Washington Report for 3-23-12

By Steve Kopperud

Does House Budget Resolution Kill 2012 Farm Bill?

With much gnashing of teeth, agriculture interests across the country this week reacted with frustration to the unveiling of the Rep. Paul Ryan’s (R-WI) FY2013 budget resolution, a bill which calls for cutting federal ag spending by $181 billion over 10 years. That total is achieved by cutting $33.2 billion out of direct payment and conservation programs ($15.5 billion on the conservation side), $15.5 billion out of federal crop insurance by cutting premium subsidies and administrative reimbursement payments to insurance companies, and about $134 billion out of nutrition programs, with $123.3 billion coming out of food stamps. Ryan cited the current “record-breaking prosperity” of farmers and ranchers, a nod to record on-farm income led by spiking commodity prices and record exports for why ag is in line for the cuts. The overall direct payment/conservation number is in line with Ryan’s recommendation last year, and compares closely to President Obama’s call for a $32-billion cut as part of his FY2013 budget recommendation. Nothing binds the House Agriculture Committee to the specific Ryan proposals. While Rep. Frank Lucas (R-OK), chair of the House Agriculture Committee, was circumspect in his reaction to the announcement, saying the numbers are “only suggestions,” and that his committee is one of six major House panels which will now try to reach the Ryan “suggestion” by reconciling program reauthorization to spending limits. Lucas praised the process, but didn’t specifically react to the “suggested” cuts; however, committee ranking member Rep. Collin Peterson (D-MN) said the Ryan budget resolution, approved this week on a one-vote margin by the House Budget Committee and set for a full House vote next, “all but guarantees” efforts to write a 2012 Farm Bill are dead. Senate Agriculture Committee Chair Debbie Stabenow (D-MI) said, “The budget proposed in the House … is irresponsible and undermines one of the few sectors in our economy that is growing and creating jobs. We must reduce the deficit in all areas … but we must do that in a way that does not hurt the economy.” She cited last year’s joint House-Senate ag panel agreement on how to cut $23 billion over 10 years as part of the failed super committee deficit reduction effort as where she and Lucas are working to consolidate programs, increase efficiencies, etc. Sen. Kent Conrad (D-ND), chair of the Senate Budget Committee, said the Ryan proposal “throws the House-Senate agreement out the window,” adding to get a Farm Bill done this year will mean House members will have to tell Ryan “the plan goes way too far and they’re not going to go for it.” Conrad is not expected to produce a similar budget resolution in the Senate, which complicates life for the House ag panel as it then has little indication how far the Senate might go in programs cuts and policy reinvention. A senior lobbyist for a national farm organization last week estimated the chances of getting a Farm Bill this year “are about 15 percent - maybe.” In a post-budget announcement this week, she said, “If I could drop that estimate any lower I would.”

Environmental Working Group Targets Crop Insurance for Cuts

Now that agriculture and Congress have agreed federal direct payment programs are dead, the Environmental Working Group (EWG) this week announced it wants major reinvention of the federal crop insurance program to cut its overhead. In taking on perhaps the only federal farm program nearly all Farm Bill interests agree is vital to controlling on-farm risk and maintaining a viable income safety net, EWG said it wants farmers to be able to buy crop insurance, it just wants to significantly decrease the amount “taxpayers have to pay for it.” In this week’s House FY2013 budget proposal, federal crop insurance would take another $15.5-billion hit over 10 years, a level supporters say is too much given the program has been reduced by nearly $12 billion over the last several years. EWG says the federal government should provide free crop insurance to producers to cover yield losses in excess of 30 percent, with premium subsidies for revenue protection policies and other products eliminated, forcing farmers to buy the policies on their own. EWG would also tie the free insurance to compliance with conservation programs, another move opposed by most commodity and farm groups, as well as the insurance industry. The U.S. Department of Agriculture (USDA) reports the federal government paid out $7.4 billion in 2011 to buy down about 60 percent of the average crop insurance premium. EWG says this buy-down is unnecessary, benefitting only large farms. The environmental group also said the subsidy benefits crop insurance companies, many of which are owned by international companies, including Wells Fargo & Co. which owns Rural Community Insurance Co., and IAT Reinsurance Group, which owns Occidental Fire & Casualty Company of North Carolina. The American Farm Bureau Federation (AFBF) said the EWG focus on insurance is expected given the elimination of direct payment programs. “The next thing you look at when you look at the dollars involved is how large are the subsidies for the crop insurance companies,” said AFBF President Bob Stallman. “We’re going to hit $11 billion in indemnity payments this year, a new record.”

Grassley Still Pushing for Hard Cap on Farm Program Payments

As the House and Senate Agriculture Committees continue to struggle with how to move forward with a 2012 Farm Bill, Sen. Chuck Grassley (R-IA) this week was joined by Sen. Tim Johnson (D-SD) in calling for a hard cap on total payments farmers may receive from the federal government. Long a priority for Grassley, he introduced legislation this week with Johnson that would “close loopholes” in the farm payment program and hold a married couple to a maximum $250,000 per year in federal program payments of any sort. Non-farmers would no longer qualify for payments under the Grassley-Johnson bill, a rewritten bill based on legislation earlier introduced but modified so that it would apply to any reinvention of a federal ag income safety net.

Romney Names Ag Advisory Committee – Lots of Familiar Faces

GOP presidential candidate Mitt Romney has named Sen. Mike Johanns (R-NE) and former House member and now Florida Agriculture Commissioner Adam Putnam (R-FL), to co-chair his agriculture advisory committee. Also named to the panel are several faces familiar to national agriculture, including Chuck Conner, CEO of the National Council of Farmer Cooperatives, and former U.S. Department of Agriculture deputy secretary of agriculture and special assistant to President George W. Bush; Randy Russell, a Washington government affairs consultant who was an assistant secretary of agriculture under President Reagan; Greg Ibach, director of the Nebraska Department of Agriculture, and a cattleman; A.G. Kawamura, founding member of Orange County Produce LLC and secretary of the California Department of Food & Agriculture; Katie Smith, director, Missouri Department of Agriculture; Al Montna, chair, U.S. Rice Federation, and president of the California State Board of Food & Agriculture; Chris Policinski, president and CEO of Land O’Lakes, and Tom Nassif, president and CEO of Western Growers, and a former diplomat under President Reagan.

Supreme Court Says Citizens can Sue EPA without Violation

The U.S. Supreme Court this week ruled landowners and other may sue the Environmental Protection Agency (EPA) for a compliance order under the Clean Water Act without having first been cited by the agency, a decision that thrilled the business community, but gave environmental activists pause. The high court rejected the federal government’s argument that a company or individual must first fail to comply and be faced with enforcement action before a suit can be filed. The case was about an Idaho couple who challenged an EPA compliance order when they were told to restore a wetland with rocks and dirt, and to cease construction of a home on the property. The couple countered their property had never been a wetland and argued they’d never been given a court hearing on the agency order. A number of national business organizations joined the couple in forcing the case to the Supreme Court, including General Electric Co., which had challenged similar compliance orders in the past. Supreme Court Justice Antonin Scalia said the Clean Water Act does prevent or preclude judicial review of compliance orders, and that a civil action under the Administrative Procedures Act (APA) was allowed.

Federal Court Tells FDA to Make Good on Effort to Take Antibiotics out of Feed

A federal district court judge in New York City said March 23 if antibiotic manufacturers cannot prove low-level feeding of some penicillins and tetracyclines to livestock and poultry is safe, the Food and Drug Administration (FDA) must issue an order to withdraw approvals for both name products and generics for agriculture use. Harkening back to a 1977 FDA proposal to remove the penicillins and tetracyclines from animal feeds on which the agency never acted – it formally cancelled two long-pending notices of opportunity for hearing – the court in New York told FDA to return to its original effort to remove antibiotics from feed and water fed to livestock and poultry. The decision came in a 2011 suit filed by the Natural Resources Defense Council (NRDC) and four other activist groups designed to force FDA action on removing the antimicrobials from feed, a practice they contend leads to increased resistance by bacteria to antibiotic treatment in humans. The court ordered FDA to reissue its notice of proposed withdrawals and hold a hearing at which drug companies will present evidence of safety, despite the judge’s comments that “the scientific evidence of the risks to human health … has grown, and that FDA has changed its position” on the products’ overall safety. The federal government can appeal the ruling, but the Administration has not reacted to the decision. FDA has been working to limit the use of the products through a collaborative programs with feed companies, drug makers, farmers and ranchers, and others, that would limit the use of antibiotics to “therapeutic” uses – still to be redefined – and restrict their use to a Veterinary Feed Directive (VFD) issued by a veterinarian that instructs feed makers on how to include the products for various species and conditions.

Still No House Agreement on Highway Reauthorization

The House continues to struggle with how it will reauthorize federal highway programs and urban commuter system support, despite the Senate’s passage of a two-year, $109-billion highway reauthorization bill and calls by Senate leadership for the House to take up its bill. The stalemate forces Congress to address continuation of the federal highway programs, and the House is looking at a three-month extension bill next week to give it time to finalize its plans. Senate Majority Leader Harry Reid (D-NV) this week slammed the short-term extension idea, saying he wants House Republicans to “feel the heat” of voters who watch highway projects suspended. Critics of the Senate bill claim its two-year time frame is too short for many of the highway projects now underway; Boehner says the bill is insufficient because it does nothing to address rising gas prices.

Moran Introduces Bill to Stop DOL on “Child Labor” Restrictions

A proposed rule by the Department of Labor (DOL) that would, in part, ban or restrict teenagers from participating in several on-farm jobs and related activities should be halted, said Senate Minority Leader Mitch McConnell (R-KY) this week, as he joined a bipartisan group of colleagues cosponsoring legislation to force DOL to halt all action on the rulemaking. The rulemaking has become a touchstone for agriculture groups which contend it totally ignores the reality of children working on their parents’ farms, operating equipment, etc. Congressional opposition says the DOL rulemaking “erodes rural cultural values,” and DOL’s attempts to rewrite the proposal to stem increasing ag opposition seem to be failing. Sen. Jerry Moran (R-KS), along with 38 cosponsors, introduced legislation this week to block the DOL from finalizing any part of the workplace safety rules it proposed last September, and Sen. Pat Roberts (R-KS), a cosponsor and ranking member of the Senate Agriculture Committee said this week the department has gone way too far. “We need the Department of Labor to take a big pill of common sense and back off,” Roberts said. The original proposal changed a long-standing statutory exemption from child labor protections if a teenager younger than 16 years old worked for a parent, saying teenagers could only work for a farm operation wholly owned by a parent, but not allowing them to work for relatives or business partners of their parents. Ag groups opposed to the rulemaking said it would have also banned teenagers under 16 from herding livestock on horseback or on vehicles, bar teenagers from rodeo competition or working in grain elevators.  DOL is reworking the parental exemption language in hopes of meeting the demands of ag groups, while moving forward with other portions of the proposed rule.

House Plan would Force EPA to do Cost Studies on all CAA Rules

A House proposal circulating this week would require the Environmental Protection Agency (EPA) to hold all rulemakings under its Clean Air Act (CAA) authority until it’s formally determined the cost of the rules. Under the proposed legislation, EPA would have to conduct feasibility and cost-impact studies when trying to change the national ambient air quality standards for smog using its CAA authority. The draft bill will be part of March 28 hearing in the House Energy & Commerce Committee, and if enacted into law would also suspend several ongoing EPA rulemakings until at least six months after a special committee set up by the proposed bill has determined the economic impact of any proposed rule. The proposal would impact automobile emissions standards, fuel standards, refinery standards and ozone regulation.

Utah Joins Iowa in Passing Farm Protection Law

Utah became the second state this year to enact legislation protecting farms, ranchers and other agriculture operations from activists who gain access through fraud with the purpose of videotaping or other removal of proprietary information. Under the Utah law, designed to inhibit activists from conducting their so-called “undercover investigations,” anyone who “documents” operations on a farm without permission is guilty of a Class A misdemeanor and up to a year in jail. Various animal rights groups are outraged by the Utah action, especially in light of Iowa Gov. Terry Branstad’s signing of a similar law last month. It’s expected the animal rights groups will try and mount a legal challenge to the new laws. Three other states are contemplating similar legislation. 

Enviro, Bee Groups Petition EPA to Suspend Clothianidin

A coalition of environmental groups and bee keepers this week filed an emergency petition with the Environmental Protection Agency (EPA) to suspend the registration of the insecticide clothianidin, a compound the groups say is linked to the death of honey bees around the country. The chemical is conditionally registered for use on corn and canola. The groups contend that when EPA granted the conditional registration in 2003, it had inadequate data to justify the impact of the chemical and it failed to follow procedures under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) to conduct a field study of the impact of the chemical on bees and insect pollinators. Further, the petition says EPA violated the Endangered Species Act (ESA) by failing to meet “effects determinations” and “failing to undergo consultation” on the impact of the compound on bees.