UC Merced professor warns of stimulus mistakes
Teacher says government may intervene too much, stifling growth...SCOTT JASON
The federal government's effort to prime the U.S. economic pump must be focused and aimed at fostering long-term growth, a UC Merced economics professor said Tuesday.
Shawn Kantor, speaking at the Greater Merced Chamber of Commerce's quarterly luncheon, warned that some of the government's mistakes in dealing with the 1930s Great Depression -- which included record-high taxes and inconsistent approaches -- must be avoided at all costs.
"Modern research on the New Deal suggests it did very little to stimulate the economy during the Great Depression," explained Kantor, a scholar on the historic crisis. "In fact, it had an adverse effect because it created more uncertainty for businesses."
Similar mistakes, such as the threat to tax the AIG bonuses at 90 percent, are worrisome because they create the same unease in the private sector, Kantor said.
The government announced Monday that it's embarking on a public-private partnership to buy up to $1 trillion in toxic assets that are dragging down bank balance sheets, he noted.
But then it's also taking a combative approach by wielding taxes as a weapon. That will spook financial leaders, and they won't work with the Treasury Department, he suggested.
"So on the one hand they're saying, 'You're evil because you make lots of money,'" Kantor said, "but on the other hand they say, 'Well, we need you because we have to do this together to bail out the economy.'"
Along with such distractions as the AIG bonuses, Kantor said trade restrictions could hurt the country's ability to recover.
He also fears that the government will grow to a record size and become more involved than it's ever been.
During his half-hour presentation at The Branding Iron Restaurant, Kantor detailed the causes and impacts of the financial crisis.
Public and private decisions created a "perfect storm" of easy money, looser credit standards and the proliferation of risky financial instruments for investors.
Political pressure resulted in increased home ownership even for people who had no chance of ever paying off a mortgage, he said.
Those mortgages were bundled as sold as safe investments, which in turn freed up more money to lend to homebuyers.
For example, Lehman Bros. had lent $30 for every $1 it had before going bankrupt, Kantor noted.
The market bubble continued to grow until it was pricked by subprime borrowers missing mortgage payments, sending home values into a downward spiral.
On top of all this, AIG had sold insurance on the bundled mortgage investments, which is why the government has given it a $182.5 billion life jacket.
Despite Kantor's concern that government will overreach, he said reforms are needed to make sure there aren't situations where companies, such as AIG, are too big and intertwined to fail. Lawmakers need to act before the political will dissipates.
"Americans are really pissed off right now that we're spending billions of dollars -- trillions of dollars -- to bail out these companies," he said. "There has to be some kind of accountability built into the system."
Merced Streams Group proposes location for Black Rascal Creek dam...JONAH OWEN LAMB
Black Rascal Creek is the one creek running into Bear Creek that has no flood controls.
The result has been flooding in the Merced area -- most recently in 1998 and 2006.
Now the Merced Streams Group, headed by Merced County, has completed its own feasibility study for a catchment, or basin for collecting water, on Black Rascal Creek that may be the first step in ending the long-standing need to build flood protections along the creek.
Through a locally funded flood control study in 2008, the streams group chose a location on Yosemite Avenue as the least environmentally sensitive site for a potential flood basin.
The study recommended several other feasible sites along with the Yosemite Avenue location.
"This is all about houses downstream," said Kellie Jacobs of the county's Department of Public Works.
The focus on Black Rascal, said Jacobs, is because it's the main source of flooding downstream. During the last big flood in 2006, the main unchecked flow into Bear Creek came from Black Rascal.
If a catchment were to be built at the intersection of Yosemite Avenue and Black Rascal Creek, the basin would temporarily collect the waters behind a dike, letting out a limited volume.
The study was a first step in the process by the three bodies that make up the Merced Streams Group: Merced Irrigation District, the city of Merced and the county. The next step is a similar yearlong feasibility study by the U.S. Army Corps of Engineers.
The $150,000 streams group study came out of local frustration in the face of Army Corps' inaction on the flood control project, said Jacobs.
Eleven years ago the streams group was put into what the Army Corps calls a general re-evaluation. Since then, little has been done to move the project forward.
"The locals don't want to sit back and wait for the Corps," said Jacobs.
Supervisor Deidre Kelsey said the county and the Army Corps have known of the flood problems along Black Rascal for years. And plans to create flood controls on the creek have been on the books for a long time. But environmental concerns stalled these efforts, she said. The original plan to deal with floodwaters was to build a reservoir called the Haystack Reservoir, which is farther up in the foothills.
"We have to fix this," she said. "It's a problem that will not go away."
Merced Irrigation District begins irrigation deliveries...CAROL REITER
On Monday morning, eastern Merced County's canals were full of liquid that seems to be worth more than gold to local growers these days: water.
The Merced Irrigation District officially began its water year on Monday at 10 a.m. Although a storm passed through the Merced area Saturday night, Hicham Eltal, assistant general manager for water resources, said that some growers have been calling for water.
"We've been getting a few phone calls, not a lot yet," Eltal said.
This year is looking like another drought year, with Lake McClure at only 68 percent of normal, and only 38 percent capacity.
Eltal said the last year the reservoir was nearly full was 2006. And although 2007 and 2008 were drought years, Eltal believes this year may be even worse.
"It's pretty grim," he said. "It's not even as good as 2008 so far."
Growers have been allocated 2.5 acre-feet of water per acre on gross acreage, instead of per irrigated acreage as in the past. In other words, if a grower owns 100 acres, but only farms 80 acres, in the past he received 2.5 acre-feet of water per acre for the farmed 80 acres. Now that grower will receive 2.5 acre-feet of water per acre for the entire 100 acres, farmed or not. That was decided at the March board meeting because some growers may put the idle acreage back into production.
An acre-foot is 325,851 gallons of water, or a year's supply for an average family in the Valley.
Growers are paying $18.25 per acre-foot of water, but that may change. A protest ballot went out to growers earlier this year that would allow the MID board to raise rates.
Wil Hunter, one of the board members, said the protest ballot wasn't necessarily the way to go. "The way the election is set up, it's doomed to fail," Hunter said. If a grower doesn't want a hike in water rates, that grower must send the ballot back into the MID. If the ballot isn't sent in, it's considered a "yes" vote on raising water rates.
Eltal said if the board is allowed to raise water rates, they could raise them as much as $5 per acre-foot. But that can be spread out over years, Eltal added. Or the board could vote not to raise water rates at all.
Hunter said growers are worried that if a water rate hike isn't passed, the MID board will choose to sell water out of district. "There's a good chance that the board could do that," Hunter said.
Hunter said that 2.5 acre-feet per acre is about what it takes to keep a crop alive and thriving, and growers have learned to deal with less water by making their water delivery more efficient.
"Growers have been asked to do more with less, and we have responded every time," Hunter said. "Hopefully, we will get some more help from the weather."
Our View: A bit of good news on water supplies...Editorial
There was a trickle of good news Friday for some water users in the Valley.
Predictions of summer deliveries from the federal water system were boosted for the small Westside Valley towns and farmers along the east side of the Valley.
But the picture is still as bleak as it gets for farmers on the Westside -- they still can't expect a single drop of Central Valley Project water supplies this year.
It's the first time in the federal project's history that water deliveries are expected to fall to zero. And that's already having devastating effects on the westside economy.
Nor should city dwellers be breathing deep sighs of relief.
The increased allocations will help, but California remains in a drought, and there are still few signs of serious efforts to address the problem.
Water shortages are likely to become permanent, as climate change and population growth simultaneously shrink supplies and boost demand for water.
That suggests the need to begin saving now, by changing the way we use water in the city.
In the meantime, we're no closer to comprehensive solutions for the state and Valley. We continue to believe that California needs a balanced combination of new surface storage, increased underground supplies and a great deal more conservation of the water we have.
But California's dysfunctional state government isn't able to get past the politics that impede such a comprehensive solution, and in the current climate, it's virtually impossible to get the federal government to pay attention to California's dire water problems.
So we bumble along as in the past while the situation worsens for all of us -- farmers, urban dwellers and businesses alike.
Like so much else around us these days, things may get a lot worse before they get better. But in the case of water, it's people's very lives that may be put at risk.
February new home sales rise unexpectedly...ALAN ZIBEL, AP Real Estate Writer
WASHINGTON -- New home sales rebounded unexpectedly last month, but were still the second-worst on record and remained well below last year's levels, according to data released Wednesday.
The Commerce Department said sales rose 4.7 percent in February to a seasonally adjusted annual rate of 337,000 from an upwardly revised January figure of 322,000. Even after the revision to January's sales results, the month remained the worst on records dating back to 1963.
Economists surveyed by Thomson Reuters had expected February sales to fall to a pace of 300,000 units.
February's sales were still down by more than 40 percent from the same month a year earlier. The median sales price fell to $209,000, a record 18 percent drop from the same month last year. The median price is the midpoint, where half sell for more and half for less.
At the current sales pace, the government said it would take a year to exhaust the supply of new homes on the market. The glut of unsold homes and competition from deeply discounted foreclosed properties puts even more downward pressure on prices and on builders' profits.
Fallout from the housing crisis is one of the biggest problems facing the country. It has played a central role in the U.S. recession, now in its second year. Foreclosures have spiked, financial companies have racked up multibillion-dollar losses and home builders like Pulte Homes Inc., D.R. Horton Inc. and Lennar Corp. have been clobbered.
Investors, however, cheered at the new home sales numbers and bid up shares in the major builders by 7 percent or more in morning trading.
To lure buyers, President Barack Obama's stimulus package included an $8,000 first-time homebuyer tax credit. Plus, the Obama administration has unveiled a $75 billion plan to curb foreclosures, which are aggravating problems in the housing market and the overall economy.
In February, sales rose 9.7 percent in the South from a month earlier, and 6.6 percent in the West. They dropped 9.1 percent in the Midwest and 3.3 percent in the Northeast.
Sales of previously occupied homes also jumped unexpectedly in February by the largest amount in nearly six years as first-time buyers took advantage of deep discounts on foreclosures and other distressed properties.
The National Association of Realtors said Monday that sales of existing homes grew 5.1 percent to an annual rate of 4.72 million last month, from 4.49 million units in January.
Study: Range of pharmaceuticals in fish across US...MARTHA MENDOZA - AP National Writer
Fish caught near wastewater treatment plants serving five major U.S. cities had residues of pharmaceuticals in them, including medicines used to treat high cholesterol, allergies, high blood pressure, bipolar disorder and depression, researchers reported Wednesday.
Findings from this first nationwide study of human drugs in fish tissue have prompted the Environmental Protection Agency to significantly expand similar ongoing research to more than 150 different locations.
"The average person hopefully will see this type of a study and see the importance of us thinking about water that we use every day, where does it come from, where does it go to? We need to understand this is a limited resource and we need to learn a lot more about our impacts on it," said study co-author Bryan Brooks, a Baylor University researcher and professor who has published more than a dozen studies related to pharmaceuticals in the environment.
A person would have to eat hundreds of thousands of fish dinners to get even a single therapeutic dose, Brooks said. But researchers including Brooks have found that even extremely diluted concentrations of pharmaceutical residues can harm fish, frogs and other aquatic species because of their constant exposure to contaminated water.
Brooks and his colleague Kevin Chambliss tested fish caught in rivers where wastewater treatment plants release treated sewage in Chicago, Dallas, Phoenix, Philadelphia and Orlando, Fla. For comparison, they also tested fish from New Mexico's pristine Gila River Wilderness Area, an area isolated from human sources of pollution.
Earlier research has confirmed that fish absorb medicines because the rivers they live in are contaminated with traces of drugs that are not removed in sewage treatment plants. Much of the contamination comes from the unmetabolized residues of pharmaceuticals that people have taken and excreted; unused medications dumped down the drain also contribute to the problem.
The researchers, whose work was funded by a $150,000 EPA grant, tested fish for 24 different pharmaceuticals, as well as 12 chemicals found in personal care products.
They found trace concentrations of seven drugs and two soap scent chemicals in fish at all five of the urban river sites. The amounts varied, but some of the fish had combinations of many of the compounds in their livers.
The researchers didn't detect anything in the reference fish caught in rural New Mexico.
In an ongoing investigation, The Associated Press has reported trace concentrations of pharmaceuticals have been detected in drinking water provided to at least 46 million Americans.
The EPA has called for additional studies about the impact on humans of long-term consumption of minute amounts of medicines in their drinking water, especially in unknown combinations. Limited laboratory studies have shown that human cells failed to grow or took unusual shapes when exposed to combinations of some pharmaceuticals found in drinking water.
"This pilot study is one important way that EPA is increasing its scientific knowledge about the occurrence of pharmaceuticals and personal care products in the environment," said EPA spokeswoman Suzanne Rudzinski. She said the completed and expanded EPA sampling for pharmaceuticals and other compounds in fish and surface water is part of the agency's National Rivers and Stream Assessment.
Home building in state, region off to poor start...Jim Wasserman
California home builders, coming off their worst year for housing starts in a half-century, are starting even fewer new homes in 2009, the California Building Industry Association said Tuesday.
State builders reported 2,298 residential permits in February, 66 percent less than the same time in 2008.
The industry's 4,298 permits in January and February are 62.7 percent less than a year ago, the association said.
Sacramento builders are faring almost as poorly. February's 140 permits for single-family homes, apartments and condominiums in El Dorado, Placer, Sacramento and Yolo counties were down 60.3 percent from February 2008. The region's 320 permits in the two-month period are down 46 percent from the same time last year.
12% jobless rate forecast for state, followed by slow recovery
California unemployment will peak at just over 12 percent late this year, setting a modern record, according to the latest forecast from the University of the Pacific.
Recovery will come slowly. Unemployment won't sink back into single digits until late 2011, or some two years after the recession is expected to officially end, according to a forecast released Tuesday by UOP.
There's typically a considerable lag between the beginning of an economic recovery and a drop in the unemployment rate, as companies are slow to re-hire even after business perks up.
Jeff Michael, director of UOP's Business Forecasting Center, said the state will lose 950,000 nonfarm jobs by the time the recession ends in late 2009. The total loss will be nearly 1 million, including the downturn in agriculture caused by the water shortages.
At 12 percent, unemployment would be the highest since modern record-keeping began in 1976. The old record is 11 percent, reached three times in the early 1980s.
The latest prediction from UCLA isn't pretty, either.
The Anderson Forecast says statewide unemployment will average 11 percent this year and 11.7 percent next year. California's economy will start recovering sometime next year, but the job losses won't end until 2011.
"The current forecast reflects a deeper and longer recession than we previously thought," senior economist Jerry Nickelsburg wrote in the forecast, due to be released today.
The UCLA forecast is one of the most closely watched in the state, although it has been criticized in some quarters for underestimating the severity of the downturn.
Nickelsburg said California will lose 2.6 percent of its jobs this year (on top of 3 percent last year) and an additional 0.6 percent in 2010. The state will see job growth, at a rate of 1.8 percent, in 2011.
Nickelsburg did find some good news, though. The housing market correction "is almost complete and the downturn in the retail sector is nearing the end of its run," he wrote.
But, he said, other sectors will continue to deteriorate. Construction won't begin any sort of comeback until late 2009, when "prices are tempting enough and supply is low enough for the market to stabilize," he wrote.
And the export sector, which helps support manufacturing and had been strong until lately, has slumped in recent months as the recession spreads overseas. That won't correct itself anytime soon.
"It is now projected that all of our major trading partners except for China will be in recession this year," Nickelsburg wrote. "This former source of strength will not be leading California's recovery."
Crowd unleashes flood of comments at peripheral canal meeting...Alex Breitler
STOCKTON - Same issue, same building, different decade.
About 120 people gathered Tuesday night at the Stockton Memorial Civic Auditorium for a chance to vent to the powers that be over plans to build a peripheral canal.
Fifteen years ago, some of the same folks met in the same auditorium as part of the CALFED process, which was supposed to fix the ailing Delta but today is viewed by many as a failure.
On Tuesday, state officials displayed new maps showing a proposed canal taking water from the Sacramento River and shipping it down the east side of the Delta, tunneling under the San Joaquin River at Rindge Tract, west of Stockton, on its way to the massive pumps near Tracy, and from there to the Bay Area and Southern California.
"Didn't most of that land use to be desert anyway?" asked 25-year-old Blake Joaquin, a wakeboarder. "Why should we give them our water? I don't understand."
The meeting was one in a series hosted by state officials and water users as part of the Bay-Delta Conservation Plan, which would basically give water users continued authority to divert water from the Delta. The plan includes restoring habitat and funneling water around, rather than through, the heart of the estuary.
"It's an effort that impacts all of us, you in particular," California Secretary of Resources Mike Chrisman told the largely unhappy audience before fielding questions and pointed comments.
Dante Nomellini Jr., representing Delta farmers, asked state Department of Water Resources Deputy Director Jerry Johns what assurance he would give that only surplus water would be diverted into the canal, even during a drought. "We are a system of laws," Johns said, at which the crowd laughed.
To learn more about the Bay-Delta Conservation Plan or to comment on the plan, visit www.resources.ca.gov/bdcp.
San Francisco Chronicle
Court weighs sex bias suit against Wal-Mart...Bob Egelko
A federal appeals court in San Francisco wrestled Tuesday with whether millions of women who work at Wal-Mart or are former employees of the nation's largest retailer can join a class action sex-discrimination lawsuit against the chain.
The company maintains that allowing as many as 2 million past and present female workers to claim they were harmed by Wal-Mart policy, rather than requiring each woman to prove she was wrongly denied pay or promotions, "takes away the rights of the defendant," attorney Theodore Boutrous told an 11-judge panel of the Ninth U.S. Circuit Court of Appeals. "In our system, a defendant has a right to put on their case."
The women's lawyer, Brad Seligman, countered that discrimination was "a system-wide process" at Wal-Mart and its 3,400 stores.
The plaintiffs' expert witness found that "in every one of 41 regions, women got paid less than men" by an average of a couple of thousand dollars a year, Seligman said. If each woman had to sue individually for that amount, no lawyer would take the case, he said.
But as a class action - which would be the largest civil rights suit in the nation's history - the suit could compensate all the women and force the company to change its practices, Seligman said.
The judges gave no clear indication of whether they would allow the suit to proceed as a class action, although each lawyer encountered skeptical questioning.
When Boutrous argued that courts should decide whether women were discriminated against at individual stores, where pay and promotional decisions are made, Judge Raymond Fisher asked why the plaintiffs couldn't attribute their treatment to a "strong pro-male culture" at Wal-Mart.
Judge Carlos Bea, however, told Seligman that allowing the women to present a case of company-wide discrimination would assume that all managers treated women alike, even if "one was benign and the other was a hate-filled person against women."
"We're not suing individual store managers," Seligman replied. When Bea asked whether Congress and the state Legislature were also discriminatory because most of the representatives are men, Seligman observed, "They're voted in."
The judges seemed divided about a critical issue - whether the suit was primarily a challenge to Wal-Mart's policy, which usually can proceed as a class action, or whether it was mainly about pay discrepancies, which courts often say must proceed individually.
The suit, originally filed in San Francisco by six women, has been on hold since 2004, when a federal judge approved class-action status on behalf of virtually all women who have worked at Wal-Mart since Dec. 26, 1998. That would require the company to defend its practices in a single jury trial, with billions of dollars at stake.
Even in recession, UC spends big on top brass...Jim Doyle
The University of California's worst financial crisis in years has not prevented the hiring of high-salaried administrative talent or the awarding of pay raises, promotions and perks to a dozen executives, university records show.
The new appointments reflect the university's commitment to providing "management effectiveness and accountability," said UC spokesman Paul Schwartz, adding that the system also needs to provide competitive salaries and benefits to attract and retain those qualified to run a major academic institution.
Last week, for example, the governing Board of Regents appointed two executives at salaries of more than $350,000 a year and authorized paid administrative leaves to two former campus chancellors - one receiving $402,200 a year and the other $315,000.
Over the last two months, the board also granted pay increases of as much as 22.3 percent to a half dozen senior managers and approved higher salary ranges for several additional department manager positions at UCSF and at the university's headquarters in Oakland.
But such appointments, pay raises and perks have infuriated UC's primary union of 11,000 staff members, University Professional and Technical Employees Local 9119, which called Tuesday for a hiring freeze of UC administrators earning more than $200,000 a year.
"We are very outraged. We confronted Chancellor Robert Birgeneau (of UC Berkeley) today about it," said Tanya Smith, the union's local president. "The chancellor responds that this is an exception, but we have seen too many exceptions. The exceptions are becoming the rule at UC, and we have had enough."
The issue is playing out against a backdrop of reduced state financial support to higher education, the likely increase of student tuition fees by nearly 10 percent this year and limiting the number of students who will be allowed to enroll.
To help offset the state's decision to slash $115.5 million from UC over two years, university officials have also eliminated scores of staff positions at the 10 campuses through attrition, buyouts and layoffs.
Officials claim to have reduced the UC Office of the President's budget by $67 million from two years ago by cutting 628 full-time employees at the Oakland headquarters, but some of these employees took jobs at other campuses. Those reductions were also accomplished with the aid of about $10 million worth of contracts paid to outside consultants.
The Board of Regents last week ratified two hires for vacant slots at the UC Office of the President.
Former investment banker Peter J. Taylor was hired as the university system's executive vice president and chief financial officer at a base salary of $400,000 a year. His perks include a relocation allowance of $64,000, reimbursement of his actual moving expenses up to $15,000, additional funds for house hunting, an $8,916-a-year automobile allowance, and eligibility to receive a low-interest mortgage loan.
The regents appointed Daniel M. Dooley as senior vice president for the university's external relations. He also continues to serve as vice president of agricultural resources and natural resources for the university system. With his promotion and double-duty, he received a $50,000 a year pay increase. His base salary for both jobs is $370,000 a year, plus an automobile allowance and eligibility to receive a low-interest mortgage loan.
The Board of Regents adopted a plan in January to freeze the salaries of UC's top administrators, saying that it would stop merit or equity increases. The regents have canceled all pending bonus payments to employees at the senior management level through 2009-2010.
But the regents left open the possibility of stipends and raises for promotions on a case-by-case basis, as well as increases to retain certain employees who receive another job offer.
Schwartz of the UC Office of the President said the pay increases and appointments should be viewed within the context of "a pay freeze for existing senior staff, restrictions on travel, and a host of other cost-cutting measures here and on every UC campus."
He also said the university is chronically underfunded.
"UC continues to take more students than the master plan calls for, despite the fact that the state is not funding these students," he said. "We're about $450 million in the hole from recent years alone.
"Where is the state in the equation?" he asked. "Where is the fact that the state is not living up to its obligation to fund higher education?"
Top officials with raises, perks
Among the top UC administrators who received pay raises and other perks:
-- John Gary Falle was appointed as associate vice president of federal government relations of the UC Office of the President. His annual salary was increased 10.4 percent from $244,500 to $270,000.
-- Henry E. Brady was appointed dean of the Goldman School of Public Policy at UC Berkeley at an annual salary of $283,200 - a 15 percent increase from his faculty salary of $246,228.
-- Dr. J. Michael Bishop, the former chancellor of UCSF, was granted a paid administrative leave (in lieu of sabbatical leave) for one year at a salary of $402,200.
-- Larry N. Vanderhoef, the former chancellor of UC Davis, was granted a paid administrative leave (in lieu of sabbatical leave) for one year at a salary of $315,000. He was provided offices on campus, an executive assistant at a base salary of $91,000 a year, and an office budget of $39,000 for the 2009-10 fiscal year.
-- Paul Staton, the chief financial officer of the UCLA Hospital System, was awarded a "pre-emptive retention" pay raise of 22.3 percent to increase his annual base salary from $310,800 to $380,000.
EPA review of mining permits signals policy shift...DINA CAPPIELLO, Associated Press Writer
WASHINGTON (AP) -- Breaking with the policies of the Bush administration, the Environmental Protection Agency is sharpening its oversight of mountaintop coal mining to ensure projects do not harm streams and wetlands.
EPA administrator Lisa Jackson directed the agency staff on Tuesday to review 150 to 200 applications for new or expanded surface coal mines, many mountaintop removal operations, pending before the federal government.
The agency also objected to two permits slated for approval by the Army Corps of Engineers. And in a third letter, the EPA recommended that the Corps deny a more recent permit request. That objection is not part of the initial review of 150-200 permits.
In letters sent to the Corps' office in Huntington, W.Va., the agency said the companies seeking the permits haven't done enough to avoid and minimize damage to water quality and stream channels. The letters address mining permits sought by subsidiaries of Richmond, Va.-based Massey Energy Co. and St. Louis-based Patriot Coal Co. for West Virginia and Lexington, Ky.-based Rhino Resources for a mine in eastern Kentucky.
The permits authorize mining companies that blast away mountaintops to access coal to dump the waste into streams and wetlands.
The actions "reflect EPA's considerable concern regarding the environmental impact these projects would have on fragile habitats and streams," Jackson said in a statement.
Environmentalists hailed the decision as a sea change in policy. The EPA has always had the authority to review and veto permits issued by the Corps of Engineers, but it rarely did so during the Bush administration.
The Corps has long been criticized by environmental and community groups and has been sued for failing to thoroughly evaluate the environmental impact of mountaintop removal.
Under the Clean Water Act, companies cannot discharge rock, dirt and other debris into streams unless they can show they will not cause permanent damage to waterways or the fish and other wildlife that live in them.
Last month, a three-judge appeals panel in Richmond, Va., overturned a lower court's ruling that would have required the Corps to conduct more extensive reviews. The appeals court decision cleared the way for a backlog of permits that had been delayed until the lawsuit was resolved.
The EPA's action on Tuesday could leave those permit requests in limbo a little longer.
Ginger Mullins, regulatory branch chief for the Corps' Huntington District, which covers portions of Kentucky, Ohio, West Virginia, Virginia and North Carolina, said the EPA reviews will delay approval of projects.
"It will take more time," said Mullins.
Inside Bay Area
Appeals court rehears Wal-Mart sex-bias case...Josh Richman, Oakland Tribune
SAN FRANCISCO — An 11-judge appeals court panel heard arguments Tuesday on whether a Bay Area-based gender-discrimination lawsuit against retail giant Wal-Mart can proceed as the largest class-action lawsuit in history.
The 9th U.S. Circuit Court of Appeals panel heard an hour of arguments on whether an estimated 1.5 million women who are current and former employees of the world's largest private employer can proceed as one in claiming they received less pay and were denied promotions in comparison to men.
The loser of this fight is likely to seek the U.S. Supreme Court's review.
Attorney Theodore Boutrous, of Los Angeles, representing the Arkansas-based company, argued that U.S. District Judge Martin Jenkins, of San Francisco, erred by applying the wrong standard when he certified the case as a class action in 2004. Boutrous said a suit so massive — in which so many plaintiffs are seeking both back pay and punitive damages that could total in the billions while also involving an individual determination for each case — can't be tried as a class action without trampling the company's right to defend itself.
But attorney Brad Seligman from the Berkeley-based Impact Fund, representing the plaintiffs, said there's nothing wrong with letting his clients prove the company "approved of and acquiesced for years" to a pattern and practice of its regional management allowing gender discrimination in pay and promotions, "to show the common operating procedure was discrimination." The fact that there's not a "one-size-fits-all" remedy for all the class members doesn't mean the lawsuit can't proceed as a class action, he argued.
The Obama administration has sided with the plaintiffs: The U.S. Equal Employment Opportunity Commission filed a brief last week arguing Wal-Mart's position would keep the government from ever seeking punitive damages from companies with a pattern of discrimination and would impede the EEOC's ability to enforce discrimination laws.
The lawsuit, filed in June 2001 in San Francisco, seeks lost pay and punitive damages on behalf of women who work or have worked at the company's stores since the end of 1998. The plaintiffs say they can show a national pattern of women paid less than men in comparable positions — despite having better performance reviews and more seniority — and of getting fewer promotions to in-store management positions than men, with those women who get promoted waiting longer for it than men.
The case's six named plaintiffs include Betty Dukes, who works at Wal-Mart in Pittsburg; Patricia Surgeson, who worked at Wal-Mart in Vacaville; Cleo Page, who worked at Wal-Mart in Livermore, Union City and Tulsa, Okla.; and Chris Kwapnoski, who works at Sam's Club in Concord.
Jenkins granted class-action status in 2004, finding the plaintiffs had shown significant evidence of company policies and practices, expert opinion on statistical evidence of gender disparities, and anecdotal evidence. A three-judge 9th Circuit appellate panel agreed in February 2007, but revised its ruling that December to send back the case to the district court to re-examine the appropriate scope of the class. That ruling is now under review by the 11-judge "en banc" panel which heard arguments Tuesday.
Wal-Mart is the world's largest retailer, with $401.2 billion in sales for the fiscal year ending Jan. 31; it operates more than 4,100 supercenters, discount stores, Neighborhood Markets and Sam's Club warehouses in the United States, and more than 3,100 in 13 other countries. It employs more than 2 million store associates worldwide, including more than 1.4 million in the United States.
Los Angeles Times
Feinstein wants desert swath off-limits to solar, wind projects
In a move that could pit environmentalists and alternative energy industries against each other, the senator wants hundreds of thousands of acres in California designated as a national monument...Richard Simon
Reporting from Washington — While President Obama has made development of cleaner energy sources a priority, an effort is underway to close off a large swath of the Southern California desert to solar and wind energy projects.
In a move that could pit usual allies -- environmentalists and the solar and wind industries -- against each other, Sen. Dianne Feinstein (D-Calif.) is preparing legislation that would permanently put hundreds of thousands of acres of desert land off limits to energy projects. The territory would be designated California's newest national monument.
The move has triggered cries of NIMBY-ism on Capitol Hill.
"If there is such strong support for renewable energy, then why are they moving to block renewable energy production in their own state?" said Rep. Doc Hastings of Washington state, the top Republican on the House Natural Resources Committee.
Myron Ebell, an energy expert with the pro-market Competitive Enterprise Institute, called Feinstein's effort "just the first example of how hard it is going to be to realize President Obama's dream of a green-energy economy."
Feinstein disputed that she is engaged in a not-in-my-backyard campaign. "I'm a strong supporter of renewable energy and clean technology -- but it is critical that these projects are built on suitable lands," she said.
The area of concern to Feinstein is between the Mojave National Preserve and Joshua Tree National Park, off old Route 66 between Ludlow and Needles. The area includes desert tortoise habitat, wildlife corridors, cactus gardens and the Amboy Crater -- an inactive volcanic crater where portions of the 1959 movie "Journey to the Center of the Earth" were filmed.
"That section of the road is as pristine as it was when travelers came across it in the 1920s and '30s," said James Conkle, chairman of the Route 66 Alliance.
Boundaries for the proposed monument have yet to be drawn up. But David Myers, executive director the Wildlands Conservancy, said it probably would be in excess of 800,000 acres. Feinstein said in a Capitol Hill interview Tuesday that she was sending her staff to the desert -- and would probably visit the area herself next month -- to consider what areas should be made off limits to green-energy projects and where they should be permitted.
Feinstein, who regards the 1994 California Desert Protection Act as one of her proudest achievements, noted that the Wildlands Conservancy spent more than $40 million buying the former railroad land in the desert and turning it over to the government in one of the largest land purchases in California history, with the intent of protecting it. "I feel very strongly that the federal government must honor that commitment," she said.
The Bureau of Land Management is reviewing 130 applications for solar and wind energy development in the California desert, covering more than 1 million acres of public land, according to Feinstein, who recently discussed her concerns with Interior Secretary Ken Salazar. At least 19 projects have been suggested in the area where the monument has been proposed, Myers said.
Salazar said in a letter to Feinstein that projects in the desert would be "carefully considered" before any decisions were made and that "every effort will be made to avoid the most environmentally sensitive and valuable areas." But he also noted that developing cleaner energy sources was a priority.
California Gov. Arnold Schwarzenegger said in a speech last year at a Yale University climate-change conference: "If we cannot put solar power plants in the Mojave Desert, I don't know where the hell we can put it."
In November, Schwarzenegger signed an executive order that a third of the state's electricity come from renewable sources by 2020. A major boost in solar and wind power is an essential component of the state's plan to cut greenhouse gas emissions under its landmark global warming law. About 12% now comes from renewable sources, excluding large hydropower plants.
His administration, however, has signaled that it will work with Feinstein. A number of companies pursuing solar or energy projects said they hoped to work with Feinstein to fashion legislation that would satisfy her, environmentalists and the industry.
"It's frustrating. We really do have competing national priorities here," said Paul Whitworth, whose San Diego-based LightSource Renewables hopes to put in a solar project on about 6,000 acres near Amboy. "We spent a lot of time researching the desert, and consulting with the BLM to make sure we didn't apply on top of an area of critical environmental concern, or area with other issues. . . . Now, there's uncertainty on whether these projects will go ahead."
"What we all know about Sen. Feinstein is that she's long been a champion for both environmental issues and renewable energy issues," said Shannon Eddy, executive director of the Large-scale Solar Assn. "I'm certainly hoping that there's some pathway that we can find here to meet the mutual goals we all have."
A representative of the U.S. Chamber of Commerce who has fought congressional actions to close off areas to oil and gas drilling questioned where energy projects would be built, if not in the remote desert.
"If you're going to take the desert away from us, where are you going to allow it -- Los Angeles?," said Bill Kovacs, the chamber's vice president for environment, technology and regulatory affairs.
Feinstein holds a position of influence: She chairs the Senate appropriations subcommittee that writes the Interior Department's budget.
California's Wipeout Economy...Steven Pearlstein
LOS ANGELES The sun is shining less brightly these days in sunny Southern California.
The recession hit here earlier and harder than the rest of the country -- the statewide unemployment rate topped 10 percent last month -- and chances are it will linger here longer.
The severe downturn reflects the region's central role in the Bubble Economy.
As the headquarters for Countrywide Financial, Washington Mutual, New Century Financial and IndyMac, along with several of the nation's largest home builders, Southern California is ground zero for the mortgage crisis and the residential real estate bust.
As the capital of conspicuous consumption, its heavy reliance on auto sales, fashion, electronics and entertainment is now out of sync with the country's new frugality.
And as the gateway through which a majority of the country's imports flowed from Asia to American homes and businesses, its ports, warehouses and distribution channels, which once strained to keep up with the volume, now find themselves with large amounts of unused capacity.
More significantly, the receding economic tide has revealed serious structural problems and challenges in key sectors. The music, entertainment and electronic gaming industries are being turned upside down by the Internet. The real estate industry is bumping up against the limits of population growth and exurban sprawl. And state and local governments that have long financed themselves by pushing costs off into the future have finally met their day of reckoning.
"People here used to feel that because of the weather and the lifestyle, we were immune," said Robbin Itkin, a lawyer with a suddenly booming corporate workout and bankruptcy practice at the Los Angeles office of Steptoe & Johnson. "They don't think that now. There is a somberness I've not seen before."
Indeed, the most recent poll by the Field Research found that only about 40 percent of Southern California residents view the state as one of the best places to live. Back in the Beach Boy days, it was more than 70 percent.
I got the most vivid picture of how dramatically things have slowed at the Port of Los Angeles. Two years ago, ships lined up out to the horizon waiting to unload containers; unionized longshoreman routinely worked double shifts; and on any day there was usually work for a thousand or more nonunionized "casual" workers. But on a recent morning, the cranes on many terminals were idle, few if any casual workers were needed, and the few ships moving through the port's channel looked to be only partially loaded.
The ports of Los Angeles and Long Beach are, far and away, the biggest economic drivers in Southern California, directly employing 280,000 workers, indirectly supporting nearly 900,000 jobs in the region and handling $350 billion in goods. But last month volume at the bigger Los Angeles port was off by nearly a third, and executive director Geraldine Knatz said she and her crew were scrambling to preserve their market share. Already the port has cut fees by 10 percent on "intermodal" cargo bound for points north and east and is considering a reduction of 50 percent on new business.
It's not just the economic slowdown Knatz worries about, but also the longer-term prospect of losing business to other western ports with lower labor and environmental costs, or East Coast ports that will become her competition once the Panama Canal is widened to accommodate the biggest cargo ships.
"We're going to come back to a new normal," she predicts, with annual growth rates of less than half the average 7 percent rate of the previous decade, and a fraction of the torrid 14 percent rate in 2006.
The port's fortunes are reflected elsewhere in the region's sizable manufacturing sector -- in particular the toy, electronics and clothing companies that have long since moved the bulk of their production to Asia but retain much of their design, marketing and distribution functions in Southern California.
Last fall, Lonnie Kane had to lay off several hundred workers at the women's clothing company he and his wife have operated for decades. They import fabric from Europe and Asia, use high-tech equipment to cut the patterns and then ship the pieces out to local shops staffed by low-wage immigrant workers for the final sewing.
The small department stores that once formed the base of Kane's business are now gone, his small-store customers cannot get credit and the big department stores that buy his blouses and sweaters are constantly on the phone delaying or canceling their orders. His sales are off by more than 25 percent.
As Kane sees it, Southern California is no longer the "middle-class paradise" it fancies itself, with steady growth of good-paying manufacturing jobs. Like the rest of the country, the region is now uncomfortably divided between the haves and have-nots. Although some of that was inevitable, he also blames state and local governments whose attitude toward business has always been that if firms failed or left the area, there would always be plenty of others to take their place.
"People think that when this is all over, it will go back to the way it always was, " Kane says. "That's a fantasy."
It is hard to overstate how reliant the Southern California economy has always been on population growth to drive its economic growth -- in oversimplified terms, building houses for the next wave of home builders. In the beginning, the early developers could be pretty confident that if they built it, they would come -- from the Northeast and Midwest, and then from all corners of the globe. But in recent years, this perpetual growth machine has pretty much run out of steam as residents old and new confronted the realities of two-hour commutes, bad air, a shortage of water and a backlash against illegal immigration.
Moreover, without the steady growth in tax revenue that came with population growth, the Ponzi scheme that passes for public finance in California was suddenly and painfully revealed. Much of the blame lies with public employee unions and a handful of other special-interest groups that have essentially hijacked political control of state and local governments. Now, despite decades of high taxes and rapid growth, state and local governments find that they not only don't have the revenue to provide even basic services, but are saddled with hundreds of billions of dollars in unfunded pension liabilities and infrastructure needs.
"L.A. is becoming a Third World city," says Rick Caruso, a successful developer who has considered running for mayor.
Although Caruso's upscale new development, the Grove, has been a smashing success, he's putting most of his new projects on hold, figuring that for the moment, there's more money to be made with lower risk by buying up financially distressed properties at deeply discounted prices. There should soon be plenty for him to choose from. The shakeout in commercial real estate, which is now in full swing in suburban Orange and Riverside counties, has made its way to the tonier areas of the city. There are numerous "For Rent" signs on Melrose Avenue in West Hollywood and along Montana Avenue in Santa Monica. Lack of financing has stalled the $3 billion, Frank Gehry-designed hotel and residential project on Grand Avenue downtown and a $400 million luxury condo tower in Century City.
"It's clear to me that we will have a lot of reinventing to do here over the next few years," Jim Thomas, a prominent local developer, told me.
What's less clear is whether Southern California is ready to embrace that challenge.
Wal-Mart Asks Appeals Court to Overturn Bias Ruling (Update1)...Karen Gullo
A lawyer for Wal-Mart Stores Inc. said a federal judge erred when he ruled that more than 1.5 million current and former workers could sue the world’s largest retailer for gender discrimination as a group.
Allowing employees to collectively seek back pay and punitive damages improperly robs the company of a chance to defend against each woman’s claim that she was paid less than her male counterparts or denied promotions, attorney Theodore Boutrous told a panel of 11 federal appeals court judges.
“In our system, a defendant has a right to put on their case,” Boutrous said at a hearing today in San Francisco.
The panel is weighing whether to throw out the ruling certifying the lawsuit as a class-action, or group, case. Class certification provides leverage for plaintiffs, making it easier to finance the lawsuit and negotiate a settlement. A trial hasn’t been scheduled in the case.
Brad Seligman, attorney for the plaintiffs, told the panel that reversing the lower-court’s ruling and handling each worker’s claim individually would deny employees the ability to seek a remedy for Wal-Mart’s conduct because it’s too expensive to sue individually for relatively small back-pay claims.
“These folks are not going to get lawyers to represent these cases,” Seligman said.
Wal-Mart, the largest private employer in the U.S., is accused of paying women less than men and giving them fewer promotions. The 2001 lawsuit was originally filed in San Francisco by six women seeking to represent other employees. Wal-Mart, based in Bentonville, Arkansas, denied discriminating and said it should be allowed to defend the women’s claims on a case-by-case basis.
After reviewing expert reports, witness statements and oral arguments from both sides, U.S. District Judge Martin Jenkins decided in June 2004 that the experiences of the six original plaintiffs may be common to other current and former workers. Jenkins certified the case as a class action.
A three-judge panel in the federal appeals court in San Francisco upheld Jenkins’s ruling in 2007. Wal-Mart appealed to larger panel of judges.
The judges didn’t say when they would rule.
The case is Dukes v. Wal-Mart Stores Inc., 04-16688, U.S. Court of Appeals for the Ninth Circuit (San Francisco).
California Home Prices Decline 41% on Foreclosures (Update1)...Daniel Taub
California home prices dropped 41 percent last month from a year earlier, more than double the U.S. decline, as surging foreclosures drove down values, the state Association of Realtors said today.
The median price for an existing, single-family detached home in California sank to $247,590 in February from $418,260 a year earlier, the Los Angeles-based group said in a statement. The U.S. median price fell 16 percent during the same period, the second-biggest drop on record, according to the National Association of Realtors.
Home prices have been falling since their 2006 peak, pushed down by rising foreclosures blamed for the U.S. credit crisis. California, the most populous state, has one of the highest rates of foreclosure, according to RealtyTrac Inc., an Irvine, California-based seller of real estate data. Lenders usually sell foreclosed properties at a discount, dragging down the median price, so it doesn’t necessarily reflect the value of most homes, the California Association of Realtors report said.
“The median, for all its imperfections, tells a really interesting tale right now,” Andrew LePage, an analyst at research firm MDA DataQuick, said in an interview. “It tells you what is and what is not selling. What’s selling right now is foreclosures.”
Foreclosures accounted for 58 percent of existing California home sales in February, compared with 33 percent a year earlier, according to San Diego-based MDA DataQuick. Inland California, where prices are lower than coastal areas, accounted for half the state’s mortgage defaults in the last three months of 2008, MDA DataQuick said.
“The California median price has declined by a larger margin than the nationwide median price,” Leslie Appleton- Young, chief economist for the California Association of Realtors, said in today’s statement. “This can be attributed to the under $500,000 portion of the market, which has experienced larger price declines than the other market segments due to the large share of distressed homes for sale.”
The California price drop led to an 83 percent increase in the number of houses sold in February from a year earlier, the state association said. The number of existing, single-family detached homes sold jumped to 620,410 on an annualized basis, up from 338,970 a year earlier. Sales dropped 0.8 percent from January.
The median number of days it took to sell a single-family home in California was 51.5 last month, down from 69.3 a year ago, the association said. The number of months needed to deplete the supply of homes on the market at the current sales pace dropped to 6.5 months from 15.3 months a year ago.
California’s most expensive region for homes last month was Santa Barbara County’s south coast, where the median fell 45 percent from a year earlier to $715,000. The least expensive region was the High Desert, where the median dropped 45 percent to $121,970, the Realtors’ group said.
Home sales in the High Desert more than tripled last month from the previous year, while sales in Santa Barbara’s south coast fell 9.4 percent.
The median condominium price in California was $219,960 in February, down 40 percent from $367,540 a year earlier, the Realtors’ report said. The number of condo sales rose 52 percent from a year earlier.