Washington Report for 11-9-12

By Steve Kopperud

White House, Congress Control Unchanged as America Votes Status Quo

With a handful of contested races to tally, America voted to stay the course, giving President Obama a second term, leaving the Senate in Democrat control and giving the GOP two more years of House control. This translates into a second chance more than a mandate. The presidential contest saw a record $6 billion spent and more than 1.2 million political ads aired. The Senate majority edged two seats to the Democrat side of the political ledger with pickups in Massachusetts and Indiana. Still undecided is the North Dakota race, where the race is too close to call and Republican candidate Rep. Rick Berg (R) is likely going to force a recount in his race with Attorney General Heidi Heitkamp. There remains two Independents in the Senate with the election of former Maine Gov. Angus King (I) who joins Sen. Bernie Sanders (I-VT). If the North Dakota race goes to the Heitkamp, who holds a miniscule lead, and both Independents caucus with the majority, the split is 55-45, still short of the 60-vote super majority to move legislation in the Senate. The House saw seven GOP members defeated, slightly narrowing Republican control. Of those defeated, four Republican members from the Illinois delegation lost their seats. Rep. Steve King (R-IA) defeated Christy Vilsack, wife of Secretary of Agriculture Tom Vilsack, and Rep. Tom Latham (R-IA), an appropriations committee stalwart, ousted Rep. Leonard Boswell (D-IA), an ag committee member. House Ag Committee member Rep. Mike McIntyre (D-NC) is facing a vote "recanvas" against State Senator David Rouzer, a former staffer to the late Sen. Jesse Helms (R-NC). The new split – with eight races still not called as final – is 233-193. 

House Energy and Commerce Committee Update

House Energy and Commerce Committee top Democrat Henry Waxman narrowly edged out his opponent in an election that will see big changeovers for the committee, especially with the potential departure of several members from both sides of the aisle. Reps Bono-Mack, Bilbray, Stearns and Bass all lost close races and represent notable departures from the committee on the Majority side. 

Bono-Mack, chair of the committee's commerce, manufacturing and trade panel, has been pushing policies to curb drug abuse, such as bills mandating tamper-resistant formulations of painkillers, and requiring mandatory prescriber training to dispense certain painkillers. This is an issue that has also been the focus of Sen. Feinstein on the Senate side, but is now without a sponsor in the House.

Bilbray, a champion of biomedical research, is also a key player in the drug and device policy arena. He has championed a federal drug track and trace system, although the topic has attracted broader bipartisan attention. Bilbray has pushed a slew of drug and device policies encouraging research and development in regenerative medicine, streamlining de novo device reviews and a recent proposal to grant marketing exclusivity for combination therapies.

Many were expecting noticeable turnover in the committee and there has also been talk of making the committee smaller overall. The Democrats leaving the committee are: Ed Towns (NY), Mike Ross (AR) and Charles Gonzalez (TX) who will all retire, and Tammy Baldwin (WI), who was elected to the Senate. Aside from Bass, Stearns, Bilbray and Bono-Mack, Republicans leaving the committee are: Sue Myrick (NC) and John Sullivan (OK), who are also retiring. Gonzalez, Towns, Ross and Myrick were members of the committee's health panel.

Senate HELP Committee Update

There could be some shakeup on the Senate HELP committee because of a possible move by Sen. Mike Enzi (R-WY) who is term-limited. Sen. Enzi could possibly take the top Republican spot on the Senate Small Business and Entrepreneurship Committee, which is now open after the retirement of Sen. Olympia Snowe (R-ME). It is most likely the HELP Committee ranking member spot would be taken by Sen. Lamar Alexander (R-TN). The committee will also be losing Sen. Jeff Bingaman who is retiring after the 112^th Congress. Members of the Committee that were re-elected on Tuesday are: Sen. Sheldon Whitehouse (D-IR), Sen. Bob Casey (D-PA), Sen. Bernie Sanders (I-VT), and Sen. Orrin Hatch (R-UT).

House and Senate Appropriations Update

The House Appropriations committee has seen some shake-ups following the election, most notably with the retirement of full Committee Ranking Member Rep. Norm Dicks (D-WA). Several names are currently being floated as possible replacements, including Rep. Nita Lowey (D-NY), Rep. Marcy Kaptur (D-OH), and Rep. Rosa DeLauro (D-CT). DeLauro is well known to Food and Drug Administration advocates due to her recent support of funding increases for FDA. The current top members on the House Appropriations FDA subcommittee Rep. Jack Kingston and Rep. Sam Farr were both easily re-elected. 

The Senate Appropriations committee is going to see some change as well. With the retirement of Sen. Herb Kohl (D-WI), current chairman of the FDA/Agriculture appropriations subcommittee, several names have been mentioned as possible replacements. Sen. Mark Pryor (D-AR) and Sen. Sherrod Brown (D-OH) are both currently on the subcommittee and do not have a chairmanship, making them the most likely front runners. The FDA/Agriculture subcommittee has one more open spot with the retirement of Sen. Ben Nelson (D-NE).

House, Senate Ag Committees Retain Most Members

Senate Ag Committee Chairwoman Debbie Stabenow (D-MI) will return, as will House Ag Committee Chairman Frank Lucas (R-OK). Among other members of the House Agriculture Committee ranking member Rep. Collin Peterson (D-MN) and Vice Chairman Rep. Bob Goodlatte (R-VA) will also return. Other notable House Ag Committee members achieving re-election include: Rep. Steve King (R-IA), Rep. Bill Owens (D-NY), Rep. Jeff Fortenberry (R-NE) and Rep. Larry Kissell (D-NC). There will be some new spots opening up on the committee with several members not returning including: Rep. Timothy Johnson (R-IL), Rep. Bobby Schilling (R-IL), Rep. Jean Schmidt (R-OH), Rep. Tim Holden (D-PA), Rep. Leonard Boswell (D-IA), Rep. Joe Baca (D-CA) and Rep. Larry Kissell (D-NC). Though some race results have not been finalized such as Rep. Mike McIntyre (D-NC), the landscape for the 113^th Congress is set. 

Retaining their seats on the Senate Agriculture Committee and joining Stabenow, are Kirsten Gillibrand (D-NY), Robert Casey (D-PA), Amy Klobuchar (D-MN) and Sherrod Brown (D-OH). There will be an opening on the minority side to replace Sen. Richard Lugar. Sen. Lugar lost earlier this year in the Indiana republican primary to Richard Mourdock. The seat was finally decided on Tuesday with Joe Donelly (D-IN) defeating Mourdock by six points.

Farm Bill Update

Chairman Lucas recently said that he and ranking member Peterson are still pushing for the Farm Bill to be passed in the lame duck session, before the end of the year. Lucas went onto say that, if a one-year extension is all they can get, he is ready to hit the ground running next spring. Many inside the beltway fear that the Farm Bill, more specifically crop insurance, could be targeted by lawmakers trying to find savings to prevent the sequestration cuts scheduled to go into effect January 1, 2013.

California Rejects GM Labeling Ballot Question

The most closely watched state ballot initiative, a proposition to label any food product – including animal and pet foods – containing genetically modified ingredients was soundly defeated this week as opponents racked up more than 54 percent "no" votes. The initiative would have also redefined and restricted the marketing of any product as "natural." The ag and food industries spent close to $45 million for TV ads, the bulk of the cash donated by Monsanto, members of the Grocery Manufacturers Association and other groups representing the food chain. Supporters spent about $9 million, most of it coming from organic food and consumer product producers. Supporters of the labeling question said it failed because of misleading advertisements "paid for by the pesticide and biotechnology corporations." 

Lame Duck is all about the Cliff

The first public test of all the presidential and congressional promises to learn to work together in a bipartisan way will be tested during the upcoming lame duck session. When Congress returns next week, the primary focus of both chambers and the White House will be ensuring the U.S. economy does not go over the "fiscal cliff." The question looming over action on the "cliff" is whether Congress will knuckle down and find a long-term solution or slap another legislative bandage on the issue and punt it into the 113th Congress next year. The "cliff" is the perfect storm of the most dreaded and most highly charged political issues – the expiration of the Bush era tax cuts and the mandatory 8-9 percent across-the-board federal spending cuts (about $110 billion a year for 10 years) – contained in the Budget Control Act of 2011, as well as extension of unemployment benefits and eligibility criteria. House Speaker John Boehner (R-OH) seized the high ground immediately after the election was called for President Obama, effectively restating his 2011 offer of his chamber's willingness to work with the Democrats to solve the fiscal challenges. Boehner is on-record saying the GOP will not support raising taxes on "anyone," and will not entertain the Obama proposal to allow the Bush tax cuts to expire on incomes of more than $250,000 a year. He said the savings needed can be part of a broader deficit reduction approach, one achieved by reforming entitlement programs, including Medicare, Medicaid and Social Security and closing special interest loopholes in the tax code and other revenue measures. He challenged the President to "lead on this issue." Senate Majority Leader Harry Reid (D-NV) is more in Boehner's camp than the President's right now, hoping his gang of eight bipartisan Senators who've been meeting over the summer can come up with the right formula of debt reduction through spending cuts and revenue raisers. 

Will Obama Re-Election Open Floodgate of Stalled Regulations

The White House effectively shut down the federal government's rulemaking apparatus when it moved into re-election mode last spring, the better to avoid controversial regulatory distractions during campaigning. Now industry is waiting for several stalled proposed and final rules to be released before the end of the year. Stalled at OMB over an estimated $1.2-billion annual compliance cost are all pending proposed rules emanating from enactment of the Food Safety Modernization Act, including proposals for how the Food and Drug Administration will regulate the feed industry under its new authority. Also stalled at the Environmental Protection Agency are proposed rules on coal-fired utilities and power plants, as well as expected new proposals on greenhouse gas emission regulation and climate change. The Commodity Futures Trading Commission has talked a lot about the rules it's about to release, but has been hamstrung defending recent rulemakings on position limits for swaps dealers. Also awaited from FDA are product and process approvals in human drugs, but also the pending approval of the first application for a genetically enhanced food animal, an Atlantic salmon that grows to market weight in half the time.

Russian Trade Pact May See Action in Lame Duck

House leadership is pledging to take up the Russian trade normalization treaty when it returns for its lame duck session next week. The treaty, which would grant Russia formal normalized trade relations with the U.S., is a major priority of business interests in the U.S. The treaty, which has bogged down over human rights issues in Russia, would remove U.S. trade restrictions placed against the old Soviet Union when it refused to allow Soviet Jews to emigrate to Israel. 

MF Global Customer Suit Adds PricewaterhouseCoopers to Defendant List

A lawsuit brought by former MF Global customers following the firm's historic bankruptcy amended its original suit this week, adding accounting firm PricewaterhouseCoopers LLP to the list of defendants, alleging the firm failed to adequately audit MF Global's internal controls over customer funds. The amended complaint also restated allegations against MF Global and its executives, accused of violating the Commodity Exchange Act in the use of customer monies. The accounting firm, which served as MF Global's independent auditor in 2010 and 2011, told PorkNetwork its last audit of MF Global was in March, 2011 "in accordance with professional standards." The suit also names CME Group as a defendant, while both Department of Justice and Commodity Futures Trading Commission investigations continue.