Washington Report for 1-14-13

By Steve Kopperud

What’s Next on a Five-year Farm Bill?

The consensus among ag groups in Washington, D.C., when it comes to what form a 2013 five-year Farm Bill should take and how quickly it will move, boils down to two notions: both House and Senate bills will look very much like the respective versions completed in 2012, and the Senate will move first. Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) said she will move quickly to get her committee to approve a five-year bill; House Agriculture Committee Chairman Frank Lucas (R-OK) has been more circumspect, saying only that he may hold a hearing in late February, backing away from earlier statements about beginning markup around the same time.

The two biggest obstacles to overcome for the committees are reconciling their respective commodity titles – the Senate takes a revenue protection approach; the House includes some conventional loan and payment programs – and how deeply cuts will be made to the federal food stamp program. The latter may be left to negotiations over broader federal spending cuts as they relate to entitlement programs.The Senate has the most heavy lifting to do as it will likely have to rewrite its commodity title to make Sen. Thad Cochran (R-MS), the new committee ranking member, and his southern committee cohorts happy. The commodity title approved by the committee and ultimately the full Senate last year is a revenue-based insurance approach to protecting farm income. However, that approach was scorned by southern crop producers as favoring large Midwestern farmers over smaller, more government-reliant southern producers.

The House bill includes marketing loans and deficiency payments – far more southern-producer-friendly – and it’s expected Cochran will push for a similar approach when the full committee begins it work. On the House side, ag committee ranking member Rep. Collin Peterson (D-MN) fired the opening salvo in the political farm legislative debate by sending a strongly worded letter to House Speaker John Boehner (R-OH), along with a copy to House Majority Leader Eric Cantor (R-VA), castigating House Republican leadership for going back on its commitment to operate the House under “regular” order and open debate by “bottling up” the bill passed by the agriculture committee. Peterson asked Boehner to provide a “written commitment” to find the floor time “if the committee marks up a new five-year Farm Bill.” Boehner refused last year to bring the bill to the floor for a vote contending it lacked the votes to pass, a statement Peterson called “patently false.” “At this point, however, I see no reason why the House Agriculture Committee should undertake the fool’s errand to craft another long-term farm bill if the Republican leadership refuses to give any assurances that our bipartisan work will be considered,” Peterson wrote. “You and your leadership team seem very content with simply extending the 2008 Farm Bill year after year without making any effort at reform, achieving savings and efficiencies, or improving the farm safety net for rural America. If that’s your goal, I will certainly accommodate you.”

USDA Names Nearly 600 Counties as 2013 Drought Disaster Areas

The U.S. Department of Agriculture released a list of 597 counties in 14 states it considers to be primary natural disaster areas due to drought and heat for 2013. Arkansas, Georgia, Kansas, Oklahoma and Texas had the most counties receiving the disaster designation. All qualified farm operations in those counties are now eligible for low-interest emergency loans, said Agriculture Secretary Tom Vilsack. Vilsack took the opportunity of releasing the county list to poke Congress to enact a five-year Farm Bill that includes updated disaster assistance programs. The department said the counties listed showed a drought “intensity value” of D2 (drought severe) for eight weeks based on U.S. Drought Monitor measurements. The Drought Monitor is a joint venture among USDA, the University of Nebraska-Lincoln and the National Oceanic & Atmospheric Administration. In 2012, the department designated 2,245 counties in 39 states – 71 percent of the U.S. – as drought disaster areas. A full list of USDA programs and services related to drought assistance can be found at www.usda.gov/drought.

FDA Publishes FSMA Human Food Safety, Produce Rules; Feed Rules Still in Review

After missing just about every statutory deadline set for publication of new rules under the Food Safety Modernization Act, the White House finally allowed the Food and Drug Administration to publish proposed rules related to human food processing and fresh produce production. Affected parties have 120 days to comment on the new proposals. Rules implementing the feed/pet food sections of FSMA are back at the Office of Management & Budget for final clearance after changes were made, and sources indicate those rules should publish in mid-February. The two published rules were called “the central framework for (contamination) prevention” by FDA Deputy Commissioner for Food Michael Taylor, who said the rules cover about 80 percent of the nation’s food supply, along with fruits and vegetables.  The first rule applies to U.S. and foreign on-farm production, packing and storage of fruits and vegetables likely to be eaten raw.

The second rule covers hazard identification and control plans by domestic and foreign food processors, manufacturers and handlers. Most food industry groups, along with organizations representing fruit and vegetable growers, declined to immediately react to the new regulations saying they need to analyze the rulemaking first. One area of focus is whether FDA adhered to congressional instructions to avoid treating small and medium farms in the same manner as multinational farming and processing conglomerates. FSMA carries an exemption for farms producing annual food sales less than $500,000 over the last three years and sales are direct to consumers within 275 miles of the farm. Compliance timelines for farms were expanded by FDA based on the size of the farming operation. The published rules carry no criminal penalties for infractions, a result of limited FDA resources for enforcement, critics said. Other rules implementing FSMA still awaited are the foreign supplier verification rule – ensuring overseas suppliers adhere to the same food safety standards and hazard controls as domestic producers – and a rule implementing third party certification standards for private entities.

Bankruptcy Judge Blocks Corzine Deposition in MF Global Customer Request

A New York bankruptcy judge this week denied a customer coalition’s request to depose former MF Global CEO Jon Corzine and other MF Global executives. The group – the Commodity Customer Coalition – was said to lack standing in the ongoing bankruptcy proceedings because it isn’t a direct creditor in the actions. The group says it represents the interests of “thousands of traders” whose accounts at MF Global were frozen by the bankruptcy declaration. The judge said the group is a “watchdog” group seeking to further its own interests in denying the request for the depositions. The group says Corzine should face criminal charges for his role in the eighth largest bankruptcy in U.S. history. It’s unclear whether several ongoing investigations by the federal government will lead to any charges against any company executives. Corzine has denied any wrongdoing.

Durbin Says Mississippi River Level OK for Now; Shippers See Traffic Shutdown

Sen. Dick Durbin (D-IL) said the Mississippi River has enough water for navigation for the time being as he completed a tour with officials, adding the White House continues to review options for maintaining navigation on the river if levels continue to drop. However, the Army Corps of Engineers and private shipper studies show the deteriorating situation means river traffic could come to “an effective halt” sometime before the end of January, but the Corps said that melting ice and snow from recent Midwest storms should help keep river levels sufficient to move barge traffic. The new data includes Corps of Engineers analysis and forecasts released by the American Waterways Operators and the Waterways Council, Inc. A shutdown will affect 8,000 jobs, cost $54 million in wages and benefits and halt movement of 7.2 million tons of commodities with a value of $2.8 billion, the groups said. The Corps says its efforts to blast rock pinnacles out of the shipping lanes and continued dredging of soft bottom sections of the river to maintain a nine-foot channel will be successful and traffic will continue to flow. Shippers want President Obama to allow the Corps to release additional water from the Missouri River reservoirs to keep Mississippi levels up, but so far the White House has remained silent.

EPA Finalizes Industrial Large Boiler Air Emissions Rule

After nearly a decade of wrangling and court actions, the Environmental Protection Agency published its final rule controlling air emissions from large industrial boilers at oil refineries, manufacturing plants and chemical production facilities. The rules, with an effective date of 2016, are designed to limit the emissions of mercury, acid gases and fine particulate matter, with total mercury emissions expected to drop 3 percent initially, EPA said. With three years to come up to the new standards – and the option of an additional year if requested – EPA said compliance should be relatively easy for most of the 2,300 regulated facilities affected by the rule based on size and operations. It’s still estimated, however, industry will spend $1.3-1.5 billion annually to comply with the new rules. The agency first tried to set boiler emission standards in 2004, but that set of rules was killed by a federal court in 2007 which said it violated the Clean Air Act. The proposed rule was re-issued in 2011, but industry opposition and congressional pressure forced the agency to reconsider and rewrite the rule after gathering more industry data.

Pompeo Bill Goes After Bioenergy, Alternative Energy Tax Breaks

Rep. Mike Pompeo (R-KS) is looking for House support for proposed legislation to kill off federal tax credits for alternative energy production. Citing the inclusion of several federal energy tax credit extenders in the recently enacted fiscal cliff deal at a cost of about $20 billion, including biodiesel/renewable diesel blenders tax credits, small bioenergy producer tax credits and infrastructure credits, Pompeo said his bill – the Energy Freedom & Economic Prosperity Act – will repeal credits for several other renewable and conventional sources of energy.

“Regardless of how you voted on final passage of the fiscal cliff legislation,” Pompeo wrote to colleagues this week, “I hope we can all agree that these energy tax credits foisted upon the House at the last minute represent bad energy policy and bad tax policy.”

Included in Pompeo’s target list of credits are the wind production tax credit; the alternative fuel and alternative fuel mixture tax credits; cellulosic biofuel producer credit; the alternative fuel infrastructure credit; the plug-in electric and fuel cell vehicle credit; and the investment tax credit for equipment powered by solar, fuel cells, geothermal or other specified renewable sources. The Kansas Republican said his goal is to control costs by eliminating “multibillion-dollar handouts to companies more than capable of financing projects on their own” and to cut energy rates to consumers.