With city residential water use down again in December, a month when lawns aren't watered as often anyway, Bakersfield's water board on Wednesday decided against asking residents to water their landscaping only on "odd or even" days. Instead, the city will work with the California Water Service Co. and other urban water agencies to tell residents about incentives on water-saving appliances and energy-saving home upgrades.

Despite an unusual amount of rain in December, Bakersfield’s water reserves are extremely low. The Isabella reservoir which helps supply the city would normally have about 260,000 acre-feet of water in it this time of year. Instead, it has only about 44,900 acre-feet. Bakersfield residential water users cut their usage from 179 gallons per capita per day in November to 138 in December.

December can be the hardest month to cut usage as most people water their landscaping less during winter months, so there's less to cut. Water Resources Manager Art Chianello recommended Bakersfield do more with advertisements, bill inserts and notices on its website informing residents of rebates on water-saving toilets and dishwashers, sprinkler controllers and nozzles, and free water conservation kits. These include two high-efficiency showerheads, a kitchen faucet aerator and a hose nozzle.

Assistant to the City Manager Steve Teglia said some water-saving home upgrades, including artificial turf, more efficient water heaters and drip irrigation can be financed with the HERO program. HERO, which stands for Home Energy Renovation Opportunity, is one of several Property Assessed Clean Energy programs statewide that lets homeowners pay for energy-efficient renovations on their property taxes. Chianello said the water resources department will begin making residents aware of HERO.

Last week in the House and Senate

The House passed a wide range of legislation this week before adjourning for party retreats, including a measure to fund the Department of Homeland Security for the rest of fiscal year 2015, a series of “fixes” to the Dodd-Frank Act and a bill to make reforms to the federal government’s regulatory process.

The Senate debated amendments to legislation to approve the Keystone XL Pipeline. So far, more than 60 amendments have been filed, including proposals by Sen. Shaheen and Sen. Portman on energy efficiency and Sen. Cruz on approving natural gas exports to World Trade Organization members and to repeal the crude oil export ban.

This week, the House will vote on legislation speeding up the natural gas pipeline permitting process and on banning late-term abortions. The Senate will continue its debate on a range of energy policy issues, culminating with a vote on the Keystone project. Both chambers will gather together on Tuesday night for President Obama’s annual State of the Union address.

Top White House environmental advisor resigns

Council on Environmental Quality acting head Michael Boots will leave the administration in March, the White House announced this week.

A CEQ spokeswoman said Boots is “considering a number of energy- and environment-related options outside the federal government.” She declined to comment on a replacement.

Boots’ departure makes him the second White House adviser within a week to announce his exit. John Podesta will leave next month.

Wall Street Connections

Antonio Weiss, the President’s nominee for an important Under Secretary position at the Treasury Department, bowed out of the nomination process due in large part to objections raised by several Democratic Senators to the candidate’s background as a Wall Street investment banker. Although Weiss still will be joining the department as an at-large advisor, he will not be able to perform many of the official duties of the Senate-confirmed position.

The move represents a symbolic victory for the Democratic Party’s left flank, which led the fight against Mr. Weiss. Separately, the President nominated the former head of a community bank to be a member of the Federal Reserve Board.

A provision included in the aforementioned TRIA bill, which was signed into law this week, requires the Federal Reserve Board to have at least one person with community bank experience. These moves highlight the movement on Capitol Hill, particularly among Democrats, away from Wall Street.

West Virginians remember chemical spill and its effects still lingers

West Virginia residents marked the 1 year anniversary of the day 300,000 state residents were told they couldn't use their water for anything except flushing toilets after at least 10,000 gallons of MCHM, a coal processing liquid, leaked from a faulty tank and into the Elk River just a mile-and-a-half above West Virginia American Water's intake.

Gov. Earl Ray Tomblin issued a do-not-use order once the leak was discovered, hours after many in the Charleston area reported a licorice smell in the air. Officials tested the water repeatedly in the hours following the leak. To be deemed safe, the chemical needed to test below 1 part per million for 24 consecutive hours. That standard came from the CDC and other federal agencies, but it wasn't immediately clear how the CDC arrived to that number.  

Nearly a week after the leak, the CDC handed down a recommendation "out of an abundance of caution" urging pregnant women to avoid drinking the water, although the do-not-use ban had been lifted causing further confusion in the community. Local health officials have called for continued medical monitoring, saying too little is known about the chemical and how it could affect human health.

"We are the first human beings this chemical has been experimented on,” one local officials said a downhill meeting, later adding, "Folks who show up at emergency rooms or doctor's offices are the tip of the iceberg."

Delegate Chris Stansbury, an incoming Republican serving Kanawha County stated, “my family and I lived through the water crisis. It's a frightening thing. We'd never been exposed to anything like that before. We understand what it's like to be subjected to that. As a public official, it's one of those things that ultimately, the responsibility lies with us to make sure West Virginia has the infrastructure it needs."

Top Senate appropriator wants to get to work passing spending bills immediately

The newly minted Senate Appropriations chairman said Wednesday that he hopes to get all of the bills done, on an individual basis, while acknowledging the Committee might have to end up bundling bills together to move them through the Senate Chamber. By trying to pass all 12 appropriations measures, Cochran is looking to replicate in the new Congress perhaps his greatest feat as the head of the same panel 10 years ago.

Cochran said he is looking to use the fiscal 2006 cycle as a model his second time around as chairman, but he will face tough challenges including limited floor time, a conservative GOP caucus determined to challenge the president and a Democratic White House preparing to defend its priorities.

“The president has a right to exercise the power of the veto, and that’s up to the president," Cochran said. “But we do have an independent responsibility, too, to express our views if we feel it’s important to do so through amendments. . . . So we’ll work those things out, but we have, I think, safeguards in place so that everybody has the opportunity to participate in the process in the United States Senate.”

Senator Cochran has his work cut out for him as the goal of passing all 12 spending bills has eluded his predecessors due to larger fiscal battles between parties and last-minute partisan riders that have killed bi-partisan support.

Taking another shot at Dodd-Frank

The House this week passed a financial regulatory relief bill that includes a number of modest amendments to the Dodd-Frank Act, many of which already had passed the House overwhelmingly. Many Democrats objected to a provision in the bill that would give collateralized loan obligations (CLOs) a multi-year exemption from the Volcker Rule, even though a similar measure passed the House unanimously last year. Separately, Democrats last week split on whether to keep a widely-supported amendment to

Dodd-Frank — an exemption for derivatives end-users (primarily non-financial companies that use derivatives for hedging and managing risks) from margin requirements — in a bill extending the Treasury Department’s terrorism risk insurance program. Democrats’ growing animus to any provisions perceived as helping big banks will complicate future efforts to advance additional Dodd-Frank fixes into law.

Immigration battle taking shape

The Department of Homeland Security is the only government agency not funded for the full fiscal year 2015 (ending on September 30) and is funded currently only through February 27. The House this week passed a funding bill for the agency for the rest of the fiscal year.

Included in the bill were prohibitions against the implementation of President Obama’s recent executive orders on immigration reforms, including late last year’s order to give legal status to up to five million immigrants in the country illegally.

The Senate will consider the measure in the upcoming weeks, but its version of the bill is highly unlikely to include the prohibitions in the House bill. Senate Republicans will try to add those House provisions but likely lack the 60 votes needed.

As we have said before, the President’s executive action on immigration will prevail and move forward, though some Republicans will try to hold the bill up into late February in what we believe will be an unsuccessful and very public effort.

Mega IRAs under scrutiny

During the presidential election of 2012, large IRAs gained attention when it was reported that Mitt Romney had a retirement account that had as much as $102 million at one point.

In September, the Senate Finance Committee (SFC) held a hearing on retirement savings, which again raised the issue of large “Romney-sized” retirement accounts. Following that hearing, a government report revealed that more than 9,000 Americans had retirement accounts in excess of $5 million. This report prompted Senator Ron Wyden (D-OR), currently the lead Democrat on the SFC, to further scrutinize these large IRAs. More importantly, SFC Chairman Orrin Hatch (R-UT) is less enthusiastic about pursuing the issue.

While outraged policymakers may craft legislative proposals to crack down on “Mega-IRAs,” we do not expect legislative proposals to advance. Instead, we expect congressional pressure to result in the Internal Revenue Service assigning a greater priority to its existing enforcement programs that cover aspects of IRA non-compliance, such as excess contributions and undervalued assets.

Cybersecurity changes

President Obama made a public push for Congress to enact new laws addressing cybersecurity threats that the government and private companies increasingly face, most recently highlighted by the Sony case.

New cybersecurity laws are possible this Congress and have both bipartisan support and opposition. Both private companies and government enforcement agencies agree that each would benefit if some information on cyber-breaches or hacking was shared so perpetrators could be more easily tracked.

But, what information should be shared and how secure would it be within the federal government? Should private companies be given immunity from litigation made possible by the release of that information? These are tough questions to resolve, but Congress will try again this year to pass a bill that addresses these competing interests.

Bipartisan legislation that the President could support may evolve, but it will be watered down by privacy advocates and likely not have a big impact on the growing threat of cybersecurity attacks.

Democrats’ middle class agenda

House Democrats, led by Congressman Chris Van Hollen (D-MD), announced an “action plan” to provide the middle class with new tax breaks. The centerpiece of the proposal is a new $1,000 tax break for workers earning under $100,000, or $2,000 for couples making up to $200,000.

This plan would be paid for by curbing tax breaks for high-income households and imposing a new tax on financial transactions. This proposal tees-up again the classic “Wall Street versus Main Street” debate. Look for Democrats to hammer Republicans over this issue on a regular basis in an effort to connect with middle-class Americans who feel left behind in the current economy.

This proposal may show up in an occasional symbolic vote over the next two years, but it will not advance in the House or Senate. While Republicans will oppose the Van Hollen proposal, they may embrace the concept of exchanging an easing of tax breaks for higher earners for lower tax rates. That trade-off would likely happen in a larger tax reform effort, which as we have previously stated, is likely to fall short this year but will re-emerge in 2017.

State of the Union

President Obama will deliver his seventh State of the Union (SOTU) address to Congress on Tuesday. He has held events around the country over the past two weeks touting what will be the primary theme of the speech—using the government to promote the middle class—by offering proposals such as free community college tuition, mortgage relief for some homeowners, greater broadband access for rural areas and other initiatives. He is field-testing these ideas at events and gauging public reaction to them before he decides to showcase them in the SOTU.

The President will also tout the performance of the economy, remind Congress that he will use his executive authority to enact policy changes he believes are necessary and address climate change.

The speech won’t change the tenor of Washington or the policy agenda Republicans will spearhead in Congress, but it does give the President a megaphone for a night to outline his priorities, reiterate his relevance despite a Republican-controlled Congress and try to get some credit for the improving economy.

What voters want

The new crop of 13 senators elected to serve in the 114th Congress are young enough to lower the average age of all 100 senators to now be 60. This group also has far less past experience in elected government. Inexperience in government now seems to be a more valued characteristic for people running for office in Washington.

Time will tell whether these trends toward younger and less experienced candidates will continue to be preferred by voters, but our guess is that they will be for House and Senate contenders given the strong animosity toward Washington for the foreseeable future.