12-1-08

 12-1-08Merced Sun-StarHighway 99 casino not a sure betLas Vegas firm planning the venture faces revenue shortfalls and possibly bankruptcy...CHRIS COLLINS, The Fresno Beehttp://www.mercedsunstar.com/167/story/572799.htmlThe Las Vegas company that wants to build a $250 million casino off Highway 99 near Madera is struggling financially and may have trouble lining up money to fund the project, gaming industry analysts say.Even worse, Station Casinos could file for bankruptcy, which would force the Mono Indians of the North Fork Rancheria to search for a new financial partner and delay the project indefinitely."Obviously this is a bad time to be trying to build a casino anywhere," said Joseph Weinert, an analyst with the New Jersey research firm Spectrum Gaming Group.Despite the nation's faltering economy -- which has not spared even the resilient gaming industry -- tribal officials say the project could break ground as early as 2010. They say the Madera casino will generate thousands of jobs and inject tens of millions of dollars into local business and government coffers.But the project, which would be California's first off-reservation casino, still needs approval from federal officials and state legislators.Station Casinos' financial troubles are emerging as an additional hurdle.Since the beginning of the year, the company has delayed plans to build a new casino in Las Vegas and, according to filings with the Securities and Exchange Commission, has lost more than $75 million.Analysts say the company is struggling to make payments on its debt, which totaled $5.4 billion as of September.The setbacks reflect a general downturn in the gaming industry. Station Casinos, the largest operator of suburban casinos in Las Vegas, has been hit especially hard because of the high rate of home foreclosures in Las Vegas, gaming consultant Ken Adams said.Credit rating agencies have increasingly warned that Station Casinos will likely be unable to make its scheduled debt payments. If that happens, analysts say, the company could file for bankruptcy.Station Casinos, however, says it expects to make its debt payments on time and complete the Madera project...Nonetheless, Station Casinos still has to find money to keep the project afloat for now -- $5 million to $10 million a year in attorney and engineering fees, Eadington estimated. Our View: University system shouldn't increase pay at the same time it cuts admissionhttp://www.mercedsunstar.com/177/v-print/story/572807.htmlDoes the California State University system exist to serve students or those who draw a paycheck from it?That question becomes necessary in light of two stories last week about CSU:That the system will accept 10,000 fewer students in the fall because of cuts of $66 million to its $2.7 billion budget.That CSU employees, faculty and staff, will receive millions of dollars in raises over the next year, some getting as high as a 19 percent increase.Taken together, these stories are an outrage. If the CSU's situation is so dire that it must renege on its reason for existence, then why on earth are some employees getting huge raises?In private industry, when a company runs into trouble, its employees are asked to sacrifice. Often it is unfair, but the alternative can be that the company goes out of business.Many employees willingly make sacrifices to keep their jobs. That is also happening in many public agencies where some employee groups have agreed to a salary freeze in light of the bad economy.But in the CSU system, it is the "customers," whom we call students, who are being asked to sacrifice.Last year, the CSU system had 460,000 students enrolled on 23 campuses from Arcata to San Diego.The chancellor has agreed to limit enrollment to around 450,000 full-time students for 2009-10. That is a cut of 10,000 students, but arguably has a larger impact, because enrollment was expected to grow next year by as much as 20,000 students.It means some qualified students may be denied access to a state university which, for many, is their only affordable option.The University of California system offered a similar solution without getting specific, saying it might have to limit undergraduate enrollment. Such suggestions are as inappropriate for the UCs as for the CSU campuses.But the CSU system added insult to injury by deciding to reward its administrators with thousands of dollars in raises. Facing similar cuts across the nation, university presidents are, instead, taking pay cuts.So we must ask: Who is being served by the CSU trustees' approval to cut admissions while increasing many administrative salaries?In a time of economic crisis, denying or delaying access to education can be the same as denying or delaying access to success.If this is the only solution the chancellor and trustees can offer, then they have failed in their appointed duties. After all, universities exist to educate -- not just to employ educators. Modesto BeeStudents stressing out over enrollment cuts in state university system...Walter Yost, The Sacramento Beehttp://www.modbee.com/local/v-print/story/517537.htmlA succession of bad news over the past two weeks has turned the college plans of California high school seniors upside down.The Community College League of California announced that proposed state budget cuts at community colleges could drive away 262,000 students.Four days later, California State University administrators said they plan to eliminate 10,000 admission spots for the coming school year.Two days after that, University of California regents warned they may limit freshman enrollments next fall.The timing couldn't be much worse for high school students in the thick of the college application season. Sunday was the deadline for many students applying to CSU and UC.Students who were considering scaling back their college plans because of shaky family finances say the barrage of proposed cuts has punched holes in their safety nets."The most surprising thing is that a lot of kids and their parents don't know what's in store for them," said Teresa Schmutte, chairman of the counseling department at Pleasant Grove High School in Elk Grove, about 20 minutes south of Sacra- mento.Some private colleges are seeing a surge in applications as opportunities appear to dry up at public schools."What I think is going on nationally is that students are applying to more schools because of the uncertainty in the economy," said Robert Alexander, associate provost for enrollment at the University of the Pacific in Stockton.Daniel Williams, a senior at Pleasant Grove, thought he had met all the requirements to be accepted at California State University, Chico, a school he's wanted to attend since his freshman year.His mother, Gina, a counselor at his school, helped him maintain a high enough eligibility index -- a combination of grade point average and ACT or SAT test scores -- to be admitted.But on Nov. 17, CSU officials said the state budget crisis had prompted them to cut enrollment by 10,000 students for the 2009-2010 school year. They pushed up application deadlines for the 23-campus system and raised entrance requirements for freshmen at the most popular campuses.Campuses that were overenrolled this year stopped accepting applications after Sunday. All CSU campuses will close admissions for first-time freshmen by March 1 or sooner, depending on space.In order to control enrollment, campuses can raise the eligibility index. That's what's tripping up Williams.Gina Williams said there were rumblings at the start of November that CSU might be tightening admissions.Her son's counselor got a call from a Chico State administrator about Nov. 1, warning that if the CSU system declared it had more students than it could accommodate, Daniel's qualifications would be considered borderline."I was shocked and felt sick," Gina Williams said. "Part of my frustration is that (counseling) is what I do; I know about all this stuff."Daniel Williams is gearing up to retake the ACT next month to see if he can improve his score."I'm still hoping I can get in," he said.Fallback plans go awry...UC system President Mark Yudof suggested the UC campuses might even out enrollment by denying admission to students' first choices and referring them to underenrolled campuses such as UC Merced...The Legislative Analyst's Office has recommended tuition at community colleges be raised from $20 per unit to $26 in January and $30 next school year. Combined with increased class sizes and possible cuts in class offerings, the Community College League predicted the changes could mean a loss of 262,000 students from the state's community colleges.The cuts come at a bad time for community colleges, as they take in students turned away from CSU and UC campuses and a flood of displaced workers seeking to upgrade job skills, said interim chancellor of California Community Colleges Diane Woodruff.Private colleges eager to fill in...California State University٠ CSU faces a $66.3 million midyear budget cut. ٠ CSU plans to eliminate 10,000 admission spots for the 2009-10 school year by moving up application deadlines and raising academic standards for incoming freshmen. ٠ Affected campuses -- those that are overenrolled -- can use supplemental admissions criteria to admit students or put students on waiting lists. The eligibility index -- a combination of grade point average and ACT or SAT scores -- can be raised to limit enrollment. ٠ Admission priority will be given to continuing undergraduate students, then community college transfer students and California residents applying as freshmen or sophomores at affected campuses. Nonresidents will have the lowest priority. ٠ Affected campuses, including Fullerton, Long Beach, Pomona, San Diego, San Luis Obispo, Sonoma, Channel Islands, Northridge and San Jose, stopped accepting application for freshmen Sunday. San Francisco State will stop Dec. 10. Chico and San Marcos will review freshman applications after Sunday on a "space available" basis. ٠ All campuses will close admissions for first-time freshmen by March 1 or before, depending on available space.University of California٠ Proposed midyear budget includes $65 million in cuts for the UC system. ٠ UC regents adopted a resolution that freshman enrollments next fall will be curtailed by as    many as 10,000 students if funding is short. ٠ At the same meeting, regents removed student fee and tuition increases from their budget for next school year. ٠UC President Mark Yudof suggested the system might even cut enrollment by denying admission to students' first-choice campuses and referring them to underenrolled campuses such as UC Merced.Fresno BeeND farmer defies government by draining wetlands...JAMES MacPHERSONhttp://www.fresnobee.com/559/v-printerfriendly/story/1043842.htmlArmed with a tractor or a backhoe, Alvin Peterson moves dirt to drain prairie potholes on his land, saying he's putting the land back to the way God intended. The 78-year-old retired farmer from Lawton, in northeastern North Dakota, has been in hot water with the U.S. Fish and Wildlife Service over wetlands for more than 40 years. The agency had an easement contract with his father for the potholes to house and feed wildlife. Federal authorities, after dealing for decades with Peterson's pothole-emptying antics, began cracking down on him. Last month - and for the second time in four years - Peterson was convicted of illegally emptying wetlands. Now he faces stiff fines and jail time. Peterson remains unfazed. "I didn't make the waterways, the good Lord did," Peterson said. The Fish and Wildlife Service, along with hunting and conservation groups, view wetlands as an environmental oasis for waterfowl and other creatures. Peterson sees the potholes as a pain, swamping his land with water and weeds and preventing him from raising crops. "Alvin Peterson is somewhat of a government protester," said Assistant U.S. Attorney Cameron Hayden, who has prosecuted Peterson. "He inherited the farm from his father and never liked the easement. He began a system of draining every prairie pothole he could find with his tractor." Peterson claims his dying father was tricked by government officials into signing an easement in the mid-1960s. He said his father was given a one-time payment of about $4,700 that forever keeps dozens of acres on the farm free of crops and under government ownership. "They've done this in a sneaky way - you'd think you were living in Russia," Peterson said. "I've had trouble with them ever since they stole this land from my father." Peterson was found guilty on Nov. 11 of two counts of improper drainage of wetlands, after a trial before U.S. Magistrate Judge Alice Senechal in Grand Forks. A sentencing date has not been set. Peterson faces up to a year in prison and a $10,000 fine. Hayden said Peterson will likely be hit with a heavy fine but won't be locked up. "I will not be requesting that he go to jail," Hayden said. "I see no point in that." Peterson was first convicted in 2004 of draining four wetlands protected by an easement held by the Fish and Wildlife Service. He was sentenced in 2005 to two years of probation and ordered to restore the four wetlands and pay a $4,000 fine. Federal wildlife officials, under the protection of armed U.S. marshals, filled in a waterway to re-establish the potholes. Peterson said the show of force on his farm was unnecessary. "I'd never hurt a Fish and Wildlife man," Peterson said. "They suffer by living." Authorities say Peterson drained some of the once-restored wetlands again last year, immediately after his probation expired. Peterson maintained that he was only cleaning out waterways. "It was plugged up," Peterson said of a 30-foot-wide, 2-foot deep slough. "I got it wide open and running like it's supposed to." Except for two years he was in the Army in Korea in the 1950s, Peterson said, he has spent his entire life on the Ramsey County farm, northeast of Devils Lake. "I was born 20 feet from where I'm talking to you on the telephone," he said in an interview with The Associated Press. "I've walked every foot of this land, poisoning gophers and riding ponies." He said the government's efforts to create wetlands on his property have failed and that there was more wildlife on the land before the government-established wetlands. "Those wetlands - the ducks can't survive there," Peterson said. "They're so full of cattails, there is no place for them to breathe and no place for them to land." Lloyd Jones, the Dakotas refuge manager for the U.S. Fish and Wildlife Service, said wetlands provide crucial habitat for wildlife, even with cattails. Jones, a biologist, has been working on wetlands issues for three decades in the prairie pothole region of the Upper Midwest. The government began buying conservation easements in 1958, he said. It has spent about $60 million to acquire some 1.5 million acres, of which 900,000 acres are in North Dakota and 500,000 in South Dakota. Montana, Minnesota and Iowa account for the remaining acres, Jones said. Money for the program comes largely from the sale of federal Duck Stamps. The program has not been without challenges, both legal and otherwise. In the 1960s, the government funded competing programs - one that paid farmers to drain wetlands and one that paid farmers to preserve them, Jones said. "Preservation won out," he said. In 1995, two Hope-area farmers were charged with draining three Fish and Wildlife easements the agency purchased on their land. The farmers, brothers Mike and Kerry Johansen, challenged the agency, saying they drained potholes outside the original easements. Federal authorities argued that the wetlands, which had expanded after years of wet weather, were covered under the original easement. The government lost its case, and charges were dropped. Jones said disputes over the easements typically are settled through negotiations. "Ninety-nine percent can be worked out," he said. "Alvin would be the 1 percent. Negotiations with him, unfortunately, have not proven to be successful." Sacramento BeeNormal rainfall predicted for north state this winter...Phillip Reesehttp://www.sacbee.com/101/v-print/story/1438420.htmlWeather experts believe Northern California will see normal precipitation this winter – a welcome tonic after two years of drought.It'll be just average, though. And these days, just average may not be enough.There's disagreement about whether a normal year will be sufficient to completely erase a water-level deficit left by drought. "Even if we get a nice, wet winter, there's still going to be difficulties," said Dave Kranz, a spokesman for the California Farm Bureau. It would take at least a couple years of good rain to replenish resources, he said.Paltry rainfall during 2006 and 2007 marked the first time since the early 1990s that most of California saw two consecutive dry years. The state has so far shouldered the burden well, drawing on reserves and groundwater.But the water supply can only stretch so far. Another dry season would likely mean mandatory restrictions on water use in many cities across the state – and would have a steep economic impact on everything from ski resorts to Central Valley farms.Against that backdrop, several experts met recently to compare weather models at a San Diego conference sponsored by the California Department of Water Resources. One theme was that meteorological patterns in the Pacific Ocean would mean Northern California should have a typical winter, but Los Angeles and San Diego probably would see drought conditions persist."Just be glad you don't live in Southern California," Klaus Wolter, a University of Colorado climatologist who spoke at the conference, told The Bee. "It has a much higher likelihood of being dry."So what does a normal rainfall year mean for the Sacramento region?Most local cities should continue to do fine, though a crisis might only be forestalled, not avoided, said John Woodling, executive director of the Regional Water Authority in Sacramento."We are in pretty good shape," Woodling said. "If we get a normal water year, it probably keeps us where we were during this last year."City leaders in Folsom, the local community most affected by drought, agree and are planning accordingly.Folsom, which has little groundwater and draws from an oft-siphoned reservoir, recently declared a water alert, telling residents to limit watering lawns, and ordering restaurants to serve water only when it's requested.A dry winter would likely mean stricter measures in Folsom. A normal year probably would mean existing restrictions stay in place, said Ken Payne, Folsom's utilities director.Farmers and ranchers also are worried. During this drought, good rangeland has disappeared. Crops have withered sooner. And it could get worse."It'll take more than one year in the sense that you are already behind," said Jerry Maltby, owner of Broken Box Ranch in Williams. "(The drought) puts everyone in a real bind."Maltby usually keeps his cattle out grazing until late May or early June. This year, he pulled them back in mid-April; there was no good rangeland. Maltby had to buy expensive feed for his cattle.This year is even more precarious, Maltby and others said, because high cattle and crop prices seen during much of the drought have recently fallen, leaving little extra money for feed.Just as worrisome is the state of Maltby's local reservoir, which is way below normal levels.It's a justified concern, water experts say, because ranchers often find themselves at the bottom of the water-rights pecking order."The big cuts will be in the agricultural supply," said Maury Roos, chief hydrologist of the California Department of Water Resources, describing what will happen if there is another dry year. "The cities can buy their way out."Roos, however, is more optimistic than most experts. He thinks a normal rainy season in Northern California would replenish reserves to pre-drought levels.Tahoe ski resorts are also anxious about the upcoming season, though they have a more mixed recent history with the drought. Two years ago, the state's snowpack was far below average for much of the year. But during the most recent winter, things didn't get dry until late in the season – after snowfall had given ski resorts a solid base."We did receive quite a bit of snow," said Rachael Woods, spokeswoman for Alpine Meadows Ski Resort, referring to some large early and mid-winter storms last season. "So we had this wonderful spring ski season."So far, signs are promising. Thanks to a large storm system around Halloween, Northern California rainfall levels are typical for this time of year. Most ski resorts will likely be opening in a couple of weeks.Ultimately, though, everyone is making an educated guess: It could be months before the water situation becomes clear. Few would be happy, for instance, if the region enjoyed solid precipitation at the start of winter but the spigot turned off again around February.This year, given the recent depletion of water reserves, the stakes are higher."It's a make-or-break winter," said Kelly Redmond, deputy director and climatologist at the Western Regional Climate Center. "We've been able to live off the buffer provided by the reservoir system. But some of the reservoirs are getting pretty low."San Francisco ChronicleCalifornians need to worry about food security...A.G. Kawamura...11-30-08http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/30/INPD149ND9.DTL&type=printableAt a time when people are deeply concerned about our dependence on imported oil, we should also be concerned about increasing our state's dependence on imported food. In fact, our ability to feed our state could be seriously threatened by problems such as a long-term drought, the state's aging water delivery and supply system, and court-ordered water supply cuts.When people talk about food security, it's normally a social justice topic at international conferences on hunger and famine. But it's a term that we're hearing more in California as population growth, along with land use and water policies, puts more pressure on this state's agricultural industry. Rather than referencing worries about global food shortages, food security for Californians is about whether our state can continue to be the nation's top food producer.One of the major threats to the state's farming industry is our lack of water. California's drought, combined with court-ordered cuts in water deliveries, is threatening our food production.Because of the water shortage, growers are cutting back on production, fallowing land and stumping trees. The drought has cost the state more than $250 million in lost plantings and 80,000 acres of crops this year alone. And that doesn't include the huge amount of idle farmland that hasn't been planted in the past few years because of an unpredictable water supply. While the drought seriously complicates matters, our problems will not be solved with just one wet winter. The comprehensive, bipartisan plan proposed by Gov. Arnold Schwarzenegger and Sen. Dianne Feinstein will provide the water necessary to meet California's needs during wet and dry years alike.Critics like to say that California farmers are wasting water and that if farmers would just conserve water, we wouldn't need to build more delivery systems. That is far from the truth.California farmers have always practiced innovative water resource management, while producing food that feeds the state and the world. Over the past four decades, the amount of water used on California farms is relatively consistent, while crop production has increased more than 85 percent. Water conservation is not inexpensive, often requiring investment in new equipment or technology. In fact, farmers in the San Joaquin Valley invested more than $500 million in high-efficiency irrigation systems from 2004 to 2006. Furthermore, water use on California's farms is enormously efficient. It's not used just once, but as many as eight times.It's fashionable today to talk about eating locally. In fact, with the amount of food grown near the Bay Area - a recent study reported that 20 billion pounds of food, valued at $10 billion, is produced within a 100-mile radius of San Francisco - it's not hard to buy locally grown food.Feeding our families locally grown food makes sense in many ways. First, we know that farmers in California adhere to the strictest environmental and food safety standards in the world. Second, for people who worry about the effect that industrial shipping and transportation have on the climate, purchasing California's produce, dairy, meat and wine means reducing your family's carbon footprint.We Californians have good reason to be proud of our state's agricultural bounty. Anyone who has lived in the Midwest or Eastern parts of the nation knows just how blessed California is to have fresh fruit and vegetables year around. But as our farmers are squeezed by issues such as a declining water supply, rising energy prices and demands for residential development, it becomes harder and harder for California farmers to stay in business. And that means that residents may see their choices narrow as the variety of crops decreases.Will farmers be forced to change their crops because of a lack of water? Will there be sufficient water so we can choose what to grow?California's historically strong agricultural industry is facing a tough future. Water is one of the biggest problems confronting our farmers today. In the end, California's water problems can only be solved through a comprehensive program that balances conservation with an improvement in the state's water delivery and supply system.A.G. Kawamura is the secretary of the California Department of Food and Agriculture. Kawamura and his family have been growing and shipping produce in Southern California for three generations.KGO-TV abc7Delta smelt closer to extinction...Ken Miguel...11-26-08http://abclocal.go.com/kgo/story?section=news/assignment_7&id=6527014SACRAMENTO, CA (KGO) -- There is more bad news for the bellwether of the Sacramento Delta. The Delta smelt continue to edge closer to extinction. It is not good news for environmentalists or for the farmers and Southern Californians who count on the Delta for water. ABC7 News went along for this season's fish count.The California Department of Fish and Game has been casting nets in the Delta for the last couple of weeks. It is not so much about what they catch, as what they don't. Since 1967, biologists have searched the murky waters of the Delta looking for what is left of the once thriving fish populations. They take detailed notes on everything, from what they catch, where they catch it, to the temperature of the water. "We sample from San Pablo Bay up to the lower Sacramento River and through the San Joaquin," said Dave Contreas with the California Department of Fish and Game. But again, the number of fish the department catches is extremely small. "What we started noticing were downward trends particularly at the start of 2000, 2001," said Contreas. It is a phenomenon known as pelagic organism decline -- a sudden and dramatic change in a population. In fact, several species continue to be at record lows. "We've seen drastic abundance changes in Delta smelt -- end of the year striped bass, longfin smelt, and threadfin shad," said Contreas. The longfin smelt numbers have been so low they could be put on the endangered species list. But it is the Delta smelt that gets all the attention. It is only found in the Sacramento Delta. It is a tiny little fish with enormous importance. Scientists and environmentalists believe it is the best indicator of the Delta's overall health. It was listed as a threatened species in 1993 and is currently being considered as a candidate for the endangered species list. "In the seventies, according to catch data, they used to catch hundreds of smelt in a spot, in one station. It's amazing what they used to catch," said Contreas. No one really knows what is causing the decline, but scientists suspect everything from pollution, to pesticides, to invasive species, to the millions of gallons of water diverted to the Central Valley and Southern California. Earlier this year, a judge ordered a nearly 30 percent reduction in the amount of water being released to Southern California to protect the Delta smelt. In a worst case scenario, restrictions to protect both Delta smelt and longfin smelt in 2009 could amount to nearly a 50 percent slash in water deliveries from the state's primary water delivery systems. Researchers are desperately trying to keep the Delta smelt from going extinct. "On-site we have probably have, maybe about 50,000 fish," said Joan Lindberg, director of the UC Davis Fish Conservation and Culture Lab in Byron. Lindberg suspects her lab may have nearly as many fish in captivity as are in the wild. Her goal is to preserve the genetic diversity of the species in case it does become extinct. They will soon begin rearing longfin smelt. The smelt raised there are primarily for research, but may someday provide a back-up plan should the little fish disappear from the wild. "There is a possibility if the population really looks like it's going to go extinct, that biologists will consider restocking some of these fish," said Lindberg. But putting the fish into the water now will not necessarily increase the numbers. Lindberg says there will have to be significant improvement in the health of the Delta in order for that to happen. According to the Department of Fish and Game, there is little sign of that happening. It will wrap up this season's count next month, but does not expect the numbers to change much. With each pull, there is less hope that the haul will show signs that the Delta smelt population is recovering. "I think you might have to see 10 times as many fish coming in the hauls to say that it looks like it might be coming back," said Lindberg. And by Lindberg's assessment, that is a very long way off. "I think that humans have to work hard to repair some of the damages that they've caused in the past and that will take years and years I think."Redding Record SearchlightIncreasingly scarce water is the new California gold...Thomas Glenn Dye...11-30-08http://www.redding.com/news/2008/nov/30/speak-your-piece/The future of California depends on the utilization of water. Water is the new California gold. Without proper control, the state will slowly deteriorate. Californians have taken water for granted for far too long. With the burgeoning population, that can no longer be the case. We have to balance it against our needs in the future. Where do we put our priorities? They are: first, in life-giving drinking water; second, in food and foliage production, and third, in sanitation. With the amount of expenditures being evaluated by state and federal agencies, there have to be viable options. Wasting water for generations is no longer acceptable. Curbing inequitable proposed measures could support production of water storage, totally independent of existing waterways and spawning grounds. Water education, like power and fuel efficiency, should parallel all efforts.Programs are being studied to store fresh water. Catch basins/dams and replenishing aquifers are considered. Current clean hydroelectric reservoirs should be retained. We need more off-line storage when wet years provide a surplus of water.One near-term effort needs to be to educate the population. Wasting of this precious resource should be curtailed. Water is the life blood of all California and bleeding it dry should be stopped, even to the extent of fines for flagrant waste.Without adequate water, the agricultural economy of the state is in trouble. The world needs the food California produces, as much as California needs the product income. It has been said the desert would bloom if it had water, and lots of arid parts of California have been converted. This has increased the need for water as well as the agricultural productivity.California is slowly digging its own grave. Case in point is the Owens River Valley on the east side of the Sierra Nevada. The Los Angeles Metropolitan Water District channeled that water source south to the growing population center in about 1913. The result was to devastate the valley, turning it into a wasteland. Only recently has the effect been addressed and any efforts at recovery experimented with. Is this the way areas must suffer before preventive action is taken?Areas of Northern California are working to keep their water rights and still provide support to the more arid southern portion of the state. Water to support fish is recognized, as this is another important food source. But have we studied the conditions adequately to be able to balance the use of water for people and food production?Sources are at work to open up streams for fish spawning. Though this is a worthwhile effort, it must be done without impacting other needs. Currently National Marine Fisheries Service scientists have identified the cause for the reduction of anadromous fish as not being the feeder streams. Removing valuable hydroelectric facilities does not appear justified and is in opposition to the efforts to promote "green" power.Millions of dollars are being spent in the Northwest studying means of retaining fresh water, while millions are being spent in California to destroy reservoirs and the accompanying hydroelectric power. This money is allocated by the California Public Utility Commission and is ratepayer money, yet these same ratepayers have had little if any say in the process. Adequate studies do not support removal of non-impacting power stations in place for over 100 years.Opening up streams means a greater flow of water to the Sacramento/San Joaquin Delta region and spurs the effort to create a peripheral canal to take water south. It is needed to support the growing population in the south, but at what cost to the north and the farms and ranches throughout the valley? Is it unreasonable to expect comprehensive study of cause and effect?A battle over water rights would be unsatisfactory and detrimental to all areas and agencies that are involved. It could easily become a federal rather than a state problem for resolution, since the option being considered of raising the height of Shasta Dam is a federal project.The current economic crisis means conservation. The balancing of the budget is vital, but it must go beyond the fiscal and include productivity. Allocations for water supplies can be established and escalating costs can be set for excessive use. There are always individuals who feel they can flaunt the rules. They should be forced to support the cost of remediation. The new California gold must be used wisely or we are destined for disaster.Thomas Glenn Dye is a retired California registered professional engineer and a board member of the Friends of Cow Creek Preserve. He lives in Whitmore.Los Angeles TimesThe spotted owl disappearing actThe number of spotted owls in the Pacific Northwest is dwindling. Some experts think an aggressive owl cousin, not logging, is to blame...Kim Murphyhttp://www.latimes.com/news/nationworld/nation/la-na-spotted-owl1-2008dec01,0,6587134,print.storyReporting from Port Angeles, Wash. — Scott Gremel makes his way swiftly and surely up the steep trail, across a frigid stream, through the colossal stands of hemlock and Douglas fir.On the ridgeline, thousands of feet above where he left his truck on the valley floor, Gremel points the antenna on his tracking device toward the next valley. A faint ping responds, the radio tag of a single barred owl that has laid claim to two entire valleys.As Gremel made his way from the Olympic National Park visitor center a few miles back, he pointed at several locations where a much more famous -- and more reclusive -- bird once nested. Nothing.Gremel has traipsed through these trees since the spring snow melt, calling out the telltale whoop-woo-hoo-hoooo of the northern spotted owl. He hasn't been able to find more than two mating pairs in this 11-square-mile region. Once, there were five.Across their entire range in Washington, Oregon, Northern California and British Columbia, there are thought to be fewer than 5,000 northern spotted owls left. In the dense forests of the Olympic Peninsula last year, spotted owls were found in 19 of the 54 sites they had once populated. Their numbers have declined by a third since the 1990s, when old-growth logging across the Pacific Northwest came to a virtual halt in an effort to protect their habitat.The declines have been so persistent -- averaging 4% a year -- that a growing number of scientists have come to think the most immediate culprit is not logging but the aggressive barred owl, which has crept into the West Coast forests from Canada over the last few decades.Bigger, more fertile and with an appetite less finicky than its threatened cousin, the barred owl has taken over in forest after forest, experts say -- claiming spotted owls' nests in the warmer, lower elevations."This barred owl pair showed up right at a nest tree where we'd had the same male spotted owl who'd been banded in '92," Gremel said. "He was last seen the year right before [the newcomers] showed up. Then this spring, a park visitor found a dead spotted owl in the campground here."There was no way of knowing whether the old owl had left of its own accord, had been driven out or simply died of old age -- but it was troubling, he said.Now, as the spotted owl continues to decline, the federal government is taking what many conservationists say is the worst step possible: reopening more of the bird's forests to logging.In what is likely to be one of the final environmental battles of the Bush administration, 18 environmental groups filed motions in federal court last week to block a massive remapping of federal lands in the Pacific Northwest. Proposals by the Bureau of Land Management and the Fish and Wildlife Service, which officials hope to have in place by the end of the year, would open up for logging large tracts that had been set aside as breathing space for the owls -- nearly 1.8 million acres.The moves amount to a wholesale reworking of the Northwest Forest Plan. The 1994 compromise -- brokered by the Clinton administration to end the timber wars of the Pacific Northwest -- set up a system of protections for the region's old-growth forests, allowing them to be thinned but not cut down.Those classic groves, all but about 20% of which have been lost to logging and development, are essential not only for the spotted owl but the marbled murrelet (a threatened small seabird) and a host of other plants and animals whose survival is considered a barometer of the planet's ecological health.The management plan has been a lightning rod for blame in a paralyzed logging industry; it turned the spotted owl into a much-maligned poster child for closed mills and economic ruin.Timber industry officials say the compromise never worked. A combination of environmental lawsuits and inadequate federal appropriations for timber management, they said, resulted in lumber mills getting little more than a quarter of the 1.1 billion board feet a year of timber they had been promised, and the Northwest's forests were left overgrown, bug-infested and dangerously prone to fires.But conservationists say the latest attempt by the Bush administration to dole out owl habitat to the timber industry marks a blatant power play by the government's top political advisors -- over the advice of Fish and Wildlife Service scientists."Saying the Northwest Forest Plan hasn't done much for owls by protecting all that habitat, so we should protect less habitat, doesn't make any sense at all," said Kristen Boyles, an attorney for Earthjustice. "The science has said we need as much habitat protected as we possibly can, and we likely need to protect much more habitat in light of the uncertainties of climate change."Ross Mickey of the American Forest Resource Council called the remapping "a small step in the right direction. There should be millions of acres taken out of what they say is critical habitat."The industry group has argued that past federal management plans set aside unreasonably large areas of the Northwest -- including newer plantations of trees -- that should never have been considered classic spotted owl habitat.Michael Campbell, spokesman for the BLM in Oregon, said the agency spent five years producing its latest plan, one that would put the lumber mills back to work and protect the owls.What many people don't realize, Campbell said, is that Pacific Northwest forests are amazingly productive and can quickly regenerate "old growth" habitat for the owls to replace whatever large trees are lost to logging.Habitat aside, Gremel said, there is still the problem of the barred owl. The spotted owl has proved unable to defend its territory against the invaders.He recalled the first time that he and his colleagues took a decoy out and began making barred owl sounds in an attempt to catch and band one of the birds. Almost immediately, a barred owl swooped down and "literally ripped the head off the decoy," Gremel said. "It was so busy ripping up the thing, it didn't even care about us approaching."What chance, he wondered, would a spotted owl have against such an adversary?"At this point," he said, "you look at all the sites where we still have spotted owls, and I can pretty much see barred owls occupying all of them."California Real Estate JournalOutcome of Recent Water-Quality Events to Shape California Development ...SHANDA M. BELTRAN...11-24-08http://www.carealestatejournal.com/newswire/index.cfm?sid=&tkn=&eid=898105&evid=1Development in California could become more difficult depending on the outcome of recent events concerning water-quality regulation. An ongoing court battle has the potential to reshape storm water regulation entirely. Pending renewal, the statewide construction storm water permit contains proposed provisions that could dramatically raise the cost of construction and even affect feasibility. Pressure to regulate the design of projects through local storm drain permits continues to squeeze the industry. Court Battle to Impact All Water Quality ProgramsIn August, a trial court handed down a rare victory for the regulated community to several Los Angeles-area cities and the Building Industry Association in the case of City of Arcadia v. State Water Resources Control Board. The court's ruling would force the Los Angeles Water Board to revise all of its water-quality standards applicable to storm water to make them more reasonable and achievable economically. Basin Plans, akin to General Plans for water, contain water-quality standards which identify the beneficial uses of waterbodies (i.e., fishing or swimming) and establish the maximum amount of pollutants that can be present in the waterbodies. Water-quality standards provide the base for water-quality regulation. Permits incorporate the standards, and several other regulatory programs are tied to maintaining the standards in local waters. Revision of the standards, per the court's order, will affect all businesses, developments and construction projects with permits in L.A. and Ventura counties as well as county citizens through programs applied to public storm drains and other regulatory vehicles. If the Los Angeles Water Board revises the standards to consider the statutory factors, some of the strict limitations placed on flows to local waters (e.g., zero trash even during flood events) could be modified, making permit limits more attainable. The Arcadia case also has statewide implications, because other regions of the state have water-quality standards that were established in the same flawed manner as was at issue in the Arcadia case. Thus, all the areas of the state could soon be looking at a new playbook for storm water regulation. Both the State Water Board and three environmental groups are challenging the trial court's order and will likely file formal appeals of the trial court's decision. As the case continues, and while the water boards are determining how to review the standards per the court's directive, the water-quality standards remain unchanged. To underscore the importance of the Arcadia case, the State Water Board's chief attorney issued, and then retracted, a moratorium on all new development and all new industry in the Los Angeles and Ventura county areas. In a unilateral action, he issued a directive to stop processing all new permits for new construction projects, utility projects and new industrial flows in Los Angeles and Ventura counties. The moratorium was issued because each of the permit programs it halted contain terms that require permittees to not violate water-quality standards. Because the standards were called into question in the Arcadia ruling, the State Board attorney felt that the permit programs had to be put on hold, which the cities and BIA deemed to be a misinterpretation of the court's order. Only through a quickly negotiated stipulation with the cities and BIA, and against the wishes of the environmental groups, was a resolution reached that put the construction industry and other permitted groups back in business. The moratorium demonstrates the importance of the Arcadia case and its potential ramifications on the permits that control development and construction in the state. Construction Storm Water Permit to Transform the IndustryOne of the permits that was temporarily affected by the Arcadia moratorium, the statewide construction storm water permit, affects all construction projects that are one acre or larger throughout the state. This permit is undergoing renewal by the State Water Board with drafts issued in March 2007 and March 2008. The current draft permit contained proposals for new stringent water-quality regulations never before seen in California or in any other state. The proposals would require all construction sites to adhere to strict numeric limits for storm water flows and would seek to control the design of developments through post-construction requirements. The implications of the revisions to the permit are significant to all those in the construction and development industries. Compliance with this permit program can be extremely costly as failure to properly comply with construction storm water permits has led recently to multimillion-dollar lawsuits and agency enforcement actions reaching six- and seven-figure settlements. After having received hundreds of written comments on the permit, the State Board staff is now reevaluating the permit before issuing another draft. Speculation holds that the State Board staff is awaiting a proposal by the U.S. Environmental Protection Agency later this year related to the validity of numeric limits for construction projects before continuing to press for such limits in the California permit. Public Storm Drain Permits to Shape Project DesignThe public storm drain permits in Southern California are going through their five-year reissuance processes and have been under increasing pressure from environmental groups and the EPA to include additional restrictions on post-construction controls for new development and redevelopment projects. The types of controls are often classified as "low-impact development" requirements that control the design of projects and would, for example, dictate the amount of impervious surfaces (buildings, paving, etc.) that could be placed on a project site. The permit for San Diego County, already approved, contained relatively mild low-impact development requirements. However, the draft Ventura County permit proposes significantly ramping up the restrictions placed on development in the name of water quality. In a proposal that could be a precedent-setting permit for all of California, the draft Ventura County permit contains strict numeric restrictions on post-construction impervious cover and contains numeric limitations on storm flows that would apply to the municipalities. The proposed numeric limits on storm flows would lead to trickle-down requirements and costs imposed upon all businesses and citizens in the county to implement and/or pay for the installation of storm water treatment plants necessary to comply with the numeric limitations. One estimate maintains that households in the county would see increases of $600 per year in storm water fees to pay for new systems. The proposed stringent limitation on impervious cover would likely make infill development extremely difficult to implement and would require the dedication of large areas of land to storm water retention. These types of design restrictions would take land use planning out of the hands of local governments and place it in the hands of the Water Board. The EPA has interjected itself directly in the processing of the public storm drain permits, calling for restrictions such as those proposed in Ventura County in all public storm drain permits statewide. Processing of the Ventura County permit was affected by the Arcadia-related moratorium; however, the Los Angeles Water Board has reinstated processing the permit, and it is expected that the permit could be finalized in the near future. Unknown at this time is whether the current controversial provisions in the draft will survive in the final permit. With the pressure imposed by the EPA, the Ventura County permit could become a model for the state and could impact all businesses, projects and citizens of California. Shanda M. Beltran is a senior counsel in the Orange County office of Allen Matkins practicing in the Land Use, Environmental and Natural Resources group. Salt Lake TribuneDrought deepens strain on a dwindling ColoradoFlows falling » California first in line as Utah, other states fight for water...Patty Henetz...11-29-08http://www.sltrib.com/news/ci_11096669The drought gripping Utah, Southern California and the rest of the Southwest this century shows no sign of ending. Scientists see it as a permanent condition that, despite year-to-year weather variations, will deepen as temperatures rise, snows dwindle, soils bake and fires burn.That's grim news for all of us in the West, perhaps most especially for the 10 million residents along the northern stretch of the Colorado River -- Utah, New Mexico, Wyoming and Colorado -- whose water rights are newer, and therefore junior, to those in Southern California, Nevada and Arizona. Making matters worse, the Colorado -- the 1,450-mile-long lifeline that sustains more than 30 million souls and 3.5 million acres of farmland in seven states, 34 tribal nations and Mexico -- is in decline, scientists warn.Even so, demand for the Colorado's water echoes from city leaders, industry giants, oil drillers, farmers, fishers, ranchers, boaters, bikers and hikers -- along with silent pleas from wildlife and the ecosystem. Trend analyses by federal scientists, probably conservative, predict the population dependent on the river will reach at least 38 million during the coming decade.Right now, California, with the most senior rights and the largest share of the Colorado under a 1922 law, is struggling with a statewide water shortage. Not enough rain has fallen in the southland, as weathercasters like to call it, home to 18 million people, roughly half the state's population. California already uses all of its Colorado River allocation. As the drought has worsened, Southern California water bosses have labored to keep the taps running through a host of conservation schemes. Meanwhile, water managers in Utah and the Upper Basin are working to get all of their water rights in use, even as their cities and counties register some of the highest per-capita consumption in the nation.Demand is up. Flows are down. Something has to give. And when it does, Utah could be in trouble if it doesn't change its wasteful ways -- just as 19th-century explorer Maj. John Wesley Powell predicted.The West lacks water, he wrote in his 1879 Report on the Lands of the Arid Region of the United States, With a More Detailed Account of the Lands of Utah. "Disastrous droughts will be frequent."Law of the RiverThe 1922 Colorado River Compact may have given California water rights senior to the other six states, but the Metropolitan Water District (Met), which supplies up to 60 percent of the water for 19 million people spread across six Los Angeles-area counties, made its claims after the state's allocation already had been divvied up. That means the most populous part of California is last in line among its peers when water runs low."If California ever did take a shortage," said Assistant General Manager Roger Patterson, "Met would take the hit."That's already happened. In 2003, California had to curtail its Colorado River use to its 1922 allocation of 4.4 million acre-feet per year, enough water for about 8 million households. Previously, under water-sharing deals with Arizona, the Golden State had been funneling about 5.2 million acre-feet. Because of its junior standing, Methad to eat about half the total shortage. No one else in the state had to cut supplies, Patterson said.In February, Met agreed to a rationing plan for most of Southern California, including Los Angeles and San Diego. It expects to add 5 million residents during the next five years. Since the Pacific Ocean blocks growth to the west, the district is pushing eastward, where it's hotter. A federal judge has ordered California water managers to leave 30 percent more water in the Sacramento-San Joaquin Delta in Northern California to stave off fish kills and keep the massive estuary healthy. More for the environment means less for Los Angeles.Other populous regions of California also have taken steps to ensure a good water supply.-- Developers in Riverside, Kern, Santa Barbara and San Luis Obispo counties must guarantee a 20-year water supply before they build.-- The state has brought back a water bank, last used 17 years ago, in which Southern California cities can buy water from willing Sacramento Valley farmers. However, given the high prices farmers can get for their crops, especially rice, willing sellers might be hard to find.-- Orange County residents are drinking recycled sewer water. -- In San Diego County, the Coastal Commission greenlighted a $300 million desalination plant adjacent to a state beach. The operation still has to meet lots of conditions -- which probably will make the plant more costly to build and run -- but even if completed would supply no more than 9 percent of San Diego's current needs.Met residents have cut back to about 185 gallons of water per person per day. Residents of Long Beach are down to 115 gallons."If Long Beach can do this," said Kevin Wattier, the city water department's general manager, "so can every other city in Southern California."Splish, splashUpstream, Utahns on average use 291 gallons of water per person per day, a rate second only to Nevada. In Salt Lake County, it's 255 gallons; Washington County, 350 gallons; Kane County, a bloated 430 gallons. Sixty percent of Utah's water goes for outdoor use, including landscaping and agriculture. In California, agriculture consumers about 85 percent. California, however, is the fifth-largest farm economy in the world. By comparison, Utah's agriculture profile is nearly nonexistent, contributing less than 1 percent to the state's economy.The system might seem out of balance. Yet no state, not even Nevada, which has the measliest Colorado allocation, wants to reopen the 1922 Colorado River Compact that divided the water. Each fears getting an even worse deal. Nor does anyone know what soon-to-be-settled Navajo claims on the river will mean to both basins.There is, however, a growing sense that the Colorado Basin states are all in this together. "Everybody ought to share in the reality of the river," said former Utah Attorney General Paul Van Dam, now director of Washington County-based Citizens for Dixie's Future. "And there ought to be great flexibility in how we use it without losing it."Dozens of scientific studies issued since 2004 have documented the Colorado's decline.The river's annual flow has averaged 11.7 million acre-feet this decade, according to federal records. In 2002, the U.S. Bureau of Reclamation measured only 6.2 million acre-feet passing Lee's Ferry below Glen Canyon Dam, the lowest flow of the decade. Even after this year's above-average precipitation, Lake Powell and Lake Mead combined are at 57 percent capacity.A 2007 U.S. Geological Survey report found that, by 2050, rising temperatures in the Southwest could rival those of the nation's fabled droughts, including the Dust Bowl of the 1930s. Hotter weather is expected to reduce Colorado River runoff by at least 30 percent during the 21st century.If the USGS is correct, and if this century's trend persists, average annual flow in the Colorado could fall to 8.2 million acre-feet per year. Imagine that. The Law of the River requires 9 million acre-feet to pass Lee's Ferry on the way to the Lower Basin and Mexico. Under a strict interpretation of the law, the Upper Basin could be left with nothing.A far more likely scenario would have the states banding together to rework the river allocations. But when Arizona Sen. John McCain suggested just that during his failed presidential campaign, the shrieks emanating from Colorado's halls of power were enough to prompt the Republican nominee to back down.Pipeline dreamDennis Strong, director of the Utah Division of Water Resources, in October told the state Water Development Commission that the state is using about 1 million acre-feet of its yearly 1.4 million acre-foot allotment from the Colorado. Tribal water settlements yet to be signed would take up about 186,000 acre-feet, he said. New agricultural uses, mostly dedicated to controlling the salinity of the water that flows back to the Colorado, would take 35,000 acre-feet. Municipal and industrial uses along the river corridor would account for 5,000 acre-feet, and the proposed Lake Powell Pipeline wouldneed 100,000 acre-feet, leaving about 74,000 acre-feet unused, theoretically.Utah water managers are pushing the $1 billion-plus pipeline, which would lavish more water on a Dixie desert region likely to feel the full brunt of global climate disruption and permanent drought within the next 40 years.The state hasn't actually secured rights to the 100,000 acre-feet for the pipeline. Strong said that would have to be nailed down by 2010, when the Federal Energy Regulatory Commission is expected to issue the license necessary to start building it. He's confident the water will come.By 2040, the pipeline's water would be entirely committed to a regional population of about 400,000, Strong said.Given current scientific warnings about the shrinking Colorado, that prospect looks shaky.But Strong isn't worried. He's skeptical about global warming, though he "sees evidence" of it. "Water managers," he said, "have been dealing with drought forever."phenetz@sltrib.comSharing -- by the numbersThe 1922 Colorado River Compact divided the river during a wet cycle that assumed an average annual flow of 16.5 million acre-feet. The law requires that 9 million acre-feet per year pass Lee's Ferry below Glen Canyon Dam every year to serve the Lower Basin states and Mexico. That leaves 7.5 million acre-feet for the Upper Basin.An acre-foot is about 326,000 gallons, enough to supply one or two Western households a year.Sixty years ago, recognizing the danger of promising too much, the states amended Upper Basin allocations: Colorado would get 51.75 percent; Utah, 23 percent; Wyoming, 14 percent; and New Mexico, 11.25 percent. More recently, the Upper Basin states acknowledged the drought and agreed that they will base their percentage allotments on 6 million acre-feet per year rather than the 7.5 million acre-feet assumed in the Colorado Compact.-- Patty Henetz"Nature acts, people argue." -- Voltaire» Based on analysis of many recent climate-model simulations, the preponderance of scientific evidence suggests that warmer future temperatures will reduce future Colorado River flows and water supplies. Reduced flow also would contribute to increasing severity, frequency and duration of future droughts.Steadily rising population and urban water demands in the Colorado River region will inevitably result in increasingly costly, controversial and unavoidable trade-offs to be made by water managers, politicians and their constituents. These increasing demands also are impeding the region's ability to cope with droughts and water shortages.--National Academy of Sciences "I wish to make it clear to you, there is not sufficient water to irrigate all the lands which could be irrigated, and only a small portion can be irrigated. I tell you, gentlemen, you are piling up a heritage of conflict."-- Maj. John Wesley Powell, 1893New York TimesFarmers Panic About a ‘Cow Tax’...Kate Balbraith, Green Inc.http://greeninc.blogs.nytimes.com/2008/12/01/farmers-panic-about-a-cow-tax/?pagemode=printThe comment period for the Environmental Protection Agency’s exploration of greenhouse gas regulation ended last Friday, with farmers lobbying furiously against the notion of a “cow tax” on methane, a potent greenhouse gas emitted by livestock.The New York Farm Bureau issued a statement last week (PDF) saying it feared that a tax could reach $175 per cow, $87.50 per head of beef cattle and upward of $20 for each hog. Such a tax would represent a “massive hit on our industry here in New York,” said Peter Gregg, a spokesman for the farm bureau, in an interview.“You could take all of our cows together and they probably wouldn’t have the same effect on the atmosphere than the average traffic jam on the Tappan Zee Bridge,” he added.Farm officials from Texas to Alabama also sounded the alarm, and Mr. Gregg said that the response in New York among farmers was “almost a panic.”The hysteria may be premature, however. The E.P.A. indeed issued an “advanced notice of proposed rulemaking” this summer that called for public comments on the idea of regulating greenhouse gas emissions from cars, as well as “stationary sources” — which, yes, would include cows and other livestock. Comments are posted here. The proposal is far from being enacted, however. As my colleague Felicity Barringer has reported, the E.P.A. administrator, Stephen Johnson, expressed concern about an “unprecedented expansion” in the agency’s authority that would accompany any effort to regulate greenhouse gases.The farmers and the cowmen also have some highly placed defenders. The Department of Agriculture commented on the ease with which even small farms and ranches would run up against a proposed 100-ton limit on emissions:Even very small agricultural operations would meet a 100-tons-per-year emissions threshold. For example, dairy facilities with over 25 cows, beef cattle operations of over 50 cattle, swine operations with over 200 hogs, and farms with over 500 acres of corn may need to get a … permit. It is neither efficient nor practical to require permitting and reporting of [greenhouse] emissions from farms of this size. Excluding only the 200,000 largest commercial farms, our agricultural landscape is comprised of 1.9 million farms with an average value of production of $25,589 on 271 acres. These operations simply could not bear the regulatory compliance costs that would be involved.The idea of a cow tax aimed at curbing greenhouse gas emissions has been tried elsewhere — with similar reactions from the agricultural community. Plenty magazine notes, for example, that such taxes were proposed in New Zealand and Estonia, but were eventually shouted down. But the E.P.A. may find new impetus for the idea with the arrival of a new administration that seems determined to regulate greenhouse gas emissions. Methane has more than 20 times the heat-trapping potential of carbon dioxide, according to the E.P.A. (though it stays in the atmosphere for a shorter period).Still, there is good news for farmers. Methane can be turned into electricity — called “cow power.”CNN MoneyConstruction spending drops 1.2% October construction spending falls more than analysts had expected, a sign of persistent economic weakness.http://money.cnn.com/2008/12/01/news/economy/Construction_Spending.ap/index.htm?postversion=2008120112WASHINGTON (AP) -- Construction spending fell by a larger-than-expected amount in October, another indication that problems facing the builders of homes, hotels and other projects are deepening and likely to persist.The Commerce Department reported Monday that construction spending dropped by 1.2% in October, much bigger than the 0.9 % decline many analysts expected.Meanwhile, the Institute for Supply Management said its gauge of manufacturing activity fell to a reading of 36.2 in November, a 26-year low. That was a steeper-than-expected drop from the October reading of 38.9 and underscored that the hard economic times were beginning to have a major effect manufacturing. A reading below 50 indicates the sector is contracting.The reports did little to boost investors already uneasy about the holiday shopping season and the Dow Jones industrial average fell about 380 points in midday trading.The construction weakness was led by another sizable drop in home building, which has fallen every month but two over the past 2 1/2 years. Nonresidential building also weakened as developers face tougher times getting financing because the banking system is going through a severe credit squeeze.Hotel construction slowsIan Shepherdson, chief U.S. economist at High Frequency Economics, said construction of hotels and motels looked particularly vulnerable going forward given the boom in this area in recent years. But he said numerous areas of nonresidential activity from manufacturing to commercial, office and retail also were at risk given the extent of the slowdown in the economy.Friedman, Billings, Ramsey (FBR) analyst C. Patrick Scholes said in a client note last month that he expected fourth-quarter revenue per available room to be worse than expected, and predicted that companies such as Marriott International Inc (MAR, Fortune 500)., Host Hotels & Resorts Inc (HST, Fortune 500). and LaSalle Hotel Properties (LHO) may miss their quarterly earnings outlooks. Revenue per available room, also known as revpar, is a key gauge of a lodging company's performance.Economists believe the construction industry will be facing severe troubles until an economic recovery is firmly launched, probably not until the second half of 2009.These analysts believe the country has slipped into what could be the worst recession since the 1981-82 downturn. The current economic slump is being worsened by the most serious financial crisis to hit the country since the 1930s as banks struggle to deal with billions of dollars of loan losses, beginning with troubles with mortgage debt that reflect a record level of foreclosures.Housing construction, which has been in a slump for more than two years, fell by 3.5% in October following a 0.5% drop in September. Private residential building activity, which totaled $338.8 billion at a seasonally adjusted annual rate in October, has managed increases in only two months over the past 31.D.R. Horton Inc (DHI, Fortune 500)., a Fort Worth, Texas-based home builder, last week reported a nearly $800 million loss in its fiscal fourth quarter, reflecting in part slower home sales. Other reports last week showed that sales of new homes in October dropped 5.3% to their lowest level in nearly 18 years, while sales of existing homes fell a bigger-than-expected 3.1% in October.The Commerce Department report Monday also showed that nonresidential construction dropped by 0.7% in October, the third decline in the past four months, leaving activity at a seasonally adjusted annual rate of $417.7 billion. Nonresidential activity had been an island of strength in the midst of the steep downturn in housing, but that area has begun to weaken because of the severe credit squeeze, which is making it harder for developers to get financing.Government building projects did show strength in October, rising by 0.7% to an annual rate of $316.1 billion. State and local construction was up 0.3% to a rate of $291.1 billion, while federal construction activity totaled $25 billion at an annual rate, an increase of 5.5% from September.The Bush administration got Congress to pass a $700 billion financial system rescue package on Oct. 3, but many economists believe the bailout won't keep the country from undergoing a prolonged recession, a development which could make it even harder for the construction industry to mount a sustained recovery.Manufacturers also have been hit hard by the housing slump and financial crisis, which have led to cutbacks in business and consumer spending.Deere & Co (DE, Fortune 500)., which makes agriculture and construction machinery, has seen its profit fall amid the economic downturn. The Moline, Ill.-based company said last week that its fourth-quarter earnings fell 18% and it forecast that profit will drop by 7% in 2009. Government warned of mortgage meltdownRegulators ignored warnings about risky mortgages, delayed regulations on the industry.http://money.cnn.com/2008/12/01/news/ignored_warnings.ap/index.htm?postversion=2008120106WASHINGTON (AP) -- The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents."Expect fallout, expect foreclosures, expect horror stories," California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.Bowing to aggressive lobbying -- along with assurances from banks that the troubled mortgages were OK -- regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way."These mortgages have been considered more safe and sound for portfolio lenders than many fixed-rate mortgages," David Schneider, home loan president of Washington Mutual, told federal regulators in early 2006. Two years later, WaMu became the largest bank failure in U.S. history.The administration's blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces and discounted the value of government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.Many of the banks that fought to undermine the proposals by some regulators are now either out of business or accepting billions in federal aid to recover from a mortgage crisis they insisted would never come. Many executives remain in high-paying jobs, even after their assurances were proved false.In 2005, faced with ominous signs the housing market was in jeopardy, bank regulators proposed new guidelines for banks writing risky loans. Today, in the midst of the worst housing recession in a generation, the proposal reads like a list of what-ifs:--Regulators told bankers exotic mortgages were often inappropriate for buyers with bad credit.--Banks would have been required to increase efforts to verify that buyers actually had jobs and could afford houses.--Regulators proposed a cap on risky mortgages so a string of defaults wouldn't be crippling.--Banks that bundled and sold mortgages were told to be sure investors knew exactly what they were buying.--Regulators urged banks to help buyers make responsible decisions and clearly advise them that interest rates might skyrocket and huge payments might be due sooner than expected.Those proposals all were stripped from the final rules. None required congressional approval or the president's signature."In hindsight, it was spot on," said Jeffrey Brown, a former top official at the Office of Comptroller of the Currency, one of the first agencies to raise concerns about risky lending.Federal regulators were especially concerned about mortgages known as "option ARMs," which allow borrowers to make payments so low that mortgage debt actually increases every month. But banking executives accused the government of overreacting.Bankers said such loans might be risky when approved with no money down or without ensuring buyers have jobs but such risk could be managed without government intervention."An open market will mean that different institutions will develop different methodologies for achieving this goal," Joseph Polizzotto, counsel to now-bankrupt Lehman Brothers, told U.S. regulators in a March 2006.Countrywide Financial Corp., at the time the nation's largest mortgage lender, agreed. The proposal "appears excessive and will inhibit future innovation in the marketplace," said Mary Jane Seebach, managing director of public affairs.One of the most contested rules said that before banks purchase mortgages from brokers, they should verify the process to ensure buyers could afford their homes. Some bankers now blame much of the housing crisis on brokers who wrote fraudulent, predatory loans. But in 2006, banks said they shouldn't have to double-check the brokers."It is not our role to be the regulator for the third-party lenders," wrote Ruthann Melbourne, chief risk officer of IndyMac Bank.California-based IndyMac also criticized regulators for not recognizing the track record of interest-only loans and option ARMs, which accounted for 70% of IndyMac's 2005 mortgage portfolio. This summer, the government seized IndyMac and will pay an estimated $9 billion to ensure customers don't lose their deposits.Last week, Downey Savings joined the growing list of failed banks. The problem: About 52% of its mortgage portfolio was tied up in risky option ARMs, which in 2006 Downey insisted were safe -- maybe even safer than traditional 30-year mortgages."To conclude that 'nontraditional' equates to higher risk does not appropriately balance risk and compensating factors of these products," said Lillian Gavin, the bank's chief credit officer.At least some regulators didn't buy it. The comptroller of the currency, John C. Dugan, was among the first to sound the alarm in mid-2005. Speaking to a consumer advocacy group, Dugan painted a troublesome picture of option-ARM lending. Many buyers, particularly those with bad credit, would soon be unable to afford their payments, he said. And if housing prices declined, homeowners wouldn't even be able to sell their way out of the mess.It sounded simple, but "people kind of looked at us regulators as old-fashioned," said Brown, the agency's former deputy comptroller.Diane Casey-Landry, of the American Bankers Association, said the industry feared a two-tiered system in which banks had to follow rules that mortgage brokers did not. She said opposition was based on the banks' best information."You're looking at a decline in real estate values that was never contemplated," she said.Some saw problems coming. Community groups and even some in the mortgage business, like Welch, warned regulators not to ease their rules."We expect to see a huge increase in defaults, delinquencies and foreclosures as a result of the over selling of these products," Kevin Stein, associate director of the California Reinvestment Coalition, wrote to regulators in 2006. The group advocates on housing and banking issues for low-income and minority residents.The government's banking agencies spent nearly a year debating the rules, which required unanimous agreement among the OCC, Federal Deposit Insurance Corp., Federal Reserve, and the Office of Thrift Supervision -- agencies that sometimes don't agree.The Fed, for instance, was reluctant under Alan Greenspan to heavily regulate lending. Similarly, the Office of Thrift Supervision, an arm of the Treasury Department that regulated many in the subprime mortgage market, worried that restricting certain mortgages would hurt banks and consumers.Grovetta Gardineer, OTS managing director for corporate and international activities, said the 2005 proposal "attempted to send an alarm bell that these products are bad." After hearing from banks, she said, regulators were persuaded that the loans themselves were not problematic as long as banks managed the risk. She disputes the notion that the rules were weakened.In the past year, with Congress scrambling to stanch the bleeding in the financial industry, regulators have tightened rules on risky mortgages.Congress is considering further tightening, including some of the same proposals abandoned years ago.It's official: Recession since Dec. '07The National Bureau of Economic Research declares what most Americans already knew: the downturn has been going on for some time...Chris Isidore http://money.cnn.com/2008/12/01/news/economy/recession/index.htm?postversion=2008120114NEW YORK (CNNMoney.com) -- The National Bureau of Economic Research said Monday that the U.S. has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy .The NBER is a private group of leading economists charged with dating the start and end of economic downturns. It typically takes a long time after the start of a recession to declare its start because of the need to look at final readings of various economic measures.The NBER said that the deterioration in the labor market throughout 2008 was one key reason why it decided to state that the recession began last year. Employers have trimmed payrolls by 1.2 million jobs in the first 10 months of this year. On Friday, economists are predicting the government will report a loss of another 325,000 jobs for November.The NBER also looks at real personal income, industrial production as well as wholesale and retail sales. All those measures reached a peak between November 2007 and June 2008, the NBER said.In addition, the NBER also considers the gross domestic product, which is the reading most typically associated with a recession in the general public. Many people erroneously believe that a recession is defined by two consecutive quarters of economic activity declining. That has yet to take place during this recession.This downturn longer than mostThe current recession is one of the longest downturns since the Great Depression of the 1930's. The last two recessions (1990-1991 and 2001) lasted eight months each, and only two of the 10 previous post-Depression downturns lasted as long as a full year, according to the NBER.In a statement, White House Deputy Press Secretary Tony Fratto said that even though the recession is now official, it is more important to focus on the steps being taken to fix the economy."The most important things we can do for the economy right now are to return the financial and credit markets to normal, and to continue to make progress in housing, and that's where we'll continue to focus," he said. "Addressing these areas will do the most right now to return the economy to growth and job creation." President-elect Obama's transition team did not have an immediate comment on the recession announcement. But other top Democrats said this is further proof of the need for another economic stimulus package, which Obama has advocated."With rising costs of living, rising unemployment, record foreclosures and depleted savings, we must do more to help families make ends meet," said Senate Majority Leader Harry Reid in a statement. "With the cooperation of our Republican colleagues, we intend to send a plan to the White House as soon as possible following President-elect Obama's inauguration next month."The NBER did not give any reasons or causes of the recession. But it is widely accepted that the housing downturn, which started in 2006, is a primary cause of the broader economic malaise. The fall of housing prices from peak levels reached earlier this decade cut deeply into home building and home purchases. This also caused a sharp rise in mortgage foreclosures, which in turn resulted in losses of hundreds of billions of dollars among the nation's leading banks and a tightening of credit.The government has taken many steps to try and prevent the economy from falling into recession, but little has worked to this point.The Federal Reserve began to cut interest rates in September 2007. In February, Congress passed a $170 billion tax rebate meant to stimulate the economy. But that only boosted GDP during the second quarter.The financial market and credit crisis worsened during this summer, prompting Congress, the Treasury Department and the Federal Reserve to pump trillions of dollars into the nation's economy through a variety of programs, including a $700 billion bailout of banks and Wall Street firms and hundreds of billions of lending by the Fed to major companies and lenders.