1. ECONOMY:
Environmental laws in crossfire of Calif. budget duel

SAN FRANCISCO -- California Gov. Arnold Schwarzenegger (R) and state Democratic lawmakers returned to Sacramento this month to find themselves playing a game of political chicken, with state and federal environmental reviews of infrastructure projects caught in the middle. Facing a $42 billion deficit and increasing job losses, Schwarzenegger has proposed expediting environmental permits for some major highway projects in the name of economic stimulus and job creation. But that idea now threatens to derail the fragile budget process if an agreement is not reached this month. Go to story #1