FROM: U.S. DEFENSE DEPARTMENT
A PUBLICATION OF RANDOM U.S.GOVERNMENT PRESS RELEASES AND ARTICLES
Showing posts with label CALIFORNIA. Show all posts
Showing posts with label CALIFORNIA. Show all posts
Friday, June 19, 2015
Wednesday, December 10, 2014
REPORT SHOWS "DEFACTO" MINIMUM WAGE BELOW LEGAL FLOOR BEING PAID IN NY, CA,
FROM: U.S. LABOR DEPARTMENT
Study Finds Wage Violations in New York and California
A new report commissioned by the department shows that many workers are earning a de facto minimum wage below the legal floor, and that enforcement of wage regulations has a broad positive impact. Using U.S. Census Bureau and earnings data from New York and California, the study shows roughly 3 percent to 6 percent of all workers covered by the Fair Labor Standards Act experience minimum wage violations — translating to between $20 million and $29 million in lost weekly income, or 40 percent or more of their total weekly pay. The wage violations are driving 7,000 California families and 8,000 New York families below the poverty line. "The principle at stake, which is at the core of the president's workplace policy, is that workers should receive a fair day's pay for a fair day's work," said U.S. Secretary of Labor Thomas E. Perez. "To address the scale of this problem, we will redouble our enforcement efforts and partnerships to ensure workers take home the wages they have earned and deserve." Since 2009, the Wage and Hour Division has recovered more than $1 billion for more than 1.2 million workers. The division's administrator, Dr. David Weil, said that the prevalence of the minimum wage violations requires strategic enforcement. "We are shifting our resources toward proactive, directed investigations," he told those at the conference. That means focusing on industries where there is a high likelihood of wage violations, and where workers are uninformed of their rights or fearful of retaliation and don't file complaints, he said. Strategic enforcement, he said, is meant to cause "systemic change" and improve compliance levels.
Study Finds Wage Violations in New York and California
A new report commissioned by the department shows that many workers are earning a de facto minimum wage below the legal floor, and that enforcement of wage regulations has a broad positive impact. Using U.S. Census Bureau and earnings data from New York and California, the study shows roughly 3 percent to 6 percent of all workers covered by the Fair Labor Standards Act experience minimum wage violations — translating to between $20 million and $29 million in lost weekly income, or 40 percent or more of their total weekly pay. The wage violations are driving 7,000 California families and 8,000 New York families below the poverty line. "The principle at stake, which is at the core of the president's workplace policy, is that workers should receive a fair day's pay for a fair day's work," said U.S. Secretary of Labor Thomas E. Perez. "To address the scale of this problem, we will redouble our enforcement efforts and partnerships to ensure workers take home the wages they have earned and deserve." Since 2009, the Wage and Hour Division has recovered more than $1 billion for more than 1.2 million workers. The division's administrator, Dr. David Weil, said that the prevalence of the minimum wage violations requires strategic enforcement. "We are shifting our resources toward proactive, directed investigations," he told those at the conference. That means focusing on industries where there is a high likelihood of wage violations, and where workers are uninformed of their rights or fearful of retaliation and don't file complaints, he said. Strategic enforcement, he said, is meant to cause "systemic change" and improve compliance levels.
Thursday, October 9, 2014
$123 MILLION ALLEGED SCHEME INVOLVING ATM MACHINES IS SHUT DOWN BY SEC
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23106 / October 8, 2014
Securities and Exchange Commission v. Nationwide Automated Systems, Inc. et al., Civil Action No. 14-Civ-07249 (SJO) (FFMx) (C.D. Cal., filed September 17, 2014)
SEC Shuts Down $123 Million Atm Ponzi Scheme in California
In a case unsealed yesterday in federal court in Los Angeles, the SEC has obtained an emergency court order to freeze the assets of Nationwide Automated Systems (NAS), located in the L.A. suburb of Calabasas, Calif. The order also appointed a temporary receiver over NAS’s assets and froze the assets of the company’s owner Joel Barry Gillis and fellow officer Edward Wishner.
The SEC alleges that NAS raised more than $123 million in the past 18 months by telling investors they could purchase ATMs from NAS and then lease them back in return for “rent” of 50 cents per ATM transaction. Investors were guaranteed an investment return of at least 20 percent per year in these sale-and-leaseback agreements. However, the vast majority of NAS’s revenue is from new investor funds, and this money is being used to pay the promised returns owed to earlier investors. NAS does not actually own most of the ATMs it claims to operate, a fact unknown to investors who were contractually forbidden in their agreements from contacting the locations where their ATMs were supposedly located.
According to the SEC’s complaint filed under seal on September 17, NAS, Gillis, and Wishner convinced investors to buy an ATM by paying a flat amount – typically $12,000 but in some cases $19,800. They have claimed to operate some 31,000 ATMs in high-traffic retail locations like hotels, casinos, and convenience stores largely in the Midwest. However, reports from the company’s third-party ATM servicers only identify approximately 235 ATMs currently serviced for NAS.
The SEC’s complaint charges NAS, Gillis, and Wishner with violating Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) as well as Sections 17(a)(1) and (3) of the Securities Act of 1933. NAS and Gillis also are charged with violations of Rule 10b-5(b) of the Exchange Act and Sections 5(a), 5(c) and 17(a)(2) of the Securities Act.
The SEC’s investigation was conducted by Peter Del Greco, Sara Kalin, Roger Boudreau, and Marc Blau in the Los Angeles office. The SEC’s litigation is being led by John Berry and Gary Leung.
Tuesday, May 20, 2014
MARINES FIGHT FIRES BURNING ACROSS CAMP PENDLETON
FROM: U.S. DEFENSE DEPARTMENT
A U.S. Marine Corps CH-46 Sea Knight helicopter lifts off after filling a Bambi bucket to help fight fires and contain the Cocos fire in San Marcos, Calif., May 16, 2014. U.S. Marine Corps photo by Sgt. Keonaona C. Paulo.
U.S. Marine Corps Sgt. Carmen Zangari observes a Bambi bucket being filled beneath a CH-46 Sea Knight helicopter to help fight the Tomahawk wildfires burning across Marine Corps Base Camp Pendleton, Calif., May 16, 2014. Zangari, a flightline crew chief, is assigned to Marine Medium Helicopter Squadron 364, Marine Aircraft Group 39, 3rd Marine Aircraft Wing. U.S. Marine Corps photo by Sgt. Keonaona C. Paulo.
Sunday, May 18, 2014
DOD PHOTOS OF TOMAHAWK WILDFIRE NEAR MARINE CORPS BASE CAMP PENDLETON
FROM: U.S. DEFENSE DEPARTMENT
The Tomahawk wildfire burns through a wooded area near Marine Corps Base Camp Pendleton, Calif., May 15, 2014. U.S. Marine Corps photo by Lance Cpl. Joshua Murray.
Tuesday, May 6, 2014
CHARGES OF RACKETEERING, ATTEMPTED MURDER BROUGHT AGAINST MEMBERS OF NUESTRA FAMILIA GANG
FROM: U.S. JUSTICE DEPARTMENT
Monday, May 5, 2014
Federal Racketeering and Attempted Murder Charges Brought Against Leaders and Associates of the Nuestra Familia Gang
A second superseding indictment was unsealed today adding 19 counts including racketeering conspiracy and attempted murder against three defendants for their alleged participation in the violent Nuestra Familia gang, Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and U.S. Attorney Benjamin B. Wagner announced.
Gary Anthony Romero, 48, of Stockton, Calif., and Joe Anthony Felix, 34, of Modesto, Calif., were first charged with conspiracy to distribute and possess with intent to distribute methamphetamine by a federal grand jury in Fresno, Calif. The superseding indictment, returned under seal on April 30, 2014, includes all of the charges alleged in the original indictment, as well as new charges against them. A new defendant, Jesus Gomez Felix, 30, of Modesto, was also charged.
Jesus Felix was arrested today. Romero and Joe Felix have been in federal custody since March 2013. Jesus Felix will make his initial appearance in federal court in Fresno today, and Romero and Joe Felix were arraigned on the charges today in Fresno.
According to the superseding indictment, Nuestra Familia is a prison gang that originally formed in the California state prison system in the 1960s. Nuestra Familia leaders control and direct the gang’s criminal activities both inside and outside of the prison system.
According to the superseding indictment, Romero has been a member of Nuestra Familia for about 20 years and has reached one of the highest levels of authority in Nuestra Familia. He allegedly ordered various crimes to be committed for the benefit of the gang in Stanislaus County, including attempted murders, assaults, robberies and drug dealing. Romero is charged with racketeering conspiracy; six counts of attempted murder and six counts of assault with a dangerous weapon, all in aid of racketeering; one count of using and brandishing a firearm during a crime of violence; one count of conspiracy to commit robbery; and one count of conspiracy to distribute methamphetamine.
Joe Felix became a Nuestra Familia leader in Stanislaus County in 2012 and allegedly ordered members of the gang to commit murder and deal drugs in Modesto. Joe Felix is charged with racketeering conspiracy; one count of attempted murder, one count of conspiracy to commit murder, and one count of assault with a dangerous weapon, all in aid of racketeering; one count of using and discharging a firearm during a crime of violence; and one count of conspiracy to distribute methamphetamine.
Jesus Felix is charged with one count of assault with a dangerous weapon resulting in serious bodily injury in aid of racketeering and one count of using and discharging a firearm during a crime of violence.
This case was investigated by the Central Valley Gang Impact Task Force under the FBI’s Safe Streets Initiative, with the assistance of the Stanislaus County District Attorney’s Office, Stanislaus County Sheriff’s Office, Modesto Police Department, Ceres Police Department, the California Highway Patrol, the California Department of Corrections and Rehabilitation, the Bureau of Prisons and the Stanislaus County Probation Department.
The case is being prosecuted by Trial Attorney Louis A. Crisostomo of the Criminal Division’s Organized Crime and Gang Section and Assistant United States Attorneys Kimberly A. Sanchez and Laurel J. Montoya of the Eastern District of California.
The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Sunday, April 6, 2014
HOW ROCKS AND TREES COMMUNICATE IN SIERRA NEVADA
FROM: NATIONAL SCIENCE FOUNDATION
Granite bedrock and sequoia forests 'communicate' in the Sierra Nevada
Research reveals the coevolution of life and landscapes
If a tree falls in the forest and no one is around to hear it, does it make a sound? If it lands on granite bedrock, it does. But beyond the crash of timber onto rock, scientists have found that bedrock and the trees that grow from its weathered soils are, in a sense, communicating.
Bedrock influences forests--and the landscapes of which they are a part--more than was thought, according to researchers funded through the National Science Foundation (NSF) Critical Zone Observatories (CZO) network.
The scientists investigated the factors that influence forest cover in California's Sierra Nevada. Bedrock may be as important as temperature and moisture, they found, in regulating the distribution of trees and other vegetation across mountain slopes.
Geoscientists Cliff Riebe, Jesse Hahm, Claire Lukens and Sayaka Araki of the University of Wyoming recently published results of their study in the journal Proceedings of the National Academy of Sciences (PNAS).
Bedrock and trees in the critical zone
The research took place at the Southern Sierra CZO, one of ten NSF CZOs funded to unearth the secrets of Earth's critical zone.
Critical zone research looks at how water, life, rock and air interact from the base of the soil to the top of the vegetation canopy.
"The CZOs are providing scientists with new knowledge of the critical zone and its response to climate and land-use change," says Enriqueta Barrera, a program director in NSF's Division of Earth Sciences, which funds the CZO network.
"They're the first systems-based observatories dedicated to understanding how Earth's surface processes are coupled," says Barrera. "The results will help us predict how the critical zone affects the ecosystem services on which society depends."
The water cycle, the breakdown of rocks and eventual formation of soil, the evolution of rivers and valleys, patterns of plant growth and landforms that people see all result from processes that take place in the critical zone.
CZO scientists are investigating the integration and coupling of Earth surface processes, and how they are affected by the presence of fresh water.
The researchers are using field and analytical methods, space-based remote sensing and theoretical techniques.
The CZOs add to the environmental sensor networks in place and planned by NSF, including EarthScope, the National Ecological Observatory Network and the Ocean Observatories Network.
Scientists have known that the critical zone is a complex system in which different components interact at various space and time scales, and in which the rates of processes depend on the nature of those interactions.
Until now, however, researchers have looked at the components individually, especially in the field. The CZOs allow for investigation of the critical zone as a holistic system, rather than as isolated parts.
NSF CZOs are located in watersheds in the Southern Sierra Nevada; Boulder Creek in the Colorado Rockies; Susquehanna Shale Hills in Pennsylvania; Christina River Basin on the border of Delaware and Pennsylvania; Luquillo riparian zone in Puerto Rico; Jemez River and Santa Catalina Mountains in New Mexico and Arizona; Piedmont region of South Carolina; Reynolds Creek in Southwest Idaho; Eel River in Northern California; and linked Illinois, Iowa and Minnesota watersheds.
Composition of bedrock limits plant growth
The Southern Sierra CZO is home to extensive forests and huge exposures of granite bedrock.
"We were puzzled by the patchiness of vegetation on mountain slopes," Hahm says. "Densely forested areas are right next to places with little or no trees and soil.
"Strikingly, these bare areas sometimes occur side-by-side with groves of the largest trees on Earth, giant sequoias."
The researchers determined that bedrock composition acts to limit plant growth.
"Unexpectedly, we found that differences in bedrock composition are just as important in this ecosystem as climate," Riebe says. "That's hard to see without spatial analysis tools and integrated datasets on how vegetation and bedrock change across the landscape."
Plants get some of their nutrients from weathering of minerals as bedrock breaks down into soil. Granite rock, it turns out, contains plant-essential nutrients such as phosphorus.
"The results are important because they demonstrate that bedrock geochemistry is on par with climate as a regulator of vegetation in the Sierra Nevada--and likely in other granite mountain ranges around the world," Riebe says.
Geology of 100 million years ago linked with biology of today
Subtle differences in the cooling history of granite 100 million years ago are likely fueling the biogeochemical interactions that produce today's forest patterns.
Understanding these links is at the heart of critical zone science, says Riebe.
The findings also show that variations in forest cover correspond with differences in erosion rates. They appear to affect the pace at which the Sierra Nevada is wearing down due to the action of water, wind and biological processes.
The results will help efforts to learn how mountain forests are responding to climate-linked changes in temperature and precipitation.
"Most studies point to a shift in vegetation toward higher, cooler elevations," Riebe says. "But changes in climate may be just part of the story.
"Any changes in tree distribution will occur only with the consent of the underlying bedrock."
In the Sierra Nevada, rock meets life meets rock. Or life meets rock meets life.
-- Cheryl Dybas, NSF (703) 292-7734 cdybas@nsf.gov
Investigators
Jan Hopmans
Roger Bales
Martha Conklin
Christina Tague
Michael Goulden
Related Institutions/Organizations
University of California - Merced
Granite bedrock and sequoia forests 'communicate' in the Sierra Nevada
Research reveals the coevolution of life and landscapes
If a tree falls in the forest and no one is around to hear it, does it make a sound? If it lands on granite bedrock, it does. But beyond the crash of timber onto rock, scientists have found that bedrock and the trees that grow from its weathered soils are, in a sense, communicating.
Bedrock influences forests--and the landscapes of which they are a part--more than was thought, according to researchers funded through the National Science Foundation (NSF) Critical Zone Observatories (CZO) network.
The scientists investigated the factors that influence forest cover in California's Sierra Nevada. Bedrock may be as important as temperature and moisture, they found, in regulating the distribution of trees and other vegetation across mountain slopes.
Geoscientists Cliff Riebe, Jesse Hahm, Claire Lukens and Sayaka Araki of the University of Wyoming recently published results of their study in the journal Proceedings of the National Academy of Sciences (PNAS).
Bedrock and trees in the critical zone
The research took place at the Southern Sierra CZO, one of ten NSF CZOs funded to unearth the secrets of Earth's critical zone.
Critical zone research looks at how water, life, rock and air interact from the base of the soil to the top of the vegetation canopy.
"The CZOs are providing scientists with new knowledge of the critical zone and its response to climate and land-use change," says Enriqueta Barrera, a program director in NSF's Division of Earth Sciences, which funds the CZO network.
"They're the first systems-based observatories dedicated to understanding how Earth's surface processes are coupled," says Barrera. "The results will help us predict how the critical zone affects the ecosystem services on which society depends."
The water cycle, the breakdown of rocks and eventual formation of soil, the evolution of rivers and valleys, patterns of plant growth and landforms that people see all result from processes that take place in the critical zone.
CZO scientists are investigating the integration and coupling of Earth surface processes, and how they are affected by the presence of fresh water.
The researchers are using field and analytical methods, space-based remote sensing and theoretical techniques.
The CZOs add to the environmental sensor networks in place and planned by NSF, including EarthScope, the National Ecological Observatory Network and the Ocean Observatories Network.
Scientists have known that the critical zone is a complex system in which different components interact at various space and time scales, and in which the rates of processes depend on the nature of those interactions.
Until now, however, researchers have looked at the components individually, especially in the field. The CZOs allow for investigation of the critical zone as a holistic system, rather than as isolated parts.
NSF CZOs are located in watersheds in the Southern Sierra Nevada; Boulder Creek in the Colorado Rockies; Susquehanna Shale Hills in Pennsylvania; Christina River Basin on the border of Delaware and Pennsylvania; Luquillo riparian zone in Puerto Rico; Jemez River and Santa Catalina Mountains in New Mexico and Arizona; Piedmont region of South Carolina; Reynolds Creek in Southwest Idaho; Eel River in Northern California; and linked Illinois, Iowa and Minnesota watersheds.
Composition of bedrock limits plant growth
The Southern Sierra CZO is home to extensive forests and huge exposures of granite bedrock.
"We were puzzled by the patchiness of vegetation on mountain slopes," Hahm says. "Densely forested areas are right next to places with little or no trees and soil.
"Strikingly, these bare areas sometimes occur side-by-side with groves of the largest trees on Earth, giant sequoias."
The researchers determined that bedrock composition acts to limit plant growth.
"Unexpectedly, we found that differences in bedrock composition are just as important in this ecosystem as climate," Riebe says. "That's hard to see without spatial analysis tools and integrated datasets on how vegetation and bedrock change across the landscape."
Plants get some of their nutrients from weathering of minerals as bedrock breaks down into soil. Granite rock, it turns out, contains plant-essential nutrients such as phosphorus.
"The results are important because they demonstrate that bedrock geochemistry is on par with climate as a regulator of vegetation in the Sierra Nevada--and likely in other granite mountain ranges around the world," Riebe says.
Geology of 100 million years ago linked with biology of today
Subtle differences in the cooling history of granite 100 million years ago are likely fueling the biogeochemical interactions that produce today's forest patterns.
Understanding these links is at the heart of critical zone science, says Riebe.
The findings also show that variations in forest cover correspond with differences in erosion rates. They appear to affect the pace at which the Sierra Nevada is wearing down due to the action of water, wind and biological processes.
The results will help efforts to learn how mountain forests are responding to climate-linked changes in temperature and precipitation.
"Most studies point to a shift in vegetation toward higher, cooler elevations," Riebe says. "But changes in climate may be just part of the story.
"Any changes in tree distribution will occur only with the consent of the underlying bedrock."
In the Sierra Nevada, rock meets life meets rock. Or life meets rock meets life.
-- Cheryl Dybas, NSF (703) 292-7734 cdybas@nsf.gov
Investigators
Jan Hopmans
Roger Bales
Martha Conklin
Christina Tague
Michael Goulden
Related Institutions/Organizations
University of California - Merced
Sunday, March 30, 2014
RECENT U.S. MARINE CORPS PHOTOS
FROM: U.S. MARINE CORPS
Mar 21, 2014
Fort Hunter Liggett, CA - Marines with the tank platoon, Battalion Landing Team 2nd Battalion, 1st Marines, part of the 11th Marine Expeditionary Unit, fire the M256 smoothbore gun of four M1A1 Abrams tanks during a live-fire training exercise at Fort Hunter Liggett, Calif., March 20. Realistic Urban Training Marine Expeditionary Unit Exercise 14-1 allows the Marines and sailors of the 11th MEU the opportunity to employ techniques and tactics applicable to their future deployment. RUTMEUEX incorporates the majority of the ground combat element, aviation combat element, logistics combat element and command element of the MEU for the first time in the predeployment cycle. 140320-M-RR352-001.JPG Photo By: Sgt. Melissa Wenger.
Mar 29, 2014
Pohang, Gyeongsangbuk province, South Korea - Republic of Korea and U.S. Marines assault the beach March 29 during a rehearsal of the amphibious landing portion of Ssang Yong 2014 at Doksoek-ri in Pohang, Republic of Korea. More than 20 U.S. Navy and ROK ships are supporting the amphibious landing. This exercise demonstrates the unique ability of a Marine Expeditionary Brigade headquarters to composite multiple Marine Air Ground Task Forces arriving in theatre via amphibious shipping, along with a ROK Regimental Landing Team, into an amphibious combined MEB. (U.S. Marine Corps photo by Lance Cpl. Cedric R. Haller II/RELEASED)
Thursday, February 20, 2014
ADDITIONAL $100 MILLION WILL BE PROVIDED TO AID IN CALIFORNIA DROUGHT RELIEF
FROM: U.S. AGRICULTURE DEPARTMENT
Obama Administration Announces Additional Assistance to Californians Impacted by Drought
USDA will provide up to $100 million in livestock disaster assistance, additional $10 million for water conservation.
FRESNO, Calif., Feb. 14, 2014 – Agriculture Secretary Tom Vilsack joined President Barack Obama in Fresno, Calif., today to announce that the U.S. Department of Agriculture (USDA) will provide additional assistance to help farmers, ranchers and residents affected by severe drought in California. At President Obama's direction, USDA has made implementation of the 2014 Farm Bill livestock disaster assistance programs a top priority and plans to have the programs available for sign up by April 15, 2014.
"President Obama and I will continue to do everything within our power to support California farmers, ranchers and families living in drought-stricken areas. This assistance, coupled with other aid being made available across government, should provide some relief during this difficult time," said Vilsack. "Thanks to the newly-signed Farm Bill, we are now able to offer long-awaited livestock disaster assistance, which will provide needed stability for California livestock producers impacted by drought."
USDA has declared 54 counties in California as primary natural disaster areas due to drought. Additional USDA resources announced for California and other drought-stricken states today include:
$100 million in livestock disaster assistance for California producers. The 2014 Farm Bill contains permanent livestock disaster programs including the Livestock Forage Disaster Program, which will help producers in California and other areas recover from the drought. At President Obama's direction, USDA is making implementation of the disaster programs a top priority and plans to have the programs available for sign up in 60 days. Producers will be able to sign up for the livestock disaster programs for losses not only for 2014 but for losses they experienced in 2012 and 2013. While these livestock programs took over a year to get assistance out the door under the last Farm Bill– USDA has committed to cut that time by more than 80 percent and begin sign-up in April. California alone could potentially receive up to $100 million for 2014 losses and up to $50 million for previous years. $15 million in targeted conservation assistance for the most extreme and exceptional drought areas. This includes $5 million in additional assistance to California and $10 million for drought-impacted areas in Texas, Oklahoma, Nebraska, Colorado and New Mexico. The funding is available through the Environmental Quality Incentives Program (EQIP) administered by USDA. The assistance helps farmers and ranchers implement conservation practices that conserve scarce water resources, reduce wind erosion on drought-impacted fields and improve livestock access to water. $5 million in targeted Emergency Watershed Protection (EWP) Program assistance to the most drought impacted areas of California to protect vulnerable soils. EWP helps communities address watershed impairments due to drought and other natural occurrences. This funding will help drought-ravaged communities and private landowners address watershed impairments, such as stabilizing stream banks and replanting upland sites stripped of vegetation. $60 million has been made available to food banks in the State of California to help families that may be economically impacted by the drought. The U.S. Department of Agriculture (USDA) is providing help to food banks through The Emergency Food Assistance Program (TEFAP). 600 summer meal sites to be established in California's drought stricken areas. The U.S. Department of Agriculture (USDA) is working with the California Department of Education to target efforts to expand the number of Summer Food Service Program meal sites this summer. There are expected to be close to 600 summer meal sites throughout the drought stricken areas. $3 million in Emergency Water Assistance Grants for rural communities experiencing water shortages. U.S. Department of Agriculture (USDA) is making $3 million in grants available to help rural communities that are experiencing a significant decline in the quality or quantity of drinking water due to the drought obtain or maintain water sources of sufficient quantity and quality. These funds will be provided to eligible, qualified communities by application through USDA-Rural Development's Emergency Community Water Assistance Grants (ECWAG). California state health officials have already identified 17 small community water districts in 10 counties that are at risk of running out of water in 60-120 days. This number is expected to increase if current conditions persist.
Today's announcements build on other recent USDA efforts to help farmers, ranchers, and forest landowners mitigate the impacts of drought. Last week, USDA announced $20 million in Environmental Quality Incentives Program (EQIP) funds for agricultural conservation enhancements on key agricultural lands in California. These enhancements include irrigation efficiency, cover crops, orchard pruning, and protection of grazing lands. USDA also announced $15 million in Conservation Innovation Grants (CIG) in available funding to state and local governments, Tribes, universities, businesses and agricultural producers. These grants are dedicated to stimulating the development and adoption of innovative conservation approaches and technologies, including those that will help communities adapt to drought and climate change.
USDA also announced last week the establishment of regional Climate Hubs across the country that will help farmers, ranchers and communities get the information and data they need to make informed decisions around a changing climate. One center was established at the University of California, Davis.
As USDA begins implementing disaster assistance programs, producers should record all pertinent information of natural disaster consequences, including:
Documentation of the number and kind of livestock that have died, supplemented if possible by photographs or video records of ownership and losses; Dates of death supported by birth recordings or purchase receipts; Costs of transporting livestock to safer grounds or to move animals to new pastures; Feed purchases if supplies or grazing pastures are destroyed; Crop records, including seed and fertilizer purchases, planting and production records; Pictures of on-farm storage facilities that were destroyed by wind or flood waters; and Evidence of damaged farm land.
For more information about today's announcements, visit the USDA drought resource page at www.usda.gov/drought.
Obama Administration Announces Additional Assistance to Californians Impacted by Drought
USDA will provide up to $100 million in livestock disaster assistance, additional $10 million for water conservation.
FRESNO, Calif., Feb. 14, 2014 – Agriculture Secretary Tom Vilsack joined President Barack Obama in Fresno, Calif., today to announce that the U.S. Department of Agriculture (USDA) will provide additional assistance to help farmers, ranchers and residents affected by severe drought in California. At President Obama's direction, USDA has made implementation of the 2014 Farm Bill livestock disaster assistance programs a top priority and plans to have the programs available for sign up by April 15, 2014.
"President Obama and I will continue to do everything within our power to support California farmers, ranchers and families living in drought-stricken areas. This assistance, coupled with other aid being made available across government, should provide some relief during this difficult time," said Vilsack. "Thanks to the newly-signed Farm Bill, we are now able to offer long-awaited livestock disaster assistance, which will provide needed stability for California livestock producers impacted by drought."
USDA has declared 54 counties in California as primary natural disaster areas due to drought. Additional USDA resources announced for California and other drought-stricken states today include:
$100 million in livestock disaster assistance for California producers. The 2014 Farm Bill contains permanent livestock disaster programs including the Livestock Forage Disaster Program, which will help producers in California and other areas recover from the drought. At President Obama's direction, USDA is making implementation of the disaster programs a top priority and plans to have the programs available for sign up in 60 days. Producers will be able to sign up for the livestock disaster programs for losses not only for 2014 but for losses they experienced in 2012 and 2013. While these livestock programs took over a year to get assistance out the door under the last Farm Bill– USDA has committed to cut that time by more than 80 percent and begin sign-up in April. California alone could potentially receive up to $100 million for 2014 losses and up to $50 million for previous years. $15 million in targeted conservation assistance for the most extreme and exceptional drought areas. This includes $5 million in additional assistance to California and $10 million for drought-impacted areas in Texas, Oklahoma, Nebraska, Colorado and New Mexico. The funding is available through the Environmental Quality Incentives Program (EQIP) administered by USDA. The assistance helps farmers and ranchers implement conservation practices that conserve scarce water resources, reduce wind erosion on drought-impacted fields and improve livestock access to water. $5 million in targeted Emergency Watershed Protection (EWP) Program assistance to the most drought impacted areas of California to protect vulnerable soils. EWP helps communities address watershed impairments due to drought and other natural occurrences. This funding will help drought-ravaged communities and private landowners address watershed impairments, such as stabilizing stream banks and replanting upland sites stripped of vegetation. $60 million has been made available to food banks in the State of California to help families that may be economically impacted by the drought. The U.S. Department of Agriculture (USDA) is providing help to food banks through The Emergency Food Assistance Program (TEFAP). 600 summer meal sites to be established in California's drought stricken areas. The U.S. Department of Agriculture (USDA) is working with the California Department of Education to target efforts to expand the number of Summer Food Service Program meal sites this summer. There are expected to be close to 600 summer meal sites throughout the drought stricken areas. $3 million in Emergency Water Assistance Grants for rural communities experiencing water shortages. U.S. Department of Agriculture (USDA) is making $3 million in grants available to help rural communities that are experiencing a significant decline in the quality or quantity of drinking water due to the drought obtain or maintain water sources of sufficient quantity and quality. These funds will be provided to eligible, qualified communities by application through USDA-Rural Development's Emergency Community Water Assistance Grants (ECWAG). California state health officials have already identified 17 small community water districts in 10 counties that are at risk of running out of water in 60-120 days. This number is expected to increase if current conditions persist.
Today's announcements build on other recent USDA efforts to help farmers, ranchers, and forest landowners mitigate the impacts of drought. Last week, USDA announced $20 million in Environmental Quality Incentives Program (EQIP) funds for agricultural conservation enhancements on key agricultural lands in California. These enhancements include irrigation efficiency, cover crops, orchard pruning, and protection of grazing lands. USDA also announced $15 million in Conservation Innovation Grants (CIG) in available funding to state and local governments, Tribes, universities, businesses and agricultural producers. These grants are dedicated to stimulating the development and adoption of innovative conservation approaches and technologies, including those that will help communities adapt to drought and climate change.
USDA also announced last week the establishment of regional Climate Hubs across the country that will help farmers, ranchers and communities get the information and data they need to make informed decisions around a changing climate. One center was established at the University of California, Davis.
As USDA begins implementing disaster assistance programs, producers should record all pertinent information of natural disaster consequences, including:
Documentation of the number and kind of livestock that have died, supplemented if possible by photographs or video records of ownership and losses; Dates of death supported by birth recordings or purchase receipts; Costs of transporting livestock to safer grounds or to move animals to new pastures; Feed purchases if supplies or grazing pastures are destroyed; Crop records, including seed and fertilizer purchases, planting and production records; Pictures of on-farm storage facilities that were destroyed by wind or flood waters; and Evidence of damaged farm land.
For more information about today's announcements, visit the USDA drought resource page at www.usda.gov/drought.
Saturday, February 15, 2014
PRESS BRIEFING BEFORE PRESIDENTS TRIP TO CALIFORNIA
FROM: THE WHITE HOUSE
Press Briefing by Secretary Vilsack and Dr. Holdren on the President's Trip to CA
Via Conference Call
February 14, 2014
6:31 P.M. EST
MR. LEHRICH: Hey, everybody, thanks for joining us today. I hope those of you who are on the East Coast are staying warm and dry. As a reminder, this call is embargoed until 6:00 a.m. tomorrow morning, which means it’s not in tomorrow’s newspapers but can be online at 6:00 a.m. Eastern tomorrow morning. The call will be on the record with that embargo.
As you know, the President will be in the Fresno, California area tomorrow, where he’ll be talking about the severe droughts that are affecting much of California. To talk about some of the new announcements the President will have tomorrow and related issues we’ve got Secretary of Agriculture Tom Vilsack and Dr. John Holdren, who is the Director of the White House Office of Science and Technology Policy, and is going to talk to you about some of the science behind the weather we’re seeing here.
So, with that, I will turn it over to Secretary Vilsack.
SECRETARY VILSACK: Matt, thank you very much. And thanks to everybody on the call. And certainly thanks to John Holdren for doing this as well. Let me just preview for you the President’s focus on this California drought situation, which is really impacting California with its worst drought in over a hundred years, and it’s also impacting obviously other states as well.
Tomorrow the President will meet with producers and those who have been impacted and affected by the drought. He’ll have an opportunity to observe the impacts on the ground, and he’ll I think offer a message of hope and a message that the federal government will do all that it can to try to alleviate some of the stress connected with this drought.
The President, last week in Michigan, signed the 2014 Agricultural Act, which is the farm bill, and in the farm bill it restored disaster assistance for livestock producers which had been dormant since October of 2011. The President will direct the Department of Agriculture to accelerate in an historic effort to get the disaster programs now authorized under the farm bill to a point where farmers and producers in California and across the country will be able to apply for disaster assistance.
Normally, this process takes anywhere from six to eight months. The President is going to direct us to get it done within 60 days so that within 60 days, by April 15th or there abouts, farmers and producers will be able to make applications for livestock assistance and should receive checks shortly thereafter.
This will not only impact folks in California but it will also have the opportunity to provide help and assistance to producers in the Dakotas who suffered from historic snowstorms last fall, and for those who suffered through the 2012 droughts across the country and other isolated situations.
We anticipate and expect that with this announcement that once applications are filed and money distributed, it will mean somewhere in the neighborhood of $100 million of assistance to
California producers and probably likely nearly a billion dollars of assistance to producers across the country.
California producers and probably likely nearly a billion dollars of assistance to producers across the country.
The President is also going to announce additional conservation assistance at a time when water is scarce and when livestock producers are challenged, and with those who are faced with drought conditions on their land and the possibility of losing very precious soil. The President will be announcing an additional $15 million in targeted conservation assistance for those communities and areas that have been most affected by drought. Five million dollars of that will be directed to California. This is in addition to the $20 million that was announced last week. An additional $10 million will then be given and made available to producers in Texas, Oklahoma, Nebraska, Colorado and New Mexico. These resources will be above and beyond what normally these states have received and these producers would receive for assistance.
The President will also announce an additional $5 million in targeted emergency watershed protection -- I should back up and indicate that the $15 million that’s being announced in targeted conservation assistance is really designed to provide opportunities for producers to conserve more effectively their water resources, to utilize the money to impact and reduce soil erosion as a result of the drought, and potentially use the proceeds to improve livestock access to water.
Five million dollars in targeted emergency watershed protection assistance will also be announced to California, and this is designed to specifically stabilize stream banks, to replant upland strips that have been stripped of their stations as a result of the drought. This is also a soil conservation and water quality initiative.
In addition, we recognize -- the President definitely recognizes that droughts not only impact producers but also impacts the families of those who work in these orchards and with these growers and producers. A lot of folks will not be employed, or if they’re employed, they won’t work the number of hours that they would normally work. So we’re going to make sure that we provide assistance and help to those who might need the help of food banks to be able to provide food for their families. Sixty million dollars will be made available to food banks in the state of California to help families who have been economically impacted by the drought.
And as summer approaches, we realize that it may be a challenge for children to have access to meals, and so we will be working with the state of California and the Department of Agriculture to establish 600 additional summer meal sites to make sure that youngsters in this state who have been impacted in drought-stricken areas will have some assistance and some help during the summer months.
The President is also going to follow the lead of Governor Brown in California when he declared state agencies to focus on drought emergency relief last month. Governor Brown basically encouraged those in California to utilize water more effectively and efficiently. The President will direct tomorrow federal facilities which are located in California to immediately curb water use, including a moratorium on water usage for new and nonessential landscaping projects, to redouble our efforts to look at longer-term water use reduction operations and technologies at federal facilities.
And the President will direct the Department of Interior to continue to take executive action to work with water contractors and communities to speed up changes in -- obviously to maintain important environmental safeguards, but to make sure that key water projects that could be encouraged and moved along are done so. NOAA, EPA, the Bureau of Reclamation, Fish and Wildlife Services will be working daily with their state counterparts to try to make sure that everything that can be done to move water projects forward is being done in an effective and efficient way.
And we’ll obviously continue to invest in climate resilience. The President has been very focused on it, directing these agencies to be looking at this. The USDA announced that there is a climate change hub, one of which -- sub-hub will be located in Davis, California. That sub-hub will be doing research and assessing the vulnerabilities specifically of California to the change in climate. The President’s 2015 budget will include additional resources for a climate resilience fund.
So these steps are being taken in addition to the steps that have been taken and announced last week -- the $20 million for conservation and the $14 million for forestry assistance that was announced by the Department of Interior and USDA -- all in an effort to try to send a very specific message to producers in California that we are here to help to the extent that we can.
With that, I think I’d like to turn it over to John Holdren so he can explain to you the context of all of this.
John.
DR. HOLDREN: Well, thank you, Secretary Vilsack. First of all, we know that scientifically, no single episode of extreme weather, no storm, no flood, no drought can be said to have been caused by global climate change. But the global climate has now been so extensively impacted by the human-caused buildup of greenhouse gases that weather practically everywhere is being influenced by climate change.
We’ve always had droughts in the American West, of course, but now the severe ones are getting more frequent, they’re getting longer and they’re getting drier. And we understand a substantial part at least of the reason that that is happening in a warming world. First of all, in a warming world, a larger proportion of total rainfall occurs in extreme downpours, and that means more of the rainfall is lost to storm runoff, and less soaks into the ground.
Secondly, in a warming world, more of the precipitation that falls in the mountains occurs as rain rather than as snow. The rain runs off quickly in contrast to snowpack that melts gradually and thus maintains river flows through the spring and the summer. And third, higher temperatures, of course, mean greater loss of water to evaporation both from soils and from reservoirs.
There are other, more subtle respects in which global climate change may be affecting the prevalence of drought -- scientists are still arguing about those -- but the three I just described are more than enough to understand why we are seeing droughts in drought-prone regions becoming more frequent, more severe, and longer.
The situation in California as I think you all know is particularly severe. As Secretary Vilsack noted, it is the most severe drought in the more than hundred years of incremental records, but it’s also probably based on paleoclimate records one of the strongest droughts in the last 500 years. And by the way, the drought in the Colorado River Basin is probably one of the strongest droughts in that area in the last thousand years.
MR. LEHRICH: Thank you, Dr. Holdren and Secretary Vilsack. And we’re ready for some questions now.
Q Mr. Secretary, what does the administration think of the Feinstein-Boxer legislation that was introduced last Tuesday? Briefly, that would push the feds to be more flexible on how they control pumping and the water contracts for Central Valley water as well as the state water projects.
SECRETARY VILSACK: Well, the reality I think this is an opportunity for us today to focus on executive action. Obviously we’ll be -- the administration will be taking a look at what the senators are proposing -- I know they’re proposing additional help and assistance. And we’ll obviously work with the Senate and the House if they can reach a consensus on this. Obviously there’s a difference of opinion, based on what Senator Feinstein and what Senator Boxer have proposed, and what the House recently passed.
But rather than wait for congressional action, what we’re going to try to do is try to put the resources that are available that we have control over to work as quickly as possible. And that’s -- I don’t want to underemphasize the significance of the President’s directive on this livestock assistance because, historically, this has taken months and months and months to do, and the President has been very clear to me and to USDA that he wants it done so that people can begin applying within 60 days. That is going to send a very strong message about his need and his desire to get things moving and to help to the extent possible.
MR. LEHRICH: And I can just add to that, Roger, from our perspective that we are encouraged by the progress in the Senate on efforts to ease the pain caused by the drought and that we look forward to continuing to work with the bill sponsors and other members of Congress, like the Secretary said, as the process moves forward.
Q Mr. Secretary, could you elaborate on what you mean by operational flexibilities? When you want to speed changes to key water projects, what key water projects are you talking about?
SECRETARY VILSACK: These are projects that the Interior, EPA, Bureau of Reclamation and the Fish and Wildlife Services are working on. These are not projects that are specific to USDA. But the President has been very clear that he doesn’t want any delay. He wants folks to move as quickly as possible. And the announcement today in terms of the disaster assistance is a reflection of that.
I’m sure we can get you a list of the projects that are currently being worked on in California, but the bottom line here is that there’s no time for delay, there’s no time for inefficiency. The President wants things to move and he’s directing all of his agencies to do what they can to try to alleviate or to try to mitigate the impacts and effects of this drought.
Q Thanks.
Q I just want to make sure - we’re only talking about the -- we’re not talking about the livestock indemnity program, it’s just the forest disaster program, because you said it’s going to be a billion dollars country-wide and that it would help the folks who went through blizzards, but that would be more like the livestock indemnity program, wouldn’t it -- for animals who just died from freezing to death? I just want to make sure there’s nothing in here for fruit and vegetable growers.
SECRETARY VILSACK: First of all, let me be clear about this: There are four livestock disaster programs, there are four disaster programs that were reauthorized in the farm bill, and the President is instructing us on all four, to get them lined up so that applications can be received within 60 days and money can flow shortly thereafter. So this is both the forage and the livestock indemnity program, the tree assistance program -- and one that’s escaping me right now. So it’s all four; all four of them have to be institutionalized.
And as it relates to some of the specialty crops that are grown in California, it’s conceivable the tree assistance program might be of assistance to tree producers, to nut producers here in this state.
Secondly, the conservation programs that we’re announcing are designed to provide help and assistance to growers of a multitude of crops, including fruits and vegetables. To the extent that that land is now fallow and there is concern about soil erosion, to the extent that there are ways in which water resources, irrigation systems can be assisted or helped, these resources could potentially be made available as well for those growers.
So this is not limited to livestock. This is basically designed to try to provide help and assistance to producers of all stripes here in California, given the diversity of agriculture that’s been impacted.
Q Super. Thanks.
Q Hi. Thanks, Mr. Secretary. I was wondering if there was any work being done to ease water transfers between the state water program and the Central Valley Improvement program.
SECRETARY VILSACK: That's a question I’m not qualified to answer, but perhaps somebody from the White House can get some information to you on that. I don't know the answer to that question.
MR. LEHRICH: Sure. Shoot us an email and we will make sure we get you in touch with the right people, I would imagine at the Department of the Interior.
Q Thanks for the call, Mr. Secretary. The state expected $1.1 billion to be available --
SECRETARY VILSACK: I’m sorry. I couldn’t hear that question very well. There’s a problem with the phone. I’m not sure why.
Q Yes, is that better?
SECRETARY VILSACK: You can try it.
Q Yes, Mr. Secretary, so the $1.1 billion, is that the total in damages that you -- that has been calculated for this? Or that's just the amount of money that may be used? In other words, is it $1.1 billion in damages right now, just to be clear?
SECRETARY VILSACK: Yes, to be clear about this, we estimate that the livestock disaster assistance programs will provide for California producers up to $100 million. That's our estimate based on what we know and what we think we know about the damages that already have been suffered.
The billion-dollar number would include the $100 million and would include all of the other potential applications that could be forthcoming from folks who lost livestock or were impacted by the 2012 drought across the country, or who lost serious losses as a result of the snowstorms in the Dakotas last fall. So it’s a billion dollars total. Of that amount, $100 million is the estimate for what we think is likely to occur in California. Is that clear?
Q Okay. One follow-up? Would you support more reservoirs to hold the water for droughts like this in California?
SECRETARY VILSACK: Well, I think actually I‘m probably not the person to ask that question. What I am interested in making sure that we do is to provide producers with as much information as we possibly can about how to most effectively use the water resources, whatever they are, wherever they come from, however they're stored in an environmentally appropriate way and the like, and distribute it appropriately.
Our goal here is to make sure that we provide producers help and assistance because they have suffered immediately and to use the climate hub efforts to assess the long-term vulnerabilities, to provide and identify technologies for producers that they can use to adapt to a changing climate or to mitigate the impacts.
We have already invested several hundred million dollars in research in California. A lot of it has been focused on trying to figure out how to use water more effectively, how to reduce the salinity of the water that is available, how to ensure that new technologies -- new seed technologies are being developed, to utilize scarce water resources more effectively. That's the role and responsibility of the USDA, and that's what we’re -- that's what I’m focused on -- getting relief to folks.
DR. HOLDREN: Can I just add -- this is John Holdren. Let me just add one point there. The problem in California is not that we don't have enough reservoirs. The problem is that there’s not enough water in them. Just to give you some numbers: As of the end of last weekend, Fulsom Lake was at 22 percent of capacity; Lake Oroville at 37 percent; Pine Flat at 18 percent; San Luis Reservoir at 30 percent. You get the idea. We just haven’t had enough water flowing into those reservoirs. It wouldn’t help to build any more.
Q Thank you.
Q Yes, can you tell me if the administration took a position on the bill that passed the House last week that was supposed to address these water problems in California?
MR. LEHRICH: Yes, Gary. We did take a position. We’ve issued a statement of administration policy opposed to that bill. and we’ll be happy to send you the full text of that statement of administration policy.
Q Thank you.
Q Hi. Thank you for speaking with us. I have a question about the $100 million in livestock disaster assistance. Can dairy farmers use that money to shore up the crops they need to feed to their livestock? Or is it simply for livestock head guys?
SECRETARY VILSACK: There are two different programs. One addresses livestock that died as a result of whatever -- storms, drought. There’s also a forage program that basically provides help and assistance to producers who have been unable to obtain the forage that they traditionally could rely on to feed their livestock. This gives them cash assistance that allows them potentially to get forage and feed from other sources. It might be more expensive. There may be transportation expenses. So it’s both.
Q Okay, so we could see California dairy farmers using that money to buy forage from out of state?
SECRETARY VILSACK: Or a different feed that they wouldn’t normally or traditionally use, because they have their own access to their own fields, which right now are not producing enough. It’s always up to the producer. It’s up to the producer’s situation.
But the point of this is it provides help and assistance to producers who have been negatively impacted by this drought either in terms of the availability or substantial cost with alternatives or substitutes.
Q The President rarely discusses climate change when he talks about extreme weather. Is that going to change tomorrow? And if so, for all those parched Americans out there, how do you really connect things like cutting greenhouse gases or backing renewable energy with terrible drought?
But the point of this is it provides help and assistance to producers who have been negatively impacted by this drought either in terms of the availability or substantial cost with alternatives or substitutes.
Q The President rarely discusses climate change when he talks about extreme weather. Is that going to change tomorrow? And if so, for all those parched Americans out there, how do you really connect things like cutting greenhouse gases or backing renewable energy with terrible drought?
DR. HOLDREN: I mean, number one, you can certainly expect that the President will talk about the connection between the increasing frequency and intensity of droughts and climate change when he speaks tomorrow. He has actually repeatedly talked about the connection between climate change and extreme weather. He did so in his speech at June 25th at Georgetown University when he rolled out the Climate Action Plan.
And he will talk tomorrow about the phenomena that I mentioned earlier in this call, which is that we really understand a number of the reasons that global climate change is increasing the intensity and the frequency and the length of droughts in drought-prone regions. This is one of the better understood dimensions of the relationship between global climate change and extreme weather in particular regions.
Q I also have a question about moving along key water projects. I’m wondering if by that you or the administration is endorsing in any way the Bay Delta Conservation Project to build twin tunnels under the Delta to transfer water more effectively from north to south.
SECRETARY VILSACK: I don’t know the answer to that question. I can tell you that we have at the USDA been involved in the California Bay Delta area with additional investments over the last several years. But I’m not familiar with that specific project.
DR. HOLDREN: Nor am I.
SECRETARY VILSACK: I don’t know the answer to that question. I can tell you that we have at the USDA been involved in the California Bay Delta area with additional investments over the last several years. But I’m not familiar with that specific project.
DR. HOLDREN: Nor am I.
Q Can I have a follow-up question? I’m wondering for the drought assistance for growers and farmers, what form will that assistance take? Do you have an idea about that?
SECRETARY VILSACK: When you say “form” -- well, let me just see if I can respond to your question. The livestock disaster assistance we referred to earlier is in the form of cash. It’s in the form of money. The conversation assistance is also in the form of resources that will be utilized by producers. It helps to pay for conservation practices that they may install on their property or efficiencies that they may create in terms of water resources that they’re currently using.
Most of these programs are sort of matching funds providing help and assistance to the producer -- not fully paying for all of the steps, but helping to pay for a portion of them. The emergency water assistance grants are grants made to communities themselves. So that’s resources, money that’s provided to a community, it’s not provided through producers. It’s provided to a community that is faced with water shortages. And they may be taking steps to secure additional water resources. And this money is provided to assist them in helping to pay for whatever steps they’re taking.
The food bank resources is money from The Emergency Food Assistance Program, TEFAP, that gives food banks the capacity to go out and purchase whatever they believe is most appropriate, most necessary, to help families based on what demand at the food bank is. And the summer meal program, basically once the sites are set up, USDA provides a cost to -- the 600 summer meal sites, that is -- USDA provides reimbursement to the affiliates or the community that is sponsoring the meal sites. We basically pay for the meals and we provide a reimbursement level based on the number of meals that are supplied. So it’s a wide range of types of assistance that are provided.
MR. LEHRICH: Thank you, Secretary Vilsack and Dr. Holdren. And thank you all for taking the time to join us. One more reminder that this call was on the record, but is embargoed for 6:00 a.m. tomorrow morning Eastern time, which means it’s not in Friday’s papers, it’s in Saturday’s papers, but can be online at 6:00 a.m. Eastern time.
As always, if you didn’t get a fact sheet or have follow-ups, feel free to get in touch with us. Otherwise, I’m sure that Secretary Vilsack and the President look forward to seeing a bunch of you tomorrow in California.
MR. LEHRICH: Thank you, Secretary Vilsack and Dr. Holdren. And thank you all for taking the time to join us. One more reminder that this call was on the record, but is embargoed for 6:00 a.m. tomorrow morning Eastern time, which means it’s not in Friday’s papers, it’s in Saturday’s papers, but can be online at 6:00 a.m. Eastern time.
As always, if you didn’t get a fact sheet or have follow-ups, feel free to get in touch with us. Otherwise, I’m sure that Secretary Vilsack and the President look forward to seeing a bunch of you tomorrow in California.
Thanks again. Have a good night.
END
Wednesday, February 12, 2014
TRANSCRIPT OF REMARKS BY SEC COMMISSIONER GALLAGHER AT FORUM FOR CORPORATE DIRECTORS, ORANGE COUNTY, CALIFORNIA
FROM: SECURITIES AND EXCHANGE COMMISSION
Remarks to the Forum for Corporate Directors, Orange County, California
Commissioner Daniel M. Gallagher
Forum for Corporate Directors, Orange County, California
Jan. 24, 2014
Thank you, Chris [Cox], for your generous introduction and your invitation to address this truly distinguished gathering. I was honored that Chris asked me to speak here today. But it was an even bigger honor to work for Chris when he was Chairman, both as his Counsel and as Deputy Director of the Division of Trading and Markets. Chris’s incredible intellect and leadership tremendously benefited the agency during the worst of the financial crisis. I know I can speak for my colleagues who, like me, toiled in the trenches alongside Chris when I say that Chris was an island of calm in a sea of misguided government intervention.
* * *
This morning, I’d like to discuss two issues that, along with a holistic review of equity market structure, should be at the very top of the SEC’s agenda. The first is the revamping of our corporate disclosure system, and the other is a set of much needed reforms for the proxy advisory industry. Each of these issues demands our close attention despite the fact that – at the risk of sounding subversive – neither issue was the subject of a congressional mandate to the Commission. So while these issues are not among the fashionable diversions of the moment, addressing them would be consistent with what I like to call the Commission’s basic “blocking and tackling” mandates. We have spent far too little time on such core responsibilities over the last four years, and the neglect is evident.
* * *
Let’s begin with disclosure reform. The SEC is, first and foremost, a disclosure agency. Our bedrock premise is that public companies should be required to disclose publicly and in a timely fashion the information a person would need in order to make a rational and informed investment decision. That is the foundation of our securities law regime and the core principle by which we administer those laws. We can’t protect investors and foster capital formation in fair and efficient capital markets unless critically important information about public companies is routinely and reliably made available to the public.
At the same time, we need to take seriously the question of whether there can be too much disclosure. Justice Louis Brandeis famously called sunlight the best disinfectant.[1] No doubt – but, as my friend and former colleague Troy Paredes pointed out some years ago, investors can be “blinded by the light” of information overload.[2] From an investor’s standpoint, excessive illumination by too much disclosure can have the same effect as inundation and obfuscation — it becomes difficult or impossible to discern what really matters. More disclosure, in short, may not always yield better disclosure.
* * *
Investors often say that disclosure documents are lengthy, turgid, and internally repetitive. Today’s mandated disclosure documents are no longer efficient mechanisms for clearly conveying material information to investors, particularly ordinary, individual investors – myself included. A recent House of Representatives Appropriations Committee report put it like this:
“Voluminous, overly-complex, legalistic and immaterial corporate disclosures both increase investor confusion and discourage shareholder participation in important corporate governance matters.”[3]
The complexity of today’s disclosure requirements give the Commission cause for self-examination. SEC rules that require periodic corporate reporting, the detailed instructions that implement them, as well as pertinent staff interpretations and guidance, have been the principal forces shaping modern corporate disclosure. External forces, too, have played a role, most notably the risk of litigation – much of it absolutely frivolous and solely for the benefit of plaintiffs’ lawyers. When failing to make an anticipatory disclosure can prompt a shareholder lawsuit, it is rational for those who prepare corporate disclosure documents to prepare for the worst. The result is a perverse incentive to create prolix disclosure documents that are designed primarily to anticipate and defend against shareholder lawsuits rather than to provide intelligible and pertinent information to the average investor.
* * *
So what should we do? Should we jump in with both feet to begin a comprehensive review and overhaul of SEC-imposed disclosure requirements under the securities laws? Or should we take a more targeted approach, favoring smaller steps towards our ultimate reforming goals? Ordinarily, I would argue for a comprehensive approach to solving almost any problem in securities regulation, since actions in one area frequently have unforeseen and unintended effects in others.
Where disclosure reform is concerned, though, I would prefer to address discrete issues now rather than risk spending years preparing an offensive so massive that it may never be launched. I’ve been gratified to see that Chair White, too, has expressed an interest in disclosure reform,[4] so I hope and expect that, under her stewardship, the Commission can make real headway on this important issue.
Although the Dodd-Frank Act did not mandate disclosure reform, the JOBS Act required the SEC to study Regulation S-K, our fundamental regulation governing non-financial statement corporate disclosure, to determine where its requirements could be updated “to modernize and simplify the registration process and reduce the costs and other burdens associated with” it for emerging growth companies.[5] The resulting Commission staff report to Congress called for a reevaluation of the Commission’s disclosure requirements “in order to ensure that existing security holders, potential investors and the marketplace are provided with meaningful and … non-duplicative information upon which to base investment and voting decisions, that the information required to be disclosed by reporting companies continues to be material and that the disclosure requirements are flexible enough to adapt to dynamic circumstances.”[6]
The staff report further emphasized that “economic analysis must … inform any reevaluation of disclosure requirements.”[7] It’s hard to disagree with any of those conclusions.
* * *
So, notwithstanding the approximately sixty – yes, sixty - Dodd-Frank-mandated rules we have yet to complete, it’s my strong belief that it’s time to get started on disclosure reform. I’d like to share, based in large part on what I’ve heard from market participants, a few examples of some good, practical issues on which the Commission should focus.
One such issue is “layering disclosure” based on the recognition that some information is inherently material, such as a company’s financial statements, while some is not – for example, the pay-ratio calculation required by Dodd-Frank.[8]
Another issue is the need to streamline Form 8-K disclosure. Does each of the categories of information now required to be disclosed on Form 8-K really require almost immediate disclosure when a change occurs?
I also believe that we should make a targeted effort to reduce redundancy in filings by providing authoritative guidance explicitly telling issuers where they must disclose and where, by contrast, they need not disclose particular types of information. This would enable those looking for that information, including professional analysts and advisers, to find it or identify its absence easily.
Also in the name of reducing redundancy, it’s high time that we gave priority to streamlining proxy statements and registration statements. Permitting some of the required financial information to be included in an appendix to the proxy, for example all financial tables other than the summary compensation table, would aid both investors and issuers. As for registration statements, we could permit forward incorporation by reference in Form S-1 registration statements. That would permit a registrant automatically to incorporate reports filed pursuant to the Exchange Act subsequent to the effectiveness of the registration statement.
We also need to renew our focus on the potential of technology to improve corporate disclosure, acknowledging that our present requirements are almost certainly not those we would have devised for today’s technology-enabled world.[9] Here, I would be remiss if I did not cite data tagging as an investor-empowering analytic tool for ensuring that information is disclosed and presented in a manner that promotes ease of comparison and analysis. The SEC’s move to data tagging is an innovation for which Chairman Cox deserves the lion’s share of the credit, and it took vision and persistence, not to mention one heck of a terrific staff. But make no mistake: we have not come anywhere close to realizing the potential technology holds for improving our disclosure system.
One small way to further integrate technology into our disclosure regime would be to test a standardized, online disclosure system that requires one-time online disclosure of basic corporate information, mandating that it be updated as necessary with changes tracked, rather than rotely repeated each year in annual disclosure documents.
In addition, we could increase the reliability and authoritativeness of SEC disclosure guidance by issuing significant guidance only with the explicit endorsement of the Commission, rather than as staff guidance. Guidance issued under a Commission imprimatur would allow registrants to feel more confident in relying on it – especially, I’d note, from a litigation standpoint.
We must also recognize politically-motivated disclosure mandates as the ill-advised anomalies they are and, as an independent, bipartisan agency, express our opposition to the use of the securities disclosure regime to advance policy objectives unrelated to providing investors with information material to investment decisions. Our new Form SD, adopted to implement a pair of wholly social policy mandates,[10] serves as an example of such policy-driven forays.
These are just examples, and I’m sure that all of you could supplement this short list.
* * *
But we can’t stop there. No discussion of disclosure reform would be complete without addressing the issue of corporate governance – and no discussion of corporate governance would be complete without considering the role of the proxy advisory industry. I have spoken about this issue repeatedly, and I’ve been glad to see that the subject of proxy advisor reform has, over the past twelve months, been the subject of a Congressional hearing, academic articles, media reports, rulemaking petitions and even, I’m especially happy to say, a recent SEC roundtable.
Proxy advisory firms have gained an outsized role in corporate governance, both in the United States and abroad. In the United States, I am sorry to say this is largely a result of the unintended consequences of SEC action. In 2003, the SEC adopted new rules and rule amendments that required an investment adviser exercising voting authority over its clients’ proxies to adopt policies and procedures reasonably designed to ensure that it votes those proxies in the best interests of its clients.[11] By adopting this rule, the Commission sought to address, among other goals, an investment adviser’s potential conflicts of interest when voting a client’s securities on matters that affected its own interests. The Commission’s adopting release noted that “an adviser could demonstrate that the vote was not a product of a conflict of interest if it voted client securities, in accordance with a pre-determined policy, based upon the recommendations of an independent third party.”[12]
Proxy advisory firms realized the potential windfall offered by these new rules, and sought guidance from the SEC staff accordingly. The result was the issuance of two staff no-action letters that effectively blessed the practice of investment advisers rotely voting the recommendations of proxy advisors.[13] I have spoken frequently and at length about the perceived safe harbor that these letters created and the fiduciary and other concerns they raise, and I have called for prompt Commission action to address the harm they have done.[14]
In a 2010 concept release often called the “proxy plumbing release,” the Commission revisited the question of proxy advisory firms by highlighting several issues, including conflicts of interest and the lack of accuracy and transparency in formulating voting recommendations.[15] Attention to proxy advisory firms has, since then, increased both in the United States and abroad.[16]
Last month’s Commission roundtable on the issue brought together a distinguished and diverse group of participants to discuss the role of proxy advisory firms and the services they provide. Participants included representatives from proxy advisory firms, institutional shareholders, pension funds, investment advisors, legal practitioners and groups representing corporate secretaries and directors. Among the topics discussed were the influence of proxy advisers on institutional investors, the lack of competition in this market, the lack of transparency in the proxy advisory firms’ vote recommendation process and, significantly, the obvious conflicts of interest when proxy advisory firms provide advisory services to issuers while making voting recommendations to investors.[17]
The feedback we have received confirms that the roundtable was an important first step towards proxy advisory reform. While not everyone agrees on what the next steps should be, I see a common thread: there is a clear need for reform and sustained SEC attention. The spirited, in depth discussions that took place at the roundtable and a burgeoning proxy advisory services comment file are evidence enough.[18] In that vein, I want to take this opportunity to ask each of you to join in thinking about the influence of proxy advisory firms and I encourage you to provide your views to the Commission. Start by asking yourselves whether the current role of proxy advisory firms and rote reliance on them by institutional investors advances the best interests of shareholders. I think the answer is obvious, but the Commission can benefit from your views on which reforms would be most impactful.
* * *
In conclusion, I very much hope you will engage vigorously in the conversation regarding reforms to both our corporate disclosure system and the proxy advisory industry. We need to hear directly from those of you who are daily and directly affected by the status quo. As helpful as they have been, we don’t need any more concept releases or roundtables. In both of these priority areas, we have a good idea of the problems and what needs to be done to fix them – and even where to begin, which is often the hardest part of enacting reforms. There is no reason for further delay. We have an opportunity to make good, incremental progress in this area. We should not let a fixation on the perfect put at risk, or even delay getting started making such progress.
I appreciate the opportunity to share these thoughts with you this morning and look forward to your engagement – as well as your questions.
[1] Louis D. Brandeis, Other People’s Money at 92 (1914).
[2] Troy A. Paredes, “Blinded by the Light: Information Overload and Its Consequences for Securities Regulation,” 81 Wash. U. L. Q. 417 (2003). Available at: http://digitalcommons.law.wustl.edu/lawreview/vol81/iss2/7 .
[3] House Rep’t 113-172, Financial Services and General Government Appropriations Bill, 2014, at 71.
[4] M. J. White, “The Path Forward on Disclosure,” speech to the National Association of Corporate Directors — Leadership Conference 2013 (Oct. 15, 2013). Available at: http://www.sec.gov/News/Speech/Detail/Speech/1370539878806.
[5] JOBS Act, sec. 108(a). The SEC Staff’s report was issued on December 20, 2013. See, “Report on Review of Disclosure Requirements in Regulation S-K” (Dec. 2013) (“S-K Report”), available at http://www.sec.gov/news/studies/2013/reg-sk-disclosure-requirements-review.pdf.
[6] S-K Report at 93.
[7] Id. at 94.
[8] Section 953(b).
[9] Professor (and former SEC Commissioner) Joe Grundfest and former SEC Director of Corporation Finance Alan Beller made this point in their 2008 paper, “Reinventing the Securities Disclosure Regime: Online Questionnaires as Substitutes for Form-Based Filings,” Rock Center for Corporate Governance, Stanford University, Working Paper Series No. 2 (Aug. 4, 2008). Available at: http://ssrn.com/abstract=1235082.
[10] The Commission adopted Form SD (17 CFR 249.448), in conjunction with adopting its rule to implement Section 1502 of the Dodd-Frank Act (“Conflict Minerals”) (Rel. No. 34-67716 (Aug. 22, 2012)). That same day, the Commission also adopted a rule to implement Section 1504 (“Disclosure of Payments by Resource Extraction Issuers”) of that Dodd-Frank Act, to which Form SD would also apply (Rel. No. 34-67717 (Aug. 22, 2012)). Both rules were subsequently challenged in court. The district court upheld the conflict minerals rule; its decision was appealed and argued in the D.C. Circuit on January 7, 2014. The resource extraction rule was vacated and remanded to the Commission.
[11] Final Rule: Proxy Voting by Investment Advisers, 68 FR 6585, available at http://www.sec.gov/rules/final/ia-2106.htm.
[12] Id. Emphasis added.
[13] See “Investment Advisers Act of 1940—Rule 206(4)-6: Institutional Shareholder Services, Inc.” SEC letter to Mari Anne Pisarri, September 15, 2004, http://www.sec.gov/divisions/investment/noaction/iss091504.htm and “Investment Advisers Act of 1940—Rule 206(4)-6: Egan-Jones Proxy Services,” SEC letter to Kent S. Hughes, May 27, 2004, http://www.sec.gov/divisions/investment/noaction/egan052704.htm.
[14] See Commissioner Daniel M. Gallagher, “Remarks before the Corporate Directors Forum,” January 29, 2013 available at http://www.sec.gov/News/Speech/Detail/Speech/1365171492142#.UpENB3cgqSo; See Commissioner Daniel M. Gallagher, “Remarks at 12th European Corporate Governance & Company Law Conference,” May 17, 2013 available at http://www.sec.gov/News/Speech/Detail/Speech/1365171515712#.UpEMtXcgqSo; See Commissioner Daniel M. Gallagher, “Remarks at Society of Corporate Secretaries & Governance Professionals,” July 11, 2013 available at http://www.sec.gov/News/Speech/Detail/Speech/1370539700301#.UpEMPHcgqSo; See Commissioner Daniel M. Gallagher, “Remarks at Georgetown University’s Center for Financial Markets and Policy Event,” October 30, 2013 available at http://www.sec.gov/News/Speech/Detail/Speech/1370540197480#.UpEL9HcgqSo.
[15] See Concept Release on the U.S. Proxy System, July 14, 2010, available at http://www.sec.gov/rules/concept/2010/34-62495.pdf.
[16] See Commissioner Daniel M. Gallagher, “Remarks at Transatlantic Corporate Governance Dialogue Conference: The Realities of Stewardship for Institutional Owners, Activist Investors and Proxy Advisors,” December 3, 2013 available at http://www.sec.gov/News/Speech/Detail/Speech/1370540436067#.UtVfr3f3Jn8.
[17] See SEC’s Proxy Advisory Services Roundtable Webpage available at
http://www.sec.gov/spotlight/proxy-advisory-services.shtml.
[18] See Comments on Proxy Advisory Firm Roundtable available at http://www.sec.gov/comments/4-670/4-670.shtml.
Remarks to the Forum for Corporate Directors, Orange County, California
Commissioner Daniel M. Gallagher
Forum for Corporate Directors, Orange County, California
Jan. 24, 2014
Thank you, Chris [Cox], for your generous introduction and your invitation to address this truly distinguished gathering. I was honored that Chris asked me to speak here today. But it was an even bigger honor to work for Chris when he was Chairman, both as his Counsel and as Deputy Director of the Division of Trading and Markets. Chris’s incredible intellect and leadership tremendously benefited the agency during the worst of the financial crisis. I know I can speak for my colleagues who, like me, toiled in the trenches alongside Chris when I say that Chris was an island of calm in a sea of misguided government intervention.
* * *
This morning, I’d like to discuss two issues that, along with a holistic review of equity market structure, should be at the very top of the SEC’s agenda. The first is the revamping of our corporate disclosure system, and the other is a set of much needed reforms for the proxy advisory industry. Each of these issues demands our close attention despite the fact that – at the risk of sounding subversive – neither issue was the subject of a congressional mandate to the Commission. So while these issues are not among the fashionable diversions of the moment, addressing them would be consistent with what I like to call the Commission’s basic “blocking and tackling” mandates. We have spent far too little time on such core responsibilities over the last four years, and the neglect is evident.
* * *
Let’s begin with disclosure reform. The SEC is, first and foremost, a disclosure agency. Our bedrock premise is that public companies should be required to disclose publicly and in a timely fashion the information a person would need in order to make a rational and informed investment decision. That is the foundation of our securities law regime and the core principle by which we administer those laws. We can’t protect investors and foster capital formation in fair and efficient capital markets unless critically important information about public companies is routinely and reliably made available to the public.
At the same time, we need to take seriously the question of whether there can be too much disclosure. Justice Louis Brandeis famously called sunlight the best disinfectant.[1] No doubt – but, as my friend and former colleague Troy Paredes pointed out some years ago, investors can be “blinded by the light” of information overload.[2] From an investor’s standpoint, excessive illumination by too much disclosure can have the same effect as inundation and obfuscation — it becomes difficult or impossible to discern what really matters. More disclosure, in short, may not always yield better disclosure.
* * *
Investors often say that disclosure documents are lengthy, turgid, and internally repetitive. Today’s mandated disclosure documents are no longer efficient mechanisms for clearly conveying material information to investors, particularly ordinary, individual investors – myself included. A recent House of Representatives Appropriations Committee report put it like this:
“Voluminous, overly-complex, legalistic and immaterial corporate disclosures both increase investor confusion and discourage shareholder participation in important corporate governance matters.”[3]
The complexity of today’s disclosure requirements give the Commission cause for self-examination. SEC rules that require periodic corporate reporting, the detailed instructions that implement them, as well as pertinent staff interpretations and guidance, have been the principal forces shaping modern corporate disclosure. External forces, too, have played a role, most notably the risk of litigation – much of it absolutely frivolous and solely for the benefit of plaintiffs’ lawyers. When failing to make an anticipatory disclosure can prompt a shareholder lawsuit, it is rational for those who prepare corporate disclosure documents to prepare for the worst. The result is a perverse incentive to create prolix disclosure documents that are designed primarily to anticipate and defend against shareholder lawsuits rather than to provide intelligible and pertinent information to the average investor.
* * *
So what should we do? Should we jump in with both feet to begin a comprehensive review and overhaul of SEC-imposed disclosure requirements under the securities laws? Or should we take a more targeted approach, favoring smaller steps towards our ultimate reforming goals? Ordinarily, I would argue for a comprehensive approach to solving almost any problem in securities regulation, since actions in one area frequently have unforeseen and unintended effects in others.
Where disclosure reform is concerned, though, I would prefer to address discrete issues now rather than risk spending years preparing an offensive so massive that it may never be launched. I’ve been gratified to see that Chair White, too, has expressed an interest in disclosure reform,[4] so I hope and expect that, under her stewardship, the Commission can make real headway on this important issue.
Although the Dodd-Frank Act did not mandate disclosure reform, the JOBS Act required the SEC to study Regulation S-K, our fundamental regulation governing non-financial statement corporate disclosure, to determine where its requirements could be updated “to modernize and simplify the registration process and reduce the costs and other burdens associated with” it for emerging growth companies.[5] The resulting Commission staff report to Congress called for a reevaluation of the Commission’s disclosure requirements “in order to ensure that existing security holders, potential investors and the marketplace are provided with meaningful and … non-duplicative information upon which to base investment and voting decisions, that the information required to be disclosed by reporting companies continues to be material and that the disclosure requirements are flexible enough to adapt to dynamic circumstances.”[6]
The staff report further emphasized that “economic analysis must … inform any reevaluation of disclosure requirements.”[7] It’s hard to disagree with any of those conclusions.
* * *
So, notwithstanding the approximately sixty – yes, sixty - Dodd-Frank-mandated rules we have yet to complete, it’s my strong belief that it’s time to get started on disclosure reform. I’d like to share, based in large part on what I’ve heard from market participants, a few examples of some good, practical issues on which the Commission should focus.
One such issue is “layering disclosure” based on the recognition that some information is inherently material, such as a company’s financial statements, while some is not – for example, the pay-ratio calculation required by Dodd-Frank.[8]
Another issue is the need to streamline Form 8-K disclosure. Does each of the categories of information now required to be disclosed on Form 8-K really require almost immediate disclosure when a change occurs?
I also believe that we should make a targeted effort to reduce redundancy in filings by providing authoritative guidance explicitly telling issuers where they must disclose and where, by contrast, they need not disclose particular types of information. This would enable those looking for that information, including professional analysts and advisers, to find it or identify its absence easily.
Also in the name of reducing redundancy, it’s high time that we gave priority to streamlining proxy statements and registration statements. Permitting some of the required financial information to be included in an appendix to the proxy, for example all financial tables other than the summary compensation table, would aid both investors and issuers. As for registration statements, we could permit forward incorporation by reference in Form S-1 registration statements. That would permit a registrant automatically to incorporate reports filed pursuant to the Exchange Act subsequent to the effectiveness of the registration statement.
We also need to renew our focus on the potential of technology to improve corporate disclosure, acknowledging that our present requirements are almost certainly not those we would have devised for today’s technology-enabled world.[9] Here, I would be remiss if I did not cite data tagging as an investor-empowering analytic tool for ensuring that information is disclosed and presented in a manner that promotes ease of comparison and analysis. The SEC’s move to data tagging is an innovation for which Chairman Cox deserves the lion’s share of the credit, and it took vision and persistence, not to mention one heck of a terrific staff. But make no mistake: we have not come anywhere close to realizing the potential technology holds for improving our disclosure system.
One small way to further integrate technology into our disclosure regime would be to test a standardized, online disclosure system that requires one-time online disclosure of basic corporate information, mandating that it be updated as necessary with changes tracked, rather than rotely repeated each year in annual disclosure documents.
In addition, we could increase the reliability and authoritativeness of SEC disclosure guidance by issuing significant guidance only with the explicit endorsement of the Commission, rather than as staff guidance. Guidance issued under a Commission imprimatur would allow registrants to feel more confident in relying on it – especially, I’d note, from a litigation standpoint.
We must also recognize politically-motivated disclosure mandates as the ill-advised anomalies they are and, as an independent, bipartisan agency, express our opposition to the use of the securities disclosure regime to advance policy objectives unrelated to providing investors with information material to investment decisions. Our new Form SD, adopted to implement a pair of wholly social policy mandates,[10] serves as an example of such policy-driven forays.
These are just examples, and I’m sure that all of you could supplement this short list.
* * *
But we can’t stop there. No discussion of disclosure reform would be complete without addressing the issue of corporate governance – and no discussion of corporate governance would be complete without considering the role of the proxy advisory industry. I have spoken about this issue repeatedly, and I’ve been glad to see that the subject of proxy advisor reform has, over the past twelve months, been the subject of a Congressional hearing, academic articles, media reports, rulemaking petitions and even, I’m especially happy to say, a recent SEC roundtable.
Proxy advisory firms have gained an outsized role in corporate governance, both in the United States and abroad. In the United States, I am sorry to say this is largely a result of the unintended consequences of SEC action. In 2003, the SEC adopted new rules and rule amendments that required an investment adviser exercising voting authority over its clients’ proxies to adopt policies and procedures reasonably designed to ensure that it votes those proxies in the best interests of its clients.[11] By adopting this rule, the Commission sought to address, among other goals, an investment adviser’s potential conflicts of interest when voting a client’s securities on matters that affected its own interests. The Commission’s adopting release noted that “an adviser could demonstrate that the vote was not a product of a conflict of interest if it voted client securities, in accordance with a pre-determined policy, based upon the recommendations of an independent third party.”[12]
Proxy advisory firms realized the potential windfall offered by these new rules, and sought guidance from the SEC staff accordingly. The result was the issuance of two staff no-action letters that effectively blessed the practice of investment advisers rotely voting the recommendations of proxy advisors.[13] I have spoken frequently and at length about the perceived safe harbor that these letters created and the fiduciary and other concerns they raise, and I have called for prompt Commission action to address the harm they have done.[14]
In a 2010 concept release often called the “proxy plumbing release,” the Commission revisited the question of proxy advisory firms by highlighting several issues, including conflicts of interest and the lack of accuracy and transparency in formulating voting recommendations.[15] Attention to proxy advisory firms has, since then, increased both in the United States and abroad.[16]
Last month’s Commission roundtable on the issue brought together a distinguished and diverse group of participants to discuss the role of proxy advisory firms and the services they provide. Participants included representatives from proxy advisory firms, institutional shareholders, pension funds, investment advisors, legal practitioners and groups representing corporate secretaries and directors. Among the topics discussed were the influence of proxy advisers on institutional investors, the lack of competition in this market, the lack of transparency in the proxy advisory firms’ vote recommendation process and, significantly, the obvious conflicts of interest when proxy advisory firms provide advisory services to issuers while making voting recommendations to investors.[17]
The feedback we have received confirms that the roundtable was an important first step towards proxy advisory reform. While not everyone agrees on what the next steps should be, I see a common thread: there is a clear need for reform and sustained SEC attention. The spirited, in depth discussions that took place at the roundtable and a burgeoning proxy advisory services comment file are evidence enough.[18] In that vein, I want to take this opportunity to ask each of you to join in thinking about the influence of proxy advisory firms and I encourage you to provide your views to the Commission. Start by asking yourselves whether the current role of proxy advisory firms and rote reliance on them by institutional investors advances the best interests of shareholders. I think the answer is obvious, but the Commission can benefit from your views on which reforms would be most impactful.
* * *
In conclusion, I very much hope you will engage vigorously in the conversation regarding reforms to both our corporate disclosure system and the proxy advisory industry. We need to hear directly from those of you who are daily and directly affected by the status quo. As helpful as they have been, we don’t need any more concept releases or roundtables. In both of these priority areas, we have a good idea of the problems and what needs to be done to fix them – and even where to begin, which is often the hardest part of enacting reforms. There is no reason for further delay. We have an opportunity to make good, incremental progress in this area. We should not let a fixation on the perfect put at risk, or even delay getting started making such progress.
I appreciate the opportunity to share these thoughts with you this morning and look forward to your engagement – as well as your questions.
[1] Louis D. Brandeis, Other People’s Money at 92 (1914).
[2] Troy A. Paredes, “Blinded by the Light: Information Overload and Its Consequences for Securities Regulation,” 81 Wash. U. L. Q. 417 (2003). Available at: http://digitalcommons.law.wustl.edu/lawreview/vol81/iss2/7 .
[3] House Rep’t 113-172, Financial Services and General Government Appropriations Bill, 2014, at 71.
[4] M. J. White, “The Path Forward on Disclosure,” speech to the National Association of Corporate Directors — Leadership Conference 2013 (Oct. 15, 2013). Available at: http://www.sec.gov/News/Speech/Detail/Speech/1370539878806.
[5] JOBS Act, sec. 108(a). The SEC Staff’s report was issued on December 20, 2013. See, “Report on Review of Disclosure Requirements in Regulation S-K” (Dec. 2013) (“S-K Report”), available at http://www.sec.gov/news/studies/2013/reg-sk-disclosure-requirements-review.pdf.
[6] S-K Report at 93.
[7] Id. at 94.
[8] Section 953(b).
[9] Professor (and former SEC Commissioner) Joe Grundfest and former SEC Director of Corporation Finance Alan Beller made this point in their 2008 paper, “Reinventing the Securities Disclosure Regime: Online Questionnaires as Substitutes for Form-Based Filings,” Rock Center for Corporate Governance, Stanford University, Working Paper Series No. 2 (Aug. 4, 2008). Available at: http://ssrn.com/abstract=1235082.
[10] The Commission adopted Form SD (17 CFR 249.448), in conjunction with adopting its rule to implement Section 1502 of the Dodd-Frank Act (“Conflict Minerals”) (Rel. No. 34-67716 (Aug. 22, 2012)). That same day, the Commission also adopted a rule to implement Section 1504 (“Disclosure of Payments by Resource Extraction Issuers”) of that Dodd-Frank Act, to which Form SD would also apply (Rel. No. 34-67717 (Aug. 22, 2012)). Both rules were subsequently challenged in court. The district court upheld the conflict minerals rule; its decision was appealed and argued in the D.C. Circuit on January 7, 2014. The resource extraction rule was vacated and remanded to the Commission.
[11] Final Rule: Proxy Voting by Investment Advisers, 68 FR 6585, available at http://www.sec.gov/rules/final/ia-2106.htm.
[12] Id. Emphasis added.
[13] See “Investment Advisers Act of 1940—Rule 206(4)-6: Institutional Shareholder Services, Inc.” SEC letter to Mari Anne Pisarri, September 15, 2004, http://www.sec.gov/divisions/investment/noaction/iss091504.htm and “Investment Advisers Act of 1940—Rule 206(4)-6: Egan-Jones Proxy Services,” SEC letter to Kent S. Hughes, May 27, 2004, http://www.sec.gov/divisions/investment/noaction/egan052704.htm.
[14] See Commissioner Daniel M. Gallagher, “Remarks before the Corporate Directors Forum,” January 29, 2013 available at http://www.sec.gov/News/Speech/Detail/Speech/1365171492142#.UpENB3cgqSo; See Commissioner Daniel M. Gallagher, “Remarks at 12th European Corporate Governance & Company Law Conference,” May 17, 2013 available at http://www.sec.gov/News/Speech/Detail/Speech/1365171515712#.UpEMtXcgqSo; See Commissioner Daniel M. Gallagher, “Remarks at Society of Corporate Secretaries & Governance Professionals,” July 11, 2013 available at http://www.sec.gov/News/Speech/Detail/Speech/1370539700301#.UpEMPHcgqSo; See Commissioner Daniel M. Gallagher, “Remarks at Georgetown University’s Center for Financial Markets and Policy Event,” October 30, 2013 available at http://www.sec.gov/News/Speech/Detail/Speech/1370540197480#.UpEL9HcgqSo.
[15] See Concept Release on the U.S. Proxy System, July 14, 2010, available at http://www.sec.gov/rules/concept/2010/34-62495.pdf.
[16] See Commissioner Daniel M. Gallagher, “Remarks at Transatlantic Corporate Governance Dialogue Conference: The Realities of Stewardship for Institutional Owners, Activist Investors and Proxy Advisors,” December 3, 2013 available at http://www.sec.gov/News/Speech/Detail/Speech/1370540436067#.UtVfr3f3Jn8.
[17] See SEC’s Proxy Advisory Services Roundtable Webpage available at
http://www.sec.gov/spotlight/proxy-advisory-services.shtml.
[18] See Comments on Proxy Advisory Firm Roundtable available at http://www.sec.gov/comments/4-670/4-670.shtml.
Tuesday, August 27, 2013
THE RIM FIRES
The Rim Fires. Credit: NASA |
The Rim Fire in northeastern California continues to burn on the Stanislaus National Forest, Yosemite National Park, and the Bureau of Land Management and State responsibility land. This fire began on August 17, 2013 and its cause is still currently under investigation. Over 224 square miles have been affected as of Sunday, August 25. It is still only 7 percent contained. Inaccessible terrain, strong winds, and dry conditions all present at this fire make for very difficult fire fighting. The ability for this fire to create havoc spreads far and wide, beyond even the area it is consuming. According to the San Jose Mercury News, "Although the Rim Fire is more than 100 miles from the Bay Area, it still could threaten San Francisco's electric supply if it damages the power system originating in O'Shaughnessy Dam at Hetch Hetchy reservoir."
The latest on the Rim Fire from inciweb.org: "The Rim incident is expected to continue to exhibit very large fire growth due to extremely dry fuels and inaccessible terrain. Rapid fire growth and extreme fire behavior and hampering suppression efforts. Aerial resources are being effective with MAFFs and VLAT DC-10 air tankers prepping locations in advance of the fires spread toward the Highway 108 corridor and along the eastern perimeter of the fire. The forecasted high winds and high potential for long range spotting however remains a significant concern for fire to advance beyond the retardant lines and allow for fire spread into the communities of Tuolumne City, Twain Harte and Long Barn to the west of the fire and east into the Hetch Hetchy watershed."
The fire itself is in control of its own weather. NBC4 in Southern California reports: "Calfornia fire officials say the fire is so large and is burning with such a force, it has created its own weather pattern, making it difficult to predict which direction it will move. 'As the smoke column builds up it breaks down and collapses inside of itself, sending downdrafts and gusts that can go in any direction,'' CalFire spokesman Daniel Berlant told the Associated Press. "There's a lot of potential for this one to continue to grow.'"
Dense smoke from the fire has been a serious health threat as well. Health officials in Reno, Nevada report the air quality index in their city is in the "unhealthy" range due to the smoke fallout from the Rim Fire. The smoke has also created visibility problems for air ambulance services in the Reno area as well. The smoke has prevented them from responding to some emergency calls across the region in the last couple of days.
Wednesday, August 21, 2013
SUMMER WILDFIRE BATTLES RAGE ON THE HOMEFRONT
Photo: A C-130J from the 146th Airlift Wing in Port Hueneme, Calif., drops fire retardant over the trees in the mountains above Palm Springs, Calif., July 19, 2013. Air National Guard photo by Senior Airman Nicholas Carzis
FROM: U.S. DEPARTMENT OF DEFENSE
California National Guard Battles Several Wildfires
California National Guard
SACRAMENTO, Calif., Aug. 20, 2013 - Nearly a dozen aircraft and crews from the California Air and Army National Guard are battling wildfires across Northern California.
Currently, nine California Army National Guard helicopters and two California Air National Guard air tankers are working in coordination with CAL FIRE and U.S. Forest Service firefighting crews to battle the American, Swedes and Rim fires.
The aircraft have dropped more than 250,000 gallons of water or fire retardant since the first crews were activated Aug. 13.
National Guard units also are involved in fighting fires in Idaho, Nevada, Oregon and Utah.
"We train for this fight every year," said Army Maj. Gen. David S. Baldwin, the adjutant general of the California National Guard. "Our ongoing coordination with CAL FIRE and CAL OES ensures that the right people, with the right training, are in the right place when the lives and property of our fellow Californians are on the line."
Three UH-60 Black Hawk helicopters are battling the American Fire, two Black Hawks are assigned to fight the Rim Fire, and three helicopters -- two Black Hawks and one CH-47 Chinook – are engaged in battling the Swedes Fire. Meanwhile, one Black Hawk helicopter is staged in Redding, Calif., on call for medevac support.
Each Black Hawk is equipped with a 660-gallon water bucket, while the Chinook's bucket has a 2,000-gallon capacity. The medevac helicopter is equipped with a specialized crew and a hoist for extracting injured personnel from rugged terrain.
The helicopters have completed more than 229 drops, releasing about 111,500 gallons of water since their Aug. 17 activation.
The two C-130J air tankers are fighting the Rim fire. Both aircraft are equipped with the Modular Airborne Firefighting Systems II (MAFFS) and are capable of discharging 3,000 gallons of water or fire retardant along the leading edge of a fire in less than five seconds, saturating an area one-quarter of a mile long by 100 feet wide.
Since their activation Aug. 13, the air tankers have completed more than 53 drops, releasing about 142,000 gallons of retardant.
FROM: U.S. DEPARTMENT OF DEFENSE
California National Guard Battles Several Wildfires
California National Guard
SACRAMENTO, Calif., Aug. 20, 2013 - Nearly a dozen aircraft and crews from the California Air and Army National Guard are battling wildfires across Northern California.
Currently, nine California Army National Guard helicopters and two California Air National Guard air tankers are working in coordination with CAL FIRE and U.S. Forest Service firefighting crews to battle the American, Swedes and Rim fires.
The aircraft have dropped more than 250,000 gallons of water or fire retardant since the first crews were activated Aug. 13.
National Guard units also are involved in fighting fires in Idaho, Nevada, Oregon and Utah.
"We train for this fight every year," said Army Maj. Gen. David S. Baldwin, the adjutant general of the California National Guard. "Our ongoing coordination with CAL FIRE and CAL OES ensures that the right people, with the right training, are in the right place when the lives and property of our fellow Californians are on the line."
Three UH-60 Black Hawk helicopters are battling the American Fire, two Black Hawks are assigned to fight the Rim Fire, and three helicopters -- two Black Hawks and one CH-47 Chinook – are engaged in battling the Swedes Fire. Meanwhile, one Black Hawk helicopter is staged in Redding, Calif., on call for medevac support.
Each Black Hawk is equipped with a 660-gallon water bucket, while the Chinook's bucket has a 2,000-gallon capacity. The medevac helicopter is equipped with a specialized crew and a hoist for extracting injured personnel from rugged terrain.
The helicopters have completed more than 229 drops, releasing about 111,500 gallons of water since their Aug. 17 activation.
The two C-130J air tankers are fighting the Rim fire. Both aircraft are equipped with the Modular Airborne Firefighting Systems II (MAFFS) and are capable of discharging 3,000 gallons of water or fire retardant along the leading edge of a fire in less than five seconds, saturating an area one-quarter of a mile long by 100 feet wide.
Since their activation Aug. 13, the air tankers have completed more than 53 drops, releasing about 142,000 gallons of retardant.
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