GOOD NEWS

Halliburton Warns Significant Frack Growth May Be Impossible This Year


Editor OilPrice.com
Thu, July 21, 2022 

Fracking, or hydraulic fracturing, is an oil extraction technique that involves high-pressure water blended with sand and chemicals, forced into underground rocks known as shale to capture oil and gas. The process was revolutionized by horizontal drilling in the 1980s and 2000s, transforming America into the world's largest oil producer overnight.

American shale drillers have shown how quickly they can boost oil production over the years. But after several years of divestment and decarbonization, the days of fracking roaring back to life are over.

Halliburton Co.'s CEO Jeff Miller confirmed this to analysts during a conference call Tuesday. He said the oilfield equipment market is so tight that oil explorers are already discussing 2023 projects.

Miller said oil companies don't have enough fracking equipment for newly leased wells this year. He said diesel-powered and electric equipment are in short supply, "making it almost impossible to add incremental capacity this year."
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This development is another setback for the Biden administration's efforts to increase US oil production to ease the worst inflation in forty years ahead of the midterm elections in November.

A similar message was conveyed by Exxon Mobil, whose CEO said that global oil markets might remain tight for another three to five years primarily because of a lack of investment since the pandemic began.

Chief executive Darren Woods said it'll take time for oil firms to "catch up" on the investments needed to ensure enough supply.

Related: Saudi Arabia’s Ability To Pump More Oil “Limited”

Back to the shale patch, where even if exploration companies were to obtain fracking equipment for drilling new or existing wells, the frack sand used to blast through shale rocks is in short supply across Texas.

Russell Hardy, the CEO of the world's largest independent oil merchant, Vitol, also believes oil prices will remain high because the market can't see where additional supply is coming from to balance demand.

Meanwhile, Brent oil prices rose to $106 on Tuesday after President Biden returned from Saudi Arabia without an agreement on increasing output from OPEC+.

"The message is that it is OPEC+ that makes the oil supply decision, and the cartel isn't remotely interested in what Biden is trying to achieve," said Naeem Aslam, the chief market analyst at Avatrade.

Neither US shale nor OPEC+ appears to be increasing output in the immediate future for their own respective reasons, indicating tight crude supplies will keep energy prices elevated and inflation high.

All the Biden administration can hope for now is a recession to curb consumer demand to rebalance markets.

By Zerohedge.com

China’s $1.2 Trillion Wealth Fund Reorganizes Key Investment Arm

CHINESE CAPITALI$M IS FINANCIAL IMPERIALISM

Bloomberg News
Wed, July 20, 2022 



(Bloomberg) -- China’s sovereign wealth fund is merging a unit overseeing billions of dollars in private equity and infrastructure investments into its main operations, according to people familiar with the matter, seeking to boost efficiency after a talent exodus and as offshore investing grows more complex.

China Investment Corp., which oversees $1.2 trillion in assets, recently combined the operations of CIC Capital with its main overseas investment business, the people said, asking not to be named because the matter is private. The consolidation partly unwinds the Beijing-based fund’s 2015 decision to create the unit as its direct investment arm to boost long-term returns and help Chinese companies expand abroad.

While the functions of CIC Capital’s teams are little changed, the new structure is another step in streamlining operations. The sovereign wealth fund last year restructured how it decides on international investments, setting up two new committees in place of bodies at units CIC Capital and CIC International that had overlapping responsibilities.

CIC didn’t reply to an emailed request seeking comment.

CIC Capital has been a key part of Chairman Peng Chun’s effort to raise direct and alternative investments to 50% of the sovereign wealth fund’s overseas portfolio, a goal he has months left to achieve under a five-year plan that runs till 2022.

The unit’s main business departments, which look after private equity and infrastructure investments, have now been renamed and re-aligned alongside departments operating in the same areas at the wider company, the people said. The middle and back-office functions have also been renamed or combined.

CIC Capital committed $19.5 billion of investments in four years through 2019, according to its annual reports. Its key deals include Tank & Rast, which provides services like gas stations on German motorways, and Turkey’s container terminal Kumport.

The unit has seen an exodus of senior investment professionals, especially after dealmaking became more difficult in the US and the pandemic curbed travel. At least nine senior managers have departed in recent years, including Executive Vice President Zhang Qing, who left in early 2019, and Winston Ma Wenyan, a managing director and former head of the Toronto office, who quit in 2018.

CIC has received little fresh capital from the government in the past decade as the nation’s foreign exchange reserves halted their years-long surge. The company has also disclosed little progress after saying in 2017 it was considering bond sales to boost funds at CIC Capital to as much as $100 billion.

Direct and alternative investments at the sovereign fund expanded by about 0.8 percentage point to 43% as of end of 2020, reversing a decline of almost 2 percentage points in 2019, according to its 2020 annual report, the latest.

Before the revamps, CIC’s overseas investments were handled by CIC International and CIC Capital, with each unit executing and managing investments approved by their own investment committees. Now both units’ departments collectively handle and manage investments along business lines, guided by two committees overseeing public assets and non-public assets.

Here are some of the recent changes made:

CIC Capital’s Investment Department Two has been renamed Private Equity Investment Department Two; the business in charge of infrastructure holdings, Investment Department One, is now Real Asset Investment Department Two, the people said.


CIC’s private equity department has become Private Equity Investment Department One, while the real estate department is now Real Asset Investment Department One, the people said.

Capital Outflows From China Sovereign Bonds Just Hit $30 Billion

Bloomberg News
Fri, July 22, 2022 






(Bloomberg) -- China’s bond market is becoming the locus for global capital outflows and there are signs the government is growing concerned about the $30 billion exodus as it delays data and seeks to manage investor expectations.

Foreign funds offloaded 55.9 billion yuan ($8.3 billion) of the nation’s debt in June, a fifth month of net sales that swelled the total outflows this year to 200 billion yuan. That’s an abrupt reversal for a market that had seen global participation grow every year since 2014, when Bloomberg started compiling data based on official figures.

In one way, the outflows aren’t surprising as they come after aggressive Federal Reserve rate hikes caused the premium offered by China’s bond yields over Treasuries to become a discount. Yet, the exodus is a concern given it’s taking place at a sensitive time before a key leadership summit this year, and coincides with an escalating economic and property-market crisis.

China’s officials have downplayed the outflows, insisting the country is still an important destination for cross-border bond investments.

“Fluctuations in bond flows are very common in both developed and emerging markets, while the volatility seen in China is relatively low,” Chunying Wang, a spokeswoman for the State Administration of Foreign Exchange, told reporters on Friday. Index-tracking funds and global central-bank allocations are helping to stabilize the situation, especially as the latter account for over half the total of Chinese debt held by overseas investors, she said.

The publication of the June bond figures by China Central Depository & Clearing Co. took place about a week later than in previous months. Interbank-bond-market figures released by the central bank’s Shanghai head office on Friday were also delayed, as they are typically sent out in the first half of each month. In May, China’s bond-trading platform for foreign investors quietly stopped providing data on its transactions.

Foreign investors still held 2.32 trillion yuan of Chinese debt at the end of June, well above the 221 billion yuan they owned in 2014. The opening up of China’s capital markets and the inclusion of the nation’s debt in more global bond indexes has attracted central banks and global investors eager to tap its higher yields.

“The bulk of the remaining foreign holdings of Chinese fixed-income assets reflects reserve manager, sovereign wealth fund and index tracking demand,” said Lemon Zhang, a strategist at Barclays Plc in Singapore. Looking ahead, large inflows are unlikely as investors aren’t optimistic on duration or China’s currency, while higher global yields provide alternatives, she said.

Demand for Chinese bonds has waned in recent months as US 10-year yields surged above 3%, while similar-maturity yields in China remained stuck in a range of 2.7% to 2.85% due to the People’s Bank of China’s accommodative monetary policy.

“Bond inflows are unlikely to make a strong comeback due to the narrowed nominal yield differentials,” said Frances Cheung, rates strategist at Oversea-Chinese Banking Corp. in Singapore. “The argument that Chinese government bonds are more resilient in the face of rising yields may also be weakening, as further increases in global yields may be seen as smaller than we observed in previous months.”

There are other signs of concerns about capital outflows too. Chinese regulatory officials have recently been ordered to exercise greater caution when it comes to reviewing new overseas spending and investment plans due to concern higher US interest rates will increase capital outflows, people familiar with the matter said this month.

The share of overseas investors’ holdings in China’s sovereign bonds dropped below 10% at the end of June for the first time since January 2021. Foreign funds also sold a net 90 million yuan of local government debt and 35.47 billion yuan of policy bank notes last month, the ChinaBond data also showed.

(Updates to add strategist comment in eighth par

China’s Credit Market Rocked by More Debt Delays, Plunging Bonds

Wei Zhou and Dorothy Ma
Thu, July 21, 2022


(Bloomberg) -- China’s credit market is now showing stress on an almost daily basis, as a worsening property crisis shatters assumptions about safe borrowers and even Chinese investors turn against troubled debtors.

The country’s junk dollar bonds were on the brink of record lows Thursday, as a state-backed developer sought payment delays on $1.6 billion of dollar notes. In other signs of stress, the debt of a private builder deemed healthy just months ago sank, while creditors spurned a restructuring plan by the parent of BMW AG’s China partner.

Taken together, the incidents point to a credit market in a new phase of turmoil as stress spreads from cash-starved private developers to those with government backing and companies outside the housing sector. Chinese investors pushing back on debt reprieves or unfavorable restructuring plans also suggest dwindling confidence in Beijing’s ability to pull off a fast economic turnaround.

“Sentiment in China’s high-yield market deteriorated on China South City’s surprising extension,” said Ting Meng, senior Asia credit strategist at Australia & New Zealand Banking Group Ltd. “It will be very challenging for developers in the second half as we’re not seeing the real estate sector bottom yet. Even if the industry bottoms, the recovery of HY bonds will be time consuming and painful.”

The day began with China South City Holdings Ltd. proposing changes to its dollar bonds, including extending maturities and paying principal in installments. A slide in the securities -- which were near par just two months ago after a bailout -- has rattled investors who had bet its state links would help insulate it.

Prices of Chinese high-yield dollar notes, a market dominated by developers, have neared record lows this week. While prices of some property notes edged up Thursday on short covering, the absolute levels remain in distressed territory.

The selloff has engulfed even investment-grade peers including China Vanke Co. Another builder previously seen as relatively safe, Country Garden Holdings Co., had trading of one of its yuan bonds briefly suspended Thursday after the security fell 22% to 54 yuan. China’s top-performing mutual fund this year is among a growing list of investors cutting exposure, with major developers like Vanke and Seazen Holdings Co. dropping out of its top ten holdings.

China Bad-Debt Firm Sells Local Bond as Property Bailout Planned

There was some relief later in the day.

The nation’s banking and insurance watchdog pledged that regulators will work with local authorities to ensure delivery of property projects, which have stalled as developers run out of cash.

It’s asking banks to facilitate completion of real estate projects, while China Vanke was also able to sell 3 billion yuan ($444 million) of debt at 3%, the middle of an indicative range. Bonds of Country Garden also jumped.

Repayment risks in China Inc. have spread to unprecedented levels. China South City, which focuses on commercial projects in sectors like logistics, had warned that if the so-called consent solicitation isn’t successful, it might not be able to repay principal or interest on its dollar bonds and that might lead to an event of default.

If the proposed amendments become effective, a Shenzhen entity which in May bought a 29% stake in China South City would enter a type of credit protection called a keepwell deed involving all the dollar bonds. That seemed to be enough to boost the price of the bonds maturing next year at least 8.7 cents, set for the largest gain in months.

But broader concerns persist, as the still deeply distressed price levels reflect. The builder suffered a record drop in the August dollar bond earlier this week, highlighting investor worries about imminent debt deadlines at property firms. Numerous developers this year have sought extensions on local and offshore bond payments.

“Despite property sales improving, developers are finding it difficult to secure financing and continue construction, prompting reports of homebuyers refusing to make mortgage payments,” Goldman Sachs Group Inc. analysts wrote in a risk report. “We believe further policy changes are needed to improve confidence and ensure the issues around mortgage repayments is addressed.”

As the rout in credit markets intensifies, China’s local investors, who have until recently been remarkably receptive to distressed firms’ attempts to delay bond repayments or reorganize debt, are getting impatient.

Brilliance Auto Group Holdings Co., parent of German automaker BMW’s China joint-venture partner, failed to get approval from some creditors on its restructuring plan. The state-run company entered a court-led restructuring in late 2020 after defaulting on some 6.5 billion yuan of obligations.

The creditor revolt came on the heels of bondholders’ rejection of China Evergrande Group’s proposal earlier this month to extend a yuan note, a rare move that may result in a landmark onshore default. The developer, which remains at the epicenter of the property debt crisis, has already suffered dollar bond delinquencies and aims to unveil a preliminary overhaul plan by the end of July.

WITH CHINESE CHARACTERISTICS 

PolyMet and Teck form JV to develop Minnesota mining projects

July 20 (Reuters) - PolyMet Mining Corp and Teck Resources Ltd said on Wednesday they will form a joint venture to develop their Minnesota copper and nickel mining projects.

The new company, known as NewRange Copper Nickel LLC, will share costs to develop the two proposed mines, which aim to produce metals used to make electric vehicles and other green technologies.

Shares of St. Paul, Minnesota-based PolyMet jumped 6.8% on Wednesday morning after the news, while shares of Vancouver, British Columbia-based Teck fell 1.9%.

PolyMet's $1 billion NorthMet project is by far the most advanced of the two, as it has received most of its permits. It does face some regulatory and legal opposition. Teck's Mesabi project has yet to be fully studied and does not yet have permits.

Both projects are located in Minnesota's Iron Range region, which has a long history of mining taconite ore for steel production. The area is about 200 miles (322 km) north of Minneapolis.

Both companies have agreed to fund the JV with an initial budget of $170 million for permitting and engineering work.

As part of the deal, PolyMet will remain an independent company and Glencore Plc will remain its largest shareholder. Glencore has committed to funding up to $105 million of PolyMet's share of the JV's costs.

Glencore controls about 71% of PolyMet's shares. As part of the JV announcement on Wednesday, PolyMet said that Glencore may eventually exercise its options to convert debt into equity, steps that would boost its stake to 78%.

(Reporting by Ernest Scheyder; editing by David Evans)

Ukraine war spurs LNG demand in Japan despite fossil fuel activism

Madeleine Bruder1 day ago

Reliance on LNG: a storage tank at the Tokyo Electric Power Co.mpany’s gas-fired thermal power plant in Futtsu © Tomohiro Ohsumi/Bloomberg

Green activists have put in a record number of demands to Japanese companies for action over fossil fuel investment — just as experts warn that liquefied natural gas (LNG) project financing will be necessary for several years because of the war in Ukraine.

During this year’s round of annual general meetings, climate activist groups, including Australia’s Market Forces and Japan’s Kiko Network, submitted shareholder proposals to four companies listed on the Tokyo Stock Exchange urging stronger commitment to tackling climate change.

Among the companies were Japan’s second-biggest lender, SMFG, and Tepco, a provider of electricity to Tokyo. According to the activists, the lifetime emissions from 10 LNG projects planned by these businesses will be around 1.2bn tonnes of carbon dioxide.

“Japan is on the front line of a global economy-wide transition driven by the need to adapt to the threats and opportunities of the climate crisis,” said Sachiko Suzuki, a researcher at Market Forces, in a statement in April. “Change is happening fast and those companies that fail to align their strategy are creating a grave risk to their future. Investors are alive to these threats and demanding action.”

Lenders say they are caught in the middle. In an interview with the FT in the same month, Masahiro Kihara, the chief executive of Japan’s third-largest lender, Mizuho, said the government should speed up the creation of a post-Ukraine energy plan, stressing it was indispensable.

Mizuho CEO, Masahiro Kihara, has called for more debate on energy policy and clarity on timeframes © Bloomberg

“What I’d like to be done is for the government and the private sector to have a very serious discussion about this,” said Kihara. “And I think that’s one thing that’s not being accomplished right now by the politicians. There’s no debate on energy policy.”

“There has to be a discussion with a specific timeframe in mind: for example, ‘until here, we’ll use LNG, after that, we’ll use renewables, etc’. We need to have that kind of grand design. And relying on other countries has become very risky,” he added.

Amendments proposed by activists at the AGMs required two-thirds majority support and they did not pass. Still, corporate executives privately say they cannot ignore strong shareholder backing of climate motions even if they are not agreed.

A case in point is a motion from 2020, when a climate group filed the first such proposal to Mizuho. The motion prompted the country’s three largest banks to refrain from financing future fossil fuel projects.

Jera’s LNG fired power plant in Ichihara © Toru Hanai/Bloomberg

Workers inside the power plant © Akio Kon/Bloomberg

Since Russia’s invasion of Ukraine in February, however, there have been several clear signs that the world is shifting back to more LNG, as gas prices on the spot market soar and Russia threatens to cut supplies to more countries.

Late last month, the G7 group of industrialised nations said investment in LNG was a “necessary response to the current crisis”, adding that, “in these exceptional circumstances, publicly supported investment in the gas sector can be appropriate as a temporary response.”

Another indicator, says Kaushal Ramesh, gas and LNG analyst at consultancy Rystad Energy, is France’s state-backed utility Engie signing a 15-year deal with Houston-based NextDecade — even though the talks were suspended in 2020 after the French government raised environmental concerns.

We are starting to see clear signs of a reversal of the ‘no fossil fuel’ policy

“The biggest sign of reversal is that European buyers are now signing 20-year contracts with the US,” says Ramesh. “We are starting to see clear signs of a reversal of the ‘no fossil fuel’ policy.” 

Ramesh cites a string of deals by US LNG companies as American exporters position themselves to fill the gap as Europe turns away from Russian imports.

Venture Global, an exporter on the Gulf of Mexico coast, says it has struck a deal to sell 1.5mn tonnes a year to EnBW, one of Germany’s largest energy companies, in the first binding long-term agreement by a German company to buy US LNG.

More stories from this report

Gas prices in Europe have jumped after Russia cut capacity on its main gas export pipeline to Germany, fuelling concerns that Moscow is weaponising its gas exports in response to EU sanctions.

The International Energy Agency said Europe must prepare immediately for the complete severance of Russian gas exports this winter, urging governments to take measures to cut demand and keep nuclear power stations open.

Rystad Energy warns that LNG demand will outstrip supply by the end of this year. The consultancy adds that “although soaring demand has spurred the greatest rush of new LNG projects worldwide in more than a decade, construction timelines mean material relief is unlikely only after 2024”.

Scott Neilson, partner at law firm Allen & Overy, says banks are “in a tough spot because they know that a lot of their clients want to be developing their businesses and their countries, and they’re given limited options”.

Neilson adds that it remains unclear whether resistance to lenders investing in LNG projects will affect funding at such a critical time, but adds: “Certainly not in the short run — maybe longer term when there’s viable alternatives but, at the moment, there’s a need for Asia-Pacific to transition away from coal, frankly.”

Checkout latest world news below links :

Canada Will Impose a New Tax on Private Jets, Yachts and Luxury Cars

Dana Givens
Fri, July 22, 2022 

ROBB REPORT


High-end vehicles are about to get a little more expensive north of the border.

The Canadian government unveiled its 2022 tax budget last month, which included a new luxury levy for any organization buying high-cost vehicles. This week, the Canadian government released more details on how it will implement the tax, which goes into effect on September 1.

The Select Luxury Items Tax Act will apply to all new cars and aircraft with retail prices exceeding $100,000 and boats that cost more than $250,000. The new rate would equate to 10 percent of the full value of the item. The move would also apply the tax retroactively to any “written sales agreements” made after January 1, 2022.

Retailers, importers, wholesalers and manufacturers would be required to register with the Canada Revenue Agency (CRA) on the first day of sale or importation of all orders moving forward under the new guidance, even if they are already registered as a recognized vendor within one of the three sectors.

The tax is a part of the new Bill C-19 law, which includes several other corporate tax measures. Among these are reductions for profits on zero-emission technology manufacturing.

Various experts have criticized the bill, with some predicting it could result in the loss of at least 900 jobs. Anthony Norejko, president and CEO of the Canadian Business Aviation Association, wrote in a statement warning the government that “the economic impact of the luxury tax will be significant and have not been studied with a comprehensive understanding of our industry.”

“We urge this government to return to the table and, at the very least, consult with our sector on reasonable timelines for tax policy changes that should not be punitive but indeed supportive for all Canadians,” Norejko’s statement continued.

Whether those costs outweigh the benefits to the environment remains to be seen. According to a Legislative Costing Note by the Parliamentary Budget Office, the tax would generate $600 million in revenue over five years.

Must-see video: Massive 11-foot alligator in Florida lets out vicious roar while being wrangled

Fri, July 22, 2022 

A large alligator in Florida let out a dinosaur-like roar while wildlife officers were trying to wrangle it out from under a Jeep. (Credit: Charlotte Co. Sheriff's Office)

‘It is a little eerie.’ Tree in ‘enchanted’ NC forest is growing in a knot. Why?


Hans Rohr photo

Mark Price
Thu, July 21, 2022 

A tree tied in a knot is growing in eastern North Carolina — and a state forester says it’s one of the most mystifying sights you can find in the “enchanted forest.”

It’s accessible only by foot in Bladen Lakes State Forest, about 45 miles southeast of Fort Bragg, and a photo shared on Facebook by the N.C. Forest Service shows its whimsical curves.

Bladen Lakes State Forest Supervisor Hans Rohr says it’s a very strange longleaf pine.

“It has been in this position for about as long as I can remember, just shy of 20 years,” he says. “It’s about 25 feet tall, but if you straightened it out, it would be about 50 to 60 feet tall.”

Social media reactions to the Facebook photo have included comparisons to “a huge snake.” Some have also suggested the state collect the seeds to see what may grow from them.

But seeing it in person is disconcerting, Rohr says.

“You just don’t expect that,” he says. “I’ve spent a lot of time in the woods and I have never seen a tree shaped like that. It is a little eerie looking.”

There are other trees in the same area that are similarly off-putting, he says, including one that appears to have a head and two arms raised in the air.

As for the knotted tree, Rohr has some theories.

“One theory could be that an older tree or something maybe fell on it, but didn’t break it. It just bent it in this manner and the tree was able to make this 360 (degree) ring around it. Another theory is there was some kind of damage, maybe insect damage, which made the top branch die and a side branch took over.”

Theory No. 1 unravels when considering there are no signs of an older tree that fell nearby, he says.

Longleaf pine can reach 110 feet in height and have been known to live more than 450 years, according to the Longleaf Alliance.

They are widespread in Bladen Lakes State Forest, a 33,500-acre “working forest” that funds itself with “sales of timber, pine straw and charcoal,” the state says.

The knotted tree is behind a gate in an area known as the Addie Barnes red-cockaded woodpecker area,

 home to the endangered red-cockaded woodpecker.

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Native Americans may have originated from China, says new study on 14,000-year-old human fossils



Jane Nam
Thu, July 21, 2022

A new study suggests that Native Americans may have originated from Southern China, based on the discovery and DNA analysis of 14,000-year-old human fossils.

The journal “Current Biology” published the study on July 14, which stated that the discovered fossils are thought to belong to an extinct maternal branch to which Native Americans are also possibly related.

Researchers compared the genome of the bones to people from around the world and came to the conclusion that they matched those of an individual deeply linked with East Asian ancestry.

Archaeologists had previously found fossils in China’s Yunnan Province three decades ago; however, it was not until 2018 that a team was able to extract DNA from the ancient skull and use genome sequencing to prove that the individual belonged to an extinct species of modern humans whose descendants were now in East Asia, the Indo-China peninsula and the Southeast Asian islands.

The same team proposed that some people from southern East Asia had traveled north along the coastline of present-day eastern China, went through Japan, reached up to Siberia and then crossed the Bering Strait between the continents of Asia and North America.

While a previously discovered infant’s remains from an archaeological site in Alaska in 2013 proved that modern Native Americans came from Asia, the recent findings narrow down from which parts of Asia they may have originated.

Bing Su from the Kunming Institute of Zoology explained, “Such data will not only help us paint a more complete picture of how our ancestors migrate but also contain important information about how humans change their physical appearance by adapting to local environments over time, such as the variations in skin color in response to changes in sunlight exposure.”

More from NextShark: Anti-Asian hate still a widespread problem in Canada, polls show

Featured Image via UW (University of Washington) (left) and Inside Edition (right)

More from NextShark: Anti-Asian hate incidents up by 47% in Canada, report reveals

U.S. launches probe of Houston illegal dumping over alleged discrimination

The Houston skyline is seen beyond a railroad yard by the

 Houston Ship Channel in Houston
Fri, July 22, 2022

By Valerie Volcovici and Kanishka Singh

WASHINGTON (Reuters) -The Justice Department on Friday opened an investigation into whether the city of Houston's response to illegal dumping discriminated against Black and Latino communities, citing environmental and health risks.

The Justice Department's civil rights division will lead the environmental justice investigation with support from the U.S. Attorney's Office for the Southern District of Texas. It will examine whether Houston's environmental enforcement and solid waste management operations, policies and practices resulted in discriminatory dumping in Black and Latino communities.

"Illegal dump sites not only attract rodents, mosquitoes and other vermin that pose health risks, but they can also contaminate surface water and impact proper drainage, making areas more susceptible to flooding," said Assistant Attorney General Kristen Clarke of the department’s civil rights division.

"No one in the United States should be exposed to risk of illness and other serious harm because of ineffective solid waste management or inadequate enforcement programs," Clarke added.

Houston Mayor Sylvester Turner said the launch of the probe was disappointing. He described the investigation as "absurd, baseless, and without merit." He added the city will cooperate with the Justice Department and was confident the outcome would show no discrimination from Houston.

The investigation is part of a broader Biden administration effort to prioritize environmental justice in its policymaking. The Justice Department in May announced the launch of a new office to help low-income areas and communities of color battle the disproportionate impact of air and water pollution.

"This investigation exemplifies the department's commitment to alleviating disproportionate environmental burdens or an all too often by communities of color, low income communities and to tribal communities," said U.S. Attorney Jennifer Lowery in a press conference.

Clarke said the complaints of illegal dumping, including reports of dead bodies and animals, came from northeast Houston and extend back years. She said the investigation will examine citywide data and focus on disparities between the specific neighborhood and the rest of the city.

If the Justice Department finds violations of the Civil Rights Act, it will work with city officials to come up with a voluntary compliance plan for the city, Clarke said.

(Reporting by Kanishka Singh in Washington; Editing by Jonathan Oatis, Matthew Lewis and Aurora Ellis)