 48 frames per second instead of the standard 24: “We’ve seen the arrival of iPhones and iPads and now there’s a generation of kids — the worry that I have is that they seem to think it’s OK to wait for the film to come out on DVD or be available for download. And I don’t want kids to see ‘The Hobbit‘ on their iPads, really. Not for the first time. So as a filmmaker, I feel the responsibility to say, ‘This is the technology we have now, and it’s different … How can we raise the bar? Why do we have to stick with 24 frames? …’”

“The world has to move on and change. And I want to get people back into the cinema. I want to play my little tiny role in encouraging that beautiful, magical, mysterious experience of going into a dark room full of strangers, and being transported into a piece of escapism.”

— Martin Freeman (Bilbo Baggins) on shooting some scenes without other actors around: “I must admit I found the green screen and all that easier than I thought I would. … I found the technical aspect of it quite doable. Some of it’s difficult, but it’s quite enjoyable, actually. It taps into when I used to play ‘war’ as a 6-year-old. And the Germans were all imaginary. Because I was playing a British person. So yeah, I was on the right side. …”

On marrying his performance to that of Ian Holm, who played an older Bilbo Baggins in the “Lord of the Rings” trilogy: “I knew I couldn’t be a slave to it. Because as truly fantastic as Ian Holm is in everything, and certainly as Bilbo, I can’t just go and do an impression of Ian Holm for a year and a half. Because it’s my turn. But it was very useful for me to watch and listen to stuff he did, vocal ticks or physical ticks, that I can use but not feel hamstrung by.”

— Hugo Weaving (Elrond) on the differences in tone to the “Rings” trilogy: “This one feels lighter, more buoyant, but it’s got quite profoundly moving sequences in it, too … I think it’s very different in many ways, and yet it’s absolutely the same filmmaker, and you are inhabiting the same world.”

— Elijah Wood (Frodo) on returning to Middle-earth in a cameo role: “It was a gift to come back … what they’d constructed was such a beautiful remembrance of the characters from the original trilogy.”

— Cate Blanchett (Galadriel) on the toughest part of filming: “Trying to keep my children off the set.”

— Richard Armitage (Thorin Oakenshield) on being a 6-foot-2 guy playing a dwarf: “It’s amazing how quickly you get used to it. And also, we spent most of the shoot much bigger than a 6-foot-2 guy. I mean, I had lifts in my shoes, I was wider, I was taller, and bigger-haired. And I actually think that was quite an interesting place to be, because I do think dwarfs have big ideas about themselves …”

— Andy Serkis (Gollum) on taking on the additional role of second-unit director: “There were only a couple of times where there were really, really black days where I went away thinking, ‘This is it. I can’t do it.’ But on the whole, Pete (Jackson) was so brilliant at allowing me to set stuff up and then critiquing my work … but at least I would have my stab at it.”

On the film itself: “I think it’s a great story. I think it’s a beautifully crafted film with great heart. A rollicking adventure, and it feels to me like this really massive feast that everyone will enjoy eating.”

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Strong quake hits off Japan near Fukushima disaster zone

TOKYO (Reuters) – A strong quake centered off northeastern Japan shook buildings as far away as Tokyo on Friday and triggered a one-meter tsunami in an area devastated by last year’s Fukushima disaster, but there were no immediate reports of deaths or serious damage.

The quake had a preliminary magnitude of 7.3, the U.S. Geological Survey said, adding that there was no risk of a widespread tsunami.

The March 2011 earthquake and following tsunami killed nearly 20,000 people and triggered the world’s worst nuclear crisis in 25 years when the Fukushima-Daiichi nuclear plant was destroyed, leaking radiation into the sea and air.

Workers at the plant were ordered to move to higher ground after Friday’s quake. Tokyo Electric Power Co, the operator of the Fukushima nuclear plant, reported no irregularities at its nuclear plants.

All but two of Japan‘s 50 nuclear reactors have been idled since the Fukushima disaster as the government reviews safety.

The quake measured a “lower 5″ in Miyagi prefecture on Japan’s scale of one to seven, meaning there might be some damage to roads and houses that are less quake resistant.

The scale measures the amount of shaking and in that sense gives a better idea of possible damage than the magnitude. The quake registered a 4 in Tokyo.

The one-meter tsunami hit at Ishinomaki, in Miyagi, at the centre of the devastation from the March 2011 disaster. All Miyagi trains halted operations and Sendai airport, which was flooded by the tsunami last year, closed its runway.

Five people in the prefecture were slightly injured.

“I was in the centre of the city the very moment the earthquake struck. I immediately jumped into the car and started running away towards the mountains. I’m still hiding inside the car,” said Ishinomaki resident Chikako Iwai.

“…I have the radio on and they say the cars are still stuck in the traffic. I’m planning to stay here for the next couple of hours.”

Narita airport outside Tokyo was back in action after a brief closure for safety checks. There were small tsunamis, measuring in the centimeters, elsewhere near the epicenter.

Last year’s quake, which measured 9.0, triggered fuel-rod meltdowns at Fukushima, causing radiation leakage, contamination of food and water and mass evacuations. Much of the area is still deserted.

The government declared in December that the disaster was under control.

“Citizens are now escaping to designated evacuation centers and moving to places on higher ground,” office worker Naoki Ara said in Soma, 30 km (18 miles) from the Fukushima-Daiichi plant.

Prime Minister Yoshihiko Noda cancelled campaigning in Tokyo ahead of a December 16 election and was on his way back to his office, but there was no immediate plan to hold a special cabinet meeting.

Public spending on quake-proofing buildings is a big election issue.

Japanese were posting photos of their TV screens with tsunami warnings on Facebook, asking each other whether they’re safe, confirming their whereabouts.

“It shook for a long time here in Tokyo, are you guys all right?” posted Eriko Hamada, enquiring about the safety of her friends.

Phone lines were overloaded and it was difficult to contact residents of Miyagi.

“Owing to the recent earthquake, phone lines are very busy, please try again later,” the phone operator said.

The yen rose against the dollar and the euro on the news, triggering some safe-haven inflows into the Japanese currency.

(Additional reporting by Tomasz Janowski, Leika Kihara and Aaron Sheldrick; Writing by Nick Macfie; Editing by Ken Wills)

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Standard Chartered sees $330 million settlement on Iran

HONG KONG (Reuters) – Standard Chartered expects to pay $ 330 million to settle a case with U.S. regulators who accused the Asia-focused bank of failing to comply with sanctions against Iran, further denting profit growth this year.

The settlement will be on top of the $ 340 million it paid to New York’s Department of Financial Services in the third quarter, which pushed its before-tax profit growth in 2012 to a mid-single-digit percentage from more than 10 percent, StanChart said in a statement on Thursday.

Any earnings growth would mean a 10th straight year of record profits, as StanChart has ridden on Asia‘s rise through much of the last decade, allowing it to continue hiring and increasing earnings when much of the industry is shrinking.

“It ain’t broke, so they’re not fixing it,” said Jim Antos, an analyst at Mizuho Securities in Hong Kong. “The thing they are doing is trying to add new businesses, but there isn’t a compelling story and that’s why their shares haven’t moved.”

Standard Chartered said it expected talks with U.S. Federal regulators to conclude shortly, confirming a Reuters report in early November.

Despite its regulatory woes, the bank is one of the few still hiring in the industry, saying in August it intended to add at least 1,500 more staff in the second half of this year. By contrast, most rivals have been cutting, with Citi saying on Wednesday it was cutting 11,000 jobs.

“We continue to see significant opportunities across our markets in Asia, Africa and the Middle East,” Chief Executive Peter Sands wrote in a statement released on Thursday.

KEEPING LID ON COSTS

A rise in the number of out-of-work bankers meant Standard Chartered was able to maintain a lid on costs, with revenue growing faster than costs — a phenomenon known in financial industry jargon as “positive jaws”.

For much of 2010, StanChart was hit by ever-rising costs as an increasing number of banks and brokerages tried to expand in Asia. Since then, various minor players including Samsung Securities and KBW have begun pulling out.

The bank does not release specific numbers in its trading updates, which it keeps for its annual report that is typically released in late February. It singled out Malaysia, China and Indonesia as regions where income grew by at least 10 percent.

In Hong Kong, its biggest market, income grew at a high single-digit percentage, the bank said.

StanChart’s Hong Kong-listed shares are up 9 percent year-to-date, lagging the 20 percent rise on the Hang Seng Index.

Asset quality remained good, the bank said, with loan impairments within the wholesale bank expected to be below the levels seen in the first half of this year. For the consumer bank, loan impairment is expected to increase by at least 10 percent from the first half.

However, StanChart pointed to India and the Middle East as two markets where it was watchful for asset quality. Slowing growth in some emerging markets has raised concern that StanChart could be hit by a rise in bad loans.

The bank appointed a new global head of loan syndication in late November, naming Cristian Jonsson to replace Philip Cracknell, who is retiring in March.

To diversify away from its traditional lending business, the bank has been looking to expand to areas such as commodities, where it aims to double revenue in the next four years, it said on Tuesday.

(Editing by Alex Richardson)

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South Africa military plane crashes in mountains

JOHANNESBURG (AP) — A South African military aircraft on an unknown mission to an area near the village where former President Nelson Mandela lives crashed in a mountain range, officials said Thursday. It was unclear whether there were any survivors.

The Douglas DC-3 Dakota, a twin-propeller aircraft, had taken off from Pretoria’s Waterkloof Air Force Base on Wednesday night, said Brig. Gen. Xolani Mabanga, a military spokesman. On Thursday morning, soldiers found the wreckage of the airplane in the Drakensberg mountains near Ladysmith in KwaZulu-Natal province, some 340 kilometers (210 miles) southeast of the air base, Mabanga said.

Mabanga said soldiers had been sent to the scene to look for survivors. Mabanga said he did not know what the mission of the aircraft was, though it had planned to land in Mthatha in the country’s Eastern Cape. Siphiwe Dlamini, a Defense Ministry spokesman, declined to immediately comment Thursday morning.

Mthatha is about 30 kilometers (17 miles) north of Qunu, the village where Mandela now lives after retiring from public life. South Africa‘s military remains largely responsible for the former president’s medical care. However, military officials declined to say whether those on board had any part in caring for Mandela.

In November, another South African military flight crash landed at Mthatha, sending several people to the hospital with injuries. However, at that time, the military denied that those on board had anything to do with Mandela’s care.

Mandela, 94, was imprisoned for nearly three decades for his fight against apartheid before becoming the nation’s president in the country’s first fully democratic vote in 1994.

___

Jon Gambrell can be reached at www.twitter.com/jongambrellAP .

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Guatemala detains McAfee, to expel him to Belize

GUATEMALA CITY (Reuters) – Guatemalan police arrested U.S. software guru John McAfee on Wednesday for illegally entering the country and said it would seek to expel him to neighboring Belize, which he fled after being sought for questioning over his neighbor’s murder.

McAfee, who had been in hiding for three weeks, crossed into Guatemala with his 20-year-old girlfriend to evade authorities in Belize who wanted to quiz him as “a person of interest” about the killing of fellow American Gregory Faull.

“He entered the country illegally and we are going to seek his expulsion for this crime,” Interior Minister Mauricio Lopez Bonilla said. McAfee was detained by Guatemalan police and a member of Interpol at the upscale Intercontinental hotel in Guatemala City.

One of Silicon Valley’s first entrepreneurs to build an Internet fortune, the 67-year-old made millions of dollars through the antivirus software that now carries his name.

McAfee’s behavior has been increasingly erratic in recent years but there is no international arrest warrant for him. Police in Belize say he is not a prime suspect.

Government spokesman Francisco Cuevas said the entrepreneur would be expelled to Belize and he expected the process to be completed by early Thursday morning.

Fernando Lucero, spokesman for Guatemala’s immigration department, saidimmediate deportation had been ruled out. McAfee’s lawyer Telesforo Guerra was seeking an injunction to have him released and the American said on his blog www.whoismcafee.com that he would not now be returned to the Belize border until a higher judge reviewed the case.

McAfee was taken to a residence belonging to the immigration department guarded by a small group of police.

He had been seeking political asylum in Guatemala, which has been embroiled in a long-running territorial dispute with Belize. .

Residents and neighbors on the Caribbean island of Ambergris Caye, where McAfee has lived in Belize for about four years, say he is eccentric, impulsive, volatile and at times unstable, citing his love of guns and young women.

McAfee has said he believes authorities in Belize will kill him if he turns himself in for questioning. Belize’s prime minister has denied this and called him paranoid and “bonkers.”

“It’s a wild, wild country,” McAfee told Reuters in an interview in his hotel room just hours before his detention.

“Everyone sees one part of Belize,” he said. “They think it’s a wonderful, peaceful, lovely place, blue waters, so McAfee has got to be crazy. Maybe I am crazy. If I were, I wouldn’t know.”

In Belize, he was often seen with armed bodyguards dressed in camouflage, pistols tucked into his belt. McAfee’s slain neighbor had complained about the loud barking of dogs that guarded his exclusive beachside compound.

His run-in with authorities in Belize is a world away from a successful life in the United States, where the former Lockheed systems consultant started McAfee Associates in the late 1980s. McAfee has no relationship now with the company, which was sold to Intel Corp.

NO REGRETS

There was already a case against McAfee in Belize for possession of illegal firearms, and police had previously raided his property on suspicion he was running a lab to make illegal synthetic narcotics.

He says he has not taken drugs since 1983.

“(Before then) I took drugs constantly, 24 hours of the day, I took them for years and years. I was the worst drug abuser on the planet,” McAfee said. “Then I finally went to Alcoholics Anonymous, and that was the end of it.”

But he has no regrets about the path his life has taken, or the loss of the lion’s share of his fortune over the years and says he is happier now that he cares less for material things.

“My life has not declined,” he said. “My life has been on the increase ever since I decided that stuff – houses, money – doesn’t mean much. I had more money than I could spend in million lifetimes. Why would I care?”

McAfee says he has been persecuted by Belize’s ruling party because he wouldn’t pay out some $ 2 million to it.

“The misunderstanding of the severity of their request for money was my big mistake,” McAfee said. “Had I known that, I would maybe have said $ 2 million is way too much. Let’s negotiate something, just don’t rape me for the next seven months. Writing a check would have been a lot easier.”

The party has denied soliciting money from him.

McAfee has been living in the tiny Central American nation for about four years, and wants to return to live there eventually. But he says he is being framed, and denies any involvement in his neighbor’s killing.

“We had one disagreement about a dog. I had disagreements with all my neighbors about my dogs. I had a disagreement with myself about my dogs. They were noisy,” he said.

“Why would I leave behind the body and all the evidence?” he asked. “I’m not stupid.”

(Additional reporting by Gabriel Stargardter; Writing by Simon Gardner; Editing by Philip Barbara, Lisa Shumaker and Patrick Graham)

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Male artists lead 2013 Grammy nominations

NASHVILLE, Tennessee (Reuters) – Male artists led the nominations announced on Wednesday for the 2013 Grammys, as fun., Frank Ocean, Mumford & Sons, Jay-Z, Kanye West and Dan Auerbach from The Black Keys landed six nods each for music’s biggest awards.

The nominations for New York-based indie-pop band fun. – made up of Nate Ruess, Andrew Dost and Jack Antonoff – included the four main categories for record, song and album of the year, and best new artist.

fun., which also performed at the Grammy nominations concert with Janelle Monae, said it felt good to be recognized and “took pride” in its live performances.

“Tonight, all I wanted to do was get up and really give it our all … receiving the nomination is amazing and a culmination of hard work the three of us have put into this band,” lead singer Ruess told reporters backstage.

The group scored a huge hit with its first single, “We Are Young,” and then followed that up with its successful album “Some Nights” and single of the same name.

Joining it in the album, record of the year and best new artist categories was hip hop artist Ocean.

The 25-year-old rapper-singer made waves earlier this year after revealing his first love was a man, a groundbreaking move in the hip hop industry, which has faced criticism in the past for being hostile toward gays.

His debut album, “Channel Orange” was a critical and commercial success, debuting at No. 2 on the Billboard 200 album chart in July.

Ocean and fun. will be competing with blues-rock group Alabama Shakes, country singer Hunter Hayes and folk-rockers The Lumineers for the coveted best new artist title.

While young male artists made up a large portion of nominees in key categories, noticeably absent was 18-year-old Canadian singer Justin Bieber, one of 2012′s biggest pop music stars with chart-topping album “Believe” and singles such as “Boyfriend.”

The winners will be announced at the televised awards show in Los Angeles on February 10.

AFTER ADELE, MALE ARTISTS LEAD

After British singer Adele dominated the previous Grammy Awards with her juggernaut album “21,” male artists took the lead in the album of the year category, where Ocean and fun. are competing with The Black Keys, Mumford & Sons and Jack White.

British folk band Mumford & Sons, which scored six nominations both in 2011 and 2012 for its debut album, “Sigh No More,” landed six more nominations on Wednesday for its chart-topping sophomore album, “Babel,” which is the second biggest-selling album in the United States this year.

Ohio rock duo The Black Keys, formed by frontman Auerbach and drummer Patrick Carney, landed five nominations, while Auerbach also notched a non-classical producer of the year nomination for his work on four albums.

Blues-rocker Jack White, the former frontman of The White Stripes, picked up three nods for his chart-topping debut solo album “Blunderbuss.”

Rappers Jay-Z and Kanye West continued to pick up nods for their 2011 album, “Watch The Throne,” including best rap performance for “N****s in Paris.” Jay-Z also landed nods for collaborating on songs with Young Jeezy and Rihanna, while West scored multiple nominations for his song “Mercy.”

Kelly Clarkson was one of the few leading female nominees, picking up three nominations, including record of the year and best pop vocal album.

R&B singer Rihanna also landed three nods, including best solo pop performance for “Where Have You Been.”

Record of the year nominees saw an assortment of rock, pop and hip hop nominees, with Clarkson’s “Stronger” competing with The Black Keys‘ “Lonely Boy,” fun.’s “We Are Young,” Australian artist Gotye’s heartbreak hit “Somebody That I Used To Know,” Ocean’s “Thinkin Bout You,” and Taylor Swift’s “We Are Never Ever Getting Back Together.”

To be eligible for nominations this year, artists had to release their music between October 1, 2011, and September 30, 2012.

Adele, who swept the awards in February with six accolades including the top three, landed only one nomination this year for best pop solo performance, as she did not release any music in the eligibility time frame.

The nominations for the top awards and main categories were announced during an hour-long televised concert in Nashville for the first time, co-hosted by country-pop artist Swift and veteran Grammy host, rapper-actor LL Cool J.

Adding a twist to the announcements, Hayes sang the nominees for best pop album, a tight contest between Maroon 5, Clarkson, Pink, fun. and Florence and the Machine. Hayes picked up two nods for best new artist and best country vocal performance.

British rock legends The Who will receive the Grammy Lifetime Achievement Award in February.

(Writing by Piya Sinha-Roy; Editing by Peter Cooney and Lisa Shumaker)

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Celebrations planned as Wash. legalizes marijuana

SEATTLE (AP) — Legal marijuana possession becomes a reality under Washington state law on Thursday, and some people planned to celebrate the new law by breaking it.

Voters in Washington and Colorado last month made those the first states to decriminalize and regulate the recreational use of marijuana. Washington‘s law takes effect Thursday and allows adults to have up to an ounce of pot — but it bans public use of marijuana, which is punishable by a fine, just like drinking in public.

Nevertheless, some people planned to gather at 12:01 a.m. PST Thursday to smoke in public beneath Seattle‘s Space Needle. Others planned a midnight party outside the Seattle headquarters of Hempfest, the 21-year-old festival that attracts tens of thousands of pot fans every summer.

“This is a big day because all our lives we’ve been living under the iron curtain of prohibition,” said Hempfest director Vivian McPeak. “The whole world sees that prohibition just took a body blow.”

In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed.

That law also takes effect Thursday, when gay and lesbian couples can start picking up their wedding certificates and licenses at county auditors’ offices. Those offices in King County, the state’s largest and home to Seattle, and Thurston County, home to the state capital of Olympia, planned to open the earliest, at 12:01 a.m. Thursday, to start issuing marriage licenses. Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

The Seattle Police Department provided this public marijuana use enforcement guidance to its officers via email Wednesday night: “Until further notice, officers shall not take any enforcement action — other than to issue a verbal warning — for a violation of Initiative 502.”

Thanks to a 2003 law, marijuana enforcement remains the department’s lowest priority. Even before I-502 passed on Nov. 6, police rarely busted people at Hempfest, despite widespread pot use, and the city attorney here doesn’t prosecute people for having small amounts of marijuana.

Officers will be advising people to take their weed inside, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. “The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a ‘Lord of the Rings’ marathon in the privacy of your own home, if you want to.”

Washington’s new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions.

But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it’s banned from federal properties, including military bases and national parks.

The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect.

“The department’s responsibility to enforce the Controlled Substances Act remains unchanged,” said a statement issued Wednesday by the Seattle U.S. attorney’s office. “Neither states nor the executive branch can nullify a statute passed by Congress” — a non-issue, since the measures passed in Washington and Colorado don’t “nullify” federal law, which federal agents remain free to enforce.

The legal question is whether the establishment of a regulated marijuana market would “frustrate the purpose” of the federal pot prohibition, and many constitutional law scholars say it very likely would.

That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana.

Colorado’s measure, as far as decriminalizing possession goes, is set to take effect by Jan. 5. That state’s regulatory scheme is due to be up and running by October 2013.

___(equals)

Johnson can be reached at https://twitter.com/GeneAPseattle

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Fracking in the U.K.: Britain Looks to Boost Shale Gas

Could a European shale-gas revolution start in Britain? While efforts to drill gas from shale deposits have stalled on the Continent, the British government could soon give the go-ahead to drilling and provide tax breaks to encourage it.

Chancellor of the Exchequer George Osborne, scheduled to unveil a new government energy plan on Dec. 5, has said he wants to ensure that “Britain is not left behind” the U.S., where a shale-gas boom has dramatically lowered prices and ended the country’s dependence on imported gas.

Energy Secretary Ed Davey wants to lift a moratorium on hydraulic fracturing, the controversial drilling method known as fracking, that was imposed last year after drilling by Britain’s Cuadrilla Resources caused two minor earthquakes in northwestern England. Cuadrilla’s chief executive, Francis Egan, told London’s Telegraph newspaper on Dec. 1 that he was ready to “press on quickly” if the ban were ended.

The enthusiasm in Britain contrasts sharply with France, the only other Western European country with significant shale-gas reserves. French President François Hollande, elected in May, has promised to maintain a ban on fracking during his 5-year term. Poland also has shale-gas reserves, but early exploration has yielded disappointing results.

Drilling in Britain won’t start immediately. In his Dec. 5 presentation, Osborne is expected to call for consultations on what he has described previously as “a generous new tax regime” to encourage shale-gas development. He also will suggest creating an agency called the Office of Unconventional Gas to allow industry, consumer groups, and environmentalists to settle disputes and to regulate the sector, people familiar with the plan told Bloomberg News. Energy Secretary Davey has said that questions about regulatory oversight and the involvement of local communities should be addressed before drilling resumes.

Still, it’s clear the government has put shale gas on a fast track. Britain’s North Sea gas reserves are being depleted; they’re expected to decline from 40 percent of the current gas supply to only 20 percent by 2030, according to Bloomberg New Energy Finance. That will force the country to rely increasingly on imports from Africa and the Middle East. And British natural-gas customers are paying almost three times as much as their counterparts in the U.S., where a flood of shale-gas has sent prices plunging.

Cuadrilla estimates that the area it is exploring in Lancashire, in northwestern England, could contain 200 trillion cubic feet of gas—more gas than all of Iraq. “We can supply a quarter of the U.K.’s gas demand,” CEO Egan told the Telegraph. The company, whose chairman is former BP (BP) CEO John Browne, voluntarily suspended exploration in Lancashire after earthquakes there in April and May 2011 were linked to its drilling. The company and government officials have subsequently said they believe fracking can be carried out safely.

Opponents are already mobilizing. Hundreds of anti-fracking demonstrators protested in London and other cities on Dec. 1. Besides worrying about potential earthquakes and groundwater contamination, environmental activists say that shale-gas development will undermine efforts to develop nonpolluting renewable energy sources.

Advocates who expect to replicate the U.S. shale-gas boom are likely to be disappointed, though. More-stringent British environmental regulations and mineral-rights rules will add to development costs, says John Williams, an energy analyst at Pöyry Management Consulting in Oxford. In a recent study, Williams and two colleagues estimated that the planned development in Lancashire would lower British gas prices no more than 4 percent. “We’re not going to see anything like the price crash in the U.S.,” Williams says.

The Pöyry study, based on a review of data provided by Cuadrilla, estimated that Lancashire shale could supply 21 percent of Britain’s gas by 2030. That won’t harm the country’s efforts to reduce carbon emissions, Williams says, because it could reduce the need to burn coal. Gas “is the obvious backup fuel” when wind and solar power aren’t available because of weather conditions, he says. “If you are going to need gas, shale can be a source.”

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