Is 2011 the Year of the Blockbuster Tech I.P.O.?

Is 2011 the Year of the Blockbuster Tech I.P.O.? - New York Times

Evelyn M. Rusli asks in New York Time's Deal Book if 2011 will be the Year of the Blockbuster Tech I.P.O.? A question that merits our attention!

FarmVille, Zynga’s online game.

For technology start-ups, the initial public offering has long lost the sheen of the dot-com era, when it seemed like anyone with an idea could go public. At the peak of the bubble, the Silicon Valley factory was in overdrive, pumping out hundreds of I.P.O.’s. a year.

In the wake of the financial crisis, there were just 45 offerings of tech companies in 2010, according to investment firm Renaissance Capital. The year before, only 16 debuted.

Now, Silicon Valley could see a modest return to the prerecession days — and even a hot brand-name initial offering from the likes of Groupon, Facebook or Zynga analysts say.

“If the equity markets remain stable, I expect a solid I.P.O. market,” said Peter Falvey, co-head of technology investment banking for Morgan Keegan. “We could see 20 percent more deals by value and by number.” Mr. Falvey and others also see increasing odds for a “Death Star explosion” — a blockbuster, multibillion dollar offering from a major Internet company. That theory gained credence on Thursday, when DealBook reported that that social-buying site Groupon is preparing for to I.P.O. at the end of 2011.

Silicon Valley is waking from a deep slumber.

The credit crisis paralyzed the technology I.P.O. market, as investors shunned unproven ventures. Only 20 companies went public from 2008 to the end of 2009, according to data from Renaissance Capital.

Meanwhile, initial offerings have become less attractive to young entrepreneurs who do not want to be burdened with the costly bureaucratic challenges of going public, including increased regulatory scrutiny, constant filings and high investment banking fees.

Instead, more founders are delaying initial offerings in favor of additional venture capital. Facebook raised more than half a billion dollars from the Russian firm Digital Sky Technologies. As DealBook noted, Groupon is negotiating with Fidelity, T. Rowe Price and Morgan Stanley for another round of financing that could be as large as $950 million.

Still, several analysts say I.P.O.’s may be regaining favor again, thanks to the improving stock market and a better economic environment.

“We may be nearing an inflection point,” said Paul Bard, a vice president at Renaissance Capital. “Companies are feeling good about their businesses, the buy side is more interested in growth and new money is coming into the market. When you have those three things happening in concert, that creates the potential for a very vibrant market for tech I.P.O.’s.”

The market may also be supported by the steady flow of Chinese companies, looking to go public on American exchanges. Eleven technology companies based in China had initial public offerings in the United States this year, including DangDang, an online retailer that experienced higher-than-expected demand in its debut, raising $272 million.

After a sluggish start, I.P.O. performance and pricing has picked up in the second half of this year. The shares of technology companies that have recently gone public are up 50.3 percent from their initial offer price, according to Morgan Keegan.

Although there are a few well-known names in this group, including the electric-car marker Tesla, the vast majority are little known, small-cap stocks. And some have done very well.

Shares of the software maker RealPage, which began trading in August, have roughly doubled. RealD, the 3-D technology company that went public in July, is up 60 percent.

The average first-day increase in share price was 18 percent, said Mr. Bard, adding that the recent rally would encourage small and midsize tech start-ups to take the plunge next year. He says he expects 2011 I.P.O. activity for technology stocks to match the levels of the years preceding the recession. In those years, the market averaged 53 public offerings a year with a value of $9.6 billion, according to Renaissance Capital.

There are 22 companies in the tech I.P.O. pipeline, including the Web chat serviceSkype, which many predict will be a billion-dollar offering.

The latest parlor game, however, is placing bets on whether Internet companies like Groupon or Facebook, which already have multibillion-dollar valuations, will join the fray. There has been significant demand for these Web darlings in the secondary markets, private exchanges that match buyers and sellers, including former employees looking to sell their stock. Facebook, at the center of the frenzy, is trading at an implied valuation of $42.4 billion, according to SharesPost.

Although the company’s founder, Mark Zuckerberg, has said that he is in no rush to go public, the company may face increased pressure in the near term. As more investors pile into Facebook shares, often through special investment pools, the company could soon surpass 500 shareholders. That milestone would subject the company to a Securities and Exchange Commission rule that would require Facebook to register with the S.E.C. and submit financial results.

As DealBookreported, the S.E.C. has started to ask for information about secondary-market trading in the shares of Facebook, Twitter, Zynga and LinkedIn.

If Groupon or Facebook, or one of their peers, do go public in 2011, Mr. Falvey said it would be a game changer for the industry.

“There’s a chance that you get that Death Star I.P.O. in the tech market that draws huge attention to I.P.O.’s,,” he said, “the kind of attention we haven’t seen since the tech bubble burst in 2000.”

Energy companies in Switzerland join forces for new nuclear plants

Swiss nuclear firms join forces on new reactors - Reuters

Axpo, Alpiq, and BKW will each take a third in a new project company

Swiss utility companies Axpo, Alpiq (ALPH.S: Quote) and BKW (BKWN.S: Quote) have decided to club together in their plans for two new nuclear power stations to replace existing capacity, they said on Thursday.

Although new capacity is probably a decade away, the plans show Swiss operators are determined to keep control of some 3,200 megawatts of capacity that currently supply 40 percent of Swiss electricity usage from five generation units. [POWER/CH]

"This represents a milestone in the bid to ensure security of supply in Switzerland," said a statement issued by Axpo.

"This will speed up the political process and official procedures, enable synergies to be exploited in the evaluation process, and save on costs," it added.

The aim is to compensate for existing plants reaching the end of their operating lives and for French import agreements that are due to expire, it said.

Switzerland's role is pivotal in central European power markets, where prices are converging. Nuclear serves as a basis while its big hydropower sector supplies neighbours in years with high water supply but necessitates imports in dry years.

Under the latest plans, the three companies will further develop previously separate projects jointly and be given equal shareholdings each in a joint planning and project company, which might also become a joint operating company in the future.

Decisions on sites and the prioritisation were expected to be made in mid-2012, they said.

Sites at Niederamt, Beznau and Muehleberg have already been declared suitable for replacement plants and further feasibility studies are under way.

The ratio of power procurement entitlements has also been laid down, with some minor adjustments. It will roughly be 59 percent for Axpo and its subsidiaries Axpo AG and CKW, 25.5 percent for Alpiq and 15.5 percent for BKW, commensurate with their existing share of current production capacity.

The existing Swiss capacity is split betwen the three firms, with some participation of cities and Cantons, and Germany's E.ON (EONGn.DE:Quote), which has a 20 percent share in Muehleberg. (Reporting by Vera Eckert; editing by James Jukwey)

Probable Carcinogen Found in Tap Water of 31 U.S. Cities

Probable Carcinogen Found in Tap Water of 31 U.S. Cities - New York Times

In 25 of 35 U.S. cities where tap water supplies were tested for hexavalent chromium -- deemed likely to cause cancer in humans in a U.S. EPA draft review this year -- levels of the chemical exceeded the minimum set by the state of California to protect public health, according to a report released today by an environmental group.

The Environmental Working Group's (EWG) new findings mark a public flare-up in the behind-the-scenes battle over estimating the carcinogenicity of oral exposure to hexavalent chromium, also referred to as chromium-6. The draft EPA assessment released in September could pave the way for a national drinking-water standard for the chemical, best known for polluting groundwater in Hinkley, Calif., where activist Erin Brockovich won a multimillion-dollar settlement for locals and became a household name.

The outcry over cancer cases in Hinkley helped push California to set a tap-water public health goal of 0.06 parts per billion (ppb) of chromium-6, an early move on the way to a binding state standard (Greenwire, Aug. 21, 2009). Of the 35 cities where EWG tested drinking supplies, 31 contained some level of chromium-6, and 25 -- including Washington, Los Angeles and Norman, Okla., where samples showed 12.9 ppb -- contained levels higher than the California goal.

EWG senior scientist Rebecca Sutton, an environmental chemist who crafted today's report, said her group's data provide new ammunition for measuring and restricting chromium-6 in drinking water nationwide. The federal government made "a very poor choice" by mandating its current drinking-water tests for total chromium, a metric that blends hazardous chromium-6 with the essential nutrient trivalent chromium.

Sutton added that while "industry is doing its very best to slow the process down even further," she hopes to see California advancing its chromium-6 limits to serve as a potential model for broader action. "Sometimes the state of California can lead the way, can show, 'Hey, this is possible,'" she said.

Brockovich, now an author and full-time consumer advocate, predicted in an interview that further chromium-6 water contamination issues would emerge "not only at a national but a global level."

"There is no reason why we can't address this without sounding some kind of panic alarm, which [critics] are going to accuse us of doing," Brockovich said.

A heavy metal commonly used in industrial dyes and coatings that also occurs naturally in small amounts, chromium-6 is known to be carcinogenic via inhalation. The cancer-causing effects of oral exposure through water, however, remain the subject of intense debate between environmentalists and industry.

The recent EPA draft review of chromium-6 incorporated the results of a 2008 National Toxicology Program (NTP) study that found a higher occurrence of gastrointestinal tumors in exposed rodents. The American Chemistry Council and the American Water Works Association, which represents water utilities that could bear the costs of broader chromium-6 testing, have both questioned the application of the NTP study to human exposures at lower levels.

ACC and AWWA have called on EPA to postpone further action on its chromium-6 risk assessment until new studies, including one funded by industry, are released next year.

A senior official at the Southern California Water Committee (SCWC), an alliance of industry and local governments active on water quality issues in the state, also asked EPA to delay the chromium-6 assessment until more studies are released.

Using the 2008 NTP data to assess the cancer-causing effects of lower exposures to chromium-6 "may not reflect the true risk and will have significant consequences for the public's confidence in the quality and safety of their drinking water," SCWC Executive Director Richard Atwater wrote to EPA in October. "Furthermore, it would prematurely trigger regulatory levels that water supply agencies simply don't have the equipment to monitor and detect."

Click here to read EWG's full report on hexavalent chromium in drinking water.

Wyoming Natural Gas Fracking Rules for Point the Way for Public Disclosure of Chemicals Used

Wyoming Natural Gas Fracking Rules for Point the Way for Public Disclosure of Chemicals Used - New York Times

To coax more oil from a wildcat well named "Mad Hatter," Halliburton Co. is planning to inject water mixed with small concentrations of napthalene, ethanol, "1,2,4-Trimethylbenzene" and "hydrotreated light petroleum distillate" into a hole in the ground near Casper, Wyo.

Such detailed chemical information was once a closely guarded secret. But it is available to anyone with an Internet connection now that Wyoming is demanding that drillers disclose each chemical that they are putting in each well.

Led by Gov. Dave Freudenthal (D), state regulators decided that the best response to fears about water contamination and the prospect of federal regulation was to order the country's most detailed disclosures of the ingredients used in hydraulic fracturing.

Though companies had long argued that fracturing fluid recipes are trade secrets worth millions of dollars, there has been relatively little grumbling since the rules kicked in Sept. 15.

"I'm not hearing many complaints," said John Robitaille, vice president of the Petroleum Association of Wyoming. "I think we're OK."

And Wyoming's regulations could be the shape of things to come. The Obama administration is looking to the Cowboy State as a model for fracturing disclosure on federal lands in the West. Interior Department officials figure it would be hard to argue against an approach developed in petroleum-friendly Wyoming.

If that led to Western state governments adopting similar rules, Eastern states such as Pennsylvania could feel pressure to demand similar information from drillers tapping into the rich Marcellus Shale.

"It will certainly become a model for disclosure," said Dave Alberswerth, a former Clinton administration Interior official now with the Wilderness Society. "It'll be more difficult for industry to argue against this."

In fracturing, crews inject tanker-loads of water and sand underground to blow apart the rock and release gas. A small fraction of that concoction is a mixture of chemicals as mundane as ice cream thickener and as toxic as benzene.

Improvements in fracturing technology have opened the vast shale formations in Pennsylvania and other states that were previously considered too difficult and expensive to tap.

But the rapid expansion of drilling and fracturing has intensified fears that the toxins and carcinogens in fracturing fluid might contaminate drinking water. Environmentalists and congressional Democrats have pushed not only for public disclosure of fracturing chemicals but also stricter federal regulation of the practice.

Drilling companies, though, say fracturing is safe and existing state regulation is sufficient. They stress that the fracturing fluid is injected thousands of feet below drinking water aquifers and maintain that there has never been a proven case of groundwater contamination from the fracturing process.

Hushing the debate

With the regulations, Wyoming has done what Washington failed to do: quiet the burgeoning debate about fracturing.

The rules accomplish much of what congressional Democrats and environmental groups were seeking in the arena of disclosure. Though they cover only one state, that state accounts for a tenth of all gas production in the United States. Neither industry nor environmentalists are completely happy with the disclosure regulations, but both have accepted them.

The oil and gas industry has arrived at this point after years of struggle. Companies have long maintained that public disclosure of fracturing fluid ingredients would unfairly cost them millions of dollars. In a filing with the Securities and Exchange Commission earlier this year, Halliburton said federal or state requirements to disclose the composition of fracturing fluid would be a regulatory burden that could decrease profits.

Halliburton spokeswoman Teresa Wong referred questions about the Wyoming regulations to trade groups such as the Petroleum Association of Wyoming.

"As for Halliburton, we will of course continue to comply with all laws and regulations," Wong said.

But as pressure grew, companies such as Exxon Mobil Corp. insisted that they actually were disclosing the ingredients because they posted "material safety data sheets" (MSDS) at work sites. But those information sheets are for industrial accidents, not groundwater monitoring, and they often omit key data.

When Colorado overhauled its regulations in 2007, it required more disclosure, but not to the public. Colorado now requires drillers to keep a detailed inventory, but they only give a copy to regulators if asked.

But as the public profile of fracturing has risen to become the subject of independent film documentaries and network shows like "CSI: Crime Scene Investigation," more companies have embraced the need for full public disclosure.

"Giving the public a greater sense of transparency is an important step forward," Anadarko Petroleum Corp. spokesman John Christiansen said. "Once the process is better understood, we think the public will be more comfortable with it."

Industry advocates say that the quiet compliance of drillers of Wyoming proves that their objections were not so much about informing the public so much as opposition to giving more power to a federal agency such as U.S. EPA.

Arkansas has approved well-by-well disclosure regulations that go into effect next year. Also, an association of state oil and gas regulators called the Ground Water Protection Council is developing a voluntary system for well-by-well disclosure that has been endorsed by drilling companies.

Interior studies Wyo. model

Still, other Western states have even fewer requirements for disclosure. New Mexico regulations, for instance, do not address disclosure of fracturing chemicals.

In the East, Pennsylvania currently requires public disclosure of fracturing chemicals, but only the MSDS sheets, which are available at regional offices. But amid a strengthening gas rush, the state is still determining how it will tax and regulate oil and gas production. New York has banned most high-volume fracturing while it studies the process and develops rules.

Congressional efforts to force disclosure of chemicals stalled this year and will likely disappear when Republicans take over the House next year. But at a forum on fracturing late last month, Interior Secretary Ken Salazar announced his department plans to develop rules on public disclosure of fracturing chemicals used on the vast public lands of the West (E&ENews PM, Nov. 30).

"I'd like to see that happen," Wyoming Oil and Gas supervisor Tom Doll, who shepherded the new regulations, said in an interview. "What we're saying is have something that's working. Nothing beats success like success."

Interior officials confirmed that they are looking to Wyoming as a model for such regulations, which would primarily affect lands and minerals overseen by the Bureau of Land Management. And Salazar gave Doll a keynote role at Interior's fracturing forum. Administration officials used the forum to explore how public disclosure has worked on federal lands in Wyoming.

Still, Salazar's announcement sparked outrage from Republicans on Capitol Hill.

"I oppose adding burdensome, new red-tape that will further discourage oil and gas production on public lands in the West," Sen. John Barrasso (R-Wyo.) wrote to Salazar after the announcement.

Barrasso declined to comment about how he would react to Interior adopting Wyoming's rules, saying through a spokeswoman that he would not comment on a "hypothetical situation."

Drillers also remain wary of the idea of federal regulation, even if it is modeled on rules they have accepted at the state level.

"If they copied it verbatim, we'd have no problem with it here in Wyoming," the state petroleum association's Robitaille said. "But in my experience, that's not how it works."

As gratified as they are to see movement toward greater disclosure, environmentalists say they still want to see stricter regulation, preferably by U.S. EPA under the Safe Drinking Water Act.

"Disclosure helps only after your water is contaminated. It doesn't prevent your water from being contaminated," said Amy Mall of the Natural Resources Defense Council.

'Trade secrets'

And environmentalists are also worried that Wyoming is agreeing to too many industry requests to shield compounds as "trade secrets."

"While we've been getting disclosure, it looks like that will be tightening up," said Jill Morrison, an organizer with the Powder River Basin Resource Council in Sheridan, Wyo.

But Doll said secrecy will be the exception, not the rule. He said his staff has been careful not to shield the chemical ingredients of broadly used "plain vanilla" fracturing fluid.

"Initially, I think people thought, 'They'll say that everything is a trade secret,'" Doll said. "That hasn't been the case."

The application for the Mad Hatter well, a "frack job (pdf)" for Strachan Exploration Inc. of Englewood, Colo., was denied (pdf) last month because it failed to list the ingredients of compounds for which Halliburton had not yet received trade secret protection.

The Wyoming Oil and Gas Conservation Commission website lists 16 approvals for trade secret protection, some for single products and some for long lists of compounds.

Halliburton has gotten five fracturing products shielded. BJ Services won trade secret status for 36 products, including fracturing sand.

Their requests are public record, and their reasoning points to the importance of fracturing chemicals, even though they amount to a tiny fraction of the total volume of what is injected.

ChemEOR Inc., a Los Angeles-based oilfield chemical company, told Wyoming regulators it spent more than $400,000 directly on research and development of a product called InFlo 250 W. Halliburton said it spent "tens of millions of dollars" researching new fracturing fluids during the past five years. The company said that public disclosure of its proprietary formulas could cost it $375 million.

Halliburton also argues that public disclosure of the chemicals in the compound would discourage research into fracturing fluids that reduce damage to the environment.

Wyoming regulators gave trade secret protection to many products that are toxic, which could keep raising questions about the value of secrecy. An MSDS sheet (pdf) on file with Ohio regulators, shows that ChemEOR's Inflo 250 W contains toxic methanol and 2-Butoxyethanol, a fracturing ingredient cited in several contamination allegations, and other hazardous components.

In several cases, Wyoming regulators granted trade secret status to compounds used by Halliburton and BJ Services but stated that they "are not approved for use in groundwater." That generally means they include some form of hydrocarbon, such as a petroleum distillate.

"The thing about trade secret protection," NRDC's Mall said, "is that it's only going to work if the public thinks its credible."

Industry Group, BLM Spar Over Decline of Oil and Gas Leases

Industry Group, BLM Spar Over Decline of Oil and Gas Leases - New York Times

An industry report last week showing a 79 percent decrease in oil and gas leases issued on public lands has ignited a debate over whether the Obama administration's leasing policies are stifling job creation and energy production.

The Western Energy Alliance -- representing more than 400 oil and gas companies in the Rocky Mountain states -- said its data show a dramatic decline in the use of public lands for oil and gas development and a corresponding dip in government revenue.

"This trend, if continued, will result in a decline in energy development with a resulting loss of jobs, and less revenue for federal and state treasuries at a time when Americans are very concerned about out of control deficits and spending," said Spencer Kimball, the group's manager of government affairs.

The Bureau of Land Management in fiscal 2010 issued 79 percent fewer leases in Colorado, Montana, New Mexico, North Dakota, Utah and Wyoming than in fiscal 2005, the Denver-based group found.

The alliance also found leasing revenue on public lands dropped 46 percent over the same period, and overall onshore royalties slid 33 percent over the past two years. Both revenue streams are roughly split between states and the federal government.

BLM responded by saying oil and gas leasing is market-driven and linked to price and energy consumption, rejecting industry claims that its leasing program had led to the decline.

"In response to falling oil and natural gas prices, oil and natural gas development companies have scaled back energy development and leasing activities," the agency said in a posting on its website, "a downward trend that is reflected in decreased leasing nationally, not just on federally-managed lands."

BLM presented a graph suggesting leasing and permits have generally followed the price of oil and natural gas over two decades.

Dave Alberswerth, the Wilderness Society's senior policy adviser on energy issues, said agency data show that although BLM issued 4,487 permits to drill in fiscal 2009, the permit recipients drilled 3,267 new wells, leaving 1,220 permits unused for the year.

"Though the industry complains about administration policies restricting 'access' to federal lands for oil and gas development, they didn't use anywhere near the number of drilling permits issued by the BLM in the last fiscal year," Alberswerth said. "It's a classic price-demand sort of relationship."

He added that the alliance "is selecting the facts that fit their arguments."

Declining demand for leases

The recent decline in natural gas prices, in fact, has caused a corresponding decline in the number of acres that industry asked BLM to offer for lease, according to a Greenwire analysis of government data last spring (Greenwire, April 1).

"Regardless of decreased commodity prices and reduced industry activity, the BLM continues to offer industry-nominated parcels for auction, and has even seen an increase in generated revenues for American taxpayers," BLM said.

The agency held 29 onshore lease sales in 2010 covering 3.2 million acres in the West and Alaska that netted more than $213 million -- a 57-percent increase over 2009, according to BLM, which has scheduled 36 lease sales in 2011.

To hammer home its point, BLM quoted a Greenwire article that quotes Kathleen Sgamma, the alliance's government affairs director, stating, "Drilling is down because of the economy. I don't think anyone denies that."

But Jon Haubert, spokesman for the alliance, said this week that BLM had failed to include the second half of Sgamma's statement: "As the economy recovers, these [BLM] policies will affect companies two or three years out and slow the recovery of the West."

"I have to admit, we are a little surprised they came out swinging directly at us," Haubert said in an e-mail, "I guess it's pretty apparent we struck a nerve."

While the alliance's energy "dashboard" stops short of blaming Interior Department policies for the leasing decline, the group has criticized the agency for reforms it says have sent a chilling message to oil and gas firms.

The group earlier this year blasted Interior's oil and gas leasing reforms, as well as decisions to analyze the greenhouse gas impacts of leasing and withdraw several dozen oil and gas leases sold in Utah a year ago.

The group also has two pending lawsuits in the U.S. District Court in Wyoming challenging BLM's failure to issue leases within 60 days of their sale, as required by law, and the agency's restricted use of categorical exclusions used to bypass environmental reviews.

Departing Sen. Dorgan Brings Earmark Deluge to N.D.

Departing Sen. Dorgan Brings Earmark Deluge to N.D. - New York Times

Despite ranking 47th among the states in population size, North Dakota may land some of the biggest earmarks in the nation for water projects: $14.3 million for infrastructure, $13.4 million for rural water supplies and a provision -- its price unspecified -- to require the federal government to pay for all future flood control work at Devil's Lake.

Those earmarks carry among the largest price tags in the water and energy section of the spending bill Senate Democrats hope to pass before year's end.

For the potential local tax dollars saved and jobs created, North Dakotans can thank outgoing Sen. Byron Dorgan. The Democratic chairman of the Energy and Water Appropriations Subcommittee has wielded his influence expertly, echoing the calls across Capitol Hill for greater investment in the nation's crumbling water infrastructure while using his powerful seat to ensure that an outsized portion of that investment flows to North Dakota, observers say.

"We have very serious needs for investments in water infrastructure," Dorgan said in July at a subcommittee markup of a bill that proposed spending nearly half a billion dollars more on water projects than President Obama proposed in his budget.

In an analysis of earmarks lawmakers requested this spring, North Dakota ranked first in the nation in dollars per capita requested, about $3,911 per person, or almost twice as much as Mississippi's $2,262, according to the watchdog group Taxpayers for Common Sense. That group's analysis of the latest spending measures is not yet complete.

The group also found that Dorgan ranked 12th in the Senate for total earmark money requested, not far behind the Senate's top three earmark-requesters, by dollar amount: Louisiana's Mary Landrieu (D), Mississippi's Roger Wicker (R) and Kansas' Sam Brownback (R).

"He's proven pretty adept at getting them," said Steve Ellis, spokesman for Taxpayers for Common Sense. "Senator Dorgan's no slouch."

A Dorgan spokesman dismissed the comparison. "We'd be high, per capita, for anything," said spokesman Barry Piatt.

Earmarks are generally defined as specific federal spending requests made by individual lawmakers for projects in their home district. The practice, often associated with "pork barrel" or "pay to play" politics, once again has come under intense scrutiny, since Senate Democrats unveiled a 2011 spending proposal this week that includes thousands of them, requested by both Republicans and Democrats, including some members who have criticized the practice.

Dorgan is not one of those. He defends earmark spending as the logical way for Congress to target federal dollars to region-specific needs and a relatively insignificant portion of federal spending. The 6,700 earmarks included in the proposed $1.1 trillion spending plan total $8.1 billion.

"You would think members of the House and Senate know best about the priorities of the states and the regions," Dorgan said. "The way to reduce the federal budget deficit is not to change the issue of earmarks."

Asked about the water projects he earmarked, Dorgan described a separate issue: a state-federal agreement struck decades ago that promised irrigation projects in return for flooding a large swath of North Dakota farmland.

"This is the result of finishing an agreement with the federal government," Dorgan said.

The deal dates back to a 1944 act of Congress in which North Dakota allowed for six dams to be constructed along the Missouri River. In exchange for the 300,000 acres of farmland that would be flooded, Washington, D.C., promised the state more than 1 million acres of irrigation by moving water to the eastern part of the state.

Over the ensuing decades, progress has started and stopped amid concerns over environmental effects, costs, land acquisition and Canadians' fears that water might be pushed north into their country from the Missouri River.

"That's the rationale for a lot of what he does: Promises were made. A flood was delivered. We still need to get what we were supposed to get in exchange," said David Conrad, senior water resources specialist for the National Wildlife Federation.

Conrad said Dorgan's water earmarks raise complex questions about the federal government's role in protection against flooding and providing for irrigation and infrastructure.

In the case of Devil's Lake, Dorgan's earmark would assume all costs for maintenance and rehabilitation of a levee designed to hold back waters of a lake that has no natural release valve and has, as a result, tripled in size since 1993 thanks to a string of wet years.

Environmentalists admit it is a "crisis situation" for the nearby town of Devil's Lake, population 7,200, but add that for the federal government to assume the cost of all future levee maintenance sets an unsustainable precedent, because hundreds of levees around the nation have been deemed to be at risk of failing. Since 1993, already more than $800 million has been spent relocating utilities, raising roadbeds, and buying and moving homes in the way of the waters, Conrad said.

"That's quite an impressive rider to put into such a bill, with obviously substantial future costs and possibly, setting a precedent that could ultimately open the floodgates to call upon the government to assume levee costs elsewhere," Conrad said. Normally, the federal government would split such costs, were it not for the $65 billion backlog in the Army Corps of Engineers' construction budget and the vast maintenance needs of the nation's levees.

"There's not enough money in the world for the federal government to pay all the local costs associated with levees in the country right now," Conrad said.

Generous Tariff Lures British Farmers Into Raising Solar Power Arrays

Generous Tariff Lures British Farmers Into Raising Solar Power Arrays - New York Times

GLASTONBURY, England -- Michael Eavis is not your average farmer, but this year he is following the herd. Spurred on by a new tariff that pays individuals to produce their own electricity and sell it to the nation's grid, Eavis has installed 1,100 solar photovoltaic panels on the roof of his dairy barn. He calls it his "Mootel."

"I have wanted to do this ever since I built the barn about 10 years ago. The feed-in tariffs just made it much easier and more profitable. Everyone is thrilled to bits with the array. It is working really well," he toldClimateWire.

"The panels will earn about £50,000 [$79,053] a year, so in 10 years we will have paid off the £500,000 [$790,398] we borrowed from the bank to build the array. Solar power is really clean -- even more so than wind -- and it is free. There is enough energy from the sun to power the whole world during the day," he added.

Eavis is just one among a throng of people, including many farmers, who have leaped at the chance the tariff scheme offers both to make money and to get "greener." In contrast to many other such schemes across Europe, the U.K. feed-in tariffs pay for all power produced, not just that exported to the grid. They also have the added attraction of being guaranteed for 25 years.

Of course, not every farmer can do this on the scale Eavis has. He is the sponsor of the 40-year-old Glastonbury Festival, a three-day music and performing arts event that draws 150,000 rock fans to his Worthy Farm, which is about 130 miles west of London.

But a lot of them are trying. Meanwhile, the new, austerity-prone British government, which inherited the scheme, is trying to maintain a stiff upper lip. Well aware of the retrospective changes being discussed in Spain to slash the cost of its runaway solar power sector, the government has pledged that, while new, lower rates could be implemented in 2013, there will be no backsliding.

"There will never be any changes made retrospectively to the feed-in tariffs," a spokeswoman for the Department of Energy and Climate Change said.

Rate of applicants accelerates

Government figures show a phenomenal rate of uptake since the April 1 start of the scheme in the United Kingdom, with solar photovoltaic far and away the favorite technology. As of the middle of last month, 11,370 individual projects had been registered since the scheme started, representing a total of just under 44 megawatts of power capacity, and according to Ofgem -- the government's energy watchdog -- the rate of applications is accelerating rapidly.

Of these, 10,552 were photovoltaic, which also accounted for 60 percent of rated power capacity; 699 were wind; 114 were hydro; and five were micro combined heat and power. Close to three-quarters of the total was domestic, with most of the rest commercial.

The government didn't divulge how many of the applicants are households and how many are farmers. But Farming Futures, part of an agricultural think tank, has done a poll that found that 80 percent of farmers in the United Kingdom want to put solar photovoltaic panels on their roofs within the next three years -- before any changes can be implemented in the tariff's payout.

"We have seen a real appetite for investing in solar this year, and it is great to see so many farmers recognizing this opportunity to create an income and diversify, as well as contribute to developing a low-carbon economy in the U.K.," said Madeline Lewis of Farming Futures.

Under the scheme a solar photovoltaic array with a capacity of 4 to 10 kilowatts will earn the owner 36.1 pence (55 cents) per kilowatt-hour of power produced and consumed on-site. The rate falls to 31.4 pence (49 cents) for installations of 10 to 100 kW and 29.3 pence (46 cents) for those from 100 to 5,000 kW -- the range into which Eavis' 200 kW array fits.

Worries about melting cables

All power exported to the grid earns 3 pence (4 cents) per kilowatt-hour, and in all cases, the tariff is guaranteed for a quarter of a century.

"Traditionally, farming revenue is quite seasonal. But now we are making money by creating clean energy, we have the peace of mind of another income, and we are doing our bit reducing our carbon footprint," said farmer Michael Frankel, who installed a solar power array on his barn roof earlier this year.

There is one possible hitch. The Conservative-Liberal Democrat coalition government that inherited the scheme -- and a £180 billion ($238 billion) budget deficit from Labour when it took power in May -- has said it will not review the scheme before 2012 unless there is a higher-than-expected uptake.

It has not said what that would be, but a DECC spokeswoman said she expected the early review trigger level to be announced very soon "to give absolute clarity" -- although she insisted that any review would only be of future rates.

The newly formed British Photovoltaic Association industry lobby group calculates that the U.K. solar market, with the feed-in tariff scheme securely under its arm, could reach 60 MW by the end of this year and climb to 1,000 MW by 2015 and 5,000 MW by 2020.

Eavis certainly has plans to expand his array, possibly before he has even paid off the bank loan to build the original, because the future income is already known and the duration of the income stream likewise.

"Most of the electricity will go to the farm, although some will also go to the grid. Ideally, I would like to get a second batch the same size as the first one, so we would have 2,200 solar panels in total," he said. "But we have to make sure we have the right cables. Put too much down them, and they start to melt."