President Obama's State of the Union speech, in which he outlined a list of heretofore traditional GOP initiatives, faces a reality test in a couple of weeks when he sends his delayed FY2012 budget to Capitol Hill. At the same time the House GOP's dedication to cut spending for anything and everything that is discretionary and non-defense may be setting it up for a head-on collision with its industry allies. With the Congressional Budget Office (CBO) estimating the federal deficit will hit nearly $1.5 trillion by the end of this fiscal year, the President nevertheless talked of "investment" - which Senate Minority Leader Mitch McConnell (R, KY) said was Latin for "spending" - but he also talked about a five-year freeze on domestic discretionary spending; he said he'd send Congress a plan to reorganize the federal government; he wants to see pending trade deals ratified; he'd support corporate tax reform, but only if it's deficit neutral; extend the solvency of Social Security; he wants to overhaul federal education policy; spend billions on a six-year transportation/infrastructure authorization bill, and tackle comprehensive immigration reform.  

Republicans unveiled and successfully passed this week a resolution on taking spending down to FY2008 levels or lower, but falls short of a measure from the Republican Study Committee (RSC) which pushed for a cut of $2.5 trillion in projected spending over the next decade. House GOP leadership is trying to corral its conservative freshmen members. While initially talking about cutting federal spending $50-60 billion in FY2011, a letter from the most conservative Republican House members this week called on House Speaker John Boehner (R, OH) to commit to cutting $100 billion by the end of September.  The new members said they ran on the GOP "Pledge to America" which promised the higher spending cut figure during their first year in office in order to reduce spending to FY2008 levels.  The first test will be when the House takes up a continuing resolution to keep the federal government running, a move that must be done before March 4. Leadership said it's willing to look at a spending cut level below FY2008, perhaps as low as spending levels in FY2006.

Ag Cuts - How deeply the budget knife slices and where is the question.  Already known to be on the block are the $200-million Market Access Program (MAP), which assists industries in selling product overseas, and which if cut, would have an immediate impact because groups would cut back promotion and shut down overseas offices. The GOP would also shutter the $1.4-billion U.S. Agency for International Development, and whack the $56.2-million organic certification cost-share program.  Missing from the RSC recommendations and any other official documents is talk of cutting the $5-billion farmer direct payment programs at USDA, especially in a year when farm income is at record levels due to high commodity prices.  Some contend direct payments aren't targeted because Congress is about to take on the Farm Bill; others say it's because the programs deliver federal dollars to just about every district in the House.

Dodging the jibes of Capitol Hill and essentially recognizing there would be no middle ground for opponents and supporters of genetically enhanced (GE) alfalfa, USDA this week opted to fully deregulate Roundup Ready alfalfa.  House Agriculture Committee Chair Frank Lucas (R, OK) praised the USDA decision, saying extensive review of GE alfalfa has shown it to be safe, and that USDA is doing the right thing.  The American Soybean Assn. (ASA) said it supports USDA's decision, saying the decision to fully deregulate without conditions, such as USDA-directed planting restrictions, shows the department is adhering to a science-based system of review and approval.  The department had examined several options regarding the environmental impact of the GE crop, including a formal environmental impact statement, as well as bringing every stakeholder out there to discuss options for how to get the GE alfalfa into fields.  In addition to the deregulation move, USDA is reestablishing two advisory committees - the Advisory Committee on Biotechnology and the 21st Century, and the National Genetic Resources Advisory Committee. Other steps taken in the context of the deregulation decision include conducting research to ensure genetic integrity, production and preservation of alfalfa seed; refining and extending current models of gene flow in alfalfa; requesting proposals through the Small Business Innovation Research program to improve handling of forage seeds and detection of transgenes in alfalfa seed and hay, and providing voluntary, third party audits and verification of industry stewardship initiatives.

Saying the Commodity Futures Trading Commission (CFTC) is creating "an irrational sequence of rule proposals," House Agriculture Committee Chair Frank Lucas (R, OK) has asked CFTC Chair Gary Gensler to voluntarily submit rulemakings based on the Wall St. deregulation package enacted last year to the Office of Management  & Budget (OMB), even though the commission is an independent federal agency and exempt from a recent White House mandate on rule reviews.  Lucas, and Rep. K. Michael Conaway (R, TX), chair of the panel's subcommittee on general farm commodities and risk management, said in a letter to Gensler this week they strongly recommend the reviews.  Lucas warned when the financial reregulation package was enacted it would lead to heavy rulemaking on non-Wall St. companies engaged in over-the-counter financial derivatives.  Lucas and Conaway said the rulemakings mandated by the law and the way the CFTC is approaching the rulemakings do not allow meaningful public comment.

Heeding the call of the biofuels companies that their future lays in federal investment in flex fuel cars and infrastructure development, Sen. Tom Harkin (D, IA) this week introduced legislation to spur federal dollars to meet those goals.  In addition to mandating an increase in flex fuel vehicles built by private manufacturers, the Harkin bill would invest through loan guarantees in about 80% of the cost of construction of renewable fuels pipelines to move biofuels from the Midwest to other parts of the country, and increase the number of blender pumps at gas stations.  The bill would mandate that half of the new vehicles built in the U.S. be able to use an 85% ethanol blended gasoline by 2014, and that 90% of cars and trucks use the blend by 2016.  Fuel distributors would be required to install blender pumps by 2020, with $350 million authorized to help them meet the mandate by 2016.  The bill was cosponsored by Sens. Tim Johnson (D, SD), Amy Klobuchar (D, MN) and Al Franken (D, MN).
 

A package of Senate rule changes, said by some to be the most significant in 35 years, was agreed to by the Senate this week.   The series of votes on elements of the package restricts the practice of "secret holds" on legislation and nominations, and cuts by about a third the number of presidential appointees required to be confirmed by the Senate.  On holds, the name of a Senator placing a hold on a bill would be disclosed after two days.  Senate Majority Leader Harry Reid (D, NV) and Minority Leader Mitch McConnell (R, KY) also personally agreed that while either is leader of the Senate, they will not resort to the so-called "nuclear option" in blocking legislation, meaning they will not use a procedural maneuver that allows a simple majority of the Senate to approve changes in rules and procedures.  Included in the changes is elimination of a Senator's ability to force the reading of legislation or amendments if the text of the documents has been available for 72 hours. Rejected by the Senate was a move to reduce the number of votes needed to overcome a filibuster; a move to officially eliminate the use of filibusters to block legislation, and a move to force Senators to physically be on the floor and continuously talk if they wish to filibuster a bill or nomination.

Right now, about a dozen Republican Senators are putting the finishing touches on a proposed constitutional amendment that would require the federal government to balance its budget each year.  The prospective cosponsors include a number of the freshman Senators elected in November, 2010, but it's expected the lead author of the bill will be Sen. Orrin Hatch (R, UT), ranking member of the Senate Finance Committee.  In the House, more than half a dozen bills have been introduced requiring a balanced budget.

In the wake of the largest single daily soybean sale since USDA began issuing daily sales reports in 1977 - 2.74 million tons to China - Secretary of Agriculture Tom Vilsack said the sale should be taken as "another strong sign" that the Chinese view the U.S. as a reliable supplier of high-quality products.  Vilsack said U.S. farm exports to China have grown nearly 10 fold over the last decade, from $1.5 billion in FY2000 to $15 billion this year. 

Legislation to Block EPA Rulemakings - Senators began introducing legislation this week to block EPA from engaging in regulation of greenhouse gas emissions.  Sen. David Vitter (R, LA) dropped a bill that would block EPA from taking action until India, Russia and China take similar action; Sen. John Barasso (R, WY) said he'll introduce a bill to stop EPA based violations of the Clean Air Act, the National Environmental Policy Act and other federal laws, and Sen. Jim Inhofe (R, OK), ranking member of the Senate Environment & Public Works Committee, said he's working with Rep. Fred Upton (R, MI), chair of the House Energy & Commerce Committee, on a plan to end regulation of greenhouse gases through the Clean Air Act.  Rep. Joe Barton (R, TX) said he's going to invalidate the EPA endangerment finding, and could introduce legislation requiring new cost-benefit rules.  Sen. Jay Rockefeller (D, WV) is expected to reintroduce his bill to forestall EPA actions for two years.

EPA Remains at Center of Federal Regulatory Misbehavior -- A draft outline circulating this week of the House Energy & Commerce Committee's priorities for the new Congress shows EPA squarely at the center of the panel's intention to hold extensive oversight hearings into Administration environmental and energy policies and programs.  Congressional Quarterly, which obtained the outline, said the committee intends to put the brakes on EPA's regulation of greenhouse gases, demanding a cost-benefit analysis of the rulemaking.  The panel said it would also examine where waste exists in Obama energy stimulus packages.

Older Cars Get Green Light on E15 Use -- As expected, EPA last week announced it will allow gasoline/ethanol blends of up to 15% for 2001-2006 cars and light trucks.  Previously, the agency said OK to the higher blend for 2007-2010 model cars and trucks.  Critics say the increase couldn't come at a worse time and will simply divert more corn from food use, sending food prices higher.  "When consumers ask why their food prices are higher, it will be difficult for EPA to explain that today's decision has no impact on the food shopper's dollar," said the National Chicken Council (NCC). The National Farmers Union (NFU) praised EPA's move.

Pesticide Permit Issue Looming - As a result of a 2009 decision by the Sixth Circuit Court of Appeals in a case brought against EPA by the National Cotton Council in which the court held EPA can't exempt pesticide users from the Clean Water Act (CAA), some pesticide uses will need National Pollutant Discharge Elimination System (NPDES) permits come April 9.  While most states reported that row crop application will not need a permit, applications in ditches to kill weeds will require permits.

OSHA Temporarily Withdraws Ergonomic Reporting Plan
OSHA announced this week it is temporarily withdrawing from federal review a plan to require employers to report work-related musculoskeletal disorders on OSHA Form 300 employer injury and illness logs.  The agency said it needs more time to solicit greater input from small businesses, and will work with the Small Business Administration (SBA) on outreach.  OSHA said the proposal does not affect current requirements for some employers to report such injuries.  OSHA says musculoskeletal disorders account for 28% of all reported workplace injuries and illnesses. 

39 Industry Groups Call for House Hearing on Hours of Service Proposal
Nearly 40 industry organizations signed a letter this week to the chairs and ranking members of the House Transportation & Infrastructure Committee and its transport subcommittee, asking for a hearing on the Federal Motor Carrier Safety Administration's (FMCSA) proposed changes to commercial trucker hours-of-service regulations. Ranging from the Agricultural Retailers Assn. to UPS, the groups said the new proposed rules, published last month, are complex, restrictive and will hamper industry compliance and motor carrier enforcement.  The groups asked the House committee to hold its hearing prior to the close of the FMCSA comment period February 28.