KATHRYN, N.D. – All that's left of this southeastern North Dakota town is a bar, a church, a post office and about 55 people who call it home — but if floods like the ones that hit last spring begin to rise again, it could be destroyed.
That's led some to quietly joke that the town may not be worth holding onto at all. In conversations among townspeople and even local officials, some are wondering if moving Kathryn might be cheaper than the $5 million or more it could cost to replace the Clausen Springs Dam.
The mayor, however, won't even consider the idea of uprooting the town.
"Five million dollars is a drop in the bucket to save a town," Mayor Dave Majerus said of Kathryn, which is shrouded by rolling hills, pastureland and crop fields about 60 miles southwest of Fargo.
The conversation has revealed a deeper problem in the vulnerable community: Just who, if anyone, will foot the bill to repair the dam? It's one of up to 30 smaller, mostly earthen dams for which it could cost millions to fix damage caused by erosion.
Kathryn's 55 residents were evacuated for a few days in April after heavy flooding began eroding the dam, six miles west of the town. It was just one segment of the weather disaster that pummeled most of North Dakota, sending the Red River to a record level in Fargo and causing an ice jam on the Missouri River in Bismarck.
In a scene replayed across the state, trucks hauled in clay to fortify the dirt and grass spillway at the dam near Kathryn and North Dakota National Guard soldiers in helicopters dropped more than 100 one-ton sandbags to help shore it up.
Months after the rivers receded, the erosion damage to dozens of small earthen dams is still being assessed statewide. It's forcing officials to talk — if only halfheartedly — about the possibility of moving the town of Kathryn rather than fixing the dam. Other dams, which are not threatening towns, might never be fixed.
The Clausen Springs Dam is about 50 feet high and about 700 feet long and holds back a lake about the size of 50 football fields. It was built in 1967, before state dam safety standards were enacted, and created a picturesque lake and campgrounds. It protects Kathryn, which was founded in 1900 and named for a daughter of the president of Northern Pacific Railroad, which extended track to the area.
"Everybody likes it, but nobody wants to lay claim to it now because of the cost to repair it," Majerus said of the dam.
Lee Grossman, the assistant Barnes County state's attorney, said a written agreement between the state and county "doesn't say who's responsible when an act of God destroys the dam.
"That's still open for interpretation," Grossman said.
Money for some of the work could come through federal disaster funds, but they would only repair the dam to the state it was in before last spring's floods, said Todd Sando, an assistant engineer for the state Water Commission. The Clausen Springs Dam would still need county and state funds to bring it up to code.
County officials have hired an engineering company to provide an estimate of how much it would cost to repair the dam and to study how bad the damage would be if the dam failed. Chad Engels, an engineer with West Fargo-based Moore Engineering Inc., said rebuilding the dam and bringing it into compliance would cost "$5 million, give or take one or two million."
It would cost about $100,000 to repair the emergency spillway, restoring the dam to its pre-flood condition, Engels said. For about the same price, officials could also permanently drain the lake, he said.
It's unlikely Kathryn would be leveled by "a wall of water" if the dam broke, but it would likely be destroyed by floodwater and mold, Engels said. His firm is still working on its worst-case scenario study, but he believes floodwaters would reach 5 feet in the town.
"If the dam broke, water would be all over the place," he said.
It isn't clear how much it would cost to actually relocate the town, and the idea has not been formally proposed. No cost estimates have been drafted. But a similar idea was executed in a larger North Dakota town years ago for less than the estimated cost of repairing the Kathryn dam.

The town of Churchs Ferry was bought out by the government in 2000 because of the rising Devils Lake. Churchs Ferry was nearly cleared of homes after the $3.5 million Federal Emergency Management Agency buyout. The town had about 100 residents at the time; only a handful remain.

Gordon Broadwell, a retired farmer who lives on high ground two miles north of Kathryn, said he's safe from the floodwater if the dam breaks. But he thinks the dam is dangerous for his neighbors and the town if the area gets another flood like the one earlier this year.

"Next year, if the same thing happens, she'll let go," he said. "It would probably be better buying out Kathryn, which isn't much of a town to begin with."

SAN FRANCISCO (Reuters) –
Apple Inc's quarterly profit blew past Wall Street forecasts thanks to strong sales of Macs and iPhones and higher-than-expected gross margins, boosting its shares 4 percent on Tuesday.

The company continued to defy the global recession with a solid 13 percent jump in fiscal third-quarter net profit. It sold more than seven times as many iPhones -- 5.2 million units of its latest signature device -- as the year-ago period.

"The numbers are great. Their gross profits continue to surprise people and there is a return to product momentum ... a return to growth in the Mac business," said Andy Hargreaves, an analyst at Pacific Crest Securities. "And then the iPhone is doing tremendously well and that is a potent combination."

Apple reported a net profit of $1.23 billion, or $1.35 a share, for its fiscal third quarter ended June 27, up from $1.07 billion, or $1.19 a share, in the year-ago period.

Earnings per share beat by far the average Street forecast of $1.18 according to Reuters Estimates, and topped even the most bullish "whisper" numbers of $1.30 to $1.35.

Sales of Macs and iPhones both beat analysts' expectations, helped by product refreshes and lower prices, while iPod shipments were toward the low end of forecasts.

Apple said it sold 2.6 million Macs, up 4 percent from a year ago, and 5.2 million iPhones in the June quarter, during which the company launched its third-generation iPhone 3GS and cut the price on the second-generation model to $99.

The iPhone is often thought of as more of a consumer device, but Apple said nearly 20 percent of Fortune 100 companies have bought at least 10,000 units and it is unable to make enough iPhone 3GSes to meet demand -- a shortfall the company said it is working to address.

Although the smartphone segment continues to grow more crowded with competitors, Chief Operating Officer Tim Cook said on a conference call the company is "years ahead of other people" in its competitive position.

IPHONE DRIVES

The install base for the iPhone and the iPod Touch -- which share operating systems -- is now 45 million, Apple said.

"The iPhone is the biggest driver right now, because the profitability is really high," said Frost & Sullivan analyst Ronald Gruia. "It's been an absolute success."

Yet there had been some concern about margin pressure heading into the results, given the product price cuts and the trend of higher component costs.

Although Mac units rose, revenue in the segment fell 8 percent from a year ago as average selling prices came down, a trend seen throughout the PC industry.

But Apple posted a gross margin of 36.3 percent, above the 34 percent some analysts predicted. That compared with 36.4 percent in the last quarter and 34.8 percent a year ago. The company saw margins at 34 percent in the September quarter.

Apple said component costs rose, but not as much as expected and it spent less than it planned in several areas.

"The overall takeaway is that Apple continues to execute in this tough environment," said Kaufman Bros analyst Shaw Wu.

"They do the hardware, software and service, and that really allows them to have a leg up against competitors."

Investors have pushed Apple's stock about 75 percent higher this year, well ahead of other big technology issues.

Apple issued a typically conservative outlook for the current quarter, forecasting earnings of $1.18 to $1.23 a share on revenue of $8.7 billion to $8.9 billion.

While that was below the average analyst estimate of $1.30 in earnings per share and $9.1 billion in revenue for the fiscal fourth quarter, it had little impact on investors.

Revenue rose 12 percent to $8.3 billion in the June quarter, versus analysts' average estimate of $8.2 billion.

Cash and marketable securities totaled more than $31 billion, one of the biggest cash hoards in all of technology.

The results demonstrated the consumer appeal of Apple's products despite a troubled economy that has dented sales at competitors selling less expensive products.

Apple reported relative strength in consumer demand, and weakness in education, one of its key markets.

But iPods were a chink in its armor. Apple shipped 10.2 million iPods in the quarter, down 7 percent on the year. As iPod sales slow down, analysts see alternative catalysts on the horizon, with the expected launch of an iPhone in China and a rumored tablet PC or Internet device in the works.

Cook said the company hoped to have an iPhone in China within a year.

Chief Executive Steve Jobs did not make an appearance on the company's conference call, despite rumors that he might. Jobs recently returned from a nearly six-month medical leave, where he underwent an a liver transplant.

Shares of Cupertino, California-based Apple closed at $151.51 on Nasdaq and rose to $158.34 in extended trading.

(Reporting by Gabriel Madway; Additional reporting by Doris Frankel and Tiffany Wu; Editing by Edwin Chan and Richard Chang)

WASHINGTON – Democratic lawmakers opposed to federal funding for abortions said Tuesday the House leadership's health care bill contains a "hidden mandate" that would allow taxpayer dollars to be used to end pregnancies.
It's the latest controversy to hit the health care overhaul in a week that has seen Republicans sharpen their attacks and some Democrats start to waver on President Barack Obama's top domestic priority.
Abortion is not mentioned in the 1,018-page bill that Democratic leaders hope will be approved by the last of three House committees this week. Supporters of the legislation say that means the bill is neutral.
But abortion opponents say the bill's silence is precisely the problem.
Without an explicit prohibition on federal funding for abortion, it could be included in taxpayer-subsidized coverage offered through the health overhaul plan, abortion opponents say.
"We cannot support any health care reform proposal unless it explicitly excludes abortion from the scope of any government-defined or subsidized health insurance plan," a group of 20 Democratic representatives said in a June 25 letter to House Speaker Nancy Pelosi, D-Calif.
When the legislation was unveiled last week, it failed to include language abortion opponents were seeking. Now they are going public. Rep. Bart Stupak, D-Mich., who helped draft the letter to Pelosi, plans to join lawmakers of both parties Wednesday at a news conference to criticize the legislation.
The Supreme Court has established a woman's right to abortion, but federal law prohibits government funds from being used to pay for the procedure in most cases. However, nearly 90 percent of employer-based private insurance plans routinely cover abortion.
The Democratic health overhaul plan envisions setting up a new health insurance marketplace — called an exchange — through which individuals and businesses could get coverage similar to what's now available for employees of large companies. Government subsidies would be available for individuals and families making up to four times the federal poverty level. Abortion rights supporters say prohibiting plans in the exchange from covering the procedure amounts to taking away a right that women now have.
House Energy and Commerce Committee Chairman Henry Waxman, D-Calif., is trying to find a compromise, but that may not be easy. Not only do abortion opponents want to block funding, they also want to make sure that the procedure is not included in the benefits package.
Separately, another group of lawmakers wrote Pelosi on Tuesday urging a compromise that would leave the decision on abortion coverage up to insurers doing business in the exchange, but forbid the carriers from using any dollars from federal subsidies to pay for ending pregnancies.
"This solution maintains the current status quo in the private market — where insurance companies can choose whether to include this coverage in their plans and individuals can choose which plan (and what sort of coverage) fits their individual needs and values, while ensuring that no federal funds are used to pay for abortions," said the letter from Rep. Tim Ryan, D-Ohio, and three other Democrats.
However, it's unclear whether insurance companies could keep federal subsidies separate from other funds they receive from individuals and employers to cover premiums.
In the Senate, Finance Committee Chairman Max Baucus vowed that he would not let abortion controversies "embroil" the health care overhaul.
"Health care reform is not about that issue at all," Baucus, D-Mont., said Tuesday. He said the Senate plan would be "neutral — status quo."
Obama, who supports abortion rights, sidestepped a question on the brewing controversy. "Rather than wade into that issue at this point, I think that it's appropriate for us to figure out how to just deliver on the cost savings and not get distracted by the abortion debate," the president said in an interview with CBS News.

WASHINGTON (Reuters) –
President Barack Obama said on Tuesday he wants stronger ties with Brazil, especially in the commercial area, a top aide and possible successor to Brazilian President Luiz Inacio Lula da Silva said.

"He made what I consider a very strong and important statement," Lula's chief of staff Dilma Rousseff, speaking through a translator, said at the end of the U.S.-Brazil CEO Forum, which brings together top U.S. business and top government officials from each country.

Rousseff, who is Lula's preferred candidate in Brazil's 2010 presidential election, said Obama dropped in on her and other forum participants during a meeting in the office of White House national security adviser Jim Jones.

The forum consists of 10 business leaders each from the United States and Brazil, who meet at least once every six months to make recommendations to the two governments on how to expand trade and investment ties.

Bilateral trade between the two countries reached about $63.4 billion in 2008. The United States enjoyed a rare, but small, surplus with its llth largest trading partner.

Tim Solso, president of Cummins Inc and the U.S. co-chairman of the forum, said the participants urged the two countries to begin talks on a Trade and Investment Framework Agreement as a stepping stone to a broader trade pact.

White House deputy national security adviser Michael Froman said the two governments would explore that possibility, but had not made any decision yet.

Brazil's Minister of Development, Industry and Foreign Trade Miguel Jorge also participated in the forum, along with U.S. Commerce Secretary Gary Locke.

The two sides discussed progress on bilateral tax and investment treaties, as well as ways the two countries could cooperate on developing renewable energy source and addressing global climate change, officials said.

The CEOs recommended the United States eliminate its tariff on ethanol imports, a move that would benefit Brazil but face strong opposition from U.S. corn growers and their proponents in Congress, such as Senator Charles Grassley.

The government and business leaders called for conclusion of the long-running Doha round of world trade talks.

Froman denied the United States was dragging its feet in those negotiations, as some diplomats at World Trade Organization headquarters in Geneva have complained.

U.S. Trade Representative Ron Kirk has been "very active and engaged," including meeting this week in Singapore with trade ministers from the Asia-Pacific region, he said.

Rousseff blamed the slowdown in the talks on the global financial crisis, rather than the Obama administration.

"I believe that we'll sooner or later continue to an updated variant of the Doha round ... I'm not pessimistic about the situation," Rousseff said.

(Editing by Eric Walsh)