Stop by our booth and see your association staff at the World Ag Expo in Tulare - Feb. 8-10.  Our booth number is #6108 in the Dairy Pavilion.

On Tuesday February 1^st, the Assembly Water Parks and Wildlife Committee held an Oversight hearing on the subject of management of California's groundwater resources.

There were four principal panels discussing various aspects of groundwater management. Although these panels were diverse, there were several themes that kept repeating themselves along with questions from Chairman Huffman. Among these provocative questions were the following:

1.       Why is California the only Western state that does not have centralized mandatory groundwater monitoring and reporting?

2.       If, as several presenters suggested in their PowerPoint presentations, surface water is hydrologically connected to groundwater, why doesn't the state board or regional boards have jurisdiction over groundwater?

3.       Although California has numerous hydrologic regions with different groundwater issues, why isn't there some centralized and uniform approach to regulating groundwater as the state resource?

From the tenor of the committee hearing, it is safe to assume that Assemblyman Huffman is intending to focus legislative attention on mandatory/centralized groundwater in 2011. This would significantly alter agricultures use of groundwater for both a primary source of water and to substitute for surface water.  We will keep you posted if and when legislation is introduced. 

Karen Ross officially started as Secretary of the California Department of Food and Agriculture on Tuesday February 1^st.  On her first day she was given the difficult task of reviewing staff and stakeholder recommendations on how to meet the elimination of $15 million of general fund in year 1 and $30 million of general fund in year 2 as well as the loss of $32 million in general fund for the California Fair industry.  Chris Zanobini, Debbie Murdock and our consultants Tad Bell and Dennis Albiani have been serving on numerous stakeholder committees diligently reviewing program staffing, funding options and work plans and participating in recommending how the department will meet these challenges while safeguarding the state from invasive pests and animal diseases. 

Secretary Ross will be testifying in budget committees starting next week explaining her plan on how to address the budget challenge.  She is continuing to hold stakeholder meetings to discuss the various funding options.  She is open to input and is promising to be an accessible advocate for California Agriculture in her position as Secretary. 

House Budget Committee Chair Paul Ryan (R, WI) this week released his committee's FY2011 budget allocation capping federal spending at $1.055 trillion. Non-security discretionary spending is limited to $420 billion, the same as in FY2008, and will require cuts of $32 billion from current levels.  Meanwhile, on the Senate side, Appropriations Committee Chair Daniel Inouye (D, HI) said this week he will impose an earmark moratorium for both FY2011 and FY2012 spending bills, a move hailed by Republicans generally.  House leadership had said they were looking for cuts in the neighborhood of $55-60 billion.  Appropriations Committee Chair Hal Rogers (R, KY) said he'll have a draft bill to implement the cuts for committee consideration next week, but subcommittee chairs can do the math and are aware of the challenge. For instance, the agriculture/FDA subcommittee needs to find $3.2 billion in cuts, a 14% reduction from last year. The limit is $58 billion less than President Obama's FY2011 budget request, and sets off battles not only between Republicans and Democrats over how much to cut from which programs, but also means House GOP leadership must calm its crop of new conservative members who want to cut at least $100 billion from FY2011 spending.  The latter contest may be the easier to win for leadership given five months of the fiscal year has already passed.

With a handful of bills already introduced in both chambers calling for a constitutional amendment requiring a balanced federal budget, this week two Senators moved the spending control game forward by announcing they'll introduce bipartisan legislation to cap federal spending rather than slash budgets across the federal government.  Sens. Claire McCaskill (D, MO) and Bob Corker (R, TN) said their draft bill would cap federal spending beginning in FY2013, with total federal spending gradually cut over each fiscal year for the next 10 years. The goal is to get total federal expenditures down to 21% of gross domestic product (GDP), compared with 25% today.   

McCaskill called the House Republican Study Committee's goal of cutting $2.5 trillion over a decade "ridiculous," saying her bill is "possible and responsible."  Senate Budget Committee Chair Kent Conrad (D, ND) allowed the McCaskill-Corker proposals will have a tough time in the Senate, but said he's wary of more drastic actions during a slow economy.  Conrad pointed to advice from independent economists that says Congress should implement spending cuts gradually so the economy is not "shocked" by a loss of capital.  Corker said there are seven cosponsors lined up for the cap bill, including Sens. Richard Burr (R, NC), Saxby Chambliss and Johnny Isakson (R, GA), James Inhofe (R, OK); Mark Kirk (R, IL) and John McCain (R, AZ). 

President Obama's FY2012 budget proposal will include small business tax breaks, including a proposal that would permanently eliminate capital gains taxes on small business investments, the White House said this week. Specifically, the benefit would be applied to an exclusion of gains from the sale of certain stocks from income taxes if the stock is held for more than five years. Obama also wants to renew and expand the New Markets Tax Credit to provide small businesses operating in low income areas an incentive to invest. Currently, the capital gains exemption for small business is a temporary benefit that expires at the end of this year.

Senate Energy & Natural Resources Committee Chair Jeff Bingaman (D, NM), one of the moderate voices in the chorus of those pushing for a wholesale rewrite of national energy policy, said this week he plans to bring back his committee's bills from the last Congress to begin the debate this year. At the same time, voices from both sides of the aisle and from within the environmental community said any effort to tie energy policy to blocking EPA regulation of greenhouse gases as some have called for, is a "non-starter." Bingaman said he's talking with the White House about various approaches, including a bill that would provide incentives for businesses to adopt "green" technologies and a bill to rewrite offshore drilling regulations.  

Both pieces of legislation passed his committee last year with bipartisan support, but saw no floor action. Bingaman said he's also looking at incorporating provisions to deal with clean coal and nuclear energy, as well as wind and solar energy development.  President Obama in his State of the Union speech called on the U.S. to get 80% of its energy needs from so-called "clean" sources by 2035, and this week upped the ante, calling for tax breaks for energy-smart upgrades of commercial buildings and new federal spending on retrofitting existing structures.  The White House said its proposal would cut energy use by 20% over 10 years and save $40 billion in energy costs annually.  Also expected in the President's FY2012 budget recommendation is a Department of Energy program that would provide loan guarantees for financing new energy efficiencies at hospitals, schools and commercial buildings. 

Upton, Inhofe Unveil Bill to Permanently Block EPA Greenhouse Gas Authority - In a move designed to draw attention to congressional frustration with EPA over its perceived overzealous regulatory agenda, Rep. Fred Upton (R, MI), chair of the powerful House Energy & Commerce Committee and Sen. Jim Inhofe (R, OK), ranking member of the Senate Environment & Public Works Committee, this week unveiled a bill that would permanently bar EPA from regulating climate change.  EPA Administrator Lisa Jackson, testifying before a relatively friendly Senate committee this week, said advisors to President Obama have counseled him to veto any such legislation. Joining bills already in the hopper by Sen. John Barasso (R, WY) and Sen. Jay Rockefeller (D, WV), the Upton-Inhofe bill carries the imprimatur of the committees of jurisdiction over the agency's greenhouse gas rulemaking.  The bill would amend the Clean Air Act (CAA) to remove from the agency administrator any authority to take action on greenhouse gases "due to concerns regarding possible climate change..." Inhofe said his chamber's bill may draw Democrat support, "particularly from some coming up in 2012." House Democrats called the move "gutting the Clean Air Act..." Rep. Nancy Pelosi (D, CA) also criticized the Upton bill, citing a Natural Resources Defense Council (NRDC) poll showing 87% of Americans want EPA to regulate greenhouse gas emissions.

Grassley Wants EPA to Meet its Dust Reg Review Promise - A letter from Sen. Charles Grassley (R, IA) to EPA Administrator Lisa Jackson pressing her to comply with his earlier request that her agency review a pending dust regulation for its impact on agriculture was sent this week.  Grassley told Jackson he's concerned that excessive dust control measures as proposed by the agency will slow economic development in rural communities and impose heavy costs on farmers and ranchers. While an Obama executive order instructs agencies to review regulations on the books and those proposed as possible "job killers," EPA has made it clear that order does extend to independent agencies, a position Grassley called "unfortunate."

Despite Criticism, Jackson Announces New Plan for Perchlorate, Drinking Water Regs - Almost in defiance of congressional and regulated industry critics that EPA's zeal for rulemaking is off the charts, EPA Administrator Lisa Jackson this week told a Senate committee her agency plans to set standards for perchlorate, as well as propose revisions for chemical standards in drinking water. While the last two administrations refused to take the same action, EPA said Jackson's decision comes after a study by EPA scientists of "emerging science" on perchlorate, a naturally occurring and man-made chemical.  In a separate action from the perchlorate announcement, EPA said it will establish drinking water standards to "address a group of up to 16 toxic chemicals that may pose a risk to human health." That risk is cancer, said EPA. The move, the agency said, is part of a strategy laid out by Jackson last year to address contaminants as a group rather than individually.

New Senators Tell EPA to Back Off Boiler Rules - Twelve freshmen Republican senators and one Democrat sent a letter this week to EPA Administrator Lisa Jackson pushing her to relax air pollution controls on industrial boilers that will force industry to install a "super boiler that currently does not exist." The freshmen said the rules as proposed last April - which are designed by EPA to meet a court order that certain boilers use "maximum achievable control technologies" - will cost industry billions of dollars and put "a tremendous number of jobs at risk."  Toxics which must be limited under the proposed rule include mercury, lead, arsenic, formaldehyde, benzene and dioxins.  The deadline for implementing the rule is February 21. Last December, a bipartisan group of Senators urged Jackson to release a study confirming job losses due to the new boiler rules.  The Senators said EPA refuses to release a Department of Commerce study showing significant economic harm from the proposed rules.

House Ag Committee Sets Hearings on Dodd-Frank, Farm Bill

Moving swiftly into oversight mode, the House Agriculture Committee announced late this week it will hold two hearings, the first on February 10 to examine implementation of the Dodd-Frank Wall Street Reform & Consumer Protection Act.  The second hearing will be on February 17, and will review the "state of the farm economy" in the context of rewriting the 2008 Farm Bill. The Dodd-Frank oversight hearing will examine how the Commodity Futures Trading Commission (CFTC) is proceeding on its regulation writing to implement various over-the-counter and derivatives protections.  Committee Chair Frank Lucas (R, OK) last week sent a letter to CFTC Chair Gary Gensler urging him to submit all drafted regulations on Dodd-Frank to the Office of Management & Budget for cost-benefit analysis.  President Obama's executive order requiring agencies to review all regulations both on the books and pending for any threat of "job killing" does not apply to independent agencies such as the CFTC and EPA. 

Making good on a major campaign and policy pledge following the November elections, House leadership this week said the Rules Committee February 8 will take up a resolution directing 10 standing committees to begin a process of "inventory and review (of) existing, pending and proposed regulations and orders...with respect to their effect on jobs and economic growth."  Leadership is also moving ahead on legislation that would require any new federal regulation with an annual economic impact of $100 million or more to be approved by Congress.  

Currently, the $100-million cap triggers an Office of Management & Budget (OMB) review of the cost/benefit of such rules, including small business impacts.  Rep. Geoff Davis (R, KY) introduced HR 10, which has already been heard in the Judiciary Committee and has been endorsed by House Speaker John Boehner (R, OH).  A Senate bill is expected to be introduced by Sen. Jim DeMint (R, SC).  The Rules Committee action means committees will be formally required to conduct the oversight and review process, providing both interim and final reports to leadership.  This is part of what House Majority Leader Eric Cantor (R, VA) called last November "a sustained effort using oversight and the congressional power of the purse to provide a check on the Administration's anti-employer agenda."  The committees directed to conduct oversight include Agriculture, Education and the Workforce, Energy and Commerce, Financial Services, Judiciary, Natural Resources, Oversight and Government Reform, Small Business, Transportation and Infrastructure and Ways and Means.

Saying he's "not convinced" the U.S. and Mexico are prepared to set up a new cross-border trucking program, Rep. Bob Filner (D, CA) this week called on the House Transportation & Infrastructure and Homeland Security Committees to hold hearings before any U.S.-Mexico agreement is finalized. Filner, whose district includes the entire California-Mexico border, said he's concerned the administration does not fully understand the impact of its proposal on road safety, border wait times, jobs or national security, adding he doesn't believe that "appropriate checks are in place to ensure the safety of Mexican trucks that come across the border." 

Expired pilot programs allowing trucks weighing up to 94,000 lbs. on six axles to operate on federal highways in Maine and Vermont would become permanent under legislation to be introduced by Sens. Patrick Leahy (D, VT) and Susan Collins (R, ME).  The pilots, designed to study the impact of the heavier vehicles on infrastructure, have been highly successful, taking heavier trucks off state highways. Currently federal law caps truck weight at 80,000 lbs. if operating on interstate highways.  Leahy and Collins tried to get the pilot programs made permanent during appropriations negotiations last November, but were unsuccessful. The programs expired in mid-December.  The White House supports the Leahy-Collins initiative.