Merced Sun-Star
Our View: Merced County CEO hides behind public information officer
Dee Tatum has transformed himself into the man behind the curtain by cutting off press...Editorial
Getting information directly from Merced County CEO Dee Tatum is impossible lately. He likes to hide behind the county's public information officer.
But now he's gone too far.
Having a county worker speak on his behalf regarding his purchase of 24 acres in Planada is clearly a misuse of our tax dollars.
This was Tatum's private deal that has nothing to do with the county. Why is a county worker spending time on this?
In 2005, Tatum bought the land from developer Pacific Holt Corp. that may have been discounted by about $50,000. A Merced County civil grand jury investigated and found nothing wrong.
Now a new inquiry by the state Fair Political Practices Commission is under way thanks to criticism voiced by the Merced County Sheriff Employees Association.
The union believes the difference in prices amounts to an improper gift to Tatum from a local company looking to develop land in the area.
Until an investigation finds otherwise, this is Tatum's deal and has nothing to do with his work at the county. County employees shouldn't be speaking on his behalf.
Even more important is that our county leaders communicate directly with the public instead of an employee who acts as a filter. This is not what a public information officer is supposed to do. Most public information officers act as facilitators. Finding the appropriate person to speak on behalf of the county is what they do best. Get it right.
The county has a rich history of wasting tax dollars -- we can cite the Riverside Motorsports Park, questionable benefits for elected officials and the huge chunks of money supervisors give out each year -- and maybe it's time that the public gets its information directly from county officials.
Maybe it's time Tatum starts communicating directly with the public over his private affairs.
Sacramento Bee
California's Indian casinos see gamblers spend less...Mary Lynne Vellinga...1-18-09
First of two parts examining the effects of the economy on gambling in California.
The four-story steel skeleton and idled cranes in back of Thunder Valley Casino in Placer County puncture any notion that the gambling business is recession-proof.
Construction stopped abruptly in December on the casino's $1 billion expansion. Its owner, the Auburn Indian Community, is reassessing whether it really needs a 23-story hotel, or a nine-story parking garage.
Thunder Valley representatives say the timeout has nothing to do with the December opening of the new, $530 million Red Hawk Casino on Highway 50 in Shingle Springs. Tribal spokesman Doug Elmets said construction will resume this spring, perhaps with minor modifications.
But there's no denying that the new competition comes at a bad time for Thunder Valley and other gambling venues.
Revenue growth for tribal casinos in California has flattened in the past year, and in some cases has dropped. Exact figures for individual tribes are hard to come by, since they aren't required to report them.
"Based on what I know, a lot of the Indian casinos are down double digits," said Rich Hoffman, chief executive officer for Jackson Rancheria Casino. "I've heard figures ranging from 10 percent to 20 percent, especially for casinos in the more mature markets like Southern California."
Hoffman said revenues at Jackson, which pulls customers mostly from the Central Valley, were flat in 2008 compared with 2007.
Elmets, a spokesman for both Jackson and Thunder Valley, said the number of people coming to gamble at Thunder Valley remains the same. But those people are spending less.
"The casinos that I'm familiar with are profitable enterprises; the number of people coming to them is stable," Elmets said. "The people are just not generally spending as much. We expect that as the market recovers, business will increase."
Still, he said, it's only "prudent" for the Auburn Indian Community to take a hard look at how many suites and parking spaces it needs in the expansion, which also will include a performance venue. The amenities were planned in large part to pull in more Bay Area patrons.
Another area tribe, the Rumsey Band of Wintun Indians, is pushing forward with an expansion of its Cache Creek Casino Resort in Yolo County's bucolic Capay Valley. The tribe says the expansion is needed to give customers a reason to keep making the special effort it takes to get to Cache Creek, which is not located near a major highway.
Cache Creek General Manager Randy Takemoto released a written statement this week saying the casino had seen a "noticeable drop in spending" by its customers.
Even a plateau in profits marks a significant change for Indian casinos in California.
For the past decade, tribal casinos that started out as modest bingo halls have enjoyed a legal monopoly on Las Vegas-style gambling that brought them enormous economic rewards and transformed the lives of their members.
The average slot machine in an Indian casino produces roughly $300 in profits for the house each day, said Bill Eadington of the Institute for the Study of Gambling & Commercial Gaming at the University of Nevada, Reno.
Frank Streshly, senior analyst with the Nevada Gaming Control Board, said that compares with about $121 for a slot machine in Nevada.
But now the number and scale of Indian casinos has grown enough that they're competing with each other. Thunder Valley, Cache Creek and Red Hawk – the three major players in the local market – each have as many slot machines as a large Las Vegas casino, such as Bellagio.
Operating in an increasingly competitive environment, tribes rely heavily on advertising promotions and prizes. They are emphasizing qualities that appeal to specific groups, such as Asians, who make up 50 percent or more of the patrons at Thunder Valley and Cache Creek.
Red Hawk, the newest casino, is owned by the Shingle Springs Band of Miwok Indians. Aside from bright-shiny-newness, it has added features to help it stand out, including a child care center and an arcade for teens.
General manager Peter Fordham said most of Red Hawk's customers are coming from the greater Sacramento area, and business has been good. The casino added 80 employees in the past week, bringing the total to 1,750.
"We're very pleased with what we're seeing so far, and we're certainly not cutting anything back," he said.
Red Hawk doesn't market much in the Bay Area yet. By contrast, most of Cache Creek's customers come from the Bay Area, many of them on tour buses. And Thunder Valley operates marketing storefronts in the Chinatowns of San Francisco and San Jose.
"One of the reasons the Bay Area is so important is that they have one of the largest Asian populations in the world, and there's no doubt that, culturally, Asians are more committed to gambling than any other demographic," Elmets said. "We've got an Asian marketing team at Thunder Valley that speaks virtually every dialect."
With Thunder Valley upping the ante by adding a hotel, Cache Creek is planning its own expansion that will bring its hotel from 200 to 667 rooms and add a performing arts hall and 27 luxury casitas for overnight guests on the hillside above the casino.
In an environmental review of the Cache Creek expansion, the Rumsey band describes the project as "essential to enabling the resort to maintain its competitive position in the market."
The tribe has reached an impasse with Yolo County in negotiations over how much it should pay the county to make up for the impacts of the expansion – an increase in traffic on Highway 16, for example. The two sides are headed for arbitration.
Yolo County Supervisor Mike McGowan complains that the county is caught in an arms race among Indian casinos.
"The motive has moved from what must we do to be self-sufficient to what do we need to do to be more competitive," McGowan said.
As Thunder Valley and Cache Creek strive for Las Vegas glitz, Jackson Rancheria has cultivated a down-home niche, appealing to Valley residents who live between Galt and Modesto. The casino recently opened an RV park with a resort-style pool to lure overnight travelers.
Any setback for Indian gambling could hurt not only tribes – whose members have grown accustomed to hefty payouts – but also communities that have come to rely on the casinos for thousands of jobs and multimillion-dollar annual payments for such services as police and fire.
So far, however, Indian casinos in the Sacramento area haven't suffered anything like the double-digit declines hitting their competitors in Reno, Lake Tahoe and Las Vegas. They may actually benefit from the downturn if California gamblers decide to stay closer to home.
On Thursday afternoon, the parking lot at Thunder Valley was about two-thirds full. An announcement on the casino loudspeaker said the bus to San Jose was about to leave.
"It sure looks like there's a lot of people in there, even for a Thursday," said John Gadsden, a Citrus Heights resident who said he comes to the casino a couple times a year.
Fordham, the Red Hawk manager, said he thinks the long-term outlook for Indian casinos in the region still looks very bright. He noted that the area still has relatively few large casinos compared with some markets.
"We believe there's business here that hasn't even been touched yet," he said.
Tribal slots deal no jackpot for California...Peter Hecht
Second of two parts examining the effects of the economy on gambling in California.
As California government verges on going broke, one long-promised elixir – Indian casino gambling – is proving to be not such a sure bet.
Tribal revenue-sharing payments to the state will total a third less than expected this fiscal year and are expected to fall further short of projections for the following year, according to new state budget estimates.
The forecasts raise doubts about the anticipated windfall from Gov. Arnold Schwarzenegger's pursuit of new casino deals and unprecedented expansion of Indian gambling.
"It was oversold," said I. Nelson Rose, a Whittier College professor specializing in gambling law. "He (Schwarzenegger) thought the deals were good for the tribes and the state. But he was wrong in predicting the future. And the tribes were wrong, too."
Running against Gov. Gray Davis in the 2003 recall election, Schwarzenegger railed against California's failure to tap Indian casinos.
Davis signed gambling compacts in 1999 that let 61 California tribes develop casinos of up to 2,000 slot machines each without contributing to the state's general fund.
New tribal gambling deals negotiated by Schwarzenegger will pump $362 million into the state's general fund this year. That is $123 million less than the Governor's Office had expected.
Projected casino revenue-sharing payments to the state for the next fiscal year – $393 million – are expected to be $192 million short of forecasts.
Last February, voters approved Schwarzenegger-negotiated gambling agreements to allow four already-rich Southern California tribes to add up to 17,000 new slots. A fifth tribe got state approval for another 5,500 slots.
The governor predicted $13.4 million to $23.4 million in state revenue over 25 years from the five deals alone. He also announced he was opening the door – while still pushing hard bargains – for any tribe willing to pay the state to chase its casino dreams.
But wealthy tribes with expanded casino agreements couldn't meet growth expectations in the face of an economic downtown.
And, with the exception of the Shingle Springs Miwok's new Red Hawk Casino in El Dorado County, many tribes with 1999 state compacts spurned Schwarzenegger's overtures. Others wouldn't meet the governor's demands for a healthy piece of the action and walked away from negotiations.
"The governor took office on the premise that he could fix the budget. And one of his premises was that Indian gaming had been unreasonably granted a license to operate in California without having to contribute to the state fund," said Ken Adams, a national gambling analyst.
But Adams said Schwarzenegger had "stars in his eyes" when he proclaimed in 2004 that the state could garner a "fair share" of as much as 25 percent of casino revenue.
Schwarzenegger has successfully negotiated new gambling deals with more than a dozen tribes. The agreements went beyond the Davis-negotiated 1999 compacts, which required tribes to make limited payments into funds to help non-gambling tribes and offset impacts on communities.
H.D. Palmer, the governor's deputy finance director, said the reduction in tribal revenue doesn't alter that Schwarzenegger added an important long-term component to state revenue.
"The administration is pleased with the compacts that we've been able to successfully negotiate," he said.
Schwarzenegger allowed the impoverished Yurok tribe in far northwest California to build a 99-slot roadside casino on Highway 1 in exchange for 10 percent of revenue of up to $50 million for a casino expected to make but a fraction of that. Yet the tribe has yet to get its casino off the ground.
He agreed to let the San Manuel Band of Mission Indians add 5,500 slot machines – on top of its 2,000 slots – in exchange for the tribe paying $45 million a year on its existing machines, plus 15 percent of revenue from the next 3,000 machines and 25 percent on the next 2,500 slots.
While San Manuel announced plans to add 1,500 slots, most of the wealthy tribes added only a fraction the state hoped for.
The Sycuan Band of the Kumeyaay Nation, in San Diego County, exited its deal for 3,000 new slots because it could neither afford costs of expansion nor $20 million in new state payments on its 2,000 existing slots.
The Agua Caliente Band of Cahuilla Indians agreed to pay the state $22.5 million for its existing 2,000 slots and 15 percent of revenue on 3,000 new machines. But after adding a total of 900 slots to its casinos in Palm Springs and Rancho Mirage, the tribe pulled 400 machines because of a drop in casino business.
"It's a daunting obstacle in front of us," tribal Chairman Richard Milanovich said of the tribal gambling economy. "By the same token, we feel we are moving forward."
Yet in another sign of tough times, the Pechanga Band of Luiseño Indians, which won voter approval for a Schwarzenegger deal to add 5,500 new slot machines, laid off nearly 9 percent of its work force last summer. It is adding only a portion of allowable new casino games – about 1,600 bingo machines converted to slot machines.
"The state is going to get more money under the amended compacts than it would have gotten without them," said George Forman, an attorney representing tribes including Sycuan and the Morongo Band of Mission Indians. "But nobody is immune from the laws of economics. I don't think anybody could have seen in February 2008 what things would be like in 2009."
Milanovich said it is unfair to blame the Governor's Office for decreased tribal revenue-sharing payments.
"I don't believe they were too optimistic," Milanovich said. "Those (original) estimates were based on sound economic projections at the time."
But in recent years, some casino deals pushed by Schwarzenegger couldn't pass political muster.
The governor signed a creative, yet controversial deal to allow two poor, isolated tribes from San Diego and Humboldt counties to build side-by-side hotels and 2,000-slot casinos in Barstow in exchange for the state getting 16 percent to 25 percent of profits.
The deal failed in the Legislature amid vehement opposition from powerful Southern California tribes, calling the planned Barstow development – along Interstate 15 to Las Vegas – an egregious case of "reservation shopping."
The Barstow deal was encouraged by Schwarzenegger to settle a lawsuit from an Indian band seeking to build a casino on tribal lands bordering a pristine North Coast estuary and state parklands. The Barstow tribal partnership has since collapsed.
Virgil Moorehead, chairman of the 23-member Big Lagoon tribe, said he is returning to court to build a casino on its Humboldt County land. He said talks broke down with the governor on the tribe's request to build a temporary, 350-slot machine casino in exchange for the state finding an alternative, off-reservation site later.
"He nixed the idea," Moorehead said. "... He didn't think he could get land into trust for off-reservation gaming accomplished in his lifetime. So we're going back to court."
After voters last February approved Schwarzenegger-negotiated deals for Sycuan, Pechanga, Agua Caliente and the Morongo Band of Mission Indians, the governor said he was ready to trade more casino slots for more state revenue.
He soon struck a deal with the Shingle Springs Band of Miwok Indians, which was entitled to 2,000 slot machines yet couldn't open its casino due to the 1999 compacts' statewide slot machine cap. The governor and the tribe signed an amended deal allowing up to 5,000 slots in exchange for revenue-sharing payments of 20 percent to 25 percent.
But other negotiations have gone nowhere. Allison Harvey, executive director of the California Tribal Alliance, said one of its member tribes walked away from talks to expand its casino "because the terms the governor was negotiating were too steep."
"The governor has gotten pie in his eyes about what he could get out of these tribes," Harvey said. "He had this great idea he could balance the budget. But a lot of tribes left the table because they didn't like the conditions he was asking for."
Other tribes with 1999 compacts said the market the governor and others envisioned may not have existed in the first place.
The Redding Rancheria was entitled to 2,000 slot machines under its 1999 gambling deal. It has since concluded that its current casino – with 1,026 slot machines – is likely as much as it will ever need.
The rancheria is undertaking a $60 million improvement program – down from $125 million due to the economy – to add a hotel and spa. But general manager Gary Hayward said the rancheria of Wintu, Pit River and Yana Indians has no interest in going back to the state to negotiate for any more slot machines.
"Just because you can go up to 2,000 slots doesn't mean you need to," Hayward said. "That's what tribes are now looking at. In reality, they're finding that adding more games is just going to dilute their dollars."
Editorial: Highway 50 deal: Everybody wins
A judge has blessed the agreement reached between environmentalists, transit operators and Caltrans that will allow the construction of carpool lanes on Highway 50 through Sacramento to proceed. All sides in this dispute deserve praise.
In today's highly polarized and litigious environment, the Highway 50 settlement represents a rare feel-good compromise. Everyone came away with something.
When the new lanes are built, commuters who drive into downtown Sacramento from the foothills for work every day will get some traffic relief.
Because the Transportation Department agreed to provide $7 million in additional transit funding for the Highway 50 corridor, light-rail riders will get speedier and more frequent service between downtown Folsom, Hazel Avenue and downtown Sacramento.
Also, the state agreed to help finance improved bike and pedestrian access to the light-rail station at Mather Field Road.
The deal represents a breakthrough in the state's ongoing budget battle as well. Gov. Arnold Schwarzenegger wanted to fast-track 10 projects, including Highway 50 lane expansion, as part of a modest economic stimulus plan he hopes to include in a final budget deal.
The environmental lawsuit blocking the construction of the seven miles of new freeway lanes proposed from Sunrise Boulevard to Watt Avenue
prevented that.
Senate President Pro tem Darrell Steinberg deserves credit for bringing the sides together. Participants say it took a week of almost around-the-clock negotiations to hammer out a deal over issues that had been debated for years.
The Highway 50 compromise should demonstrate something to all sides. The governor and his Republican allies should learn that just exempting everything from environmental review is not likely to lead to a good outcome. Environmentalists should learn that holding projects up interminably doesn't lead to progess, either.
When both sides are reasonable, both sides can win.
San Francisco Chronicle
Judge halts oil, gas leases near national parks...Felicity Barringer, New York Times
The federal Bureau of Land Management's chance to cash in on millions of dollars from oil and gas leases in Utah starting this week has been delayed, at least temporarily, by a court order.
A federal judge granted a temporary restraining order Saturday sought by seven environmental groups that blocks oil and natural gas exploration on tens of thousands of acres of federal land in the state. The judge, Ricardo Urbina of U.S. District Court in Washington, ruled that the Interior Department had not done sufficient environmental analysis, particularly of how air quality might be degraded.
"Because of the threat of irreparable harm to public land if the leases are issued," Urbina wrote, "the balancing of equities also tips in favor" of the environmental groups.
The decision came just hours before oil and gas companies could have taken possession of the leases, which they bought on Dec. 19. The Bureau of Land Management could have cashed the checks from the winning bidders today. At that point, the leases would have become final.
The number of tracts available for lease in Utah had been reduced by the bureau late last fall after the National Park Service objected to plans to lease hundreds of acres near Arches and Canyonlands National Parks. But the scaled-back proposal still included land within sight of the parks, as well as land in and around Nine Mile Canyon, an area with well-preserved pre-Columbian rock art.
"The judge's order saves some of the most spectacular landscapes in the nation - lands within a stone's throw of two national parks - from being turned into oil and gas fields," Heidi McIntosh, a lawyer with the Southern Utah Wilderness Alliance, one of the groups that sued, said in an e-mail message.
Kathleen Sgamma, the government affairs director of the Independent Petroleum Association of Mountain States, said the decision was "a setback for energy security."
"We feel adequate analysis and protections were in place," Sgamma said.
Contra Costa Times
Nation keeping eye on illegal-student case...Matt Krupnick
Several states are keeping an eye on a California court case that could be a bellwether for colleges that discount tuition for undocumented immigrants.
The California Supreme Court has agreed to consider a lawsuit over a state law that allows universities and colleges to charge the same tuition to undocumented students that state residents pay. If the high court overturns the law, it could lead to similar challenges in nine other states that discount prices for noncitizens; several of the states have submitted briefs.
The court is expected to hear the case late this year or in early 2010.
Attorneys for the plaintiffs say the policy has discriminated against about 100,000 U.S. citizens who have paid out-of-state prices since it took effect in 2002. They argue that the policy violates federal laws; an appeals court agreed last year and overturned a lower-court ruling that upheld the state law.
"Some states decided to flaunt the will of the federal government," said Michael Brady, an attorney for plaintiff Robert Martinez. "They are going against Congress."
Attorneys for the defendants — the California State University, University of California and community-college systems — say their tuition policies do not violate federal laws.
Federal lawmakers made it clear that states could help undocumented students as long as state legislatures adopted laws specifically allowing that help, said Christopher Patti, an attorney for the 10-campus UC system.
The other federal law at issue is thornier for the colleges, however. That statute forbids schools from providing educational benefits to illegal immigrants based on residency status.
University lawyers say that California has avoided issue by permitting students to pay in-state tuition if they attend California high schools for at least three years. Most UC students who take advantage of the benefit are not illegal immigrants, unlike at the community colleges, where as many as 90 percent of students granted the benefit are undocumented.
The Cal State system does not collect data on those students.
The appeals court said the colleges had created a "surrogate residence requirement" through the high-school provision, a conclusion that even some supporters of the law have agreed with.
Even if the Supreme Court upholds the appeals court ruling, laws in other states are sufficiently different that they probably would not be easily challenged using California as a precedent, said Michael Olivas, a University of Houston law professor and director of the Institute of Higher Education Law and Governance. He helped write the Texas law and has worked with several other states on their policies.
The appeals court should have thrown out the California lawsuit, Olivas said.
The law causes no harm, he said. "The fact that one person gets residency status does not harm those who don't.
"Congress has no role in determining what states may do with their tuition."
Martinez has argued that out-of-state students should not be forced to pay $20,000 more than undocumented students in California. College attorneys answered that immigrant families need the financial help in order to become productive Americans.
Thousands of Californians will be unable to attend college if the law is overturned, said Orson Aguilar, executive director of the Berkeley-based Greenlining Institute, which studies immigration and education issues.
"I just met a student who didn't know he was undocumented," Aguilar said, adding that the man had lived in the United States since he was 1 year old. "I think California is going to miss out if we don't do this.
"In the long term, it's better for the country and for California."
Mercury News
California residents among those with highest homeownership burden...Alan Zibel. AP Data Specialist Allen Chen contributed to this report. 
WASHINGTON — When it comes to homeownership, Hispanics in New Jersey, single parents in California and senior citizens in Rhode Island all have something in common: More than a third have an unaffordable mortgage.
Inequality in America has traditionally followed familiar patterns of race, age and education. Those long-standing gaps have been magnified by the real estate boom and now the historic bust, according to an Associated Press analysis of 2007 Census Bureau data.
While minorities have made significant gains in wealth and home ownership since 1990, "things are going into reverse gear," and now the homeownership rate for blacks and Hispanics is falling, said Edward Wolff, a New York University economist who studies income and wealth distribution.
Nearly 9.5 million households, or nearly one out of every five of the nearly 52 million homeowners with a mortgage, spend 38 percent or more of their pretax income on their mortgage payment, property taxes and insurance, the AP's analysis found. That's the new threshold to qualify for the loan assistance program launched last month by Fannie Mae and Freddie Mac, the mortgage finance companies now under government control.
Not surprisingly, the most financially burdened are in California, Florida, Nevada and the Northeast, areas hardest hit by soaring home prices and now foreclosures.
Yet in every state, there are many pockets of homeowners who are just one unexpected medical bill or car repair from falling behind on their mortgages and setting the foreclosure clock ticking.
The AP's analysis reveals the enormous scope of the U.S. housing market bust and how unevenly the burdens are spread, both geographically and demographically. And the situation is worsening — a record 10 percent of U.S. homeowners with a mortgage are at least one payment behind or were in foreclosure as of last fall, compared with 7.5 percent a year earlier and just under 6 percent in 2006.
The burden is clearly more arduous among minority households, the AP analysis found.
Just under a third of Hispanic homeowners spend at least 38 percent of their income on housing expenses, compared with about a quarter of Asian and black households and nearly 16 percent of white households.
In much of the country, the trend is more pronounced. For example, included among those who spent at least 38 percent of their income on housing are:
About 40 percent of black borrowers in California, Nevada, Oregon and Massachusetts.
More than 30 percent of Asian borrowers in California and Florida.
Nearly half of Hispanic homeowners in Rhode Island and at least 40 percent in Alaska, California, Florida, Hawaii, Maryland, New Jersey and New York.
Many Latino families wound up with expensive subprime mortgages because they often have cash income and no bank account, said Janis Bowdler, associate director for wealth building at National Council of La Raza in Washington.
It is common for Latino families to have stable incomes, but limited credit histories — and hence lower credit scores, which lenders use to gauge risk. Many have multiple sources of income, some of it in cash.
During the housing boom, consumer advocates say it was both faster and more profitable for mortgage brokers and loan officers to put Hispanic families in loans that didn't require proof of income, but charged higher interest rates.
"They had them out the door in a fraction of the time," Bowdler said. "They were definitely getting more expensive loans."
Now, Hispanic households like the Cazares family of Visalia, Calif are caught up in the mortgage crisis. Out of work for more than a year after contracting a rare disease caused by an airborne fungus, Joel, 36, brings in $550 a week in disability payments. His wife Maria, 34, makes about that much money weekly by working as a hair stylist.
They haven't made their $2,500 home loan payment in four months. The couple, who have three kids, have been waiting since October for a loan modification from IndyMac Bank, which was seized by the federal government last July. They hope it will bring their payment down to a more manageable level of around of $1,500.
In the meantime, they buy supersized bags of generic cereal to make ends meet. They've canceled their Internet service and are only using one of their two cars, a pickup truck, because it gets better gas mileage.
Our money's like a piece of gum," Joel Cazares said. "We're making it stretch as far and as long as we can."
The AP's analysis also found that education level is highly correlated with income and mortgage expenses. Nearly one in three of those without a high school or college diploma spend at least 38 percent of their income on housing, compared with only 12 percent of those with advanced degrees, the AP analysis found.
In addition, seniors spent a far higher share of their income on housing than any other age group.
While about half of seniors own their homes outright, the other half often face financial challenges and diminished earning potential.
Among seniors with a mortgage, nearly three in 10 spend at least 38 percent of their income on housing, according to the AP analysis. The stress is most severe in nine states: California, Washington D.C., Florida, Massachusetts, Nevada, New Jersey, New York, Rhode Island and Vermont.
As the pain from the mortgage crisis spreads, Washington is abuzz with talk of new efforts to stabilize the housing market and stop the freefall in home prices. President-elect Barack Obama has pledged to direct up to $100 billion in financial bailout money toward a sweeping effort to prevent foreclosures.
Frustrated housing counselors around the country say that if the Bush administration had grasped the severity of the foreclosure crisis earlier and enacted more ambitious programs long ago, the pain for American families and the economy might not be so severe.
"So far, we haven't seen the mortgage products or resources that we really need to help people who are at risk of losing their homes," said Brenda Clement, executive director of the Housing Action Coalition of Rhode Island.
To be sure, housing counselors acknowledge that some borrowers only have themselves to blame. They clearly got in over their heads and many knowingly took out risky loans. But they also say that mortgage brokers and lenders took advantage of the elderly, immigrants and the unsophisticated.
For decades, the government and most lenders considered homeowners who spent 30 percent or more of their income on housing to be financially strapped.
But that rule of thumb got thrown out the window during the housing boom. When prices were soaring, many Americans could only afford to buy a home by taking out ever-riskier home loans. Lenders were happy to cooperate, because if the homeowner defaulted, the property could still be sold for enough money to cover the loan.
House-rich and giddy, American attitudes about debt and the risks that go with it changed dramatically.
"The average American is in hock up to his eyeballs," said David Wyss, chief economist at Standard & Poor's in New York.
That's especially true now that prices are falling and around 13 million households, or about one in four with a mortgage, owes more to the bank than their properties are worth, according to Mark Zandi, chief economist at economic forecasting firm Moody's Economy.com
One of those "underwater" borrowers is Heather Noble, 36, who lives outside Detroit and can see five foreclosures from her front porch. A single mother, she struggled to make her mortgage payment since being laid off from her job in October 2007.
Late last summer, she started a $17-an-hour job handling billing for a doctor's office, but making her home loan payment of around $1,000 a month was a stretch because her take-home pay is at most $1,600 a month, depending on the amount of time she works.
Starting last spring, she spent hour after hour on the phone talking to what she describes as "every human being and division possible" at JPMorgan Chase & Co., before obtaining approval for a loan modification.
Noble's modification had been held up until the fall, and she was actually blocked from making her monthly payment until the Associated Press made an inquiry into her case. "In the large volumes that we're handling, we occasionally will miss something," spokesman Tom Kelly said.
Her two home loans have now been modified. Effective Feb 1., her new monthly payment will be a much more affordable $683 a month.
"That I can pay," she said. "Now I can pay my bills and stay current and not worry about losing my house."
Among single parents like Noble, more than a quarter in Michigan and about 27 percent nationwide spend at least 38 percent of their income on housing. And in California the strain is far worse: About four in 10 single parents meet that threshold.
And what worries Avis Holmes, director of Detroit Non-Profit Housing Corp. in Detroit, is that much of the government's financial aid isn't targeted at those who are in the greatest danger of losing their homes.
So far, Holmes said, "there are no rescue funds for the homeowners."
Monterey Herald
Your Town: Ryan Ranch Park's water use under review
Ryan Ranch
water hookup
ban urged
A moratorium on development in the Ryan Ranch industrial park due to lack of water will be considered by the Monterey Peninsula Water Management District board Wednesday.
The district staff has prepared a report that says the water supply serving Ryan Ranch falls short of the current system capacity of 175 acre-feet per year and cannot support a projected expansion of 190 connections in the Ryan Ranch parcel.
District general manager Darby Fuerst has directed the staff to suspend receipt and processing of water permit applications for Ryan Ranch.
The board will convene at 8:30a.m. in its conference room at 5 Harris Court, Building G, Ryan Ranch
Los Angeles Times
California emission waiver looms for carmakers
Barack Obama is expected to allow California and other states to enforce tough air quality rules soon after taking office...Ken Bensinger
If the auto industry thinks it has problems now, wait until Barack Obama takes the wheel.
Not long after assuming the presidency, Obama is expected to grant a waiver allowing California and more than a dozen other states to enforce their own greenhouse-gas emission standards on autos.
That would completely change the landscape for vehicle regulation and obligate automakers to produce cars that are far more efficient than those called for under current federal standards -- an average of 3 miles per gallon more by 2015, and 7 mpg more by 2020, according to some calculations.
Environmentalists and state regulators say that the rules are key to combating global warming and point to a series of court rulings backing their implementation.
"This is an essential piece of the nation's environmental strategy," said Tim Carmichael, president of the Coalition for Clean Air. Environmentalists estimate that cars create about a quarter of U.S. carbon emissions.
But it's a nightmare scenario for automakers, which argue that complying with the California guidelines would create regulatory headaches and a technology burden that could add at least $1,000 and as much as $5,000 to the cost of each vehicle.
As such, the prospect of the waiver is creating a fierce debate about automotive regulation, pitting concerns about the environment against the deeply troubled finances of an industry that has thrown itself at the mercy of Washington just to remain solvent.
Asking carmakers to comply with California's rules would be tantamount to forcing a cancer patient to "finish chemo and then go run the Boston Marathon," General Motors Corp. spokesman Greg Martin said. "Right now, we're just trying to make it through the current situation."
GM and other automakers, including foreign companies Toyota Motor Corp. and Honda Motor Co., have vigorously opposed implementation of the California rules and have fought it in court for years.
Nonetheless, their efforts have provoked judicial rulings in four different federal courts that open the door to California -- along with 17 states that have adopted the Golden State's rules -- regulating its own carbon emissions under a 2002 law.
The final barrier to implementation, a waiver from the Environmental Protection Agency, was held up a year ago when the Bush administration denied the request. California then sued the EPA, a congressional investigation was launched and during the campaign, Obama pledged to grant the waiver if he was elected.
Mary Nichols, chairwoman of California's Air Resources Board -- the agency that would implement and enforce the regulation -- said the likelihood of getting the waiver was "over 95%." She said that Obama's transition team has "had conversations" with her agency to coordinate how and when the waiver should be granted.
"A plan of action is already pretty much in hand," she said.
Last week, Lisa Jackson, Obama's nominee to head the EPA, addressed the emission issue as well.
"If I am confirmed, I will immediately revisit the waiver," Jackson said.
Currently, the only standard that automakers have to meet is Corporate Average Fuel Economy, or CAFE. Just over a year ago, Congress passed a law that will ramp up the national average fuel economy for cars and trucks.
Final rules for implementing the new CAFE standard have not been issued -- the outgoing administration threw that football to Obama earlier this month -- but the law calls for a nationwide average of 35 mpg by 2020.
That's a substantial increase from the previous standard of 27.5 mpg for cars and 22.5 mpg for trucks, but pales in comparison with the California rules.
Under those, carmakers have to show a 30% overall reduction in greenhouse gas emissions on their vehicles by 2016. That's the same kind of regulation as in Europe and Japan, where cars have strict emission requirements but not specific mileage standards.
Emission reductions do have a direct effect on vehicle mileage, however. Simply put, reduced carbon emissions track very closely with higher fuel efficiency since they are measured in grams of carbon per mile. According to the Air Board, California's rules would require a national average of 34.5 mpg by 2015, compared with 31.6 mpg under the federal rules. By 2020, that could be as high as 42 mpg.
That will require carmakers to spend huge amounts of money on new technology, while penalizing them for selling less-efficient trucks and sport utility vehicles.
"We're committed to increasing efficiency, but these kinds of increases take time and money, and unfortunately that's something in very short supply right now," said Charles Territo, spokesman for the Alliance of Automobile Manufacturers, a trade group that has led legal efforts to squelch the California rules.
Only California and the U.S. government are allowed to regulate air quality, but other states may choose the federal standard or the California rules.
A Toyota spokesman said the states adopting California's rules -- including New York, Florida and Massachusetts -- represent about 40% of the U.S. population, and potentially even a greater slice of the vehicle market.
Since the complicated California rules are written based on state-by-state sales of vehicles, the Japanese company fears having to market different vehicles to meet each state's target, as well as another group of vehicles in states that haven't signed on to the California rules.
"For the industry, it's important that there's just one national standard that we're chasing," said Jim Lentz, president of Toyota's U.S. sales arm.
He and others indicate their hopes that the Obama administration will be sensitive to the industry's challenges, including the possibility that in 2009 sales could drop about 20% for the second year in a row.
Unfortunately for carmakers, the industry's top defender in Congress, Rep. John D. Dingell (D-Mich.), lost his chairmanship of the powerful Energy and Commerce Committee to Henry Waxman, a California Democrat known for an environment-first platform.
GM Vice Chairman Bob Lutz said he expected help in negotiating an alternative to the California rules from the so-called car czar, an intermediary to be appointed by Obama under terms of the $24.9 billion in government aid committed to GM, Chrysler and their financing units.
"We've never had a go-to person in Washington," said Lutz, who estimates that compliance with the rules would add as much as $5,000 to the retail price of a car. Lacking such help, "we can meet the law, but it's going to take a lot of money."
Based on the restructuring plans submitted to Congress by GM, Ford and Chrysler in November, the Natural Resources Defense Council released a study that indicates all three would be able to comply with California emission standards with current technology.
But to do that, they would have to substantially change the way they do business, said Roland Hwang, senior policy analyst at the council.
"They're going to have to find a way to make money on small cars, because it will be too hard to make the standards with big cars," Hwang said.
Not all companies are kicking and screaming.
Ed Cohen, vice president for government affairs at Honda, believes that carbon-based standards are inevitable. He said Honda had been preparing for the Obama administration to grant the waiver, making plans for a fleet far more efficient than even that called for under the California rules.
"We're setting a pattern for the future," Cohen said. "Any company that is not assuming a constant rate of improvement in fuel economy and carbon emissions is making a big mistake."
U.S. economy may sputter for years
Unemployment could be worse than now by the time President-elect Barack Obama's first term ends...Peter G. Gosselin
Reporting from Washington — Transfixed by the daily spectacle of dismal economic news and wild Wall Street swings, few Americans have looked up to see what a wide array of economists say lies beyond the immediate crisis.
And with good reason: The picture isn't pretty.
The sleek racing machine that was the U.S. economy is unlikely to return any time soon despite the huge repair efforts now underway. Instead, it probably will continue to sputter and threaten to stall for years to come.
The prospects are so gloomy, according to a recent study, that unemployment may be slightly higher by the time President-elect Barack Obama's first term ends.
The damage done by plunging house and stock prices, the failure of other major economies to be independent sources of growth and hidden weaknesses in America's past performance have crippled nearly every actor in the nation's economic drama.
None -- save perhaps the government -- retains the power to push the economy back to speeds it regularly achieved during much of the last generation, economists say.
The result: An economy that once averaged 3% or better annual growth would be lucky to grow 2% a year during the entirety of the new president's term.
"That is going to feel like stagnation" to most people, said John Lonski, chief economist at Moody's Investors Service.
"We're in a post-bubble global recession, and post-bubble recessions are lethal for growth," Stephen S. Roach, chairman of Morgan Stanley Asia, said from Beijing. "It will be a long time before the world experiences anything more than anemic recovery."
Obama and his economic aides seem to understand the painful prospects they face.
Obama misses no chance to temper hopes for a quick and complete comeback. A recently released study by Christina Romer, his nominee to chair the Council of Economic Advisors, and Vice President-elect Joe Biden's chief economist, Jared Bernstein, concluded that, even with an $825-billion stimulus package, the unemployment rate at the end of Obama's first term would be one-half to one full percentage point above where it was before the start of the recession.
That would mean as many as 1.5 million additional jobless workers. And some independent economists say that number could be much higher.
What most worries analysts is not a cataclysm such as the Great Depression but the sort of economic morass into which Japan fell after its stock and real estate markets burst in the late 1980s and early '90s.
Daily life for most Japanese citizens wasn't terrible. There were few company shutdowns or mass layoffs. Indeed, the Japanese came to call their economic condition the "golden recession," said Simon Johnson, a senior fellow at the Peterson Institute for International Economics.
The problem was that the country simply didn't grow -- and that, economists worry, is what could happen in the U.S. and around the world.
"Four years from now, I suspect that we'll be pretty much where we are today," Johnson said. The question he predicts people will then ask: "Why can't we get growth going again?"
Four factors -- like the cylinders of an engine -- power an economy: consumers, investors, the government and a favorable balance of trade with other countries. And for many years, the most important of these has been the American consumer. U.S. households long have accounted for the lion's share of economic activity not only here but also in much of the rest of the world.
Although U.S. consumers constitute only about 4.5% of the global population, they bought more than $10 trillion worth of goods and services last year. By contrast, said Roach of Morgan Stanley Asia, Chinese and Indian consumers, who together account for 40% of global population, bought only $3 trillion worth.
In the last decade, a new generation of financial engineering -- complex deals involving home equity loans, subprime mortgages and other devices that provided easier access to credit -- seemed to make it safe for Americans to save less and consume more. That further expanded their share of global economic activity and made them even more indispensable here and abroad.
U.S. consumer spending shot up from a little over 73% of the economy to nearly 77% from 2001 to 2007, according to government statistics.
Initially, the expansion was heralded as evidence of economic vitality. But by now, it has become apparent that the growth was largely a debt-driven bubble -- and a double bubble at that, in housing and in personal consumption.
As the elaborate superstructure of easy credit began to pop rivets, consumers found themselves caught dangerously short. They have reacted by drastically cutting back on purchases, particularly those that are discretionary.
Retail sales in the last three months of 2008 plunged 7.7% compared with a year earlier, the government said last week, making it the worst sales quarter in more than 40 years.
At almost any other time, economists would write off such a drop as sharp but short-lived and predict that Americans would return to their spendthrift ways as soon as the economy began to recover. But many veteran forecasters say this time is different.
"Decades of borrowing have finally caught up with consumers; they realize there is no more easy money left," said Allen Sinai, chief economist of Decision Economics Inc. "This is going to scar this generation of consumers the way the Great Depression did our fathers' and grandfathers'."
For the first year of the current crisis, which began in the summer of 2007, there was hope that a replacement for U.S. consumers and a new source of economic strength had been found in the rest of the world's economies, especially such giant and newly industrializing nations as China and India.
Economists pored over figures suggesting these economies were continuing to boom even as the U.S. tottered on the financial brink. There was much talk about other countries having "decoupled" from America and begun their own, internally fueled expansions.
But by last fall, the hope had faded. The economies of most of the world are either slowing sharply or actually shrinking. Asian powerhouses such as China are doing so because of a bust in exports to the U.S.
Worse yet, much of the Asian boom appears to have sprung from a sort of financial engineering that served as a matched set to that in the U.S. By keeping their currencies undervalued, they kept export prices low and encouraged others -- especially Americans -- to keep buying.
China and other Asian economies "were driven by export bubbles, which, in turn, were a play on the U.S. consumption bubble," Roach said. With the bubbles on both sides now burst, the U.S. and Asia are dragging each other down, he said.
If renewed consumption isn't going to revive the U.S. economy, and a growing world able to buy more U.S. exports has vanished, one of the few options for recovery that's left is business investment.
But investment, especially in high technology, was barely growing even during the boom years of this decade. With the economic crisis, it has plunged.
Lonski, the Moody's economist, used government statistics to examine business investment in such high-tech items as computer and telecommunications equipment.
What he found was that in most previous cycles, companies quickly resumed investing after the economy moved from bust to boom, pushing computer and telecom orders back above their pre-bust highs. But not in this decade.
Between the last recession in 2001 and the current one, high-tech investment has barely crawled upward. That has left telecom and computer orders still down nearly 50% from their previous highs.
"This shows that technological progress was lagging" during the decade's good years, Lonski said. It seems unlikely the pattern should improve now that times are bad.
That leaves only government to power the renewed growth. Every Economics 1 textbook introduces the economy with the same simple equation. It reads: consumption + investment + net exports + government spending = gross domestic product or output.
It's an equation that the new president and his top economic aides know well. With the first three elements negative or contracting quickly, the new administration sees few alternatives but to sharply expand the fourth factor -- government spending.
It's not a surefire solution. But the hope is that something eventually catches and the nation's economic engine begins turning over again on its own.
Cargo letup weighs on nonunion dockworkers
Fewer containers to unload at the ports of Los Angeles and Long Beach mean fewer shifts for 'casual' workers...Ronald D. White
The waterfront was booming in 2005 when Joey Hurtado inherited his uncle's longshore card.
Consumers were spending, and the toys, clothes and other goods they bought had to be hauled across the Pacific from factories in Asia. As a nonunion "casual" on the wharves in Los Angeles and Long Beach, Hurtado got the chance to train and work at one of the nation's highest-paying blue-collar jobs.
"I was there religiously," said Hurtado, who joined a throng of hopefuls every morning at a sprawling open-air hiring yard near the ports. Three or four days of work a week was the norm.
Not anymore.
Early one recent morning, Hurtado, 27, was at the same hiring spot. The workload was light even for the union dockworkers who are always chosen first. For Hurtado, there was "nothing. I haven't worked in a month."
The workforce of nonunion dockworkers has become a kind of barometer for the volume of business at the ports and for the strength of the nation's economy.
In December 2006, the last month in what became the peak year for business at the harbor, hundreds of casuals were needed every workday for jobs that the International Longshore and Warehouse Union couldn't fill. On one such day, casuals filled more than 2,000 positions over three shifts, lashing and unlashing cargo containers, driving yard equipment or assisting in clerks' offices.
In December 2008, casuals were needed just four days, and only 95 found work on the best of those days.
As economies around the world began to slump in 2008, cargo movement at U.S. seaports slowed dramatically, including a 6% drop in Los Angeles and an 11% decline in Long Beach for imports and exports combined. It has been a painful blow to what was one of the country's last vestiges of steady employment growth.
In such a climate, the desire to win these often dangerous longshore jobs is even greater, and it's easy to see why. During the first 1,000 hours on the job, dockworkers earn $22.47 an hour. By the time they reach 2,000 to 4,000 hours, they are making more than $25 a hour. And those with the greatest seniority are chosen for the pinnacle: membership and generous benefits from the union, which represents dockworkers on the West Coast.
That's what keeps Hurtado driving the 15 miles from his Bell home as often as twice a day for the first and second shifts at the ports, especially now that the retail and construction jobs Hurtado also has held are almost equally scarce.
"Unemployment checks really aren't cutting it for me, and they are about to run out anyway," said Hurtado, who has two young sons and a wife who works as a clerk for Stater Bros.
"I've seen people go from having nothing to having a house and sending their kids to college working on the docks," Hurtado said. "I just hope it turns around."
Another casual, 27-year-old Megan O'Donnell of San Pedro, remembers the pride she felt when her father, a dockworker for 35 years, handed his longshore card to her. Like Hurtado, she was a beneficiary of the union tradition of passing the right to begin training and be hired as a casual dockworker to the next generation.
O'Donnell started working on the wharves in 2007, the first time in 15 years that cargo at the ports didn't increase. Still, she was able to supplement her waitressing work, earning as much as $150 for the one day of work a week she usually got on the docks.
Now, weeks pass between hirings at the seaports, providing further encouragement for her goal of becoming a registered nurse. She says she's keeping her longshore card, just in case.
"A casual card is the perfect thing to have when you are still in school," O'Donnell said. "It's always good to have a backup plan."
A turnaround isn't on the horizon yet.
Around the world, more than 200 cargo container ships have been idled because there is too little cargo for them to carry profitably, industry experts said.
Those ships are capable of hauling a combined 550,000 containers, or the same amount of cargo moved by the ports of Los Angeles or Long Beach in a typical month. It's equal to 4.5% of the world's container ship fleet, making this worse than the last international shipping slump in 2002, when 3.5% of a significantly smaller world fleet was out of work, experts said.
"This is really unprecedented," said Paul Bingham, managing director of global trade and transportation practice at IHS Global Insight. "We don't have anything to compare this to in the post-World War II era."
IHS Global Insight is predicting more of the same through at least the first half of 2009. It's expecting improvement if Congress and the Obama administration agree on a big economic stimulus package -- and it works.
Erik Autor, vice president and international trade counsel for the National Retail Federation, said the next few months "will be difficult."
"I don't think anyone knows where the bottom is," Autor said.
The slowdown has been so pronounced that ILWU International President Robert McEllrath took the unusual step of appealing to his rank and file to share the work instead of jostling for the double shifts and extra pay that were common in the boom years.
"This recession may be the deepest our present union members have ever experienced. It's time to ask yourself 'Is it fair for me to have two jobs in one day when others don't get one?' " McEllrath wrote in the union newspaper.
On the management side, shipping lines and terminal operators have used fewer "steadies," workers who report directly to the same employers every day instead of to the union hiring hall in exchange for a guarantee of five or even six days of work.
Some weeks "we're not able to guarantee four or even three days of work," said Jim McKenna, chief executive of the Pacific Maritime Assn., which is composed of the shipping lines and terminal operators at the nation's West Coast ports.
"We are anticipating 2009 to be pretty dismal," McKenna said.
On a recent afternoon, Port of Los Angeles Executive Director Geraldine Knatz looked out from her office onto a shipping channel that seemed quiet enough to allow water-skiing.
In a December letter to port employees, she warned that first quarter 2009 port business could decline as much as 30%, in part because Denmark-based A.P. Moller-Maersk, the world's largest shipping line and the port's biggest tenant, is moving some of its local operation to Seattle. Port tenants might find it hard to meet their rent obligations.
"We are going to try to work with everybody," Knatz said. "We are willing to cut back on our side because we want to help our customers as well. We are trying to reduce our expenses to be flexible as possible."
Landlord ports such as Los Angeles and Long Beach have no independent taxing authority and rely on negotiated leases for their revenue, said Dick Steinke, executive director of the Port of Long Beach. In exchange for improved terminals and better equipment such as cranes, the tenant shipping lines and terminal operators agree to do enough business to allow a decent return on the port's investments.
In the past, every tenant easily met those requirements, but 2009 might be the first year that some won't, he said.
"This is something I haven't seen in the 20 years I've worked at this port," Steinke said.
San Diego Union-Trubune
Pressure grows on power plants' cooling system
Critics: Method harms marine life...Mike Gardner, U-T SacramentoBureau
SACRAMENTO — Blamed for the widespread killing of marine life, California's coastal power plants are under mounting pressure to abandon an antiquated process that draws in ocean water to cool turbines.
The battle has raged from the statehouse to the White House. California agencies are divided, the San Diego County Water Authority is worried, legislation has been introduced in Sacramento, and even the U.S. Supreme Court is preparing to weigh in.
Opponents of more controls have warned of higher bills and tighter energy supplies. Water supplies from desalination plants built alongside power generators also could be at risk, they say.
Supporters contend that these cooling systems will continue to disrupt the cycle of life in the sea if left unchecked.
“We're taking a look at World War II technology, which is creating great havoc,” said state Sen. Ellen Corbett, a San Leandro Democrat carrying legislation that would force coastal generators to switch to more environmentally friendly cooling systems by 2015.
Her bill would impose fees on plants using the process known as “once-through cooling” and would generate $15,000 for every 1 billion gallons of water used by plants. With 16 billion gallons a day flowing through the affected plants, the fees would amount to more than $87 million a year.
The fee would be collected from 2011 through the end of 2014 – the last day the cooling system would be permissible under Corbett's measure, Senate Bill 42. The measures probably faces a tough road, given the state's limited energy and water supply. Gov. Arnold Schwarzenegger has not taken a position on the bill.
Nineteen plants along California's coast use once-through cooling, a process that involves piping in water daily and discharging billions of gallons back into the ocean, according to a state report.
Those plants generated 20 percent of the state's power need in 2005. However, at such volume and velocity, the cooling practice destroys fish and threatens other marine life, such as harbor seals, sea lions and sea turtles. The ocean's food chain is put at risk by the process, critics say.
The state Water Resources Control Board is separately developing a policy to govern ocean-water use at coastal plants, including three in San Diego County: San Onofre, Encina and South Bay, which use once-through cooling.
Agencies have dueled over the language for nearly three years with the group that manages the state's power grid, the California Independent System Operator, which is adamant in seeking to minimize restrictions.
The state water board is not expected to seek a shutdown of the plants when it releases its policy later this year, said Judie Panneton, a research analyst with the agency. “Banning them is not the focus of our draft policy,” she said. “It's the effect on marine life that we're focusing on.”
In Washington, the U.S. Supreme Court recently heard oral arguments in a case brought by New York-based Riverkeeper that could determine whether the U.S. Environmental Protection Agency should consider costs as part of requirements to protect sea life when assessing power plants. The decision could steer the incoming Obama administration as it develops policies toward once-through cooling.
These challenges to generators come at a time of tight energy and water supplies in the state. With the recession taking a toll, ratepayers might be in no mood to take on higher costs for both.
Eliminating once-through cooling at all the plants could cost “as little as around $100 million to as much as $11 billion, depending on how and when the policy is enacted and how the industry responds,” according to the state Water Resources Control Board.
Alternatives include dry cooling, a process that relies on air-cooled condensers and fans. Eight plants use that system, but they absorb higher costs.
Cooling towers recirculate the water, reducing demand for more water. All but two inland plants use this process. Another option is to use recycled wastewater, which will be put to the test at a plant near Los Angeles.
Southern California Edison, which operates the San Onofre Nuclear Generating Station, warns that a hasty policy shift could do more harm to the environment. The plant generates enough power for 1.4 million homes.
“Sweeping new policy requiring cooling towers could significantly raise customer rates and harm the environment,” Edison said in a statement to water quality regulators. “In our case, SCE would be forced to secure more base-load power at higher customer cost from carbon-emitting fossil fuel plants – increasing local air pollution and adding to greenhouse gas emissions . . . ”
Edison says it has acted aggressively to limit damage by its cooling system, including installing a device that pushes fish away from intakes and a system that provides an escape for fish in the pipe. Edison also has launched the nation's largest artificial kelp reef project off the coast near San Clemente.
Commercial fishermen, however, contend that power generators should be doing more after decades of destroying marine life and threatening their livelihood by using once-through cooling.
“Companies have ignored the fact that it does have a cost. It's just that they're passing the costs along to someone else – us,” said Zeke Grader, executive director of the Pacific Coast Federation of Fishermen's Associations.
There is another wrinkle in the ongoing debate. Some desalination plants, which are being aggressively pursued as California continues to face drought , could be located next to power plants.
The San Diego County Water Authority, exploring a desalination venture with Edison near San Onofre, is expected to oppose Corbett's measure. The water authority wants to keep its options open to use once-through cooling, or some other system, depending on cost and effectiveness.
“It would potentially severely restrict our options to develop these plants,” said Bob Yamada, a water resources manager at the authority. “You could potentially eliminate a significant new water supply.”
Poseidon Resource's fledgling venture in Carlsbad – the most prominent of the county's desalination plants – will not use once-through cooling. Nor will the Carlsbad Energy Center, proposed by NRG West.