On Wednesday afternoon, Governor Jerry Brown signed the 2012-2013 State Budget with very little fanfare. This morning, the U.S. Supreme Court issued its long-awaited decision regarding the Patient Protection and Affordable Care Act (PPACA).

Governor Brown Signs 2012-2013 State Budget

Late Wednesday night, Governor Jerry Brown signed a $91 billion budget for the 2012-13 budget year, which begins on Sunday.

Faced with a nearly $16 billion deficit, both houses of the Legislature and the Governor struggled over where to cut spending and find savings. Among the numerous impacts, one of the more significant is savings created by shifting 880,000 low-income children from Healthy Families to Medi-Cal. The budget also cuts funding for trial courts and allows for a 5% pay cut for state workers through 12 unpaid days off per year.

Although the budget is finalized on paper several impacts are still unknown. The Governor has placed an initiative on the November ballot critical to the state’s finances which will raise taxes on California’s top wage earners. If voters reject the Governor’s initiative it will automatically trigger several significant cuts, particularly in the education. This initiative relieved the Governor and Legislature from looking at increasing taxes through the budget process, most likely on businesses, which is why CGA supported the Governor going to the ballot.

A synopsis of the budget can be found here on Governor Brown’s website.

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U.S. Supreme Court Upholds the Patient Protection and Affordable Care Act

Today, the U.S. Supreme Court rendered its decision to uphold the Patient Protection and Affordable Care Act (PPACA) on a 5-4 vote with Chief Justice John Roberts providing the swing vote. The effects of this landmark ruling on the grocery industry is largely unknown and still to be determined by regulation, but there are some key components to closely monitor.

Government agencies will soon release criteria that will determine which employees must be offered health insurance under the new law. If companies choose not to offer that insurance, they must pay an additional tax penalty.

Other significant components primarily affecting the grocery industry is a food menu labeling requirement and drug prescription requirement. Included in the PPACA is language regarding menu labeling for restaurants. The FDA issued a proposed rule that included grocery stores under the scope of the menu labeling requirement. However, the FDA also included an option that would limit restaurant menu labeling to establishments with 50% or more of their floor space devoted to restaurant or restaurant-type food. No word on which option the FDA will enforce. You can read more about menu labeling here.

Finally, the PPACA requires a doctor’s prescription before a customer can use an FSA debit card to purchase over-the-counter medications at local food stores.

GMO Foods Don’t Need Special Label, American Medical Assn. Says

Should foods containing genetically modified ingredients be specially labeled as such? The American Medical Assn. doesn’t think so, according to a policy statement adopted Tuesday at its annual meeting in Chicago.

The 500-ish-word statement, which is not yet up at the medical association’s website, says among other things that as of this month, “there is no scientific justification for special labeling of bioengineered foods, as a class, and that voluntary labeling is without value unless it is accompanied by focused consumer education.”

Federal oversight in agriculture, the statement also says, “should continue to be science-based and guided by the characteristics of the plant or animal, its intended use, and the environment into which it is to be introduced, not by the method used to produce it, in order to facilitate comprehensive, efficient regulatory review of new bioengineered crops and foods.”

In other words, it’s less important whether a plant or animal was altered by conventional breeding or genetic engineering, say, than what the potential for a problem might be.

The AMA does want each new genetically modified organism, or GMO, product to be carefully assessed for consumption safety and potential environmental risks such as spread of insect-resistance or herbicide-resistance to a crop’s wild relatives. And the AMA would like to see better technologies developed for assessing health risks, such as the potential for eliciting allergic reactions.

Here’s an emailed statement from AMA board member Dr. Patrice Harris:

“The science-based labeling policies of the FDAdo not support special product labeling without evidence of material differences between bioengineered foods and their traditional counterparts. The AMA adopted policy supporting this science-based approach, recognizing that there currently is no evidence that there are material differences or safety concerns in available bioengineered foods.”

And more from Harris: “Recognizing the public’s interest in the safety of bioengineered foods, the new policy also supports mandatory FDA pre-market systemic safety assessments of these foods as a preventive measure to ensure the health of the public. We also urge the FDA to remain alert to new data on the health consequences of bioengineered foods.”

Whatever one’s feelings about GMO foods, it is true that conventional breeding is perfectly capable of throwing up potential health and environmental hazards, and yet this process is far freer from a regulatory standpoint. The topic is fairly extensively reviewed in a 2004 report from the National Academy of Sciences, which was undertaken to assess the safety of genetically engineered foods.

“All foods, whether or not they are genetically engineered, carry potentially hazardous substances or pathogenic microbes and must be properly and prudently assessed to ensure a reasonable degree of safety,” the report notes.

And it goes on: “History provides examples of traditional breeding that resulted in potentially hazardous foods .. Solanaceous (tobacco family) crops, such as potato and tomato, naturally produce various steroidal glycoalkaloids …. During the course of ordinary plant breeding assessments, breeding lines with increased levels of glycoalkaloids may be identified by the breeder as showing superior insect or disease resistance and retained for possible commercial release. The elevation of glycoalkaloid levels responsible for the pest tolerance may not be noted until people become ill from consuming the foods.”

New chemicals can also arise from such breeding. The review cites a case where geneticists bred the cultivated potato (Solanum tuberosum) with a wild potato (Solanum brevidens). The hybrid produced a toxic alkaloid called demissidine, even though neither parent potatoes had contained it.

In November, Californians will get to vote on whether foods with GMO ingredients will require labels.

Reprinted from The Los Angeles Times (6/21/2012)

Associated Press: California Cigarette Tax Proposition Defeated

A California ballot measure to increase the cigarette tax by $1 a pack has failed, the Associated Press reported today.

Proposition 29 has been trailing in the vote count since the June 5 election, though the narrow margin made it too close to call until today. Wednesday, the gap was only 13,327 votes out of nearly 4.9 million counted.The latest results posted by the Secretary of State show the measure losing by 27,888 votes, less than one percentage point.

Supporters said the measure would raise $735 million annually for cancer research and smoking cessation programs.

Tobacco companies spent tens of millions of dollars against the measure. Opponents argued that the measure was flawed and lacked accountability and oversight for how the revenues would be spent.

No on 29 spokeswoman Beth Miller said, “”We are obviously very encouraged with the way the vote count is going.”

But, she said, they’re waiting until all the votes are tallied: “We’re not declaring a win yet. There are still 100,000 votes out there.”

Reprinted from The Sacramento Bee (6/22/2012)

FDA Urges Removal of Oysters, Clams, Mussels, and Some Scallops Products from Korea From Market

Media Inquiries: Curtis Allen, 301-796-0393, [email protected]

Consumer Inquiries: 888-INFO-FDA

The U.S. Food and Drug Administration is urging food distributors, retailers, and food service operators to remove from sale or service all fresh, frozen, canned, and processed oysters, clams, mussels, and whole and roe-on scallops (molluscan shellfish) from Korea that have entered the United States. This includes molluscan shellfish from Korea that entered the United States prior to May 1, 2012, when the FDA removed such products from the Interstate Certified Shellfish Shippers List (ICSSL), and that which may have inadvertently entered the country after that date. These products and any products made with them may have been exposed to human fecal waste and are potentially contaminated with norovirus.

Molluscan shellfish contaminated with fecal waste and/or norovirus are considered adulterated under the Federal Food, Drug, and Cosmetic Act. Following initial notifications last month, a number of food companies have begun to remove these products from their distribution chain. However, many others have yet to take action.

A comprehensive FDA evaluation determined that the Korean Shellfish Sanitation Program (KSSP) no longer meets the sanitation controls specified under the United States’National Shellfish Sanitation Program. The FDA’s evaluation found significant deficiencies with the KSSP including inadequate sanitary controls, ineffective management of land-based pollution sources and detection of norovirus in shellfish growing areas.

The deficiencies in the KSSP prompted the FDA to remove all Korean certified shippers of molluscan shellfish from the ICSSL on May 1, 2012. Although Korean molluscan shellfish represent only a small fraction of the oysters, clams, mussels, and scallops sold in the United States, the removal of Korean shellfish shippers from the ICSSL is an important step in stopping the importation of molluscan shellfish harvested from polluted waters.

Consumers who have recently bought molluscan shellfish and are concerned that it may have come from Korea, should contact the store where it was purchased and ask about its origin. Consumers can check the label on packaged seafood to see if it is from Korea. If it is not clear where the product is from, consumers can call the manufacturer to find out. Consumers should dispose of molluscan shellfish from Korea and any products made with molluscan shellfish from Korea.

These actions only affect molluscan shellfish harvested from Korean waters. They do not affect the receipt of fresh and frozen molluscan shellfish by distributors, retailers, and food service operators from any of the other shellfish shippers listed in the ICSSL. Further, these actions do not affect the importation of canned and other processed product made with molluscan shellfish harvested from non-Korean waters. The FDA is in ongoing discussions with Korean authorities to resolve the issue.

Although the heat treatment that canned products undergo should eliminate the risk of norovirus, the contents of the cans of molluscan shellfish from Korea are still considered not fit for human food because the products were harvested from waters subject to human fecal contamination. For fresh, frozen, or products processed by methods other than canning, the products should also be considered food not for human consumption and may also carry a risk of norovirus.

Noroviruses cause gastroenteritis. Symptoms of illness associated with norovirus include nausea, vomiting, diarrhea, and stomach cramping. Affected individuals often experience low-grade fever, chills, headache, muscle aches and a general sense of tiredness. Most people show symptoms 12 to 48 hours after exposure to the virus. The illness typically lasts one to three days. Dehydration is the most common complication, especially in young children and older adults, which may require medical care. While there have been norovirus illnesses in the United States from the consumption of Korean oysters as recently as 2011, there have been no U.S. illnesses from the consumption of Korean shellfish reported in 2012.

The FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency also is responsible for the safety and security of our nation’s food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.

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Late yesterday afternoon the California Secretary of State’s office announced that proponents of a sweeping GE labeling and food marketing initiative has in fact qualified to appear on California’s General Election ballot in November.

Qualification was expected, with proponents submitting nearly twice the number of required signatures. The final random sample verification report notes County voting officials had confirmed as valid 561,466 signatures – 555,236 were needed to automatically qualify. CGA has been closely monitoring the effort and has significant concerns about the impact of the proposal on the retail food industry. The proposal seeks to not only mandate labels on food containing GE ingredients, but also creates significant restrictions on the use of terms like “natural” in food labeling and marketing and in-store signage.

This initiative joins an already crowded field of eight proposals that are guaranteed a spot on the November ballot. An additional five are pending signature verification, including the Governor’s temporary tax increase proposal. The deadline for any initiative to qualify for the November ballot is June 28.

CGA will discuss taking a formal position on the initiative at its July Board meeting. In the meantime, we will continue working with the Coalition Against the Costly Food Labeling Proposition. Additional resources are available on the coalition’s web site including information on becoming a member and educational resources.

For more information on the initiative, or if you are contacted by media and would prefer to have the Coalition respond, please contact Keri Askew Bailey.

June 5, 2012 – Growing in severity, number and type, retailers are reporting organized retail crime (ORC) has become more troublesome than ever before. Of the 125 retail companies surveyed for NRF’s eighth annual Organized Retail Crime Survey, a record-setting (96.0%) say their company has been the victim of organized retail crime in the past year, up from 94.5 percent last year, and another 87.7 percent say ORC activity in the United States has grown over the past three years.

“What this tells us is that as retailers and law enforcement become more aware of and more proactive in pursuing organized retail crime gangs, criminals have become more desperate and brazen in their efforts, stopping at nothing to get their hands on large quantities of merchandise,” said NRF Vice President of Loss Prevention, Rich Mellor. “Selling this stolen merchandise is a growing criminal enterprise and retailers must remain vigilant as this is an issue that involves everyone’s cooperation when it comes to protecting retailer’s assets, including their valued store associates and customers.”

The silver lining: more companies this year believe law enforcement is aware of and understands the severity and complexity of the issue (40.0% vs. 32.3% in 2011). More than half (54.4%) say top management at their company is aware of the problems associated with organized retail crime.

Increase in violence and cargo theft pose problems for retailers

Cargo theft continues to grow at an alarming rate, posing huge problems for retailers and their distribution centers. According to the survey, 52.1 percent of companies say they have been a victim of cargo theft in the past 12 months, up from 49.6 percent last year. A significantly higher percent of companies this year said cargo theft occurs mostly en route from the distribution center to the store (68.1% vs. 57.4% last year). Four in 10 (43.5%) say these incidents also occur en route from manufacturer to distribution center and 15.9 percent say they happen at the distribution center.

The survey also indicates a growing trend in the level of violence retailers see when organized criminal gangs are apprehended. Retailers say on average 15 percent of apprehensions lead to some level of violence, up from 13 in 2011. Retailers grappling with these violent acts also report that they believe more ORC offenders are engaged in drug activity. Nearly half (49%) of respondents estimate drugs and drug activity are linked to organized retail crime incidents.

When asked what new trends in organized retail crime they have noticed in the past year, retailers cited familiar issues involving the economy, returned stolen merchandise, gift card fraud, and increases in violent activity upon apprehension. However, new to the list of trends this year were specific references to 1.) digital receipt fraud; 2.) increased smash and grab incidents; and 3.) collusion with street gangs.

“Though retailers continue to make great strides in their fight against organized retail crime, sophisticated criminals with unending opportunities and anonymous outlets to sell their stolen merchandise are proving to be quite challenging for both retailers and law enforcement agencies working to combat this issue,” said NRF Senior Asset Protection Advisor Joe LaRocca. “With the types of organized retail crimes changing in severity and scope every day, and cargo theft and violent instances becoming more troubling, retailers are constantly on high alert.”

Baltimore, Orange County, CA, added to top 10 cities for organized retail crime

Organized retail crime gangs still wreak the most havoc in the same parts of the country, but a few new additions give credence to the growing problem retailers are reporting in this year’s survey. The top 10 locations in the United States that retailers say have the most criminal activity are (in alphabetical order):

Atlanta, GA
Baltimore, MD/Washington DC
Chicago, IL
Dallas, TX
Houston, TX
Los Angeles/Orange County, CA
New York, NY/Northern NJ
Miami, FL
Phoenix, AZ
San Francisco/Oakland, CA

Federal Legislation Still Needed to Combat Growing Problem

For years, retailers and other vested parties have worked together to tackle organized retail crime. These partnerships include regional groups and associations who host meetings to share intelligence and work with local, state and federal law enforcement agencies. Even with the success of these partnerships organized retail crime remains a Federal issue because it crosses state lines. NRF strongly believes that organized retail crime must be addressed through Federal legislation, by amending the Federal Criminal Code to effectively address the organized and serious nature of this issue and, be properly defined as a federal crime with appropriate sentencing guidelines as well as providing Federal law enforcement the resources needed to combat this crime.

Sprouts Farmers Market and Sunflower Farmers Market have finalized the merging of the two companies, making Sprouts among the largest natural and organic foods retailers with 144 stores and projected 2012 revenues expected to near $2 billion.

“Everyone at Sprouts is eager to work with the Sunflower team to build a stronger company,” said Shon Boney, CEO of Sprouts. “In joining forces, we will create a company that is not only bigger, but better – and continue to provide our signature shopping experience with a strong commitment to value and natural products. The customers and employees of both stores have a lot to look forward to as we launch this great adventure.”

The addition of the Sunflower stores expands Sprouts’ geographic footprint to Nevada, Utah, New Mexico and Oklahoma and further extends its presence in the states of California, Arizona, Colorado and Texas. All of the Sunflower stores will be re-branded under the Sprouts banner. The conversions will begin in July and occur in phases through the end of the year. The stores will receive new interior and exterior signage, updated fixtures and an expanded merchandise mix.

Sprouts will remain headquartered in Phoenix, and Sunflower’s corporate headquarters in Phoenix and Boulder will be consolidated into the Sprouts office.

Sprouts traces its lineage back to Henry Boney, a San Diego entrepreneur who opened his first business, a fruit stand at the corner of 71st and El Cajon Boulevard near La Mesa, California in 1943. Over the years, he and his family started and sold many retail businesses, including Speedee Mart, Boney’s and Windmill Farms.

The second generation of Boney’s stores were opened in 1969 by Henry’s sons, Stan, Steve, and later Scott. The name was changed to Henry’s Marketplace in 1997. The Boney family ran Henry’s until 1999, when the stores were sold to Wild Oats Markets, Inc., which later sold them again.

Henry’s son, Stan, and his grandson, Shon, along with family friends Kevin Easler and Scott Wing, returned to the natural foods business in 2002 when they opened the first Sprouts Farmers Market store in Chandler, Arizona. Sprouts grew rapidly, and just last year reunited with Henry’s in a merger sponsored by Apollo Management, L.P., which is now the majority owner of Sprouts.

Reprinted from Progressive Grocer (5/29/2012)

The L.A. City Council should approve a ban on the carry-out bags to protect the environment.

The City Council on Wednesday will consider whether to ban stores in Los Angeles from offering single-use plastic carry-out bags. A ban would take some getting used to, but examples from other jurisdictions, including the unincorporated areas of Los Angeles County, show that it can be done and that shoppers and stores quickly adapt. A ban is the right move. The council should adopt it.

For a city with such a strong environmental ethic, Los Angeles is lagging on the plastic bag issue. It has been batting around the idea of a ban for three years as cities up and down the state acted to keep millions of the bags from being freely distributed, only to end up fouling waterways, beaches and the ocean.

Like the Styrofoam containers that once held fast-food hamburgers, plastic bags became popular because they seem cheap and convenient. But it turns out they seem cheap only because the true costs aren’t assessed directly to the seller or the buyer, but to all of us when we bear the burden of environmental degradation and cleanup. Some fast-food chains recognized that they, their customers and our society could take a step forward by reaching back and returning to the use of paper containers. Others caught up when laws required them to. No one is the worse off for it, and we’re all better off without the Styrofoam clogging streets and sewers and, eventually, forming part of a floating mid-ocean garbage patch.

Likewise, plastic bags are more costly to all of us than they appear and won’t be missed once they are gone. Stores do offer an alternative — asking modern life’s essential question, “Paper or plastic?” — but there are even better options. More shoppers now carry reusable totes, and for those who won’t, don’t or just forgot, paper bags would still be available in Los Angeles stores for a modest fee.

Isn’t a plastic shopping bag ban just as foolish as the new requirement, panned on this page last week, that stores put locking wheels or other devices on shopping carts to make sure that they don’t end up on city streets? Not at all. Losing carts is costly for stores, and they have a financial incentive to self-police and to round up carts that have gone astray. There is no inducement for stores to gather up all the disposable plastic bags they send home — nor do they have the ability to do so — so they freely distribute them at little cost to themselves but at a huge cost to the environment.

Law or regulation is required when the free market and habit lead us to do things that produce hidden and unacceptable costs. That’s the case with single-use plastic bags. It’s time for the state’s largest city to catch up and ban them.

Reprinted from The Los Angeles Times (5/22/2012)

Governor Brown today released his May Revise – an updated budget proposal designed to reflect the reality of 2011’s tax take and newer revenue estimates. According to the document, California’s estimated shortfall has grown substantially to $15.7 billion, up from the $9 billion anticipated in the Governor’s January budget proposal. The Governor blamed that increase on three factors: his prior revenue estimates were too high; mandated spending to education under Proposition 98 increased; and courts have blocked some $1.7 billion in cuts included in the FY 2011-12 enacted budget.

That forced the Governor to propose additional cuts, which he called “more difficult” than initially anticipated but also necessary to restore the state to fiscal balance by reducing overall spending to a sustainable level. Overall, the proposal seeks an additional $8.3 billion in cuts and $5.9 billion in revenues. $5.6 billion of the revenues are attributed to passage of the Governor’s temporary tax increases that will likely appear before voters on the November ballot.

Included in the May Revise proposal are:

• A 5% across-the-board reduction in State worker pay (achieved through either reduced workweek or pay reduction);
• Implementation of some co-payments for Medi-Cal beneficiaries including pharmacy co-pays of $1 and $3 (based on drug status and method of dispensing);
• A reduction of $2.5 Million in funding to the California Department of Food and Agriculture (CDFA saw a $31 Million reduction in the prior budget);
• Trigger cuts totaling $6.1 Billion should the Governor’s proposed temporary tax increases fail to reach the ballot or be rejected by voters.

CGA is continuing to review the proposal and will provide updates as warranted. In the meantime, should you have any questions about today’s proposal from Governor Brown please do not hesitate to contact Keri Askew Bailey.

The Los Angeles City Council approved a new law Tuesday that requires some markets to install systems to prevent the theft of shopping carts from store property.

The law was intended to reduce the proliferation of abandoned shopping carts on city streets and sidewalks.

The plan, approved on a 12-0 vote and sent to Mayor Antonio Villaraigosa, will apply only to new markets and those in which at least 50 percent of the store is being remodeled. The city Planning Department is studying ways the law can be expanded to all markets.

“It’s a massive study,” said Tom Rothmann of the code studies section of the Planning Department. “There will be thousands of stores affected.”

The law passed Tuesday applies to stores that have at least six carts. It gives them a variety of options to keep the carts on site, including posts that block removal, wheel locks or other options, including customer service to keep the carts on the property.

Councilman Tony Cardenas said he’s wanted to limit abandoned shopping carts for years, prompted by complaints from residents.

“They are not only an eyesore, but they are a danger as well,” Cardenas said. “Imagine if you are driving along and a cart is suddenly in your path. Every driver knows it will cause damage.”

Councilman Dennis Zine said he is concerned about the city’s ability to enforce the measure.

“Street Services does not have the people now,” Zine said. “What can we do to get enforcement now? I don’t want to be anti-business, but these carts are a major nuisance.”

Sarah Paulson Sheehy, local government relations director for the California Grocers Association, said her organization is concerned about the cost of the city’s proposal, which will be about $40,000 per market.

Stuart Waldman of the Valley Industry and Commerce Association said his organization has recommended the city also consider allowing the stores to develop cart retrieval programs as one of the alternatives.

“That would be less expensive for the stores and a better way to get the carts off the streets,” Waldman said.

Reprinted from Los Angeles Daily News