Friday, October 31, 2008

Thank You Chris!

Chris Doherty, Chief Financial Officer at Cal/West Seeds, has accepted the position of Senior Vice President & Chief Financial Officer at Farm Credit West. His departure from Cal/West is effective November 14. Chris has served on the Ag Council’s board of directors since 2006. His financial acumen and counsel have been extremely valuable to the Council’s administration, particularly with respect to our recent building transaction. He’s been a terrific representative for Cal/West and we wish him all the best in his new position.

Water Primer

The Legislative Analyst Office (LAO) has published the California Water Primer that will be used to brief lawmakers and legislative staff on the state’s water system and challenges. The 77 page publication provides a comprehensive overview of water sources, storage, conveyance and uses. More importantly, it outlines several policy issues that the LAO believes should be addressed by the legislature.

 The LAO uses the premise that “least cost, highest gain” should be incorporated into legislative decision-making and offers several recommendations regarding water supply reliability; realignment of water rights; groundwater regulation; and, the role of the Delta/conveyance. For example, with respect to water rights realignment, the LAO asserts that it’s in the interest of the state to undertake a concerted effort to realign the water rights system to better reflect modern needs and circumstances. This could be done by accounting for the potential for water conservation and water use efficiency in managing water rights. Thus, where water is required for agricultural purposes, the water rights should mirror only the amount of water needed to grow a crop using available water efficiency technology. Similarly, urban water rights should reflect the use of cost-effective water conservation and efficiency measures. With respect to groundwater the LAO recommends the establishment of a state-administered water rights system for groundwater. It’s also recommended that the water quality permitting processes of the state and regional water boards be restructured to protect groundwater to the same extent as surface water.

Although it’s a significant part of the LAO’s responsibility to publish special issue studies for the legislature, it’s the first time in memory that they have focused on a comprehensive water policy. Given the state’s current water problems, many of the LAO’s recommendations could undoubtedly morph into legislation next year. To view the full report, go to: http://www.lao.ca.gov/laoapp/PubDetails.aspx?id=1889

Revenue Commission

Governor Schwarzenegger announced the formation of a special bipartisan Commission on the 21st Century Economy to modernize and decrease the volatility in the state’s tax system. The commission will have 12 members, six appointed by the Governor, three appointed by the Assembly Speaker and three appointed by the Senate Pro Tempore. The commission is intended to create a road map toward a more reliable revenue stream that is more reflective of today’s economy. The Governor believes that an improved revenue-gathering system would decrease the pressure for future tax increases to address revenue shortfalls, which will continue to occur if the volatility of our tax system is not reduced.

Central Valley Salt Management

State and regional water quality regulators announced an aggressive stakeholder engaged process to develop a Salt Management Plan for the Central Valley. The multi-year effort will be spear-headed through the Central Valley Salinity Coalition (CVSC), a non-profit, public-private organization. Stakeholder groups will be asked to raise $150,000-$300,000 to initially fund the effort. The CVSC’s goals are to:

1. Engage all users of Central Valley surface and ground waters to actively participate;
2. Encourage all users contributing to and/or impacted by salts and nitrate to provide financial support or other resources to the CVSC’s planning and control efforts;
3. Develop and implement a Salinity Management Plan through amendments to the Central Valley Basin Plans and Delta Plan.

According to state officials, this is will be a long and expensive process that should be done with the active involvement of stakeholders. Alternatively, if this unique public/private approach fails to gain traction within the next 12 months, the only alternative will be to pursue to a more traditional regulatory process to amend the basin plans. The Ag Council will be working with other agricultural groups to develop a strategy for actively engaging with the CVSC.

New CDFA Undersecretary

On October 16, the Governor appointed Will Brown as Undersecretary at CDFA. Mr. Brown has a long history of working with food distribution and retail interests on a host of federal and state policy issues. He has extensive policy experience in California and Texas and we look forward to working with him. The press release can be viewed at: http://www.cdfa.ca.gov/egov/Press_Releases/Press_Release.asp?PRnum=08-071

AB 32 Process Moves Forward

The AB 32 proposed scoping plan was released in early October. The document lays out recommendations for reducing greenhouse gas emissions to 1990 levels by the year 2020. The plan has a lengthy list of programmatic changes and proposals to achieve this goal. It calls for development of a cap-and-trade program, expanding energy efficiency programs and achieving various targets through policy changes and increasing fees and administrative costs. The economic analysis of AB 32’s impact on businesses is severely lacking and given today’s economic climate, we have to take this very seriously. Even the EU recognizes this problem; it recently added a requirement to its climate change policies that an economic-impact study be executed and fully analyzed prior to enacting any binding climate change laws.

There is a public hearing on the scoping document November 20-21 in Sacramento. The deadline for comments is December 10. The CA Air Resources Board is expected to take it up on December 11. The scoping plan is 142 pages in length and can be accessed at http://www.arb.ca.gov/cc/scopingplan/document/scopingplandocument.htm