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December 16, 2015     

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Inside This Issue.....
CSA Member Profile: Rick Falconer
California Legislative Update
Bayer Young Farmer Sustainability Award
World Agri-Tech Investment Summit
CalChamber Explains New Laws for 2016
CDFA Drought Update
UCD Plant Breeding Center November Newsletter
Court Tells EPA to Decide on Chlorpyrifos' Fate by End of 2016
Year-end Rush to Judgment: It's All About Spending, Taxes
House Votes to Reauthorize Surface Transportation Board, Bill Heads to President Obama
McConnell Rains on Obama TPP Parade; Ag Trade Advisory Panel Endorses Pact
WTO Sets COOL Retaliatory Tariff Cap at $1 Billion; Roberts wants Repeal
Upcoming Meetings
CSA Member Profile: Rick Falconer

Q: What is your role at Rijk Zwaan?
A: Managing Director - Focus outdoor crops

Q: What makes Rijk Zwaan unique in the seed industry? 
A: We are a family/employee owned seed company with a strong focus on research.

Q: What project(s) are you/your company working on? Any recent innovations?
A: Last month we announced the introduction of KNOX lettuce. This is a new development in lettuce breeding where varieties with this trait have longer shelf lives due to delayed pinking. Often when lettuce is cut as a whole head or a chopped product the cut surface of the tissue turns pink. Varieties with this trait will have an extended shelf life and ultimately a better experience for the consumer.

Q: Have any new team members recently joined your organization? If so, whom?
A: Yes, Rijk Zwaan USA is expanding our team.  We are adding two positions in the eastern part of the US as well as adding people in administration and research in the west.

Q: How did you get started in the seed industry? 
A: Well, I guess it all really started when I was 9 years old.  My family was in the processing tomato business in the San Joaquin Valley.  One day I was riding with my dad and he took me to a field we were planting.  Dad had several small envelopes of seed (Peto Seed) and poured one envelope into my hand to plant. "Here plant these seeds in a row but be very careful, these seeds are worth a buck each".  My eyes got big and as typical 9 year old, I followed with lots of questions. "Why are they so expensive?"  He said, "They're hybrid seeds."  Of course, I followed with "What's a hybrid?"  He explained these are special seeds that grow stronger and produce more fruit, I was hooked and from that point on had strong interest in seeds. Today I realize the significance of that time, it was a time of change in the vegetable seed industry as hybrid varieties were being introduced and developed and to a young farm kid the word hybrid had a futuristic and magic meaning that sparked interest.

Q: What advice would you offer to someone getting started in the seed industry? 
A: Get involved -- and give back to the industry.  You'll be surprised at what you learn, who you meet and how easy it really is by just showing up.

Q: Is your company active in community involvement? If so how?  
A: We try our best, but the schedule is always demanding.  In general we try to support and get involved in agricultural programs like CSA's bi-annual seed tours, 4H, FFA, Farm Day, and First the Seed, which are a few examples of organizations we like to support.

California Legislative Update
By Dennis Albiani, Legislative Advocate
Assembly Member Henry Perea Resigns
 
In a surprise announcement, Assembly member Henry Perea resigned from the Assembly as of December 31, 2015.  He will be taking an undisclosed government affairs job.  In a statement Perea said "I wasn't necessarily looking for a job because I had another year left in my term. But, the opportunity came up and after a lot of soul searching and talking to my wife (Yahaira) and trying to decide if it was something I wanted to do, we made the decision to move on with my career and take this opportunity."  Perea is the current Assembly Agriculture Committee chair, so this leaves an opening that is sure to be filled in January as 2-year bills must move out of the house of origin by the end of the month.  There will be a special election to fill his seat, likely in March and June. 
 
Cooper and Salas will Lead Moderate Democrats

Moderate Democrats in the California Assembly chose Assemblymen Jim Cooper, D-Elk Grove, and Rudy Salas, D-Bakersfield, to lead their caucus.  The moderates held a retreat in San Diego to discuss a number of issues including who they will be supporting in key democrat caucus races and to select their new leaders.  This is the first time the caucus will be led by two assembly members.  The decision followed Assemblyman Henry Perea, D-Fresno, the current leader of the group, announcing last week that he would renounce his Assembly seat.
 
Legislature Holds Numerous Interim Water Hearings
 
The interim recess has been filled with numerous hearings on various topics impacting water policy including water conservation, groundwater, desalination, urban streams and waterways and other related issues.  Below is a list of those hearings pending and the ones that occurred. 
 
Scheduled Hearings:
  • Joint Hearing of the Senate Natural Resources Committee and the Assembly Water parks and Wildlife Committee: Oversight Hearing on State Implementation of the Sustainable  Groundwater Management Act. February 9th, 9:30 a.m. - John L. Burton Hearing Room (4203)
Hearings held:
  • Assembly Select Committee on Water Consumption and Alternative Sources held a hearing on Review of Desalination possibilities and pitfalls on December 11, 2015  at 10:00 am in the Metropolitan Water District Hearing Room
  • Senate Natural Resources and Water held a hearing to discuss "California's Water Challenges in the 21st Century:  Assessing California's Chronically Underfunded Water Needs".
  • Assembly Select Committee on Water Consumption and Alternative Sources held an interim hearing at 1:00 pm on Tuesday, Nov. 17th.  This was the first of three hearings to discuss desalination, recycled water, and alternate sources of water. 
  • A joint Informational and Oversight Hearing of Assembly Water, Parks and Wildlife and the Assembly Select Committee on Urban Rivers and Streams met at the Metropolitan Water District Boardroom in Los Angeles to discuss "Water Resource Management in the Los Angeles Watershed."
  • The California Senate and Assembly Agriculture Committees held a hearing December 3rd to discuss the impacts of the drought on California Agriculture.
Overall the hearings were very straight forward and intended to provide general information to the members to better inform next year's policy debates.  

Ag Committees Hold Drought Hearing

The California Senate and Assembly Agriculture Committees held a hearing December 3rd to discuss the impacts of the drought on California Agriculture.  The interim hearing was well attended Senators Galgiani, and Pan were joined by Assembly members Perea, Gallagher, Mathis and Irwin.  The committee members heard from CDFA and USDA staff, Farm workers, water and ag researchers from universities, representatives from the industry and entities working on pilot project for groundwater storage and aquifer regeneration.  The committee received testimony that the overall impact of the drought impacted almost every commodity, although some like cattle and grazing livestock, were more impacted that others.  The drought also impacted every region, although each region was impacted differently based on amount of rainfall, cropping patterns and surface/groundwater availability. 

Association Leadership Takes Bay Area Legislative Tour

Chris Zanobini joined a delegation of agriculture, food and business leaders for a tour of bay area political interests sponsored and coordinated by California Advocates.  The day started with a fundraiser for Senate Agriculture Committee Chair Galgiani.  The delegation then hustled to San Francisco where they met with Supervisor Scott Wiener candidate for State Senate in the "San Francisco" senate seat.  The group then traveled south to San Mateo for lunch with Marc Berman, a candidate for state Assembly from Palo Alto.  The delegation then crossed back over the bay to Berkeley to meet with former Assembly member and Senate Candidate Nancy Skinner where she discussed her current campaign as well as her University teaching activities while she campaigns.  The group then traveled to Danville to meet with Catharine Baker, who brings a unique perspective as the only Republican State Legislator from the Bay Area.  Finally, the group ended the day with a fundraising dinner with State Senator Steve Glazer who has a strong streak of independence in his approach to policy making.  The group had quality contacts with 6 legislators and candidates educating each on the importance of the agriculture industry, economic impact on California and region, need for pragmatic approach on issues such as pesticides, food labeling and strong food safety requirements, as well as specific challenges such as access to the ports, environmental regulations and rising costs. 

Governor Leads Coalition to Paris Climate Conference

Governor Brown arrived on Saturday for nearly a week of events at the international summit outside Paris to negotiate a new climate pact. He has been preparing for months for the conference, where he will promote California's aggressive action on greenhouse gas emissions, a major legacy issue for him in his fourth and final term. Brown is joined by a sizable contingent from the state that includes former Gov. Arnold Schwarzenegger, Senate President Pro Tem Kevin de Le�n, Assembly Speaker Toni Atkins and six other lawmakers.

Though he missed a speaking engagement last month with UN Secretary-General Ban Ki-moon, due to the unfortunate San Bernadino shooting incident, Brown still had a busy schedule, with at least 20 appearances. They include a screening of a new climate change documentary with legendary conservationist Jane Goodall, a roundtable with California business leaders and billionaire environmentalist Tom Steyer, and a ceremony for new signatories of a memorandum of understanding to keep the increase in the average global temperature below 2 degrees Celsius.  Prior to embarking on the trip, the Governor's Office announced signing a non-binding agreement with 12 other jurisdictions to promote a goal of all passenger cars to be zero emission vehicles by 2050.

State Offers Grants for Investment in Equipment Utilizing Recycled Feedstock

California businesses supplying byproducts to livestock or performing rendering services may want to take note of legislation the association supported offering incentives for recycling equipment.  This year Governor Brown signed into law Assembly Bill (AB) 199 (Eggman), which includes equipment that processes or utilizes recycled feedstock under the existing Sales and Use Tax Exclusion Program operated by the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA).

CAEATFA is currently developing the regulations necessary to implement the AB 199 program. CAEATFA's initial Request for Information (RFI) included a deadline of Dec. 2, 2015; however, CAEATFA has indicated they are willing to take responses after the deadline to assist in development of the program and its forthcoming regulations. They are particularly interested in comments from potential program applicants.  To read the Request for Information, to sign up for e-mails on program development, or to find out more about how to comment on the development of AB 199, please visit the AB 199 Program Development website.

CDFA and USDA Offering Drought Assistance

Below are two announcements for agricultural interests regarding water conservation grants and education opportunities for dealing with drought impacts. 
  1. CDFA is now accepting applications for the State Water Efficiency and Enhancement Program (SWEEP).   An estimated $16 million will be available for competitive grant funding to provide financial assistance to implement irrigation systems that reduce GHGs and saves water at California agricultural operations.  Visit "Application Guidelines" here for detailed information on eligibility and program requirements.   CDFA will hold four application workshops and one webinar to provide information on the program requirements.  Please see CDFA News Release for dates and times of workshops.  
  2. The USDA ARS is offering a two-day workshop, "Proven Solutions to Drought Stress" in Modesto Jan 12-13 2016.  This will include information on using recycled water, irrigation timing and more.  Registration is limited to 300.  Please click here for more information.
Bayer Young Farmer Sustainability Award

We are looking for young agricultural producers that demonstrate leadership and excellence in the areas of business and environmental sustainability through the 2016 Young Farmer Sustainability Award.
 
Any farmer or rancher age 40 and under who receives at least half of his or her income from farming and farm-related ventures is eligible to apply. Applications may be accessed and completed online. All applications must be received by January 15, 2016.

World Agri-Tech Investment Summit 

The upcoming World Agri-Tech Investment Summit will be held March 16- 17, 2016 in San Francisco. The summit will focus on fostering interactive debate, generating networking opportunities and showcasing the latest technologies amongst the brightest minds in agri-tech today.   
 
Click here for more information or to register.
CalChamber Explains New Laws for 2016
(Source: CalChamber Alert)

The California Chamber of Commerce is presenting handy summaries of new legislation taking effect in 2016 that will affect the day-to-day  operations of California employers. The summaries appear in a CalChamber white paper, available to download here.

Some of these new laws make important changes to existing state law. Other mandates make small changes to different parts of existing law or may affect only certain types of employers, such as employers with piece-rate workers.  The CalChamber also reminds employers that the minimum wage increases on January 1, 2016, to $10 an hour. The increase is not a new law, but is the last mandatory increase from the legislation signed into law in 2013.

Paid Sick Leave

Already in place are the July 13, 2015 amendments to the mandatory paid sick leave law.

Those changes included clarifying who is a covered worker; providing alternative methods of accruing paid sick leave other than one hour for every 30 hours worked; clarifying protections for employers that already provided paid sick leave or paid time off before January 1, 2015; and providing alternative methods for paying employees who use paid sick leave.

More details appear in a CalChamber white paper, available here.
 
The Labor Commissioner's Office also has released revised FAQs to reflect its position on the paid sick leave amendments.

Leaves and Benefits

Other changes to leave and benefit laws include changes to kin care requirements; school and child care activities leave; National Guard leave and protections; unemployment insurance and electronic reporting (taking effect January 1, 2017); state disability insurance eligibility waiting periods (taking effect July 1, 2016); and unemployment insurance training benefits.

Wage and Hour

Many of the new wage-and-hour laws deal with how the laws will be enforced, instead of imposing significant new obligations on employers.Urgency legislation that went into effect when the Governor signed it on October 2, 2015 gives employers the right to correct two types of violations relating to itemized wage statements before an employee may bring a civil action under the Private Attorneys General Act, subject to specified limitations.
 
Other wage-and-hour laws set new rules for employers with piece-rate employees; deal with the meal periods in the health care industry (urgency legislation that went into effect on October 5, 2015); expand the Labor Commissioner's ability to enforce state and certain local laws; reduce the prohibited amount of weekly disposable earnings that may be garnished (effective July 1, 2016); provide an amnesty program for port drayage companies that misclassify commercial drivers; and make various changes relating to public works and prevailing wages.

Hiring

New laws affecting hiring practices in 2016 deal with the use of the federal E-Verify system; job protections for grocery store workers when the store changes ownership; and classifying cheerleaders for professional sports teams as employees, not independent contractors.

CDFA Drought Update

Please see attached the most recent drought update from the Governor's Drought Task Force as well as the items below:
 
Joint Informational Legislative Hearing on the Impacts of Drought to Agriculture
On December 3rd a joint meeting of the Assembly Agriculture and Senate Agriculture committees was held to hear testimony regarding the impacts of the current drought to California agriculture. Click here to find an overview of the hearing and featured speakers.
 
USDA Report Warns Climate Change Likely to Impede Progress on Global Food Security
Climate change is likely to impede progress on reducing undernourishment around the world in the decades ahead, according to a major scientific assessment released December 2nd by the U.S. Department of Agriculture (USDA) on global food security and its implications for the United States. The report, entitled Climate Change, Global Food Security and the U.S. Food System, identifies the risks that climate change poses to global food security and the challenges facing farmers and consumers in adapting to changing climate conditions. Secretary Vilsack released the report during the COP-21 Paris Climate Conference.
 
Winter Storm Readiness Fact Sheet
Each winter, large storms roll through California and with them come the possibility of flooding, coastal inundation, levee breaches, landslides and other storm impacts.  Given the strong El Ni�o conditions present in the Pacific Ocean, this year the risk for these serious impacts have increased.  A fact sheet on winter preparedness can be found here.  It summarizes the current winter outlook and recommends areas of preparation for winter storms.  Please consult our state government's central web portal for more information about how to prepare for potential winter storms: www.storms.ca.gov.
 
California's Cumulative Water Savings Continue to Meet Governor's Ongoing Conservation Mandate
Californians have reduced water use by 27.1 percent in the five months since emergency conservation regulations took effect in June, continuing to meet Governor Edmund G. Brown Jr.'s 25 percent mandate despite a decline in the statewide water-savings rate for October.  In October, when outdoor water use - and the opportunity for significant savings - typically drops off from the hot summer months, the statewide conservation rate was 22.2 percent, down from 26.4 percent in September.  More Information
 
Initial State Water Project Allocation Set at 10 Percent
The Department of Water Resources (DWR) announced an initial 2016 allocation of 10 percent for customers of the State Water Project. Depending upon the amount of rain and snow that reaches California this winter, the allocation may be increased or decreased.  If dry conditions continue into a fifth year of drought, DWR may reallocate State Water Project (SWP) supplies to meet critical human health and safety needs.  More Information
 
Final Sustainable Groundwater Management Act Basin Boundary Regulations Went Into Effect
Reaching its first major milestone under the landmark  Sustainable Groundwater Management Act (SGMA), the Department of Water Resources (DWR) implemented new basin boundary regulations, a key provision of the groundwater law.  The action comes well in advance of the January 1, 2016 SGMA deadline, effectively giving local agencies an additional six weeks to prepare their requests for any basin boundary changes.  DWR also unveiled a new web-based reporting system that allows local agencies to submit basin boundary modification requests and provides public access to view basin boundary modification information.  More Information
 
The Public Policy Institute of California Released a Report Entitled "Allocating California's Water
Directions for Reform"
A set of legal and policy reforms would improve California's water allocation and water rights systems and strengthen the state's ability to weather droughts and a changing climate, according to a report released on November 17 by the Public Policy Institute of California (PPIC) Water Policy Center.  More Information
 
Emergency Drought Barrier Removed from Delta
On November 16, the Department of Water Resources (DWR) announced that the 750-foot emergency drought barrier that spanned West False River has been completely dismantled. The barrier was erected in May and June earlier this year to prevent saltwater intrusion into the central Sacramento-San Joaquin Delta from the San Francisco Bay. More Information


Karen Ross, Secretary 
California Department of Food and Agriculture
1220 N Street, Suite 400
Sacramento, CA 95814
UCD Plant Breeding Center December Newsletter

This month, Claire Heinitz discusses her research in the Walker lab and her new position with the USDA; the priority deadline to apply for a graduate program in Horticulture and Agronomy and be considered for the National Needs Graduate Fellowship is January 5th, 2016; and the PBC announces its second annual community screening event and will be playing the film "The Mesoamerican Diet: Origin," which is free and open to all community members, including people not affiliated with UC Davis.
 
Read it online here


Court Tells EPA to Decide on Chlorpyrifos' Fate by End of 2016  

A federal appeals court last week ordered EPA to decide on whether to ban the pesticide chlorpyrifos for agricultural uses by the end of 2016, or explain what unusual circumstances prevented it from doing so.  Effectively, the order issued by the 9th U.S. Circuit Court of Appeals upheld action by a lower court in a case brought against EPA by Pesticide Action Network North America.
 
The lower court slammed the agency for what it called "egregious delay" in responding to a petition from environmental groups calling for a ban.  In addition to the December 30, 2016 deadline on a decision, the court ordered EPA to give an update of the issue's status by June 30, which "shall include a detailed explanation of extraordinary circumstances, if any exist that make EPA's compliance with the final action deadline...impracticable to meet."
 
The agency said in October it was proposing to revoke tolerances for the pesticide, but also asked for public input on uses where no human health risk was involved.  Comments are due by January 5, 2016. 
Year-end Rush to Judgment:  It's All About Spending, Taxes

As Congress rushes toward its target recess date of December 18, it's all about crafting a $1.1-trillion FY2016 omnibus spending package - and which policy riders will make the cut - and extending over 50 expired federal tax breaks, many of which are critical to agriculture/agribusiness.  Here's the lay of the political landscape:

FY2016 Omnibus
:  The current continuing resolution (CR) keeping the government operating expired December 11, with no hope that lawmakers will resolve their differences in time.  The House Appropriations Committee produced a five-day CR that will keep the federal machine cranking until December 16, giving negotiators more time and avoiding a threatened weekend session.  The Senate approved the short-term CR on December 10, and the House was expected to follow on December 11.  The White House said the President will sign the CR "only to give Congress enough time to pass a budget, but the GOP must drop ideological riders and compromise."  Appropriators hope to release the full 1,000-plus-page-spending bill early this week.

Spending is not holding up the omnibus - the October budget deal with the White House pumped another $80 billion into the discretionary spending pool - and deals on the 12 individual spending bills are cut and dried.  It's unrelated policy language, either attached to the bill already or in negotiation, that threatens to scuttle the package, leading some House conservatives to push for a six-week CR to take pressure off lawmakers, or as last year, Congress may resort to a "cromnibus," a long-term CR well into 2016.  This option drew an immediate White House veto threat.

There are 40-42 policy riders in play, according to Sen. Barbara Mikulski (D, MD), one of the Senate's lead negotiators, including campaign finance, labor regulations, and abortion.  Most are being negotiated between the two chambers' respective appropriations committees, but some are in the hands of House and Senate leadership.  Among the leadership issues are limits on and certification of Syrian and Iraqi refugees, language related to health care coverage for abortion services, and blocking EPA's controversial "waters of the U.S. (WOTUS)" rule. 

Among agriculture groups, only the National Farmers Union (NFU) issued a statement calling on lawmakers to pass a clean CR - no policy riders - as issues including country-of-origin labeling (COOL), the Renewable Fuel Standard (RFS), food labeling and other ag issues are of sufficient importance to be dealt with as stand-alone legislation. 

On the refugee issue, several conservative members are saying this is the make-or-break issue for them and their vote. This one may be avoided as part of the omnibus given strong language included in a bipartisan visa waiver bill passed last week in both chambers, but many conservatives aren't budging.

A major priority for agriculture is congressionally forcing EPA to withdraw the WOTUS rule, which expands agency and U.S. Army Corps of Engineers authority under the Clean Water Act (CWA).  This rider has a chance as other language attempting to kill off EPA rules on carbon recapture and ozone standards is more difficult for Democrats to swallow, particularly since WOTUS has been halted indefinitely by federal court order.  Democrats also see that getting out of the way of WOTUS may give them bargaining leverage on other issues.

Still in negotiations is language preempting state laws requiring the labeling of foods containing genetically engineered (GE) ingredients. The broad ag/food industry coalition may wind up settling for simple two-year federal preemption to give Congress time to wrestle with a broader bill. The coalition doesn't seem to be able to overcome opposition by a number of Senators who want to see some kind of mandatory label disclosure of or access through scanning to product ingredient information.  While the House approved a broad bill preempting the states, setting up USDA labeling certification programs and other requirements, the food industry wants a fix on the labeling mess by year's end given Vermont's GE labeling law goes into effect in July, 2016 - if it survives a federal court challenge by four separate industry groups - and companies do not want to begin the process of label redesign, warehouse reconfigurations, etc.

With the World Trade Organization (WTO) having approved up to $1 billion in retaliatory tariffs to be levied by Canada and Mexico over U.S. COOL rules, there's a major Senate effort to get language into the omnibus repealing COOL - as the House has already approved its repeal bill - despite opposition from Senate Agriculture Committee ranking member Sen. Debbie Stabenow (D, MI) who believes "voluntary COOL" is the best way to go. 

Language in the House version of the omnibus would resurrect long-dead commodity certificates, a move opposed by Sen. Chuck Grassley (R, IA) in the final omnibus package.  Grassley said last week reinstating the certificate program would allow farmers to avoid payment limits on federal programs included in the 2014 Farm Bill.  Some groups are pushing for it, one newsletter reported, but said a senior staffer warned commodity groups they can't oppose cuts in crop insurance and reopening the 2014 Farm Bill, and then turn around and urge appropriators to reopen the omnibus farm package to reinstate certificates.

The American Seed Trade Assn. (ASTA) opposes language in the omnibus that would allow extension of patent exclusivity for Marshall Ryegrass, a variety used in feeding.  While the Plant Protection Act (PPA) gives a patent holder 20 years exclusive control of the variety, there's no provision for extending that protection.  Marshall Ryegrass was given a 10-year extension of exclusivity in the 2004 appropriations bill.  ASTA says to grant yet another extension shows "a total disregard for intellectual property law and legally binding contracts."

Dodd-Frank regulations are under attack as Republicans try and use the omnibus to exert greater congressional oversight of the new Consumer Financial Protection Bureau (CFPB) and exempt small banks from Dodd-Frank regulations.  Coupled with the Dodd-Frank action is an attempt to overturn the Labor Department's fiduciary rule on retirement and investment advisors.  Democrats say a loud "no" to this GOP move.  House finance lawmakers, however, said late last week that most Dodd-Frank language is not likely to make the omnibus cut.

There's also a push by some in the House to impose new limits on who can participate in the federal sugar support program.  In a "dear colleague" letter last month, Reps. Joe Pitts (R, PA) and Bob Goodlatte (R, VA) said giving the sugar program the same eligibility rules as other federal commodity programs makes sense.

The lawmakers called the language a "simple extension of existing farm program rules."
Also contentious is language ending the U.S.'s ban on crude oil exports; a move by E-cigarette makers to get out from under FDA regulations and approvals, and a move by Republicans to nullify a National Labor Relations Board (NLRB) rule on joint employer status and union negotiations.

Tax Extenders
:  A list of 55 federal tax breaks expired at the end of 2014, and as in years past, Congress is wrestling with how to extend those breaks - retroactive to January 1, 2015 - without breaking the federal bank and while making some of the "temporary" tax breaks permanent.  The Senate passed a two-year extenders package earlier this year; the House, caught up in making some tax breaks permanent, continues to negotiate.

These negotiations, however, are inextricably linked and simultaneous with the FY2016 omnibus spending bill talks given some are pushing to attach any tax extenders package to the omnibus, and concessions on one set of numbers shifts leverage when negotiating the second package.

On the table now is a $108.6-billion two-year extension - covering all of 2015 retroactively and extending into 2016 - of existing list of tax breaks, introduced last week by Ways & Means Committee Chair Kevin Brady (R, TX).  The GOP has a list of several "temporary" tax breaks it wants to make permanent, and is actively horse trading with the Democrats over similar breaks they want to see permanent.  At its highest, the cost of this permanent package could hit $805 billion over 10 years, but negotiators say privately that cost is too high, and ultimately the price tag will be closer to $650-750 billion over a decade.  Still, fiscal conservatives on both sides of the aisle balk at the cost, especially in an election year.

However, as the cost of the package remains a bipartisan concern, discussions late last week shifted to placing some of the extended tax breaks on a five-year phaseout, particularly the wind energy tax credit and two foreign business breaks, including active financing for foreign business loans and a U.S. tax break that protects foreign corporations dividends and other income from immediate taxation.  Another action to control the package's price tag is to shrink some of the permanent tax break candidates or to delay the effective date of other shifts to permanent tax status.  These actions could lower the price tag to $600 million or so.

More than 50 agricultural groups last week sent House and Senate negotiators a letter saying a tax extenders package approved by the end of the year is imperative to restore certainty to business planning for farmers, ranchers and their suppliers.  In sharp focus for the ag groups is Sec. 179 depreciation, capped currently at $25,000, but under the extended tax break would be capped at $500,000 at is was in 2014.  Also in play for the ag groups is the 50% bonus depreciation tax benefit, a break allowing farmers and ranchers to immediately depreciate 50% of the cost of capital investment.  Both of these are also important for ag equipment manufacturers and other input suppliers.

Another section of the extenders package carries bioenergy tax breaks, including a $1-per-gallon blenders' tax credit for biodiesel and renewable diesel, which industry groups are hoping Congress will convert to a domestic producers' tax credit in 2016. The Senate bill carries the producer tax credit language on biodiesel, and Sens. Maria Cantwell (D, WA) and Charles Grassley (R, IA) introduced a bill this week further clarifying the biodiesel producers' credit, and the National Biodiesel Board (NBB) is pushing for the Cantwell-Grassley language in the final extenders package. 

Sen. Orrin Hatch (R, UT), chair of the Senate Finance Committee, is pleased the House is using a two-year bill as its basis for negotiations.  For the last few weeks, some in the House have hinted at a one-year bill, if only to control costs.  Hatch's committee earlier this year approved a $96-billion two-year extension, and Hatch sees the ultimate product of the House-Senate negotiation including some permanent tax breaks, while the majority remain "temporary." 

Some GOP priorities for permanence include the business research/development tax credit and Sec. 179 depreciation.  The Democrats - including the White House - have prioritized the Earned Income Tax Credit (EITC) and the Additional Child Care credit.  House Minority Leader Nancy Pelosi (D, CA), identified as the epicenter of the negotiations gridlock, demanding the Child Care Credit be indexed over time, but both Republicans and Democrats have foreclosed that option.  Also in play are delays in implementing the medical device tax and some tax requirements of Obamacare. 

House Votes to Reauthorize Surface Transportation Board, Bill Heads to President Obama  

The full House last week followed Senate action earlier this summer and approved reauthorization of the Surface Transportation Board (STB), the government's railroad regulatory agency.  The action also increases the STB's accountability to shippers and to Congress, and gives it a lease on life through 2020.
 
The STB oversees regulation of rail rates, mergers, line acquisitions, new line construction, line abandonment and other system issues.  The board was set up in 1996.  The new reauthorization sets new timetables and procedures for dispute resolution, allows the board to start its own rate investigations, broadens the board membership from three to five members, and allows the board members to talk to each other as long as they make appropriate public disclosure of the talks.
 
The new authorization strengthens the board "so it can carry out its statutory responsibilities and provide meaningful safeguards intended under existing law," said the National Grain & Feed Assn. (NGFA).  The Association of American Railroads (AAR) praised the reauthorization, saying the "legislation strikes the right balance of preserving market-based structure for shippers and railroads, while also providing commonsense process improvements that will allow the STB to work more efficiently."
McConnell Rains on Obama TPP Parade; Ag Trade Advisory Panel Endorses Pact 

With the White House eager to get Congress to approve the TransPacific Partnership (TPP) trade pact with 11 other Pacific Rim nations, Senate Majority Leader Mitch McConnell (R, KY) last week rained on President Obama's trade legacy, telling a reporter a Senate vote likely won't happen until after the November, 2016 national elections.
 
In related developments, two of USDA's trade advisory committees two weeks ago endorsed TPP, but both endorsements carry minority reports.  The Agricultural Policy Advisory Committee (APAC) saw a majority of its members vote to endorse TPP, as did the Animal & Animal Products Agricultural Technical Advisory Committee (ATAC). 
 
"It is the clear majority opinion of the APAC that the TransPacific Partnership Agreement (TPP) will benefit American farmers, ranchers and food and feed producers by increasing export opportunities through the reduction of tariff and non-tariff barriers and support of other market-opening mechanisms," APAC said.  ATAC's report was similar, with only dairy withholding endorsement.
 
However, the United Food & Commercial Workers International Union and National Farmers Union (NFU) said enactment of TPP will cut processing jobs, reduce labor standards and farm gate prices, and will lead to increased imports and decreased exports of American agricultural products.
 
In an article in the December 10 Washington Post, McConnell said if TPP were to come to the floor for a vote this spring or summer, it would fail.  The White House released the formal text of the trade pact on November 5, and Congress could act by February at the earliest, once a 60-day public review period has closed, but McConnell told the Post even that schedule is in doubt.
WTO Sets COOL Retaliatory Tariff Cap at $1 Billion; Roberts wants Repeal  

The clock on when Canada and Mexico will impose retaliatory tariffs on a wide range of U.S. products over U.S. country-of-origin labeling (COOL) rules keeps ticking, and the timeline for prospective action got shorter last week as the World Trade Organization (WTO) ruled the U.S. two North American neighbors and major trading partners can impose up to $1 billion in tariffs. 
 
Senate Agriculture Committee Chair Pat Roberts (R, KS) immediately issued a statement with the headline, "Retaliation is Becoming a Realization," calling for immediate repeal of COOL.  "As I've said time and again, whether you support or oppose COOL, the fact is retaliation is coming," Roberts said.  "How much longer are we going to keep pretending retaliation isn't happening?  I will continue to look for all legislative opportunities to repeal COOL."  One such opportunity is to attach repeal language to the pending FY2016 omnibus package, an option actively under consideration.
 
Blocking Roberts' in committee is Sen. Debbie Stabenow (D, MI), ranking member, who favors so-called "voluntary COOL."  She and Sen. John Hoeven (R, ND) introduced a bill earlier this year to repeal COOL and replace it with a voluntary labeling regime, saying the bill "is a bipartisan solution that would have prevented retaliation while also protecting the right of consumers to know where their food comes from."
 
However, the governments of both Canada and Mexico have publicly stated only repeal will cut off the possibility of retaliatory tariffs.  "If the U.S. Senate does not take immediate action to repeal COOL for beef and pork, Canada will quickly take steps to retaliate," Canadian Ministers Chrystia Freeland, international trade, and Lawrence MacAulay, agriculture and agri-food, said last week in a formal statement.  The Mexican government said, "The retaliatory measures will be implemented as soon as possible and will remain in effect until the U.S. complies with its international commitments...and repeals COOL in its entirety."
 
The U.S. Trade Representative's office was silent on what the U.S. government's next steps might be.  It said it "will continue to consult with members of Congress" as options are considered.  If Congress doesn't outright repeal COOL, USTR will have to convince Canada and Mexico to negotiate some other agreement to head off retaliation.  Secretary of Agriculture Tom Vilsack said Congress has to act to avoid unnecessary retaliation against fruit and produce growers, along with a host of consumer products.
 
The American Farm Bureau Federation (AFBF), the National Milk Producers Federation (NMPF), the U.S. Dairy Export Council (USDEC), National Cattlemen's Beef Assn. (NCBA), the National Pork Producers Council (NPPC), the North American Meat Institute (NAMI) and the National Chicken Council (NCC) all favor immediate COOL repeal.  The U.S. Cattlemen's Assn. (USCA), the National Farmers Union (NFU) and a host of consumer groups favor retention of COOL.  Groups like National Grain & Feed Assn. (NGFA), the American Feed Industry Assn. (AFIA), the National Corn Growers Assn. (NCGA) and U.S. Rice favor repairs or replacement of COOL as the ongoing tug-of-war threatens North American markets.

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