12-19-08

 12-19-08Badlands JournalNeither staff or the Board of the Merced Irrigation District can run a legal public meeting...Badlands Journal editorial board...12-17-08http://www.badlandsjournal.com/2008-12-17/007006The Merced Irrigation District has been in the news in recent days because there is evidently some conflict over its 2009 budget, set off by a staff proposal to sell $3 million worth of water during a severe drought. Proposals like that make farmers nervous. In the course of the conflict, as Merced Sun-Star articles below indicate, the issue of how well MID runs a public meeting has come up. Since fall 2007, MID has held a series of meetings of Merced Area Groundwater Pool Interests, a consortium of water districts in the eastern and central parts of the county. The purpose of this series of meetings was to develop a groundwater management plan sufficient to the requirements of the state Department of Water Resources for MAGPI to qualify for a grant for an "integrated" regional water management plan (the integration of both surface and groundwater supplies in one big plan). Several environmental groups attended all the meetings, unlike the MID board, whose representative as we recall only attended one of them. As the drought continues, the issues surrounding groundwater (well water) -- particularly with MID recharging the aquifer, the issue of who owns groundwater? – gain importance. MID itself now has more than 140 groundwater wells within its district boundaries, some competing with the farmers’ private wells. Neither MID or its consultants informed the public of these public meetings with any consistency. The agenda for one meeting varied according to the mailing list of recipients. Perhaps the most important issue of the entire series of meetings appeared without notice to the public and the meeting was declared a public hearing in order to adopt it.  MID staff and legal staff do not run clean meetings. There is a buffoonish playfulness and arrogance about MID's legal counsel, but the malevolent intent toward public process is always clear. In one article below, the Sun-Star reporter dutifully regurgitates a quote by Lawyer Robbins: Kenneth Robbins, MID's general counsel, maintained that the process has been open. "The budget has been fully vetted and sunshined," he said, pointing out that all public meeting laws have been followed. We’re certain neither the Sun-Star nor Lawyer Robbins can substantiate those statements. The following letter, written by legal counsel for two environmental groups that have been involved in MAGPI since its inception nearly a decade ago, is addressed to MID counsel concerning MAGPI issues. It sheds some light on MID’s habitual conduct regarding public meeting laws. December 12, 2008 Arthur F. GodwinMason, Robbins, Browning & Godwin100 Loughborough Dr. Suite DMerced CA 95348 re: Merced Area Groundwater Pool Interests -- Brown Act Compliance Dear Mr. Godwin, This office, in conjunction with the Law Office of Don Mooney, represents the San Joaquin Raptor Rescue Center and Protect Our Water, groups with an interest in groundwater management and the activities of the Merced Area Groundwater Pool Interests ("MAHPI"). This serves to respond to your letter of November 17, 2008, regarding the MAGPI Board's actions on July 30, 2008, and addresses our clients' ongoing concerns regarding the Board's future compliance with the Ralph M. Brown Act.As an initial matter, we have become aware that your law firm Mason, Robbins, Browning & Godwin acts as general counsel for Merced Irrigation District ("MID"). MID is a member of MAGPI, which includes several other interests. Our clients' concerns regarding open meetings extend to the potential conflict of interest your firm has in representing MAGPI, while having a conflicting duty in representing the best interests of just one of MAGPI's members. In order for this arrangement to be without conflict, one would have to assume that every member of MAGPI has identical interests. Such an assumption would be unrealistic. We request some assurance from your firm that in representing MAGPI, the interests of MAGPI are indeed being placed before the interests of MID.With respect to future meetings and compliance with open meeting requirements, our clients do not agree that documents were available for the July 30, 2008 meeting as set forth in your letter, and will continue to attend MAGPI meetings to carefully monitor compliance with the Brown Act. we request that MAGPI comply with all Brown Act requirements, and specifically request the following:1. In compliance with Government Code section 54954.2(a), at least 72 hours before a meeting MAGPI must prepare and post an agenda containing a brief general description of each item to be transacted or discussed, including items that will be handled in closed session. we note that it has occurred in the past that some agendas e-mailed to the public differed from the actual agenda for the meeting. we request that MAGPI staff finalize a single agenda and endeavor to avoid confusion associated with multiple agendas for the same meeting.2. We request that agendas and all writings distributed to all or a majority of members of a legislative body for discussion or consideration at a public meeting be made available without delay to our clients in accordance with the provisions of section 54957.5. We request that copies of these documents distributed to the Board be designated as documents so distributed, and that they be kept in the MAGPI office during the 72-hour period prior to the meeting so that our clients will be able to review the documents without delay.3. We request that where any writings are distributed to the Board members at a meeting, sufficient copies be made available to the public at the meeting. Documents distributed to the Board members at the meeting must be made available to the public at the meeting, not after the meeting. (Section 54957(b))4. We request that any materials submitted to the Board at the meeting by someone other than MAGPI staff be copied immediately after the meeting and made available to our clients. (Section 54957(b))5. We request that any documents which are finally approved in a closed session be provided to our clients at the conclusion of the meeting. (Section 54957.1(b))6. This letter constitutes a written request under Section 54954.1 for mailing to Lydia Miller, P.O. Box 778, Merced CA 95341, of all MAGPI agendas and meeting packets. We request that the packets be mailed to Ms. Miller at the time the agenda is posted or when the documents are provided to a majority of the members of the legislative body, whichever occurs first. In order to save time and costs, Ms. Miller is willing to receive the agendas and meeting packets via electronic mail (in lieu of U.S. Mail), at SJRRC@sbcglobal.net [1].Our clients were dismayed by the approval of the two resolutions related to the Groundwater Management Plan approved at the July 30, 2008 meeting, because of the fact that documents considered by the Board were not made available to the public, and the agenda did not include both resolutions. Because of the Brown Act violations that occurred at the July 30^th meeting, and MAGPI’s consistent disregard for the public’s right to access documents and fully participate in open meetings, we request the specific actions set forth above, as well as full compliance with all provisions of the Brown Act. Our clients intend to vigilantly observe and participate in the operation of MAGPI, and expect full compliance with the public’s right of access and comment.We appreciate your attention to these matters and look forward to hearing from you regarding the use of electronic mail for delivery of agendas and board packets to Ms. Miller, and regarding your firm’s position with respect to representation of MAGPI while at the same time acting as general counsel for one of MAGPI’s members…-------------------------------12-16-08  Merced Sun-StarWill Merced Irrigation District increase water prices?Board members unsure of what they will vote on today...JONAH OWEN LAMBhttp://www.mercedsunstar.com/167/v-print/story/596394.htmlCall it "voting in the dark."Merced Irrigation District's board of directors is set to vote on their 2009 budget this morning. But no one, including the five board members, knows exactly what their ballots will be cast for. That includes whether the district will sell water worth $3 million or raise fees to make up for a shortfall in revenue. "We don't really know what we are voting on," said board member Wil Hunter. Hunter and the other four board members may not know what exactly they are voting on today, but Dan Pope, MID's general manager, said that he does. On Monday, his staff was busy putting together several recommendations that will go before the board, including his main recommendation -- a $2 to $5 fee increase per acre-foot, among other things.(An acre-foot is around 326,000 gallons of water, or a year's supply for an average Valley family.) Everything in the process, so far, has been open and transparent, Pope said. "I would submit to you that we have adequate notice," he said. "We've had good public input."Others disagree. Diana Westmoreland-Pedrozo, the executive director of the Merced County Farm Bureau, said that while the board got the message that farmers don't want any water sales, she would like MID to run more transparently. "I would certainly like to see them be more public," she said. As for what they will vote on today, she has less of a clue. "I have no idea because all they've done is read the agenda."But Tim Pellissier, president of MID's board, said the budget is always up in the air. That makes getting specifics to the public sooner than the day of the vote almost impossible. "It's a work in progress." he said. "How can we tell the public what is going to be before us when we haven't adopted it?"Kenneth Robbins, MID's general counsel, maintained that the process has been open. "The budget has been fully vetted and sunshined," he said, pointing out that all public meeting laws have been followed. Besides, he said, everyone who has been at any of the recent meetings knows what the options are before the board about the revenue shortfall, as well as the rest of the budget.Even if there was no public notification of a fee increase, specifically, that would not be a breach of the public meetings laws, said Robbins.If a fee increase is proposed, and the board votes to adopt the proposition, it must put the item in the next agenda to be in accordance with the Brown Act, a statewide open-meetings law. Then they can start the countywide voting process needed to pass such an increase. "They can't vote on adopting the fee increase (today)," he said on Monday. On the other hand, if the proposal before the board is to vote for a water transfer, it can be passed today, said Robbins. But since none of the proposals has been made available to the public, no one knows what MID will vote on.Maybe sunshine will come at the meeting.12-17-08  Merced Sun-StarConfusion delays Merced Irrigation District vote on next year's budgetBoard members, public didn't have time to review spending plan...JONAH OWEN LAMBhttp://www.mercedsunstar.com/167/story/598067.htmlThey can make the water flow -- but can they pass a budget?After numerous public meetings over more than a month, Merced Irrigation District still has no 2009 budget. MID's board of directors unanimously voted to table the proposed 2009 budget Tuesday, even though it contained, among other things, a fee increase supported by many local farmers instead of a water sale to raise revenue. There were two main issues behind the failed proposal: not enough cuts by MID management and a budget the board knew too little about. They'd received it Tuesday morning."I would like to see the line items so we can go over them," said Director Suzy Hultgren about voting on a budget of more than $77 million. She had just gotten her copy Tuesday morning.Board member Wil Hunter said much the same, noting that he had just received the budget Tuesday morning and couldn't vote on it because he didn't know what was in it. The proposed budget, which was tabled, contained a $5 acre-foot fee increase, instead of a water transfer. (An acre-foot is around 326,000 gallons of water, or a year's supply for an average Valley family.) But several board members were concerned that if they were asking farmers to pony up more fees, MID management should make more cuts on its side first."I still have not seen the cuts in this district to make it more streamlined," said Hunter. A resolution eventually was passed to continue operations without a budget after Dec. 31. The next board meeting is scheduled for Jan. 6 when a 2009 budget may or may not be voted on.Aside from a hastily prepared budget, the meeting itself didn't run smoothly. Typos in the budget documents, public confusion over the proceedings and a failure to communicate with the public and MID staff characterized the gathering.One line item on the budget was wrongly priced at $10 billion, and page numbers on the board's paperwork packets were mislabeled. One board member was missing a section of his packet. And the public had no access to the packets under discussion at all.Items in the proposed budget were instead read, line by line in some cases, by MID staff as a hard-to-see projection was shown to the room of more than 30 people in Merced's civic center.Scott Hunter, Wil Hunter's son, complained to the board about having no documents to look at to follow along. "I would love to have a budget, but I don't have access to it," he said.Tim Pellissier, the board president replied, "We got this one today." Andre Urquidez, chief financial officer of MID, expressed regrets to the crowd as he explained the budget. "For those in the crowd, I do apologize," he said. "This can be made available upon request." It appeared that several in the crowd would have liked to have seen the documents before Tuesday's confusing meeting. ---------------------------California Government Code section 54957.5.b) (1) If a writing that is a public record under subdivision(a), and that relates to an agenda item for an open session of a regular meeting of the legislative body of a local agency, is distributed less than 72 hours prior to that meeting, the writing shall be made available for public inspection pursuant to paragraph(2) at the time the writing is distributed to all, or a majority of all, of the members of the body.   (2) A local agency shall make any writing described in paragraph(1) available for public inspection at a public office or location that the agency shall designate for this purpose. Each local agency shall list the address of this office or location on the agendas for all meetings of the legislative body of that agency. The local agency also may post the writing on the local agency's Internet Web site in a position and manner that makes it clear that the writing relates to an agenda item for an upcoming meeting.   (3) This subdivision shall become operative on July 1, 2008.   (c) Writings that are public records under subdivision (a) and that are distributed during a public meeting shall be made available for public inspection at the meeting if prepared by the local agency or a member of its legislative body, or after the meeting if prepared by some other person. These writings shall be made available in appropriate alternative formats upon request by a person with a disability, as required by Section 202 of the Americans withDisabilities Act of 1990 (42 U.S.C. Sec. 12132), and the federal rules and regulations adopted in implementation thereof.   (d) Nothing in this chapter shall be construed to prevent the legislative body of a local agency from charging a fee or deposit for a copy of a public record pursuant to Section 6253, except that no surcharge shall be imposed on persons with disabilities in violation of Section 202 of the Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12132), and the federal rules and regulations adopted in implementation thereof.Merced Sun-StarDrought called worst in years for Merced CountySome cattlemen giving up on beef business as land can't support larger herds...CAROL REITERhttp://www.mercedsunstar.com/167/story/601900.htmlSteve Obad raises range bulls -- well-bred breeding animals that go to cattlemen looking to improve their beef cattle herds.But this year, Obad has had to cut his herd by 30 to 40 percent because the demand for the bulls has cratered.It isn't that cattle raisers don't like Obad's bulls. It's that they're also cutting back their herds because of feed and water issues. Obad said he knows some cattlemen who've gotten out of the beef cow business completely, and others who have reduced their exposure."They're cutting back in hopes that there will be enough rain so they can feed their cows," Obad said.Rain in the area means grass in the foothills, and grass means feed for cattle. Because eastern Merced County has received only 1.21 inches of rain so far this season, there isn't much grass yet. Normal rainfall for this point in the season, which runs from July 1 to June 30, is 3.18 inches, according to the Merced Irrigation District, which keeps track of rainfall for the area.Because Obad has some irrigated pasture for his cattle, he has squeaked by so far. But with a possible third year of drought coming up, Obad is keeping his fingers crossed."I'm hoping I can weather it one more year," the cattleman said.Some cattle growers in the area have taken advantage of an insurance program for livestock growers that will help them in times of drought such as this one, said Laura Westerfield, the county executive director for the U.S. Department of Agriculture's Merced Farm Service Agency."We have some estimates of loss of feed in the foothills of up to 80 percent," Westerfield said.The crop disaster program for grazed forage gives varying payments to cattlemen to help offset the cost of supplemental feed. The deadline to sign up this year was Dec. 1.But this year, hay and other supplemental feed prices were astronomical, some of the highest ever seen. The insurance program won't cover the entire feed price, so cattle raisers are still facing feed issues.To check the feed availability in the foothills, the USDA sends rangeland specialists to clip, dry down and then report on the grasses available to cattle. With an 80 percent loss so far, this year has seen some of the worst losses ever.In the past, not a lot of cattle producers bought the insurance. This year, with a third drought year looming on the horizon, a lot more ranchers took advantage of purchasing it, Westerfield said.It's not just feed that is short in the foothills for cattle -- it's also water. Obad said cattlemen usually collect rainwater in ponds used to water their range cattle. But with not much rain, there just isn't the water available for the cattle now."These guys can't use those areas if there's no water," Obad said. "It's not cost effective to haul water to your cattle."Although recent rains may help to bring up more range grass, the rain needs to continue January through March to sustain the growth.After 24 years of raising cattle, Obad said this is definitely the worst drought he's ever seen:"If there's no feed, and no water, you have to pull your cattle out, and you're pretty well done."Plaintiffs say contaminated groundwater harms Beachwood residents' healthChromium 6 case expected by 2010...JONAH OWEN LAMBhttp://www.mercedsunstar.com/167/story/601914.htmlUnder the ground on a plot of half-empty industrial land just off Santa Fe Drive, a huge plume of contaminated groundwater floats unseen. A water treatment plant and a series of infusion wells on the property were used in the long process to clean the area's polluted water. The cleanup has been going on since the early '90s.And a lawsuit over the pollution and its alleged connection to the sickness of local residents in the Beachwood area also continues. The suit filed in Fresno federal court in 2007 includes more than 2,000 plaintiffs. It asserts that the groundwater pollution by a subsidiary of the pharmaceutical giant Merck & Co. made locals sick from drinking it and using it to wash, among other charges. Moreover, some local homeowners who bought property in the area claim they have lost value on their contaminated land. All the plaintiffs insist that they weren't told about the decades-old pollution.Merck attorneys said there's no evidence the pollution caused illness among the plaintiffs.Michael Bidart, a lawyer for the plaintiffs, contends that chromium 6, along with a list of other contaminants in the ground, sickened his clients and violated the Clean Water Act, among other laws."The experts that we have are discovering that the number of illnesses and medical conditions out there are cause for concern and do exceed what you would expect to see," said Bidart. Mick Marderosian, one of the lead plaintiffs' attorneys on the case, said there are many more sick people in the area than normal. People in the neighborhood have brain tumors, cancer and respiratory problems -- and that's just a short list, he said.Chromium 6, the main pollutant in the ground, was used on the site to preserve wood. The compound has recently been linked to cancer and birth defects among other illnesses, said Marderosian.Merck & Co.'s lawyer, Stephen Lewis, argues that while there is no doubt this area's water was polluted by Merck's subsidiary, there's no evidence that anyone got sick because of the pollution."There's no doubt that there was contamination at the site," said Lewis.But he explained that doesn't automatically make his client responsible for causing people to become sick."There was contamination," he said. "It did get into the groundwater that moved a very short distance off site. But we have no reason to believe that any of the plaintiffs ever drank any water that was contaminated by any activity at the site."Meanwhile, the cleanup continues. Nathan Duncan, an engineering geologist with the regional water control board who's overseeing the cleanup project, said the plume isn't growing anymore. He added that he expects the cleanup to be completed in a couple years. The first part involved the now-closed water treatment plant that cleaned water and then put it back in the ground. Earlier this year a new process began that put methanol into the ground. That's designed to change the structure of the chromium 6 so it's no longer water-soluble.But Jerri Lombardi, a paralegal working with the plaintiffs, said their evidence indicates that not only is the plume still growing, but that the cleanup hasn't worked so far. "The truth is going to show that these poor people have been unfairly exposed to a very dangerous chemical," said Marderosian. The case is still in the discovery phase, with each side presenting and collecting evidence. The plaintiffs hope to bring the case to trial by 2010. Valley group sues EPA over air quality...MARK GROSSI, The Fresno Beehttp://www.mercedsunstar.com/167/story/601910.htmlSan Joaquin Valley air activists on Thursday sued the U.S. Environmental Protection Agency, claiming the agency failed to accept or reject two rules in the Valley's ozone cleanup plan.The Association of Irritated Residents filed the lawsuit in U.S. District Court in San Francisco.One of the rules requires additional fees on businesses if the Valley doesn't meet the one-hour federal ozone standard by 2010. The other rule sets controls for dairies and other animal operations. Both rules were approved years ago by the San Joaquin Valley Air Pollution Control District. The district routinely enforces such rules, no matter what the federal government does.But federal Clean Air Act requires the EPA to determine if the rules protect the public and conform with federal law. Without EPA action, citizens cannot legally pressure regulators in federal court to fulfill the obligations in the rules."EPA should have acted two years ago to ensure our health is protected," said Shafter resident Tom Frantz, who is president of the activist association. "Once again, EPA has utterly failed to protect the health of Valley residents." EPA officials in San Francisco could not be reached for comment.Activists have successfully sued the federal agency several times in the past nine years over many Valley air cleanup issues. The lawsuits have forced several major actions, such as bans on wood burning during the worst nights in the Valley.Activists said they did not think the two ozone rules involved in the lawsuit are strong enough to protect the public.They have been particularly critical of the rule aimed at controlling emissions from animal operations, saying farmers are allowed to pick the cheapest and least-effective options. Merced County home prices continue slideStanislaus appears to have stabilized a bit in November...J.N. SBRANTI, The Modesto Beehttp://www.mercedsunstar.com/167/story/601913.htmlHome prices in Merced County continue to fall sharply even as Stanislaus County housing prices stabilized a bit last month, slowing the brutal price plunge that began three years ago.Median-priced homes in Stanislaus sold for $160,000 during November, which was $1,500 less than October. That decline was far less than previous price drops. Between September and October, for instance, home prices fell $17,500.Stanislaus County home values have fallen nearly 60 percent since peaking three years ago, according to housing statistics provided by MDA DataQuick. First-time home buyers and investors are taking advantage of the now-affordable pricing. Sales volume was strong during November, as more than twice as many homes sold compared to the same month last year.The sales statistics aren't nearly as comforting for Merced and San Joaquin counties.Merced prices continued plummeting in November, falling to a median of $124,500. That was $12,250 less than October, and nearly 66 percent below what houses were selling for three years ago.San Joaquin prices dropped to $172,000 last month, a staggering $28,000 fall from October. Its home values have declined nearly 62 percent in three years.The Valley has been rocked by the foreclosure crisis, which experts agree is pushing down home prices. Those experts disagree, however, on whether the region is through the worst of the housing mess."It comes down to just the sheer volume of problem loans in your area," said Rick Sharga, senior vice president of RealtyTrac, which monitors foreclosures nationwide. He predicted the region will continue to lead the country in foreclosures through 2009.But since this region was first to enter the foreclosure mess, some think it may be among the first to rally."It is already recovering," said Sean O'Toole, founder of ForeclosureRadar, which tracks California real estate. He said it's a good sign that the Valley's sales are up and prices are affordable."Whereas the so-called strong areas in California, like San Mateo or San Francisco, are now only beginning to correct (by lowering prices)," he said. "At current prices, I'd much rather own property in Modesto than Palo Alto at the moment."Local realty firms also are seeing some positive signs."There's a tremendous amount of demand for housing at these prices, and there are good interest rates right now," said Mike Zagaris, president of Modesto-based PMZ Real Estate.Whether home buyers will continue to be able to take advantage of low-cost housing opportunities depends on the economy, Zagaris said, "because we have a growing recession that's putting people out of work."Zagaris also is concerned that many current owners are giving up their homes because they've lost so much equity."I'm being told by my people in the trenches that the vast majority of those facing foreclosures now have no interest in redoing their loans. They just want out," Zagaris said. "If that's true, there's no stopping these foreclosures."What has stopped is most new home construction.That's good, according to Sharga, because the region needs to reduce its overall inventory of homes so demand can catch up with supply.Most of the Valley's new home builders have sold all their finished houses and they're only building new ones after they sign sales contracts, said Kent Steinwert, chief executive officer for Farmers & Merchants Bank of Central California. He thinks that will stabilize new home prices.Steinwert is bullish on the Valley's housing future: "The fundamentals are there. We're growing in population and we can't build enough homes long term to meet demand."Population estimates released this week show there's been a shift in who is living in the Valley.More people are moving out of the region than are moving in. New population estimates from California's Department of Finance determined that about 6,824 more people moved to other parts of the United States from Merced, Stanislaus and San Joaquin counties this year than moved to the region.But new immigrants from foreign countries and high birth rates among current residents more than made up for that loss, the figures showed, so the three counties still gained in population.Loose Lips:...Friday, Dec. 19, 2008Our favorite theater-lover takes a bowhttp://www.mercedsunstar.com/167/story/601915.htmlLips would have liked to wish Merced County Chairwoman Kathleen Crookham a happy second retirement on the taxpayers' dime.Unfortunately, we couldn't get a word in during her 26-minute going-away speech during Tuesday's Board of Supervisors meeting.After a gift and plaque, Crookham launched into her final oration as a public servant, beginning with her decision to run 12 years ago. Lips isn't sure how it ended because we got bored and stopped paying attention. But aren't friends supposed to provide a goodbye roast? For supervisors, those must be hard to come by.The speech was poignant, funny, historical ... and a bit bizarre.Crookham explained some of her closely kept secrets, such as why she's not listed in the phone book (she had a creepy encounter with a sex offender), a moment of poor judgment (going to a medical marijuana dispensary, watching the owner light up and being worried about her safety) and what she sees as her greatest achievements (far too many, of course, to list here).The farewell continued Thursday during a third-floor county lunch when Crookham, invoking her power as chairwoman, asked everyone to recall their most memorable holiday moment. The celebration will go well into January, when she hosts her own going-away party. Lips awaits the invite.I think I can, I think I might------------------Lips heard that Councilman Bill "The Maverick" Spriggs was checking out yardsticks, blackboards and red felt pens. The long-winded lecturer, it turns out, is thinking about running for Merced mayor.His first order of business, Lips reckons, would be adding a regular lesson about government finance -- tax increment, CDBG and sales tax leakage -- reinforced with quizzes at the end.Lips is just kidding about the lectures (we hope). Spriggs terms out in November, as does Mayor Ellie Wooten, and confirmed that he's thinking about joining the fray in a run for mayor. So far Councilwoman Michele Gabriault-Acosta said she's running. Councilman Jim Sanders is still a maybe. Lips can't wait to learn who next will say that they may possibly think about potentially deciding that they will likely consider a run for mayor. Glad our leaders are decisive.Modesto BeeKempthorne says goodbye to Colorado River group...Information from: Las Vegas Review-Journal, http://www.lvrj.comhttp://www.modbee.com/state_wire/v-print/story/537740.htmlOutgoing Interior Secretary Dirk Kempthorne told Colorado River resource managers that he expects no major changes in federal management of the river under President-elect Barack Obama's pick to be his successor.Kempthorne told the Colorado River Water Users Association annual conference Wednesday in Las Vegas that he has worked with U.S. Sen. Ken Salazar over the past 2 1/2 years, and the Democratic senator from Colorado understands Western water issues.Obama on Wednesday named Salazar as the nation's 50th interior secretary, pending Senate approval.Kempthorne said Salazar faces challenges overseeing the use of the Colorado River amid drought, climate change and increased pressure from farms, businesses, cities and homes in a region where 30 million people live."I don't believe it's a partisan issue," the Bush appointee said following his keynote remarks.Salazar will have to keep California, Arizona, Nevada, Wyoming, Utah, Colorado and New Mexico from costly litigation and "fruitless acrimony" over Colorado River resources, Kempthorne said.He added that talks also were under way with Mexico over issues concerning the river water supply and ecology.Kempthorne, a former Idaho governor, distributed plaques to water resource managers to commemorate a water shortage-sharing agreement he signed during last year's conference.The sweeping pact provided new rules for jointly operating the twin reservoirs of Lake Mead and Lake Powell during extended dry spells such as the one that has gripped the Southwest since 2001.Kempthorne called the agreement the most important relating to the river since the original 1922 compact that divided the Colorado River water resources among the seven states.Kempthorne expects smooth sailingInterior chief says successor understands water issues...HENRY BREAN, Las Vegas Review-Journal...12-18-08  http://www.lvrj.com/news/36367219.htmlBarack Obama won the presidency with promises of change, but outgoing Interior Secretary Dirk Kempthorne expects no major shake-ups when it comes to federal water policy on the Colorado River.At a meeting of water managers Wednesday in Las Vegas, Kempthorne praised the president-elect's selection of U.S. Sen. Ken Salazar to head the Department of the Interior.Kempthorne said he has worked closely with Salazar over the past 21/2 years and the Democratic senator from Colorado clearly understands the complexities of Western water issues.He expects Salazar to help foster the spirit of cooperation that has emerged in recent years among the seven states that share the Colorado River.Kempthorne's remarks came during the final day of the Colorado River Water Users Association's annual conference at Caesars Palace.After his speech, Kempthorne said responsible management of the river has little to do with which party controls the White House."I don't believe it's a partisan issue," he said. Southern Nevada Water Authority chief Pat Mulroy echoed Kempthorne's comments about Salazar. "He'll do a fabulous job," she said.Mulroy went on to praise Kempthorne for steering negotiations among the seven Colorado River states without dictating what had to be done. "He was never one to overexert his power," she said.As the nation's 50th interior secretary, Salazar will find "much work to be done" to guide the Colorado through drought, climate change and increased pressure from population growth, Kempthorne said.In the process, he said, his successor will have to keep the seven states from backsliding into "costly litigation" and "fruitless acrimony."Perhaps the biggest challenge Salazar will face concerns relations with Mexico, which is guaranteed by treaty a share of water from the Colorado.Kempthorne said productive talks are under way with Mexico over a tangle of issues concerning water supply and the river's ecology but the discussions are still in their infancy.The Las Vegas Valley gets 90 percent of its drinking water from the Colorado River, which supplies 25 million people from Wyoming to California.Kempthorne received a standing ovation before and after Wednesday's speech.Afterward, he passed out plaques to Mulroy and other representatives from the Colorado River states commemorating the shortage-sharing agreement signed last year during the Colorado River Water Users conference in Las Vegas.The sweeping agreement lays out new rules for jointly operating the twin reservoirs of Lake Mead and Lake Powell during extended dry spells such as the one that has gripped the region since 2001.Kempthorne called it the "most important agreement on the river since the original 1922 compact" that divided the Colorado among the seven states.The people present that day, Kempthorne among them, "made history with the stroke of a pen," he said.Fresno BeeFresno County home sales fall in NovemberAnalysts say decline is more due to time of year than struggling economy...Sanford Naxhttp://www.fresnobee.com/business/story/1086193.htmlHome sales fell in November in Fresno and Clovis for the first time in six months, but real estate analysts attributed much of it to the calendar rather than to a struggling economy."Everything was distorted because of the way Thanksgiving fell," said Scott Leonard, president of Guarantee Real Estate. "We only had 17 working days. Very little was done the last week of November, and December is shaping up very well."Real estate agents sold 490 existing houses in Fresno and Clovis, the lowest monthly total since May. It was the first time since February that sales failed to climb month-to-month, but the number of transactions was still well above the 254 of November 2007.In all of Fresno County, 584 houses changed hands -- up 50.1% from November 2007 and down 27% from October. Sixty-one percent of the houses sold were foreclosures, according to MDA DataQuick, which tracks the market.The median price was $160,000 in Fresno, Clovis and Fresno County. That compares with $246,500 in Fresno and Clovis in November 2007. Combine those prices with near record low interest rates and you have an unsurpassed buying opportunity, said Don Scordino, president of the Fresno Association of Realtors."The last time prices were this low, interest rates were at 9.5%," he said.Today, they are less than 5%.Leonard hopes December will be better because interest rates fell sharply to the lowest point in decades. That could boost sales and refinancing, although many families are under water on their loans and can't get new ones."I'm getting a lot more calls to work on refinancing. The problem is equity," said Guy Willis of Guarantee Home Loans.His business slipped in November, but will likely double this month, he said. Most of the loans he makes are of the Federal Housing Administration low-down-payment variety and go to first-time homebuyers, 90% of whom purchase a foreclosure.Their average purchase price: $180,000. Compare that to a year ago, when Willis' average loan was $400,000. "We are expecting that [sales] will pick up with the new low interest rates," Willis said.December will likely bring more sales, although Scordino said homebuyers are facing tougher loan underwriting standards. He also said the widespread use by banks of out-of-town escrow companies lengthens the home-buying process and leads to more cancellations, and, beginning next month, homebuyers face reduced loan limits for the popular FHA loans.The lower prices and rates are drawing more investors into the market. With stock prices falling, real estate has become an attractive alternative. "Percentagewise, we're seeing huge gains and that is a harbinger of the beginnings of a turnaround," Leonard said.He predicted falling prices would stop, although appreciation isn't likely for 12 months to 18 months.Statewide, sales have generally improved, the California Association of Realtors said in a year-end report. Sales hit bottom in December 2007, following two years of steep declines.The association predicts a 12% boost in transactions in 2009 and a 12.5% gain in 2010. The group said home prices are expected to tumble 31.7% this year and 6% in 2009.In 2008, nearly one of every five sellers sold his or her house because it was in foreclosure, in default or through a short sale, where the bank accepts less than what is owed. That was up from 6% in 2007, the association reported.Almost 23% of homes sold at a loss. Statewide, 36% of the buyers were purchasing their first home. Oil and gas drilling leases in Utah up for auction...PAUL FOY, Associated Press Writerhttp://www.fresnobee.com/641/story/1086402.htmlSALT LAKE CITY -- Security was tight Friday as an auction of leases for oil and gas drilling in Utah got under way amid protest that the sale threatens the state's wild lands and will bring drilling rigs within view of some national parks.Police, private security and U.S. Bureau of Land Management rangers were on hand as more than 100 protesters stood outside with signs reading "Protect Wild Utah" and "Our Home Is Not for Sale."The federal agency's Utah office has received threatening e-mails, but a spokeswoman, Terry Catlin, wouldn't elaborate.Despite complaints from environmental groups and scathing criticism from actor Robert Redford, the Bureau of Land Management was putting 132 parcels totaling about 164,000 acres up for bid.The auction has been called a "fire sale" by opponents because details were first announced less than two months ago. The auction is taking place a month before President George W. Bush leaves office."If we're going to sacrifice public lands, let's do it with some deliberation, not in a hasty way," said Joseph Flower, a University of Utah biology student who was among the protesters.Groups, including the National Park Service, complained about some parcels originally up for auction, saying they were too close to national parks. In response, the BLM pulled some parcels, ultimately dropping more than half of the 359,000 acres first proposed for auction."It's public lands and not for private wealth," said protester Daniel Darger. "It's going to kill tourism in this state if you can see oil rigs from Arches National Park."In a statement posted Thursday on her agency's Web site, BLM Utah State Director Selma Sierra said only 6 percent of lease parcels would ever see drilling because of the "costly and speculative" nature of the business.The BLM also typically imposes environmental safeguards on drilling parcels, Sierra said."Facts of the lease sale have been mischaracterized in the public forum, sowing confusion and misunderstanding," Sierra wrote.Conservation groups filed a lawsuit Wednesday challenging 80 of the 132 lease parcels set to go up for bid, but the groups reached an agreement with the BLM one day later that would allow the auction to go forward, according to the National Resources Defense Council.The agreement filed with U.S. District Court in Washington, D.C., stipulated that the government wouldn't issue leases on the 80 parcels for 30 days, giving a federal judge time to consider whether to block the leases. Sacramento BeeState air board investigating its own scientist...Shane Goldmacher, Capitol Alerthttp://www.sacbee.com/static/weblogs/capitolalertlatest/017945.htmlChris Reed, an editorial writer for the San Diego Union-Tribune, reports that the California Air Resources Board is investigating whether one of the scientists who authored a study used by the board to justify new limits on emissions lied about his education.Hien T. Tran, Reed reports, "is being investigated by air board officials over allegations he lied about having a Ph.D. in statistics from the University of California at Davis.""We're going to take the appropriate actions if this is true," Leo Kay, ARB's director of communications, said to Reed.Breaking news: Air board investigating whether lead scientist on diesel regs lied about his Ph.D....Chris Reed, San Diego Union=Tribune...12-18-08http://weblog.signonsandiego.com/weblogs/afb/archives/030052.htmlHien T. Tran, the California Air Resources Board scientist who was the lead author and project coordinator of the study justifying the air board's sweeping new efforts to limit diesel emissions, is being investigated by air board officials over allegations he lied about having a Ph.D. in statistics from the University of California at Davis."We're going to take the appropriate actions if this is true," Leo Kay, ARB's director of communications, told me.James E. Enstrom, an epidemiologist with the UCLA Jonsson Comprehensive Cancer Center, raised the questions about Tran's qualifications in a Dec. 10 letter to the air board. Here is the key part:California EPA Secretary Linda S. Adams wrote a November 4, 2008 letter to Dr. Young. The Adams letter makes the following statement "Regarding the professional background of the authors, the lead author and project coordinator, Hien Tran, holds a doctorate degree in statistics from the University of California at Davis . . . ."However, I have determined from the UC Davis Office of the University Registrar and the UC Davis Department of Statistics that Hien Tran holds NO Ph.D. in statistics from UC Davis. Also, I searched ProQuest Dissertation Express and found NO evidence of a dissertation on any subject from any university awarded to the Hien T. Tran employed by CARB. ProQuest UMI Dissertation Publishing has been publishing dissertations and theses since 1938 and has published over 2 million graduate works from graduate schools around the world.Enstrom forwarded me this letter when he was ignored. He believes that Tran's alleged lack of the credentials he claimed "has direct relevance to the honesty of Tran and to the scientific integrity of the draft and final reports on which he is the lead author."ARB spokesman Kay said, "I'm not trying to downplay anything," but that the diesel regulations were subject to a "rigorous internal review" and were vetted in a "peer review" by nationally recognized experts.Because of personnel privacy laws, Kay said, he wasn't sure whether he would be able to reveal the results of the investigation into Tran.Terry Francke of Californians Aware, one of the leading experts on state government privacy law, said that was "baloney," at least if Tran was found to have done something "seriously wrong even though it may not be criminal."Francke said there was "a long line of cases" in which it was established that the ARB would have to release its investigative findings and reveal what disciplinary action it took, if any, if Tran had lied about his educational background.The air board approved the action plan based on Tran's study last Friday.NOTE, 1:50 P.M.: Fixed a typo in the lead.CARB ignored well-credentialed experts on diesel regs, too -- and its own expert may have a scandal of his own...Chris Reed, San Diego Union=Tribune...12-18-08http://weblog.signonsandiego.com/weblogs/afb/archives/030038.htmlNOTE: I posted this yesterday late afternoon then accidentally unposted it when I added an update.Over the past eight years, the Bush administration has faced a steadily growing drumbeat of criticism over its readiness to play politics with decisions that should be driven by science. Critics have made their case convincingly. Someday soon, we're going to wake up and realize that the exact same thing has happened in California -- just by people with opposite political sympathies than the Bush team.This was my reaction today after reading the detailed criticism of the sham science that CARB used to justify its decision last Friday to sharply cut down on diesel emissions. The criticism came from a distinguished group: James E. Enstrom, Ph.D., M.P.H., a 35-year lifestyle epidemiologist with the UCLA Jonsson Comprehensive Cancer Center; Anthony Fucaloro, Ph.D., a 35-year chemist with public policy expertise from Claremont McKenna College Joint Science Department; Matthew A. Malkan, Ph.D., a 25-year astrophysicist with the UCLA Department of Physics and Astronomy; and Robert F. Phalen, Ph.D., a 35-year air pollution toxicologist with UC Irvine Air Pollution Health Effects Laboratory.The criticism was every bit as sharp as that made by the economists who looked at CARB's "scoping plan" for AB 32. Here are their ... Specific Concerns Regarding October 24, 2008 CARB Staff Report on PM 2.5 [that's the shorthand term for fine particles 2.5 micrometers in diameter and smaller] and Premature Deaths1) Authors have no relevant peer reviewed publications and lead author has misrepresented his "Ph.D."2) Report and public comments were never shown to outside reviewers as stated in Executive Summary.3) Five independent sources indicate no current relationship between PM2.5 and deaths in California.4) California has fourth lowest total age-adjusted death rate among US states and ew "premature deaths."5) Diesel toxicity and fine particulate air pollution in California are currently at record low levels.6) Before approving new diesel regulations, CARB should fully evaluate PM2.5 and deaths in California.Conclusion: Important epidemiologic and toxicologic evidence does not support adverse health effects of diesel claimed by CARB and new diesel regulations should be postponed until above issues are fully and fairly evaluated.Boy, does that precisely echo the peer reviewers of the AB 32 plan or what? Spurious, grand claims are made with shabby methodology.Read the joint critics' short memo here.Read a seven-page analysis by UCLA's Enstrom here.If the complex scientific stuff drives you off, just consider this point made by Enstrom about the lead author of the CARB diesel study:California EPA Secretary Linda S. Adams wrote a November 4, 2008 letter to Dr. Young. The Adams letter makes the following statement "Regarding the professional background of the authors, the lead author and project coordinator, Hien Tran, holds a doctorate degree in statistics from the University of California at Davis . . . ."However, I have determined from the UC Davis Office of the University Registrar and the UC Davis Department of Statistics that Hien Tran holds NO Ph.D. in statistics from UC Davis. Also, I searched ProQuest Dissertation Express and found NO evidence of a dissertation on any subject from any university awarded to the Hien T. Tran employed by CARB. ProQuest UMI Dissertation Publishing has been publishing dissertations and theses since 1938 and has published over 2 million graduate works from graduate schools around the world.Although Tran is shown with a Ph.D. in the draft and final reports and in the December 7, 2007 CARB Research Division Organizational Chart (http://www.arb.ca.gov/html/org/orgrd.htm), most citations of Tran in documents and meetings on the CARB website identify him as Mr. Hien Tran (http://www.arb.ca.gov/db/search/search.htm). It is very important to have Tran clarify the actual status and nature of his alleged Ph.D. degree. This issue has direct relevance to the honesty of Tran and to the scientific integrity of the draft and final reports on which he is the lead author.Too much -- CARB's own expert allegedly may not even have the degree he claims to have! I'm gonna get to the bottom of this.UPDATE, 4:50 P.M.: A UC Davis spokesman says he can't confirm or deny that the ARB's Tran has a degree from UC Davis because there are several students past and present with that name. I have a call into CARB to find out what its spokeswoman knows.UPDATE, 10 A.M. WEDNESDAY: CARB hasn't returned my call. "Dr." Tran hasn't responded to my e-mail. The digging will continue.Critics' short memo...San Diego Union Tribunehttp://weblog.signonsandiego.com/weblogs/afb/archives/902-request_to_postpone_and_reassess_carb_diesel_regulations_120308.pdfREQUEST TO POSTPONE AND REASSESS CARB DIESEL REGULATIONSJames E. Enstrom, Ph.D., M.P.H. 35-year lifestyle epidemiologistUCLA Jonsson Comprehensive Cancer Center jenstrom@ucla.eduAnthony Fucaloro, Ph.D. 35-year chemist with public policy expertiseClaremont McKenna College Joint Science Department afucaloro@jsd.claremont.eduMatthew A. Malkan, Ph.D. 25-year astrophysicistUCLA Department of Physics and Astronomy malkan@astro.ucla.eduRobert F. Phalen, Ph.D. 35-year air pollution toxicologistUC Irvine Air Pollution Health Effects Laboratory rfphalen@uci.eduDecember 3, 2008General Concerns Regarding Air Pollution Health Effects and Regulations1) Pollution levels are much lower today than in previous decades and current health risks are small.2) Small epidemiologic associations are often spurious, rather than cause-and-effect relationships.3) Regulations designed to solve one problem may have consequences that do more harm than good.4) Scientists who are not popular activists are often marginalized and their important research is ignored.5) Conflict of interest regarding power and funding exists between regulators and conforming scientists.6) New regulations must be based on a fair evaluation of all available evidence from diverse sources.Specific Concerns Regarding October 24, 2008 CARB Staff Report on PM 2.5 and Premature Deaths1) Authors have no relevant peer reviewed publications and lead author has misrepresented his “Ph.D.1) Authors have no relevant peer reviewed publications aauthor has misrepresented his “Ph.D.”2) Report and public comments were never shown to outside reviewers as stated in Executive Summary.3) Five independent sources indicate no current relationship between PM2.5 and deaths in California.4) California has fourth lowest total age-adjusted death rate among US states and few “premature deaths.”5) Diesel toxicity and fine particulate air pollution in California are currently at record low levels.6) Before approving new diesel regulations, CARB should fully evaluate PM2.5 and deaths in California.ConclusionImportant epidemiologic and toxicologic evidence does not support adverse health effects of diesel claimedSeven-page analysis by UCLA's Enstrom...San Diego Union-Tribunehttp://weblog.signonsandiego.com/weblogs/afb/archives/897-carb_enstrom_comments_on_statewide_truck_regulations_121008.pdfCalifornia Air Resources Board1001 "I" StreetP.O. Box 2815Sacramento, CA 95812http://www.arb.ca.gov/Re: Scientific Reasons to Postpone Adoption of Proposed STATEWIDE TRUCK AND BUSREGULATIONS (http://www.arb.ca.gov/regact/2008/truckbus08/truckbus08.htm)Dear Board Members:I am writing to describe important scientific reasons that must be addressed regarding the health effects of diesel particulate matter in California before the proposed “STATEWIDE TRUCK AND BUS REGULATIONS” are adopted.These comments add to my previous public comments, which were submitted on April 22, 2008 (http://www.arb.ca.gov/lists/erplan08/2-carb_enstrom_comments_on_gmerp_04...), on July 11, 2008 (http://www.arb.ca.gov/research/health/pm-mort/pm-mort_supp.pdf), and on October 1, 2008 (http://www.arb.ca.gov/lists/verdev2008/33-32-carb_enstrom.pdf).These new comments describe serious scientific deficiencies in the final October 24, 2008 CARB Staff Report "Methodology for Estimating Premature Deaths Associated with Long-Term Exposures to Fine Airborne Particulate Matter in California"(http://www.arb.ca.gov/research/health/pm-mort/pm-mort_final.pdf). This CARB Staff Report and the very similar May 22, 2008 CARB Draft Staff Report with the same title(http://www.arb.ca.gov/research/health/pm-mort/pm-mortdraft.pdf) have been used as a primary public health justification for reducing diesel particulate matter in California.These reports have been prominently cited in the proposed STATEWIDE TRUCK AND BUS REGULATIONS, particularly in Appendix D: Health Impacts from On-Road Diesel Vehicles (http://www.arb.ca.gov/regact/2008/truckbus08/appd.pdf) and in Appendix E: Health Risk Assessment for On-Road Diesel Trucks (http://www.arb.ca.gov/regact/2008/truckbus08/appe.pdf). To document the serious scientific deficiencies in the CARB Staff Report, I have identified and described six specific examples of serious errors and misrepresentations.Example 1: Scientific Qualifications of CARB Staff Report AuthorsList of authors on third title page:...Example 2: Review Process for CARB Staff ReportParagraph from Executive Summary:...Example 3: Geographic Variation of Relationship Between PM 2.5 and Deaths in Cohort StudiesParagraph from pages 25-26:...Example 4: Geographic Variation of Relationship Between PM 2.5 and Deaths in Time Series StudiesParagraph from page 26:...Example 5: Misrepresentation of July 11, 2008 CARB Teleconference Organized by Hien Tran Pages A-95 and A-96 of“Appendix 5 (Public Comments and Staff Respons In this appendix, we summarize the key comments received from the public on the May 22, 2008 draft report, and our responses to them.”Example 6: Repeated Failure to Obtain California-specific Results from ACS CPS II CohortPage A-104 of “Appendix 5 (Public Comments and Staff Responses)“12. Pope/American Cancer Society (ACS) study...Sincerely yours,James E. Enstrom, Ph.D., M.P.H.Jonsson Comprehensive Cancer CenterUniversity of California, Los Angeleshttp://www.cancer.ucla.edu/jenstrom@ucla.edu(310) 825-2048Natomas floodplain building freeze heats up race for permits...Mary Lynne Vellinga http://www.sacbee.com/101/story/1485550.htmlThe city of Sacramento raced to approve as many building permits as possible in the weeks leading up to Dec. 8, when the federal government designated Natomas a hazardous floodplain.As of that date, new construction in South and North Natomas was frozen – stopped by a federal requirement that buildings be elevated 20 feet or more. The moratorium likely will remain in place until at least 2011.To entice developers to beat the federal deadline, the city deferred a total of $1.9 million in impact fees for Natomas projects since October. Among the dozen or so projects that squeaked through: a child care center, several office buildings, an apartment complex and eight model homes. City Development Director Bill Thomas said he wasn't sure how much in the way of revenues and fees the projects would bring to the city, but every little bit of new money is important in a dismal budget year.Natomas is Sacramento's major growth frontier and accounts for about 45 percent of the dollar value of building permits issued in the city each year. Construction already had slowed dramatically due to the recession.The impact fees that were deferred won't affect the city's general fund, Thomas said. They represent contributions to such improvements as freeway overpasses and stoplights, and still will be paid as projects reach certain construction milestones."I'm comfortable we did everything possible to bring in as much business as we could for Sacramento," Thomas said.Some critics view the city's efforts in a different light."I just think it's sad when people are stumbling all over themselves to build when conditions aren't safe," said Judith Lamare, president of Friends of the Swainson's Hawk, a group that has fought development in Natomas.The U.S. Army Corps of Engineers says it no longer can certify the levees protecting Natomas' 70,000 residents as adequate to withstand a 100-year flood, the type that has a 1 percent chance of occurring in any given year.Thomas said he's comfortable that Natomas is not actually in danger. He pointed out that the levees are no weaker than they were when the federal government certified them as adequate."I live in Natomas, my family is in Natomas, and I don't feel that my family is at risk," Thomas said. "What happened was the U.S. Army Corps of Engineers changed the standards on us."Despite the efforts of Thomas and his staff, the city wasn't able to nail down construction approvals for a handful of major shopping centers, office buildings and hotels planned for Natomas.These projects fell through not because the city slowed them down, but because the real estate market collapsed."We made a very big push," said developer Angelo G. Tsakopoulos, whose plans to build a shopping center at Del Paso Boulevard and El Centro Road are now on hold until 2011."Unfortunately, given everything that was going on with the economy in September or October, I didn't have an anchor tenant for my retail site," Tsakopoulos said. "You can't build a $100 million shopping center without an anchor tenant."The Ose family also dropped an effort to win approval for a change in the North Natomas Community Plan to allow a regional shopping center, hotels and offices on 70 acres near the junction of Highway 99 and Interstate 5.Called Natomas Landing, the proposed development stirred opposition from the adjacent Westlake neighborhood. In the final months of their push for approvals, the Ose family reduced the amount of retail in an effort to address neighbors' concerns.In a July 30 e-mail, the city's Thomas told former U.S. Rep. Doug Ose he was hopeful the project could be approved by early December. "Based on the great work of your team and ours. … it looks like we are ready to shift fully into go mode," Thomas wrote.Shortly after, Ose told Thomas he would not be moving forward."We got a very clear indication in the latter part of August that there was something adverse in the financial markets," Ose said.Ose predicted it will be five years, minimum, before anything not already approved by the city gets built in Natomas, including his shopping center."Every project I've ever seen dealing with flood protection takes twice as long and costs twice as much as the original estimate," he said. "That's just my rule of thumb. If they say it's going to be two years, it's going to be four. If they say it's going to be $100 million, it's going to be $400 million." Home Front: Impact fees may be the next battlefield for area builders...Jim Wassermanhttp://www.sacbee.com/103/story/1485548.htmlWhen the housing market soared in Sacramento a few years ago, many cities, counties and school districts hiked fees for a new house, with some soaring into the $80,000s and $90,000s.Builders complained, but moved on. Times were so flush they just paid some and passed the rest to buyers. What did $90,000 matter if a house sold for $470,000 or more to a buyer using exotic financing?It's sure different today. There are no exotic loans. And much of the new home market is back in the $200,000s. At those prices, builders say, the fees make it hard to break even. So they're again pushing City Hall to rethink impact fees in light of a devalued housing market.On Tuesday, Woodland became the first city in the region – and possibly first in the state, according to the California Building Industry Association – to do just that.Typically, builders pay about $90,000 in city, county and school fees to build a house in Woodland. But with a 4-0 vote, the City Council cut its $69,000 fee to $54,000 – a 20 percent discount of $15,000 per house."In terms of the current economic conditions we believed our fees were too high," said City Manager Mark Deven.Deven said the vote sends a signal to the business community that Woodland is serious about economic development "and very serious about working with development partners in this challenging financial period."Home building giants Centex and KB Home remain the biggest players in Woodland's much-slowed growth scene.Builders hope to see a wave of similar actions across the region next year."I think this sends a huge message. This is one of the first fee reductions in the state," said Dennis Rogers, a senior executive and government affairs chief of the North State Building Industry Association in Roseville.Wednesday, Rogers drove to Galt City Hall for talks about the issue. He's also had discussions with Roseville officials.Area builders have often voiced their biggest objections to impact fees in Elk Grove and Rancho Cordova. Both cities have room for thousands of new homes in years ahead.But the cities maintain that their fees are fair, and necessary to ensure a quality of life that comes with new growth.Fees to build in Rancho Cordova top out at almost $83,000, according to the city. About half are city fees; the rest are for the county, schools and special districts."Our feeling is our fees are at an appropriate level for the standards we're providing for the community," said Assistant City Manager Joe Chinn.A struggling home building industry has already received breaks from several local governments in the region. Typically, builders pay their impact fees when applying for a permit. But Rogers said the cities of Elk Grove, Rancho Cordova, Roseville, Folsom and Woodland, along with Sacramento and Placer counties, now allow builders to pay the fees shortly before the house is occupied.That allows builders to pay and recoup their fees quickly.But many feel the amount of fees is the real battle. That could make it one of the bigger government stories of 2009.How low can they go?Is it really possible we'll see 3.5 percent mortgages, as predicted this week by CNBC's Jim Cramer on "Mad Money"?Not so fast, say mortgage industry players like Fred Arnold, president of the California Association of Mortgage Brokers. While possible, Arnold said, "In my professional opinion, it would be historic in nature and a big surprise.""I'd be happy to see it, but I don't know if it's realistic," added Bob Bader, owner of Sacramento's Arden Mortgage.Dubious, too, is Joshua Bruno, general manager of JCL Mortgage in Sacramento. But he wouldn't be surprised by anything after 2008 in the mortgage industry, he said."I came home from the military in 2006," he said. "I traded one war for another."Lower rates, meanwhile, are driving a rush to refinance said the Mortgage Bankers Association. It said 77 percent of mortgage applications last week were refinance requests. And on Thursday, mortgage giant Freddie Mac said rates were at a 37-year low.A protest with a twistWorkers at a Fairfield real estate office thought it was a Christmas party Monday when a crowd came in the door with a tree and furniture. Instead, it was a foreclosure protest by a Santa Rosa family and backers from the housing advocacy group ACORN. It's believed to the state's first "move-in" protest.ACORN spokeswoman Claire Haas said the Santa Rosa family was scheduled to be evicted. But instead of returning the keys to Fairfield agents representing the lender, the family asked for help in getting a loan modification. Without help it would just move into the real estate office.As Haas tells it, the move-in lasted less than a hour. Agents quickly called the lender to discuss plans to keep the family in its house through the holidays. At last word, the family expected to spend one more Christmas at home, said Haas. Stockton RecordTimber company's herbicide use blasted...Dana M. Nicholshttp://www.recordnet.com/apps/pbcs.dll/article?AID=/20081219/A_NEWS/812190303/-1/A_NEWSSAN ANDREAS - The environmental group Forest Ethics released a report Thursday analyzing the 770,000 pounds of herbicides that timber giant Sierra Pacific Industries used on its lands during an 11-year period and calling on the company to reduce its use of the chemicals.Sierra Pacific Industries is California's largest private land owner, with about 1.7 million acres statewide. The company also is the largest private land-owner in Calaveras County, with about 75,000 acres here.The amount of pesticides used in forestry is miniscule when compared with what happens in farming zones such as San Joaquin County, where around 11 million pounds of pesticides are used every year, or about 12 pounds for every acre of land in the county.But even though the figures for SPI reflect only a fraction of a pound of pesticide use per acre in any given year, several scientists said that herbicides such as atrazine that are used in forestry pose a risk at even very low levels both to wildlife and to the humans whose drinking water originates in the mountain forests.Tyrone Hayes, a professor in University of California, Berkeley's Department of Integrative Biology, said studies have shown that atrazine at even extremely low concentrations can mimic hormones and alter the sexual biology of creatures from frogs to humans."Hormones work in the parts per billion, parts per trillion range," Hayes said.Don Erman, professor emeritus of aquatic ecology at the University of California, Davis, said he believes there's enough evidence that trace amounts of herbicides are a danger to wildlife and humans that foresters should reconsider their use. Herbicides are typically used after an area is logged to suppress shrubs and other low-growing plants so that newly planted trees have time to grow."Those are choices we make as a society. Do we really care about what is in the water we drink, or do we want to have the cheapest food on Earth, or the cheapest timber on Earth," Erman said.Sierra Pacific Industries spokesman Mark Pawlicki said the company's pesticide use is small compared with food crop farming, and even that use is carefully regulated by state laws."Overall, forestry use of herbicides in California is less than 1 percent of total herbicide use," Pawlicki said. "In our case we do extensive monitoring in stream courses where we use herbicides.""We have yet to find a detectable amount in any watercourse," Pawlicki said.Hayes said he was skeptical. He and other scientists say concentrations of pesticides such as atrazine may be missed simply because standard lab tests are not sensitive enough."We know that it persists, sometimes for years," Hayes said.Pawlicki said if the state or federal regulations on pesticide use are inadequate, then scientists should take that up with those governments, rather than Sierra Pacific Industries."We only do it once, or sometimes twice in an 80-year period," he said of herbicide applications done when particular areas are replanted.San Francisco ChronicleC&H Sugar charged with polluting waterway...Kelly Zitohttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/19/BAHP14QUEA.DTL&type=printableState water quality regulators are charging the century-old C&H sugar refinery in Crockett with dumping sugar, coliform bacteria, mercury and other chemicals into the Carquinez Strait over the last three years, potentially harming fish and marine life.The more than 50 violations could cost the company as much as $500,000, depending on the findings of a hearing scheduled in February, according to the San Francisco Regional Water Quality Control Board."These are older facilities, and that's what we face throughout the state - old pipes, old plants," said Dave Clegern, spokesman for the State Water Resources Control Board, which oversees the regional agency. "They need to be monitoring this and have people trained to catch these things before we have 34 of them."Regulators said 34 of the illegal discharges, 32 of which contained sugar, emanated from the plant, which uses water to cool its refining system. The remaining discharges came from storm-water runoff, a minor oil spill and from a sewage treatment plant operated by C&H and which serves the refinery and 1,100 properties in the Crockett area.No single discharge created a "serious threat" during the July 1, 2005 to Oct. 31, 2008 span, Clegern said. But continued dumping could alter the pH levels of the water, endangering fish and plants.Company officials said that after several delays they have repaired leaks in the cooling system that sent sugar into the waterway. The firm also said it installed new equipment and gave additional training to employees."We have taken the necessary steps to ensure such delays do not occur again and no sugar-discharge violations have occurred since last February (2008)," the company said in a statement.This week's complaint was not the first for the refinery. Between September 2004 and June 2005, the water board recorded 10 violations, resulting in $30,000 in fines.At the Feb. 11 hearing, the regional water board will hear from C&H before deciding whether to amend the fine or refer it to the state attorney general's office. The company may waive the hearing by paying the full amount.In addition, C&H may be allowed to pay slightly less than $250,000 toward an environmental project such as upgrading its facilities or restoring a local habitat.The red brick refinery on the banks of the Carquinez Strait was founded in 1906 as the California and Hawaiian Sugar Company Inc. Ninety-nine years later, in 2005, the company was purchased by American Sugar Refining Inc. of Yonkers, N.Y., which each year sells more than 3 million tons of white granulated, golden grown, powdered and other types of sugar. The Crockett facility annually produces about 700,000 tons of sugar.New ban imposed on regulating global warming gases...DINA CAPPIELLO, Associated Press Writerhttp://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/12/18/national/w163241S62.DTL&type=printableThe Bush administration is trying to make sure in its final days that federal air pollution regulations will not be used to control the gases blamed for global warming.In a memorandum sent Thursday, outgoing Environmental Protection Agency Administrator Stephen Johnson sets an agency-wide policy prohibiting controls on carbon dioxide emissions from being included in air pollution permits for coal-fired power plants and other facilities.The decision could give the agency a legal basis for issuing permits that increase global warming pollution until the incoming Obama administration can change it, a process that would require a lengthy rulemaking process."The current concerns over global climate change should not drive EPA into adopting an unworkable policy of requiring emissions controls," Johnson writes. And while the administrator acknowledged public interest in the issue, he writes that "administrative agencies are authorized to issue interpretations of this nature that clarify their regulations without completing a public comment process."The White House has repeatedly said that the Clean Air Act should not be used to regulate carbon dioxide or other greenhouse gases, even though an April 2007 Supreme Court decision determined that the EPA could do so under the law. But that hasn't stopped environmentalists from trying.The Thursday memo from Johnson was an attempt to clarify the agency's position after an appeals board in November rejected a federal permit for a Utah power plant putting the fate of scores of coal-burning power plants and other industrial facilities in limbo.In that case, the judges said the EPA did not make a strong enough case for not requiring controls on carbon dioxide, the leading pollutant linked to global warming. Environmentalists had challenged the permit saying that law makes clear that greenhouse gas emissions can be controlled.Environmentalists on Thursday said the EPA's memo would allow power plants to be approved that increase greenhouse gas emissions. They also said the ruling would tie the hands of President-elect Barack Obama, who has said he wants heat-trapping gases to be regulated."What you have is a midnight declaration that is designed by edict to rewrite EPA's regulations to say categorically carbon dioxide can never be considered in permitting a new coal plant," said Vickie Patton, an attorney with the Environmental Defense Fund.But EPA spokesman Jonathan Shradar said the opinion simply codifies existing agency policy."It had been the unspoken policy of the agency," Shradar said. "All it does is put into policy what the agency has done for 30 years."Representatives of the electricity generators said Thursday that the EPA once again made the right choice. Scott Segal, director of the Electric Reliability Council, an association of power companies, said if agency determined Clean Air Act could be used to place limits on carbon dioxide, many other sources would have to get permits under the law.Segal said that if the EPA had made a different interpretation the results would have been catastrophic for the economy and the environment.The rush to refinance...Carolyn Saidhttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/19/MN6A14QO49.DTL&type=printableTalk about economic stimulus. Mortgage rates tumbled to historic lows this week after the Federal Reserve signaled a willingness to reduce lending rates and spend billions of dollars to jump-start the housing market. That's triggered a rush among homeowners to refinance - potentially putting thousands of dollars a year into many consumers' pockets, money that could find its way into the general economy. The lower rates are expected to continue, which could spur fence-sitters to buy homes next year. "Interest rates are approaching 50-year lows," said Keith Gumbinger, vice president at HSH Associates in New Jersey. HSH, which conducts daily national surveys of interest rates, found that rates for a 30-year fixed-rate conforming (under $417,000) loan averaged 5.06 percent on Wednesday, down from 6.69 percent a month ago.The HSH blog this week featured the headline: "Is your mortgage lender Santa?"Mortgage giant Freddie Mac reported Thursday that rates on 30-year fixed-arte loans averaged 5.19 percent, compared with 6.14 percent a year ago. It was the lowest rate since Freddie began its weekly survey of lenders in 1971. Some mortgage brokers reported even lower rates."This is unbelievable," said Dennis Duffy, principal with A Very Nice Mortgage Company in Oakland, recounting that 30-year fixed rates dropped to 4.5 percent this week for conforming loans and to 4.875 percent for loans between $417,000 and $625,500. Those rates do not include the broker's commission. "Certainly, it's a historic opportunity for those people that can play in the marketplace," Gumbinger said. But being able to play is the rub. The most enticing rates are available only to those with excellent credit, steady incomes and substantial equity or down payment. No help to manyThat means the door will be closed to many struggling homeowners who desperately need to get out of unaffordable mortgages."These low rates will not help homeowners who are upside down" - owing more than their home is worth, said Greg McBride, senior financial analyst with BankRate.com in Florida. In the Bay Area, one-fifth of all homes are in that situation, according to a report Zillow.com released last month. Nationwide, the figure is 1 in 7, Zillow said. Similarly, homeowners with impaired credit or delinquent payments might not qualify for a new loan. Brad Blackwell, executive vice president of Wells Fargo Home and Consumer Finance, said that homeowners with 10 percent equity who are not trying to take out cash should be able to refinance; those using Federal Housing Administration loans could have even less equity. "If they can document their income and have reasonable credit, these loans are available to them," he said. As for what is reasonable credit, "to generalize, if someone's at 680 (credit score) today, they're going to be very safe," Blackwell said. "If you start getting below that, it's going to depend on other strengths."Another caveat for people in the high-cost Bay Area is that the best rates are for conforming loans under $417,000. Many homes here require larger jumbo loans, which carry higher interest rates. Congress tried to address that issue this year when it created an intermediate category for loans in high-cost areas, but there is still a price premium. Currently, conforming jumbo loans are from $417,000 to $650,500; they may be anywhere from three-eighths to a full percentage point higher than conforming loans. True jumbos, mortgages of more than $650,500, still can be 7 percent or higher."It would serve our interests here in the Bay Area to have this whole jumbo conforming category at the same rates as true conforming," said Dick Lepre, a loan agent for Residential Pacific Mortgage in San Francisco. "California has influential senators and representatives. They need to ask Congress, 'Why are you hammering us poor folks in California with these ridiculous rates for our houses?' "The nationwide drop in rates is a direct response to a major move by the Federal Reserve. In late November, the Fed said it would spend up to $600 billion to purchase mortgage-backed securities and other debt issued by Fannie Mae and Freddie Mac. On Tuesday, the Fed reiterated that plan and said it might even add other novel ways to help drive down interest rates for consumers."That announcement of a brand-new player with deep, deep pockets shifted rates down," Gumbinger said. "It adds a level of comfort to the mortgage markets."The Fed's move is the latest weapon it's pulled from its arsenal to bolster the troubled economy. 'A tax decrease'"Driving rates down is the equivalent of a tax decrease," Lepre said. "If everyone refinances their mortgage at a lower rate, it's a few hundred bucks extra in everyone's pocket every month. They're doing this so people have more money to spend."The Fed plans to participate in the mortgage market over an extended period of time. "That indicates a desire not just to push mortgage rates down, but more importantly, to keep them low," McBride said. "It is keeping rates low for an indefinite period that will bring buyers back into the marketplace. Buyers won't respond if the low rates are here today, gone tomorrow." Blackwell said Wells thinks the low rates will continue. In fact, it is likely to add staff to handle the sharp surge it's already seeing in refinance applications. Because of the volume, Wells has extended "locks" - the amount of time it guarantees a rate - to 60 days from the usual 15 or 30 days. While it's too soon for the lower rates to have spurred people to buy homes, many observers said they expect that outcome. "Home prices are down sharply," Blackwell said. "You now have low, affordable home prices and low, affordable interest rates. It's a combination we expect to (cause) increased purchase activity coming into the spring."Calif. unemployment rate jumps to 8.4 percent...MARCUS WOHLSEN, Associated Press Writerhttp://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/12/19/state/n101346S00.DTL&type=printableCalifornia's unemployment rate climbed to 8.4 percent in November, the third-highest rate in the nation, federal officials said Friday.The jobless rate announced by the U.S. Department of Labor was up from 5.7 percent a year earlier, and 8.2 percent in October. Only Michigan and Rhode Island posted higher jobless rates than California.The agency said California shed 41,700 jobs last month, bringing the total jobs lost over the past year to 136,000. Florida and North Carolina were the only states to lose more jobs in November.The U.S. unemployment rate rose to 6.7 percent in November — a 15-year high. The nation lost 533,000 jobs last month, the largest monthly job loss in 34 years.Just over 15 million Californians held payroll jobs last month. The number of people unemployed in California rose to 1.56 million, up by more than a half-million since November 2007, state officials said.Of those unemployed, 679,200 were laid off, 97,200 left their jobs voluntarily, and the remaining were new to the labor market last month.The jump in joblessness comes as California's unemployment insurance fund teeters on the brink of insolvency. The fund is expected to have a deficit of $2.4 billion at the end of 2009.To keep unemployment checks coming, the state may have to borrow from the federal government for only the second time since the program was established in the 1930s.Gov. Arnold Schwarzenegger cited Friday's numbers after vowing to veto an $18 billion deficit reduction plan that Democrats pushed through the Legislature on Thursday. The Republican governor said the plan didn't include the economic stimulus package he demanded."I've said countless times that any budget plan sent to my desk must include real stimulus that creates jobs," Schwarzenegger said in a statement Friday.Contra Costa TimesEditorial: State must boost water storagehttp://www.contracostatimes.com/opinion/ci_11263897?nclick_check=1THE TIME MAY be coming, if it is not already here, when decision-makers in Sacramento finally understand that California must store a lot more water in reservoirs or lose much of its agriculture.That message was delivered Monday by federal regulators, who placed severe restrictions on pumping water out of the Delta. The new rules in a U.S. Fish and Wildlife Service permit will require more freshwater to be released into the Delta and a lot less water to be pumped out of the estuary.U.S. District Judge Oliver Wanger ruled that the old pumping permit was highly flawed because it did not do enough to protect fish like the Delta smelt. Other species of fish in the Delta also are endangered and could face extinction without major cutbacks in water pumping. When huge volumes of freshwater are removed from the Delta, fish are caught in the pumps. Even more damaging, salinity levels in the Delta rise, allowing invasive species such as clams, algae and plants to multiply and alter the entire estuary ecosystem.The new permit is designed to save the Delta environment, regardless of the impact it will have on water users.About two-thirds of Californians depend on water that flows through the Delta. However, it is agriculture that is likely to suffer the greatest impact.Unlike a drought, when water use is cut back, the new regulations are not temporary. That means farmers and other water users no longer can rely on flows of freshwater to meet current demand. In other words, the Delta has overstepped its limits and can no longer be depended upon to provide the volume of freshwater it has in the recent past.If agriculture is to remain a healthy business in California and if other users want reliable supplies of water in dry months and in droughts, more water needs to be stored.Certainly, there should be increased efforts to conserve water and use it as efficiently as possible. There is also the hope that desalination can be an economical means of supplying freshwater.But the only practical way to provide the large volumes of water necessary for agriculture is with new and/or enlarged reservoirs. Reservoirs also could ensure sufficient water supples should a major earthquake damage pipelines running through the Delta.Work on new and enlarged reservoirs, which take many years to complete, should have been started at least a decade ago. But it is never too late to begin.The new restrictions on pumping water from the Delta will, we hope, serve as a warning that California must decide if it wants to significantly increase its water storage capacity or lose a large portion of its agricultural business and the many jobs that go with it. Editorial: The cleaning of California's air...MediaNews editorialhttp://www.contracostatimes.com/opinion/ci_11263601ON ONE DAY recently, California air regulators ushered in a new climate plan that puts the emissions hammer down on state utilities, refineries and large factories. Then, the next day, the state adopted the toughest diesel emission standards for trucks and buses in the nation. So much for that tough economy standing in the way of cleaning our air.The state Air Resources Board is now holding the worst polluters accountable for heat-trapping greenhouse gas emissions, which if met, will change the way you travel, the way utilities produce power and the way businesses use electricity. The board outlined how individuals and businesses would meet a landmark 2006 law that mandates the state would cut emissions to 1990 levels by 2020.A total of 31 new rules affecting virtually all facets of life were adopted with the belief that one day Californians will see more efficient public transportation, housing near schools and businesses, and utility rebates for homes that become more energy efficient, among other things. The air board followed that with new diesel rules where, starting in 2011, accelerates the replacement of thousands of polluting trucks and buses that are not as clean as newer models with federally-mandated emissions standards.Obviously, the board felt despite a global financial crisis and a state budget deficit projected to surpass $41 billion by 2010, the process has to begin to make good on the 2006 law called the Global Warming Solutions Act. Californians need to understand that their utility bills will rise and the cost of fuel-efficient cars will not be cheap. Odds are good businesses that incur additional costs will likely pass it on to consumers.The new diesel regulations will cost businesses, school districts and transit agencies $5.5 billion over 16 years. This alone could close some companies and put more strain on schools and public transportation. We could also see businesses either move from California or resist coming here in light of these new regulations.But the question is when do we start the process toward cleaning our air? Californians are dying or suffering each day with our bad air. Think about our students; a recent study by the USA Today rated three Berkeley schools located near a steel foundry as being impacted by industrial pollution. A San Leandro school, in the same study, was impacted by a company in San Leandro, a pipe factory in Union City, the steel foundry in Berkeley and a refinery in Rodeo, which clearly shows how widespread the damage these polluters can cause.Considering that half of all Californians live near a freeway, state officials project the new rules will save 9,400 lives between 2010 and 2025. And that tens of thousands of hospital admissions are linked to air pollution, the state estimates a savings in health care of $68 billion.The truth is we can't afford not to begin the process, but we need to move forward carefully. The average Californian needs, for instance, to afford cleaner cars or residents will continue to work on their older models.The average Californian cannot be gouged by utilities who may use these new rules as a way to raise prices. And big polluters who benefit from a cap-and-trade program need to be scrutinized closely so they, indeed, lower emissions in a timely manner.We need to carry through with these regulations because the air won't clean itself. It's going to be a strain on our economy and we may not meet all of our deadlines, but this is a bold start that needs to happen. Los Angeles TimesObama chooses global-warming foes for science postsHis selections as science advisor and NOAA head are two advocates for mandatory limits on greenhouse gas emissions. Environmentalists are heartened, and conservatives dismayed...Washington Posthttp://www.latimes.com/news/science/environment/la-na-obama-science19-2008dec19,0,5464887,print.storyReporting from Washington — President-elect Obama has selected two of the nation's most prominent scientific advocates for a vigorous response to climate change to serve in his administration, according to several sources, sending the strongest signal yet that he will reverse Bush administration policies on energy and global warming.The appointments of Harvard University physicist John Holdren as presidential science advisor and Oregon State University marine biologist Jane Lubchenco as head of the National Oceanic and Atmospheric Administration, both of which will be announced Saturday, dismayed conservatives, and heartened environmentalists and researchers.The Bush administration has sparked controversy over the last several years as political appointees have edited government documents to delete scientific findings and block scientists' recommendations."The Bush administration has been the most remarkably anti-science administration that I've seen in my adult lifetime," said Nobel laureate David Baltimore, president emeritus of Caltech, in an interview. "And I do think that there will be a sea change in the Obama administration with the respect shown for the findings of science as well as the process of science."But Bush's science advisor, John Marburger, challenged that assessment."There are stupid and foolish things that have been perpetrated by employees of the federal government in the executive branch, but it doesn't mean that the president is anti-science," Marburger said. "The president is getting blamed for every little thing that happens that people don't like in the administration."Like Energy secretary nominee Steven Chu, who directs the Lawrence Berkeley National Laboratory, Holdren and Lubchenco have argued for a mandatory limit on greenhouse gas emissions to avert catastrophic climate change. In 2007, as chairman of the board of the American Assn. for the Advancement of Science, Holdren oversaw approval of the board's first statement on global warming, which said: "It is time to muster the political will for concerted action."In October, Lubchenco told the Associated Press that she believed public attitudes on climate change were shifting. "The Bush administration has not been respectful of the science," she added. "But I think that's not true of Republicans in general. I know it's not."Alden Meyer, director of strategy and policy for the Union of Concerned Scientists, predicted that the scientists would work to change how the U.S. addresses global warming."You can see the elements coming together," Meyer said. "It means you've got people in key places across the administration that get the urgency of the climate issue and get the need for aggressive policy to move climate solutions forward, both in the U.S. and internationally."But Holdren's reported selection inspired no joy at the Competitive Enterprise Institute, a free-market advocacy group that denounces global warming "alarmists" and opposes many environmental laws. Myron Ebell, director of energy and global warming policy at the institute, said, "I think he's a very bad choice. His views are extreme, they're not based in fact, and he's a ranter."Lubchenco did not draw the same level of fire from conservative groups as Holdren on Thursday, but she represents just as radical a departure for NOAA, which oversees marine issues as well as much of the government's climate work. While NOAA has traditionally favored commercial fishing interests in policy disputes, Lubchenco has consistently called for conservation measures to safeguard ocean ecosystems in the face of industry opposition."For too many years, politics has played a greater role in fisheries management than science," said Josh Reichert of the Pew Environment Group. "This appointment carries with it the hope that this may soon change."Obama's new hotshot at NOAA...Kenneth R. Weiss...Greenspacehttp://latimesblogs.latimes.com/greenspace/2008/12/obamas-new-ocea.htmlJane Lubchenco, one of the nation's top marine ecologists, has been picked to lead the National Oceanic and Atmospheric Administration, sources say, an indication that President-elect Barack Obama wants to restore integrity to the science-based agency buffeted by politics in recent years.Her appointment, and the likely appointment of John Holdren of Harvard and Woods Hole Research Center, signals a U-turn in the federal government's approach to greenhouse gases and global warming. Holdren, rumored to be named Friday as Obama's science advisor, has likened our current situation to "being in a car with bad brakes driving toward a cliff in the fog."The two anticipated appointments have been met with relief -- and even glee -- among scientific and environmental organizations. Their members have spent a half-dozen years hand-wringing over the politicization of science and worrying about lost opportunities to preserve remnants of nature and the resiliency of the planet.The National Oceanic and Atmospheric Administration, which makes up the largest portion of the Department of Commerce, does much of the federal government's research on global warming, as well as regulate fisheries. Lubchenco, among her various efforts to protect the abundance and diversity of marine life, has led a team of researchers at Oregon State University studying the link of climate change devastating sea life in coastal waters off the Pacific Northwest.“Our oceans are experiencing the effects of global climate change –- melting sea ice, acidification, and coral loss," said Vikki Spruill, president of the Ocean Conservancy. "It is especially reassuring to have a world-renowned ecologists as NOAA administrator who knows where the biggest environmental challenge of our lifetime is taking place: beneath the sea and along our coastlines."Both Lubchenco and Holdren have fat resumes, with a long list of degrees and awards, and both previously held the post of president of the American Assn. for the Advancement of Science.Salazar, Vilsack nominations give voice to rural AmericaThe majority of conservationists and rural interest groups say that in making these choices, Obama has taken a step toward fulfilling his campaign promise of revitalizing rural economies...Jim Tankersley and Bettina Boxallhttp://www.latimes.com/news/politics/la-na-obama-rural18-2008dec18,0,2266359,print.storyReporting from Washington and Los Angeles — Every stream tells a story on the half-day drive from Denver to the Salazar family ranch, every culvert a tale of water and politics. Ken Salazar knows them all, a font of knowledge tapped by President-elect Barack Obama on Wednesday when he introduced the Democratic senator from Colorado, whose ancestors farmed and ranched the American Southwest for more than 400 years, as his choice to lead the Interior Department.Some environmentalists call Salazar too centrist and too friendly to drilling and mining interests to run the department: "His overall record is decidedly mixed, and is especially weak in the arenas most important to the next secretary of the Interior: protecting scientific integrity, combating global warming, reforming energy development and protecting endangered species," said the Center for Biological Diversity in Arizona. A letter opposing his nomination was signed by about 50 wildlife biologists and members of environmental groups.But in Salazar and former Iowa Gov. Tom Vilsack -- a longtime chief executive of a major farm state, nominated Wednesday for Agriculture secretary -- Obama is adding two rural-tuned voices to the Cabinet of the most urban president in at least 100 years. Salazar's adds a background, and perhaps a preference for farm and ranching interests, to the often-contentious politics of western water scarcity.Among the Interior secretary's duties is to oversee management of the Colorado River, a crucial source of water for irrigation and municipal supplies for seven states, including California. He will have a major say in appointments to key water posts, including the commissioner of the U.S. Bureau of Reclamation, which runs the biggest water system in the country, California's Central Valley Project."We're very pleased that we got someone who actually knows water, who is a Westerner and is a centrist -- not a liberal and not a conservative," said Jeffrey Kightlinger, general manager of the Metropolitan Water District of Southern California.The majority of conservationists and rural interest groups say that by choosing Salazar and Vilsack, Obama has taken a step toward fulfilling his campaign promise of revitalizing rural economies."We're very encouraged" by the choices, said Mark Maslyn, executive director of the American Farm Bureau, which recently honored Salazar for his work on agricultural issues. "They're men of substance, and they have a record" of supporting the renewable energy efforts Maslyn called "critical" for rural economies and the nation.Salazar barnstormed rural Colorado on Obama's behalf in the months before the November election, promising men in work boots and women in cowboy hats that the Illinois senator understood their plight better than Sen. John McCain (R-Ariz.), his Westerner opponent. He drew affirming nods when he criticized McCain for raising the prospect of renegotiating the Colorado River Compact, which apportions water among seven states.In a recent interview on the state's eastern plains, Salazar sipped from a plastic bottle with a "protect Colorado water" label. He acknowledged the challenge he had to overcome pitching a South Side Chicago candidate in agricultural areas, but he said voters responded when he stressed Obama's support for the most recent farm bill and for energy alternatives such as wind, solar and biofuels, which are booming in rural Colorado."When I explain that to people in rural Colorado," Salazar said, "people come our way."Salazar has drawn praise as a consensus-builder on water issues. Roger Patterson, who is the MWD's assistant manager and has held water posts in other states, said he was instrumental in working out a settlement in a U.S. Supreme Court case involving the Republican River.Attorney Scott Balcomb, who represented Colorado in Colorado River Basin talks for nearly a decade, said he expected Salazar to encourage the states to work out problems, rather than dumping them in the federal government's lap.Still, some voiced concerns that as a Coloradan, Salazar can't escape that state's perspective on river issues. Most of the Colorado River's flow originates in the Rocky Mountains, yet Colorado's share of its namesake river is smaller than California's."I'm sure he will try to be fair," said Bill Swan, an Arizona attorney who represents California's Imperial Irrigation District, the single biggest user of Colorado River water. "But when push comes to shove, it's often upper basin against lower basin, and he's from the upper basin -- particularly that state."Obama praised Salazar's experience in a news conference Wednesday and, in a shot at the Bush administration, said it would help him lead an Interior Department that "cleans up its act."With Salazar, Vilsack and other energy-related appointees announced last week, Obama said, "I am confident that we have the team that we need to make [the] rural agenda America's agenda, to create millions of new green jobs, to free our nation from its dependence on oil and to help preserve this planet for our children."O.C. toll road hits dead end in D.C.Commerce Department officials uphold Coastal Commission's rejection of the Foothill-South toll road, citing six alternative routes that wouldn't cut through San Onofre and Trestles...Susannah Rosenblatthttp://www.latimes.com/news/local/la-me-tollroad19-2008dec19,0,4778582,print.storyThe federal government declined Thursday to breathe new life into a plan to carve a toll road through southern Orange County, apparently ending a contentious, years-long campaign by transportation officials who predict that without it, the current freeway system is destined for breakdown.Unless they turn to the courts for relief, transportation officials in Orange County will be forced to begin anew on plans to unlock the congested Interstate 5 through south Orange County, a stretch they predict will eventually become one of the worst freeway bottlenecks in Southern California. Planners must also determine how to complete the toll road system in Orange County, the only such network in the state.Over the past several years, the fight over the toll road has grown from a parochial transportation feud into a battle that entangled the state's top leaders. The route chosen by transportation officials would have cut a six-lane turnpike through a state park and skirted the sands of the famed Trestles surf break. That prospect galvanized environmental conservation and surfing groups who were joined by several prominent state officials in opposing the road.On the other side, advocates hailed the proposed Foothill South toll road as the key to absorbing the traffic triggered by mushrooming development in southern Orange County and the steady truck traffic in and out of San Diego County. The road was decades in the planning, and dozens of routes were studied before planners picked the proposed 16-mile path.In February, the California Coastal Commission rejected that route, but advocates hoped -- and conservation groups feared -- that the Bush Administration would step in to save it. But in its 28-page decision, the U.S. Commerce Department upheld the commission's position.The toll road agency can appeal the decision in federal court, but for now the proposed route through San Onofre State Beach is dead."In the face of overwhelming evidence, this decision is an abandonment by the federal government of its responsibility to the environment and to national security," said Tustin Councilman Jerry Amante, who chairs the Foothill/Eastern Transportation Corridor Agency board."This decision is inexplicably anti-commerce and inexplicably anti-neighborhood," he said.As toll road advocates scratched their heads and stewed, surfers and environmentalists popped champagne."Hooray, hooray, hooray," said state Treasurer Bill Lockyer, who filed two lawsuits blocking the toll road when he was attorney general.Under the joint federal-state coastal act that helps regulate shoreline development across the country, federal officials could only override the state's decision if they found the project had no reasonable alternatives or was necessary to national security, according to Commerce Department officials. They said neither criteria was met."We thought it was a pretty clear decision," said Jane Luxton, general counsel for the National Oceanic and Atmospheric Administration, part of the Commerce Department. In September, she presided over a 10-hour hearing on the toll road, attended by thousands. The appeal process generated an estimated 35,000 comments -- more than any case in recent memory, according to an administration spokesman.The $1.3-billion Foothill South extension would have connected Rancho Santa Margarita to Interstate 5 at Basilone Road just over the San Diego County line at Camp Pendleton and would have been the final link in the county's 67-mile toll road system. The turnpike now ends in the midst of a residential community.Transportation officials argued that their proposal included significant environmental improvements: preservation and restoration of endangered wildlife habitats, upgraded treatment of highway runoff and $100 million for state parks."I'm stunned that any right-thinking secretary of Commerce could make this disastrous a decision," Amante said. Anti-road activists have "been able to throw a roadblock in the path of progress . . . and to mire our residents in a poor quality of life for the sake of their interests."Amante would not confirm whether the toll road agency will mount a legal challenge, but he made clear that toll road supporters were not about to give up: "We don't intend to just throw our hands in the air and say, 'Oh well.' "For their part, opponents of the road were jubilant over what they deemed a surprise decision. They had been braced for a last-minute rollback of environmental protections, similar to others made in the waning days of the Bush administration."Once you allow the veil of state park protection to be breached, it becomes impossible to defend other state parks that will be put on the chopping block for some so-called essential public purpose," said Joel Reynolds, a senior attorney with the Natural Resources Defense Council, part of the Save San Onofre Coalition. "We simply can't allow our state parks system to be sacrificed for projects that have to go somewhere, but for which agencies no longer have the resources to buy public land."Luxton said the timing of the decision was administrative, set in motion by the Coastal Commission decision, rather than political.The Coastal Commission rejected plans for the road at a raucous hearing in Del Mar last February, saying that the six-lane road violated the state's Coastal Zone Management Act. The panel cited problems including the destruction of sensitive habitats and wetlands, harm to a Native American cultural site and potential devastation of a popular campground.The Transportation Corridor Agencies, which builds and finances toll roads in Orange County, appealed that decision to the federal government, which has jurisdiction because the toll road would have connected with a federal highway.Relieved that the toll road battle has seemingly come to an end, opponents of the turnpike are urging road advocates to join them."The toll road agency has nowhere else to go anymore," Reynolds said.The decision by Commerce Secretary Carlos M. Gutierrez cited six alternate routes for a new south Orange County road that had been listed by the Coastal Commission, including an 8.7-mile extension of the Foothill South through San Clemente that would join with arterial roads to connect with Interstate 5. The federal findings do not endorse a specific route, but say that other reasonable options for a toll road extension are available.The department has overridden 14 of the 43 appeals considered since 1972.Editorial: Feds say no to Foothill SouthThe Commerce Department turns down an appeal of the Coastal Commission's rejection.http://www.latimes.com/news/opinion/editorials/la-ed-foothill19-2008dec19,0,2945934,print.storyGiven the Bush administration's propensity to ignore science and reason in pushing its anti-environment agenda, it was both surprising and refreshing to see the U.S. Commerce Department hew to the rules when it rebuffed the proposed Foothill South toll road Thursday. It's unclear whether toll road proponents will take the matter to court, but they and California parkgoers would be better off if they looked for another route instead.In considering the Transportation Corridor Agencies' appeal, which asked the federal government to override the California Coastal Commission's rejection of the road, Commerce Department officials were supposed to avoid rethinking the entire issue and instead restrict themselves to a limited set of questions: Had the Coastal Commission acted within its authority? Were there reasonable alternatives to the proposed route, down the narrow length of San Onofre State Beach? Was the road necessary to national interests? And that's exactly what they did in a well-reasoned, 28-page refutation of the toll road agency's arguments.One of the agency's emptier contentions was that the proposed road linking south Orange County to northern San Diego County was vital to national security. It would have run along the northernmost rim of Camp Pendleton, on land leased to the state for the park. The federal report includes a smack-down of that claim, with Marine Corps officials saying that Pendleton is secure without such a road. The report also affirms the Coastal Commission's power to decide issues that affect the coastal zone, even if the land involved is not strictly within that zone.Most important, the Commerce Department reminds the toll road agency that there are reasonable alternatives to the route it chose, an option that the road's planners have rejected. Their proposed route would have made the highway an unavoidable presence among the park's backcountry trails, run close to a popular campground that was built as mitigation for the San Onofre nuclear plant, and bisected an ancient Native American village considered a sacred site by the Acjachemen people.It's not easy to find the space in a largely built-out region for a major new road. The toll road's planners were trying to keep costs down and avoid seizing houses and businesses by routing it through the park. Those are worthy goals, and they took their work seriously in producing the route they did. The Commerce Department decision affirms an even more important message: Would-be builders cannot look to the region's diminishing reserves of public open spaces and habitats for endangered species as the answer to legitimate concerns about traffic and growth. California home prices dive 38%The median price drops to $258,000 in November from $414,000 a year earlier as foreclosures prop up sales but erode prices...Associated Presshttp://www.latimes.com/business/la-fi-sfhomes19-2008dec19,0,7939211,print.storyThe median home price in California dived 38% in November from a year earlier as foreclosures propped up sales but eroded prices, a real estate tracking firm said Thursday.The median home price dropped to $258,000 last month from $414,000 in November 2007, San Diego-based MDA DataQuick said. A total of 32,163 houses and condominiums were sold statewide, up 26% from a year earlier."Indicators of market distress continue to move in different directions," DataQuick said. "Foreclosure activity is at or near record levels, financing with adjustable-rate mortgages is near the all-time low."DataQuick said the median home price in the nine-county San Francisco Bay Area plummeted a record 44% in November to the lowest level since September 2000.The median price for houses and condos there dropped to $350,000 last month from $629,000 in November 2007.The peak median price -- $665,000 -- was reached in the summer of 2007.A total of 5,756 houses and condos were sold in the region last month, up 12% from the year-earlier period.Foreclosures accounted for about 47% of all sales of existing homes last month in Northern California, up from 10% in November 2007. Solano County led the way, with 63.6% of sales last month involving foreclosed properties.DataQuick said this week that the median home price in a six-county region of Southern California plunged 35% in November from a year earlier, dropping to the lowest mark since April 2003.San Diego Union-TribuneTollway project loses appeal to federal agency Commerce Dept. sees option to San Onofre...Mike Leehttp://www3.signonsandiego.com/stories/2008/dec/19/1n19toll233951-tollway-project-loses-appeal-federa/?zIndex=24871The bid to extend a tollway through the popular San Onofre State Beach hit another major roadblock yesterday. In what developers and environmentalists both saw as a surprise, the U.S. Department of Commerce rejected the state Route 241 proposal. It said the project is not essential to national security, as advocates have argued, and cited at least one other viable route. The Foothill/Eastern Transportation Corridor Agency of Orange County has spent more than 20 years and $200 million on its campaign to build the extension. In February, the California Coastal Commission rejected the agency's preferred path from Rancho Santa Margarita to Camp Pendleton. The transportation agency's leaders sought a crucial overrule from the Bush administration, which has often favored developers' interests over environmental concerns. Instead, the Commerce Department backed the commission. “I am stunned, frankly, that any right-thinking secretary of commerce would make this disastrous of a decision,” said Jerry Amante, chairman of the transportation agency. “(It) is unsupported by the facts and rewards the anti-road and anti-growth obstructionists who have engaged in an orchestrated campaign of misrepresentation and distortion.” Conservationists who have fought the proposal were giddy. “Even the Bush administration wants no part of it. . . . It just confirms how bad the project really is,” said Joel Reynolds, an attorney for the Natural Resources Defense Council in Los Angeles. Both sides pledged to continue a battle that could lead to more court proceedings. “We don't intend to just throw our hands in the air and say, 'Oh, well,' ” Amante said of the proposed $1.3 billion project. “We are resolute.” Amante said the 16-mile extension is desperately needed because of congestion on Interstate 5. He and the project's supporters said the tollway also would boost the region's economy. Jay Hansen, legislative director for the State Building and Construction Trades Council of California, said lengthening state Route 241 would generate thousands of construction jobs. “California is hurting so bad,” he said. “This would be a great opportunity for our members to get back to work.” Leaders of the Save San Onofre Coalition – composed of surfers, environmentalists and others – said more than 500,000 supporters belong to organizations fighting the project. Opponents of the project raised concerns about routing the tollway extension through the state park and a nature reserve in Orange County, as well as road construction possibly damaging the world-famous Trestles surfing spot. “The destruction of this park will threaten every state park in California,” Reynolds said. “Once you allow the veil of state park protection to be breached, it becomes impossible to defend other state parks that will be put on the chopping block for some other . . . toll road or power plant or sewage treatment plant.” The transportation agency has pitched the state Route 241 extension partly as a national security upgrade because the project would include improved vehicle access to Camp Pendleton. The Commerce Department solicited comments from more than a dozen federal agencies, including the Marine Corps, which operates the base. “None . . . raised any national defense or other national security concerns with the possibility that the project might not go forward,” yesterday's ruling said. Supporters and critics of the project fiercely debated the proposal at two hearings in Del Mar this year. Thousands of people from as far as Northern California turned out for the all-day sessions. The first was in front of the Coastal Commission, which ruled that the road was inconsistent with the state's Coastal Management Program. “Sometimes you make close calls,” commission Chairman Pat Kruer of Rancho Santa Fe said yesterday. “This wasn't a close call.” The transportation agency then appealed to the Commerce Department, which oversees the federal Coastal Zone Management Act. If the department had overruled the commission, it probably would have spurred litigation from environmentalists. Since the Coastal Zone Management Act took effect in 1972, the Commerce Department has acted on 43 appeals, upholding 29 objections by state agencies and overriding 14. The Commerce Department rejected a handful of technical arguments by the transportation agency, which said the Coastal Commission didn't have the authority to review the project and based its ruling on insufficient evidence. Commerce officials said the proposed project had “foreseeable effects” on recreation, habitat and federally protected species such as the steelhead trout and coastal California gnatcatcher. “The attorneys who did the staff work on it felt that the decision is a fairly clear-cut case,” said Anson Franklin, a spokesman for the Commerce Department in Washington, D.C. In suggesting that the transportation agency pursue another route, the federal officials highlighted an 8.7-mile extension from Oso Parkway in Rancho Santa Margarita to Avenida La Pata in San Clemente. Yesterday's ruling said that alternative would significantly reduce traffic congestion on I-5. Some environmentalists support expanding the freeway instead of building a new road. At the transportation agency, Amante dismissed the idea of picking a different path for the tollway extension. He said the other potential alignments would do more damage to the environment and neighborhoods. Amante declined to speculate on whether his agency would sue the Commerce Department because he must first consult with colleagues at the transportation board. But he said the agency was looking hard at the legal issues raised by yesterday's ruling. Elizabeth Goldstein, president of the California State Parks Foundation, said toll-road opponents won't back down. “This coalition is completely committed to doing whatever we need to make sure this toll road is not built through San Onofre State Beach,” she said. 1,400-home Fanita Ranch project on hold Economic downturn, lawsuit lead to delay...Michele Clock http://www3.signonsandiego.com/stories/2008/dec/19/1m19fanita233910-1400-home-fanita-ranch-project-ho/?zIndex=24837SANTEE — A major Santee housing development could be delayed by at least five years due to the poor economy and a lawsuit challenging the way it was approved. Carlsbad-based developer Barratt American had expected to begin work on the nearly 1,400-home Fanita Ranch project as early as last summer and to build out over 10 years. The weak real estate market and credit markets are causing Barratt American to consider making a Chapter 11 bankruptcy protection filing to allow the company to reorganize, said president Mick Pattinson. It still plans to develop Fanita Ranch, he said, but it could take longer than originally hoped. “We've had better days, but we're still here,” Pattinson said. “It's not our intention to go away. Our intention is to continue what we're doing with Fanita.” When it's done, the project on the northern edge of the city would be expected to bring at least 4,000 new residents and millions of dollars into the local economy and City Hall. Also delaying the project is a lawsuit filed by a band of environmental groups contending that the city violated state law and its general plan in approving the project's environmental review documents. Pattinson predicted that the case, filed in January, could take years to play out. Santee Mayor Randy Voepel said yesterday that he would have liked to see the project happen sooner, but he downplayed the potential negative effects on the city. He said the city has not factored revenues from the development into city budgets and described 1,400 homes as “not a monster amount” compared with the city's current 20,000 households. “I'm certainly not happy, but it is not of major impact on Santee,” Voepel said. “I mean, it is the icing on our cake, but it isn't the cake.” Van Collinsworth, whose group Preserve Wild Santee is a plaintiff in the suit over the project, said he wasn't happy about the shape of the economy, either, but hoped the delay would cause proponents to rethink their plans. “The extra time allows for more reflection about what should or shouldn't be built in that period,” Collinsworth said. “So in some respects, that's positive.” Pattinson said he didn't foresee changing the design of the project, unless the changes stemmed from the lawsuit. He said the timing of the project will depend in part on what types of federal economic stimulus packages come out of Washington in the coming months. Barratt American this year lost a $125 million line of credit with Bank of America, affecting 11 projects in San Diego, Riverside and San Bernardino counties, Pattinson said. Fanita Ranch was not one of them. Storms raise water level in 9 area reservoirs...Robert Krier http://www3.signonsandiego.com/stories/2008/dec/19/1m19water233912-storms-raise-water-level-9-area-re/?zIndex=24845SAN DIEGO — This week's heavy rains have raised the water level in San Diego's nine reservoirs, but the lakes are still far from capacity. “We need a whole lot more to get them back up to normal,” said Nathan Grima, an assistant civil engineer with the city of San Diego's water department. “We're still considered under drought conditions.” Most of the county has received more than twice the rainfall it normally would receive by this point in the season. San Diego has recorded more than 2.5 inches this week alone. The total for the season, which begins July 1, is 5.37 inches. Normal is 2.54. Ramona has recorded 6.06 inches; normal there is 3.5. But the reservoir levels were low before the fall storms because of three straight dry years in Southern California. Even after the deluges Monday and Wednesday, the city's reservoirs averaged only about a third full. All reservoirs around the county, which are owned by various cities and water agencies, averaged just below 50 percent full before Wednesday's storm. The combined storage capacity of the city of San Diego reservoirs is 202,872 acre-feet. As of yesterday, the total water stored was 66,106 acre-feet. An acre-foot is roughly 325,850 gallons and enough to meet the demands of two typical households for a year. Wednesday's storm delivered a gift of 3,209 acre-feet of water to the city's reservoirs, and runoff should continue to raise the lake levels over the next few days. Monday's storm brought a similar lift to the lakes. The National Weather Service expects another storm to arrive Monday. Forecaster Rob Balfour said the storm shouldn't pack the punch of this week's storms. He said the coast and inland valleys should receive about a half inch of rain, and the foothills could get about an inch. The weekend after Christmas, another storm could tap into subtropical moisture and deliver a drenching that could rival the storms of this week. But Balfour cautioned that it's too early to tell how big the post-Christmas storm will be. Even if that storm does match this week's downpours, the reservoirs should have no trouble handling them. “We certainly don't have to worry about overflowing,” San Diego water department spokesman Arian Collins said. Runoff caused a fish kill in Lake Hodges near Escondido yesterday, Collins said. The runoff mixed oxygen-starved water from the bottom of the lake with waters closer to the surface, and that killed some species of fish sensitive to lower oxygen levels. The die-offs are common in the spring and fall, Collins said. County farmers, many of whom have endured cutbacks in deliveries from the State Water Project this year, have appreciated the series of storms this fall. “We want them (the storms) to keep lining up like that,” said Eric Larsen, executive director of the San Diego County Farm Bureau. “Any time farmers can eliminate an irrigation cycle, that's really important.” Farmers were watching the temperatures closely last night. The weather service issued a frost advisory for the deserts and inland valleys because temperatures in some low-lying spots were expected to dip into the 20s. Washington PostEPA Eases Emissions Regulations for New Power Plants...David A. Fahrenthold and Steven Mufsonhttp://www.washingtonpost.com/wp-dyn/content/article/2008/12/18/AR2008121803687_pf.htmlThe Environmental Protection Agency ruled yesterday that new power plants are not required to install technology to reduce carbon dioxide emissions, rejecting an argument from environmental groups.The ruling, in a memorandum signed by EPA Administrator Stephen L. Johnson, turns on a seemingly arcane regulatory question that could govern the future of new fossil fuel-burning buildings and power plants under the Clean Air Act.During the Bush administration, the EPA has rejected the idea that greenhouse gases should be regulated like soot, smog precursors and other kinds of air pollution, despite an April 2007 Supreme Court ruling that said carbon dioxide fit the definition of a pollutant that could be regulated under the Clean Air Act.The case at issue yesterday began in 2007 when the EPA issued a permit to a new coal-fired power plant in Bonanza, Utah. The Sierra Club, an environmental group, filed a legal challenge, saying that the permit should have required the plant to control its output of carbon dioxide.In a case before the EPA's Environmental Appeals Board, the Sierra Club cited a rule that required plants to use the best available technology to control all "regulated" pollutants, as well as the April 2007 Supreme Court ruling.The case revolved around the question of whether carbon dioxide was required to be controlled or simply monitored.The appeals board, a kind of appeals court for EPA rules, found on Nov. 13 that the rule was unclear. Johnson's memo yesterday sought to make it plain. Major industrial corporations have been pressing the Bush administration to issue a ruling in the case."That is our established interpretation," Robert Meyers, the head of the EPA office of air and radiation, said in an interview. "We've been applying it that way for 30 years."It was unclear yesterday what the ruling's real-world impact will be. The EPA says that about 50 plants -- either new or significantly remodeled -- must obtain a permit under this provision every year. But Meyers said he does not know if any are positioned to receive final approval before President-elect Barack Obama takes office on Jan. 20.The Obama administration is likely to review the case, and Democratic officials close to the president-elect's team say that the Supreme Court ruling and the EPA's power to regulate carbon dioxide can serve as powerful levers to bring corporations and other parties to a bargaining table about broad framework for controlling greenhouse gases.New York TimesE.P.A. Ruling Could Speed Up Approval of Coal Plants...MATTHEW L. WALD and FELICITY BARRINGERhttp://www.nytimes.com/2008/12/19/business/19coal.html?sq=epa&st=cse&scp=2&pagewanted=printWASHINGTON — Officials weighing federal applications by utilities to build new coal-fired power plants cannot consider their greenhouse gas output, the head of the Environmental Protection Agency ruled late Thursday. Some environmentalists fear the decision will clear the way for the approval of several such plants in the last days of the Bush administration.The ruling, by Stephen L. Johnson, the administrator, responds to a decision made last month by the Environmental Appeals Board, a panel within the E.P.A., that had blocked the construction of a small new plant on the site of an existing power plant, Bonanza, on Ute tribal land in eastern Utah. The Supreme Court ruled last year that the agency could regulate carbon dioxide, the most prevalent global warming gas, under existing law. The agency already requires some power plants to track how much carbon dioxide they emit. But a memorandum issued by Mr. Johnson late Thursday puts the agency on record saying that carbon dioxide is not a pollutant to be regulated when approving power plants. He cited “sound policy considerations.”His said in the memorandum that each year, about 275 new sources of pollution, from power plants to apartment buildings, must obtain permits saying that they will not significantly decrease air quality. Mr. Johnson wrote that the decision he overruled had confused the federal and state agencies that issue these permits. “Given the confusion,” the memorandum said, “the best path forward is to establish a clear interpretation” of what can be considered a pollutant to be regulated. “The current concerns over global climate change should not drive E.P.A. into adopting an unworkable policy of requiring emission controls” in these cases, he said.Mr. Johnson rejected a new line of attack by environmental groups. In the wake of the Bush administration’s failure to decide if carbon dioxide could be regulated under existing laws, environmental groups pursued a new strategy in fighting proposed coal plants like the one in Utah.They asserted that because carbon dioxide must already be monitored under federal laws, that monitoring is tantamount to regulation. Therefore, they argued, its impact must be considered before new plants are approved. Last month the appeals board said the argument could be used, but was not required. On Thursday the administrator overruled the board. He said that simple monitoring cannot be considered regulation.John Walke, a lawyer at the Natural Resources Defense Council, said in a statement, “It’s a marvel to behold an E.P.A. action that so utterly disdains global warming responsibility and disdains the law at the same time.”Jeff Holmstead, a former E.P.A. official who now works with the Electrical Liability Coordinating Council, said the Johnson memo ensured that the incoming Obama administration had increased freedom to make its decisions on the status of carbon dioxide.“I think if you’re Lisa Jackson,” whom Obama has chosen as Mr. Johnson’s successor, “you have to be pretty grateful,” he said. “She has the opportunity to go through a rule-making and see how to deal” with the issue.Vickie Patton, deputy general counsel of the Environmental Defense Fund, estimated that as much as 8,000 megawatts of new coal-fired power plants could win swifter approval as a result of the ruling.Opponents of coal plants list several in the late stages of the approval process that could be affected by the decision Thursday. “There are a bunch that they are going to argue now don’t have to consider carbon dioxide, and which will be beyond the reach of the incoming Obama administration,” said Bruce Nilles, director of the anticoal campaign at the Sierra Club, an environmental group. He listed a proposed $1.25 billion plant, called Pee Dee, that Santee Cooper, a South Carolina utility, is seeking to build and that won state approval on Tuesday; a project in Rogers City, Mich., that the Wolverine Power Cooperative Electric is seeking to build; and another project in Utah, a small plant sought by Consolidated Energy in Davis County. That one would run on petroleum coke, which is also carbon-rich.Proposed Gas Drilling Upstate Raises Concerns About Water Supply...Mireya Navarro http://www.nytimes.com/2008/12/19/nyregion/19drill.html?sq=conservation&st=cse&scp=7&pagewanted=printFor most of the 30 years that they have lived in the West Village, Buck Moorhead and his family have driven north a few times a month to their other home in the Catskills to enjoy the forests, the wildlife, the peace. And for the last several months, they have attended meetings with scores of other upstate residents who fear that those attractions will be marred by pollution, new roads and plummeting property values if ambitious plans to expand drilling for natural gas proceed. “We effectively risk ruining our drinking water and turning a pristine area into an industrial landscape,” Mr. Moorhead, 55, an architect, said of the effect both upstate and downstate. “The whole thing is like a nightmare.”But when Mr. Moorhead, whose second home is in Sullivan County, spoke out against drilling this month at a hearing of the City Council’s committee on environmental protection, he was among fewer than two dozen private citizens who showed up and the only one to testify, even though the city has a considerable stake in such drilling north of the city line.Upstate, the push by energy companies to explore drilling under a broad swath of western and southern New York State have provoked alarm and protest among environmentalists and others.But in New York City, opponents say that city residents and leaders have been slow to react, despite New Yorkers’ stake: not only do many have weekend homes, but the area under consideration for drilling includes the watershed that supplies most of the city’s drinking water.“In the absence of a real rallying cry coming from the city to vigorously protect the water supply, we’re going to get rolled,” said James F. Gennaro of Queens, chairman of the Council’s environmental committee, which has been holding the hearings. Mayor Michael R. Bloomberg, who has made the environment a focus of his administration, has yet to weigh in publicly on the issue. “The mayor appreciates the need for energy, but believes it must be obtained in a responsible way,” said one of his spokesmen, Marc La Vorgna.“The watershed’s protection must be guaranteed before any drilling moves forward.”The City Department of Environmental Protection has held off taking a position until it hears from a consultant it hired to analyze any threats that drilling may pose to the water supply.But Mr. Gennaro, environmental groups like the Natural Resources Defense Council and others are calling for an outright ban on drilling in the million-acre watershed. They say that such operations represent an inherent risk to the water, which is so pure that it does not require filtration before arriving in the taps of more than 8 million people in the city and another million residents in Westchester and other counties. Any contamination, they note, would require the investment of billions of dollars in a filtration plant and would result in higher water rates. New York State has a history of gas and oil drilling going back to the 1800s, with 13,000 active wells now in operation. Energy companies are now showing interest in the Marcellus Shale, part of a sequence of layered rocks stretching from New York to Tennessee, that runs as deep as 7,000 feet below ground and requires pumping huge volumes of water laced with chemicals — one to five million gallons per well — into the earth to break the rock and extract gas. Because the process raises new issues about the use and disposal of wastewater, the State Department of Environmental Conservation is revising its regulations to address those matters before approving any new permits.The agency says that protecting all watersheds is a priority, but that talk of a ban is premature until every environmental effect of the expanded drilling is determined. A final plan on where and how drilling will be allowed is expected as early as spring.Exploration in the Marcellus Shale, a step that has became more attractive because of new technology and the nation’s push to find its own sources of energy, comes with such high expectations that it has unleashed a gold rush for land.Companies are paying property owners millions of dollars for leases to drill thousands of wells if the shale in New York proves bountiful. “It’s almost like placing bets,” said Val Washington, deputy commissioner of remediation for the state environmental agency, which is getting pressure from some counties to act more quickly to allow the drilling, so as not to miss an economic bonanza. “A lot of people are interested in it as a revenue source.”Robert Homovich, a member of the Delaware County Board of Supervisors, said the board opposes a ban on drilling in the New York City watershed. Not only does he trust that the state can ensure responsible drilling operations, he said, but a ban would also rob an economically depressed area of significant revenue.“If we don’t have this or something similar, New York City is going to bankrupt us,” he said, noting that the city has been acquiring more and more land in the area to keep it off limits to farming or development to protect the watershed. But environmental watchdogs say that concerns about contamination and public health should prevail in the decision. Steven W. Lawitts, the acting commissioner of the city’s environmental agency, said drilling on the scale now envisioned posed “great risks” and could hamper his department’s ability to keep the water clean.One major concern is the use of benzene and other chemicals used in drilling that have contaminated groundwater in other states. The state environmental commissioner, Alexander B. Grannis, has said that applicants for permits would have to disclose all components in drilling fluids.But Mr. Lawitts said there were also questions about the dangers of leaks, spills, soil runoff and other contamination from the water used in drilling.The city’s moves to keep its water supply pristine by buying up more land in the watershed could also be jeopardized by competition with natural gas companies that are offering landowners lucrative deals. Most land in the watershed is privately owned, although the city and state own about one-third. Mr. Lawitts said the city had no plans to sell drilling rights. But the state has not ruled it out, Ms. Washington said, although most of the state-owned land is a protected “forest preserve” in the Catskill Park, and off limits to drilling, said Yancey Roy, a spokesman for the State Department of Environmental Conservation.Though state officials maintain that they have the ultimate say on drilling, Mr. Lawitts said city regulations “can still govern what activity is permissible or not permissible” on watershed lands. He rejected criticism that the city was not being assertive enough. “Our top priority is the watershed,” he said. “That’s unequivocal.” Among those seeking a state ban on drilling in the watershed are environmental groups like Riverkeeper and Earthjustice. The city comptroller, William C. Thompson Jr., sent the state a letter this week warning that drilling could have “crippling implications” for customers if it reduces the quality of the unfiltered water. He said a filtration plant would cost $6 billion to $10 billion just to build, requiring at least a 30 percent increase in water and sewer rates.Meanwhile, in hopes of getting more New Yorkers involved, Councilman Gennaro is gathering signatures on petition in support of a drilling ban. And Mr. Moorhead, the West Village architect, said he planned to talk to his community board and send an e-mail message to his city friends to drum up interest among the unaware.“This is a mammoth construction project,” he said. “It’s stunning this is under consideration, when one looks at the risks.” Tax Break May Have Helped Cause Housing Bubble...Vikas Bajaj and David Leonhardthttp://www.nytimes.com/2008/12/19/business/19tax.html?_r=1&ref=business&pagewanted=print“Tonight, I propose a new tax cut for homeownership that says to every middle-income working family in this country, if you sell your home, you will not have to pay a capital gains tax on it ever — not ever.” — President Bill Clinton, at the 1996 Democratic National ConventionRyan J. Wampler had never made much money selling his own homes. Starting in 1999, however, he began to do very well. Three times in eight years, Mr. Wampler — himself a home builder and developer — sold his home in the Phoenix area, always for a nice profit. With prices in Phoenix soaring, he made almost $700,000 on the three sales.And thanks to a tax break proposed by President Bill Clinton and approved by Congress in 1997, he did not have to pay tax on most of that profit. It was a break that had not been available to generations of Americans before him. The benefits also did not apply to other investments, be they stocks, bonds or stakes in a small business. Those gains were all taxed at rates of up to 20 percent.The different tax treatments gave people a new incentive to plow ever more money into real estate, and they did so. “When you give that big an incentive for people to buy and sell homes,” said Mr. Wampler, 44, a mild-mannered native of Phoenix who has two children, “they are going to buy and sell homes.”By itself, the change in the tax law did not cause the housing bubble, economists say. Several other factors — a relaxation of lending standards, a failure by regulators to intervene, a sharp decline in interest rates and a collective belief that house prices could never fall — probably played larger roles.But many economists say that the law had a noticeable impact, allowing home sales to become tax-free windfalls. A recent study of the provision by an economist at the Federal Reserve suggests that the number of homes sold was almost 17 percent higher over the last decade than it would have been without the law.Vernon L. Smith, a Nobel laureate and economics professor at George Mason University, has said the tax law change was responsible for “fueling the mother of all housing bubbles.”By favoring real estate, the tax code pushed many Americans to begin thinking of their houses more as an investment than as a place to live. It helped change the national conversation about housing. Not only did real estate look like a can’t-miss investment for much of the last decade, it was also a tax-free one.Together with the other housing subsidies that had already been in the tax code — the mortgage-interest deduction chief among them — the law gave people a motive to buy more and more real estate. Lax lending standards and low interest rates then gave people the means to do so. Referring to the special treatment for capital gains on homes, Charles O. Rossotti, the Internal Revenue Service commissioner from 1997 to 2002, said: “Why insist in effect that they put it in housing to get that benefit? Why not let them invest in other things that might be more productive, like stocks and bonds?”The provision — part of a sprawling bill called the Taxpayer Relief Act of 1997 — exempted most home sales from capital-gains taxes. The first $500,000 in gains from any home sale was exempt from taxes for a married couple, as long as they had lived in the home for at least two of the previous five years. (For singles, the first $250,000 was exempt.) Mr. Wampler said he never sold a home simply because of the law’s existence, but it played a role in his decisions and also became part of his stock pitch to potential customers who were considering buying the homes he was building in the desert. He would point out that the tax benefits would increase their returns on a house, relative to stocks.“Why not put your money on the highest-yielding investment with the highest tax benefit?” he said recently. During the boom years, he prospered. But today he owns 80 acres of land on the outskirts of Phoenix that he cannot sell. He owes $8 million to his banks, which may soon foreclose on his land.“I am literally dying on the vine,” he said.The change in the tax law had its roots in a Chicago speech that Senator Bob Dole, Mr. Clinton’s Republican opponent in the 1996 presidential election, gave on Aug. 5 of that year. Trailing Mr. Clinton in the polls, Mr. Dole came out for an enormous tax cut, including an across-the-board reduction in the capital-gains tax.The proposal made Mr. Clinton’s political advisers more nervous than almost anything else during the campaign. The campaign’s chief spokesman, Joe Lockhart, traveled to Chicago to stand outside the ballroom where Mr. Dole was speaking and make the case that the Dole tax cut would cause the deficit to soar.At the same time, Mr. Clinton’s aides began scrambling to come up with their own tax proposal. Dick Morris, the president’s chief outside political adviser, argued that Mr. Clinton could assure his re-election by matching Mr. Dole’s call for a big cut in the capital-gains tax.But members of Mr. Clinton’s economic team, led by Treasury Secretary Robert E. Rubin, disliked that idea. They thought it would undo the tough work the administration had done to reduce the budget deficit. So they instead went looking for smaller tax cuts that would allow their boss to campaign as both a fiscal conservative and a tax cutter.Getting rid of capital gains on most home sales seemed like the perfect idea.Treasury officials had become interested in that provision earlier in Mr. Clinton’s term after Jane G. Gravelle, an economist at the Congressional Research Service, had called it to their attention, according to Eric J. Toder, an official in the tax policy office at the time. He and his colleagues were looking for ways to simplify the tax code, and Ms. Gravelle told them that eliminating capital-gains taxes on houses was an excellent candidate.The tax forced homeowners to keep track of all their renovations over many years, because the cost of those renovations could be subtracted from their taxable gain. Even renovations on previous homes often qualified, as long as people had deferred the tax in the past by buying a new house at least as valuable as their old one.“It was very hard for people to keep track of that information,” said Leslie B. Samuels, the assistant Treasury secretary for tax policy from 1993 to 1996.People could also avoid the tax under a one-time exemption, for profits of up to $125,000, if they were older than 55. Thus, the tax raised relatively little revenue — perhaps just a few hundred million dollars in today’s terms. “It was the worst kind of tax system,” Ms. Gravelle said recently. “It raised very little revenue, but it caused all these distortions and compliance problems.” Three weeks after Mr. Dole’s speech, with support from top Treasury officials, the proposal made it into Mr. Clinton’s speech at the Democratic convention. During the presidential debates that followed, he used it to parry Mr. Dole’s calls for a big tax cut. The following summer, Mr. Clinton signed the provision into law. At the time, Realtors and home builders lobbied for the provision and there was only scant opposition. Grover Norquist — a conservative activist and adviser to Newt Gingrich — said home sales did not deserve special treatment. But Republicans ended up voting for the bill by even wider margins than Democrats.Today, it is the subject for considerably more debate. Ms. Gravelle and Mr. Samuels said they thought the law had done more good than ill. And William G. Gale, director of economic studies at the Brookings Institution, said he did not think that the change in the law was central to the bubble. Low interest rates, he said, were far more important. The law’s defenders say that it also removed at least one tax incentive that had pushed homeowners to trade up. Before 1997, people had to buy a house that was at least as valuable as their previous one to avoid the tax, or else take the one-time exemption. Now they could buy a smaller property or move into a rental.But many economists say the net effect of the law was clearly to inflate the real estate market. Dean Baker, co-director of the Center for Economic and Policy Research, a liberal policy group in Washington, criticized the exemption as “a backward policy” that “helped push more money into housing.”A spokesman for Mr. Clinton declined to comment for this article.Perhaps the most detailed analysis of the provision has been the study by a Federal Reserve economist, Hui Shan, who did the analysis while at M.I.T. Ms. Shan looked at homeowners with significant equity gains, before and after 1997, and compared the likelihood of their selling their house. Her study covered 16 towns around Boston and took into account a host of other factors, like the general rise in home prices at the time.Among homes that had appreciated less than $500,000, she concluded that the change caused a 17 percent increase in sales in the decade after 1997. Before the law changed, many people apparently avoided paying the tax by simply staying in their homes.Ms. Shan also found that sales actually declined among homes with more than $500,000 of gains after the law passed. (Under the new law, couples have to pay taxes on gains above $500,000, even if they roll all those gains into a new house.) Nationwide, however, less than 5 percent of home sales over the last decade had gains of more than $500,000, according to Moody’s Economy.com.Despite the criticism, there has been little political support for trimming the tax breaks for housing. In 2005, a bipartisan panel of tax experts, which was appointed by President Bush and included Mr. Rossotti, concluded, “The tax preferences that favor housing exceed what is necessary to encourage homeownership.” Among other things, it recommended increasing to three years the amount of time people had to stay in homes to claim the tax break on a sale. But Mr. Bush and other policy makers largely ignored the panel’s report.Geo Hartley, a lawyer who has lived in Los Angeles and Washington over the last two decades, captures the divergent effects that the law appears to have. Mr. Hartley, who is 59 and single, said he found the old law “weird,” because it led him to buy bigger houses than he wanted.Since the law changed, Mr. Hartley has bought smaller homes. But he has also moved more frequently, knowing that most of the gains on his houses would not be taxed. He lived in one house in Los Angeles for a full decade before 2000. Since then, he has moved three times, making a handsome — and mostly tax-free — profit each time.“It’s part of the thinking that gets you more motivated to buy and sell property,” said Mr. Hartley, who now lives in a town house in Washington that he is trying to sell, “and have the American dream of owning a home.”CNN MoneyFailed banks for sale...who's buying?A move by regulators to open up the failed bank bidding process has sparked a wave of investor interest. But experts are wary about its real impact...David Ellishttp://money.cnn.com/2008/12/19/news/companies/banks_bidders/index.htm?postversion=2008121906NEW YORK (CNNMoney.com) -- More banks will certainly fail in the months ahead, but at least regulators shouldn't have any trouble finding buyers.Last month, two of the nation's top banking regulators - the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency - widened the buyer pool for failed banks by opening up the bidding process to both investor groups and individuals.Traditionally, this process has been limited to chartered banks and savings institutions. But regulators changed their stance partly in response to strong demand from non-bank investors and expectations that the supply of failed banks will grow in 2009.So far this year, only 26 of the more than 8,400 FDIC-insured institutions have failed. But with 171 institutions on the FDIC's so-called 'problem bank' list as of the end of the third quarter, it's likely that the assets of many more failed banks will be up for grabs next year.Waiting for a failureDespite some high-profile bank mergers in the past few months, there has yet to be a major wave of consolidation in the industry since many banks have been afraid of inheriting another company's troubled loan portfolio.Instead, many banks have waited for others to fail outright before stepping in. That's because once the FDIC assumes control of the failed bank's troubled assets, an acquirer can get deposits on the cheap and a clean balance sheet.Officials at the OCC and FDIC were unable to provide any figures as to how many investors have applied to buy failed banks so far. But they said interest in the program has been robust since it first launched.One firm that has already won conditional approval to bid for a failed bank is Ford Group Holdings, an investment group which includes long-time Texas bank investor Gerald J. Ford. That interest could extend to wealthy individuals who want to break into the banking game and even private equity players.Christopher Flowers, who runs the buyout shop J.C. Flowers, scooped up a tiny bank in northern Missouri with $14 million in assets in August. At the time, he hinted at plans to expand.But private equity investments in the U.S. banking industry have fared poorly this year. The $7 billion stake in embattled savings and loan Washington Mutual taken by private equity giant TPG was wiped out after the savings and loan giant collapsed in late September. So buyout shops may be reluctant to place any more bets."I think you have investors sitting on the sidelines saying 'Let's just wait and see how the entire business model shakes out,'" said Jess Varughese, managing partner at Milestone, a New York City-based management consulting firm that focuses on the financial services industry. Jennifer Thompson, an analyst at the New York-based financial services research firm Portales Partners, added that the move to open up the bidding process for failed banks is largely symbolic anyway since banks themselves already have a hearty appetite for the deposits of failed rivals."It is just adding to the perception of liquidity in the market," she said.Cautionary taleNonetheless, regulators have said they hope that by relaxing standards about who can participate in the program, they can fetch a better price for the assets of failed banks and better returns for the FDIC's deposit insurance fund.The agency estimates that the fund, which is used to guarantee deposits when a bank fails, will suffer about $40 billion in losses through 2013. Last summer's collapse of the California-based IndyMac wiped out $8.9 billion from the fund. Regulators have yet to announce a buyer for the troubled mortgage lender.But the program is not without its risks.Faced with an overwhelming number of bank failures, banking regulators enacted a similar move during the savings and loan crisis of the 1990s. That backfired, however, after a number of failed institutions were sold to developers which used the bank to fund their own businesses."The regulatory agencies may be looking at some individuals that are very astute," said one former staffer for the Resolution Trust Corporation, which the federal government created to help handle failed institutions during the savings and loan crisis. "That may look good now, but nobody really knows."Clock ticking at GMACGM says it will do what it needs to support its financing affiliate as a deadline for a big capital raise looms....Colin Barrhttp://money.cnn.com/2008/12/19/news/gmac.questions.fortune/index.htm?postversion=2008121915NEW YORK (Fortune) -- President Bush has thrown a lifeline to GM and Chrysler, but problems at their financing arms could throw a wrench into recovery plans. Bush announced a $13.4 billion aid package Friday morning for GM (GM, Fortune 500) and Chrysler, saying that allowing the U.S. auto industry to collapse "is not a responsible course of action." Although GM and Chrysler will now survive the holidays, their financing subsidiaries remain under immense pressure. GMAC and Chrysler Financial are struggling due to heavy debt loads and deteriorating credit market conditions.GMAC's problems have been compounded by the fact that it was a top issuer of subprime mortgages before the housing bubble burst.GMAC -- which, like Chrysler Financial, is controlled by private equity firm Cerberus Capital Management -- is trying to raise capital to become a bank holding company, which would enable it to enjoy the kind of federal financial support that GM and Chrysler are now in line to receive. GMAC faces a Friday afternoon deadline that could determine whether it will be able to qualify for bank holding status. If it doesn't, the company has suggested GMAC could face a bankruptcy filing of its own.Though GM no longer owns GMAC - it holds 49% of the finance company following a 2006 sale of the rest to Cerberus - a setback at GMAC would deepen the Detroit auto giant's financial troubles. GMAC is the biggest lender to GM's 6,500 dealers nationwide. An analyst at Barclays Capital suggestedin a report this week that GMAC's failure could force GM to come up with $9 billion to $13 billion in additional funding to back its dealers - money GM clearly doesn't have right now. An analyst with fixed income research firm CreditSights said in a report last week that GM "remains significantly dependent on its former captive auto finance subsidiary." GMAC has been trying for the past month to raise new funds by getting holders of $38 billion in its debt to swap their current bonds for a lesser amount of new bonds, cash and preferred shares. Those efforts have intensified in the past week.The company has said it needs to get 75% of bondholders to sign onto the deal to raise enough money to qualify for federal funding under the Treasury's Troubled Asset Recovery Plan. The deadline for holders to tender their bonds is 5 p.m. Friday. GMAC has said that failing to complete the swap by the end of the year "would have a near-term material adverse effect on GMAC's business, results of operations, and financial position." So far, though, bondholders have been reluctant to take a haircut on their holdings, hoping that GMAC will sweeten its offer. Indeed, GMAC last week raised the offer after it found that less than a quarter of bondholders had tendered their shares into the offer. The sweetener resulted in increased participation - 58% of GMAC bondholders had offered their bonds by the middle of this week - but the company remained far short of its 75% target. GMAC's efforts suffered another blow Thursday, when The Wall Street Journal reported that big bond manager Pimco wasn't participating in the swap. Pimco didn't return a call seeking comment. GMAC looking at many optionsGM said Friday it will find a resolution to the GMAC problems. "GM is prepared to do what we need to do to support" GMAC, said General Motors operating chief Fritz Henderson at a press conference about the loan from the government. Henderson declined to comment on the debt swap offering, but added that GM was in "constant dialogue with Treasury officials as well as the Fed." "Stay tuned. We still have some work ahead of us to try to get it done," he said. GMAC spokeswoman Gina Proia said the company was continuing "to discuss the options we've laid out previously," referring to the debt exchange plan and the company's efforts to become a bank holding company. She didn't comment on the status of these efforts or Friday's auto rescue plan, but said GMAC was "encouraged" by the government's recognition of the importance of the auto industry to the U.S. economy.The debt swap may not be GMAC's only hope. According to news reports Thursday, Cerberus was discussing a possible merger of GMAC and Chrysler Financial. Cerberus wasn't immediately available to comment on these reports. But the private equity firm did say Friday it would use the first $2 billion of proceeds from Chrysler Financial to backstop the loan for Chrysler's automotive operations.GMAC, meanwhile, said it would seek to swap some bonds in its Residential Capital mortgage unit for equity in the parent entity of GMAC Bank. That move, said Tom Ferguson at KDP Asset Management in Montpelier, Vt., could help GMAC's bank holding company application by giving the company more capital. He said GMAC has been "scrambling for ways to keep the application moving along," and wouldn't be surprised to see both GMAC and Cerberus take further action to keep the bank holding company plans from collapsing. "The investment bankers are really earning their bonuses on this one," he said.