Washington Report for 1-28-13

By Steve Kopperud

President Obama Takes Oath of Office; Moves to Fill Cabinet Slots

President Obama’s policy agenda for his second term had few surprises as presented in his inaugural speech January 21. The President laid out broad priorities for the next four years, including climate change, immigration reform, sustainable energy, gay rights, protection of federal entitlements – including Medicare, Medicaid and Social Security – and equal pay. And typical in a re-elected President’s second term, the White House is moving to fill cabinet and high-ranking administration slots soon to be vacant due to resignations. This week, Sen. John Kerry (D-MA), Obama’s nominee to succeed Secretary of State Hillary Clinton, underwent his first confirmation hearing before the Senate Foreign Relations Committee, a panel he chaired. Former Sen. Chuck Hagel (R-NE) is the nominee to replace departing Defense Secretary Leon Panetta, and his confirmation hearings will begin next week. White House Chief of Staff Jack Lew has been nominated to replace Secretary of the Treasury Tim Geithner, and John Brennan, a former CIA operative, has been nominated to head the intelligence agency. This week, Obama also nominated Mary Jo White, a former federal prosecutor and lawyer, to head the Securities & Exchange Commission. Members of Obama’s cabinet who’ve announced they’re staying include Secretary of Agriculture Tom Vilsack, who said in a statement he shares the President’s “deep appreciation for rural America … (and) I am pleased to continue working alongside President Obama to grow more opportunity in rural America.” Others include Attorney General Eric Holder, who’s said he’ll stay on for at least another year; Secretary of Health & Human Services Kathleen Sebelius; Secretary of Housing & Urban Development Shaun Donovan; Secretary of Education Arne Duncan; Secretary for Veterans Affairs Eric Shinseki and Secretary of Homeland Security Janet Napolitano. Announced departures, but without replacement nominees, include EPA Administrator Lisa Jackson; Secretary of the Interior Ken Salazar; Secretary of Labor Hilda Solis; Secretary of Energy Steven Chu; U.S. Trade Representative Ron Kirk; and FBI Director Robert Mueller, whose 10-year term expired in 2011, but who stayed on for two years at the President’s request. Filling the EPA, energy and interior slots is critical to the President’s energy and climate change priorities.

Farm Bill Makes Reid Priority List; House Ag Panel Organizes

Senate Majority Leader Harry Reid (D-NV) this week formally introduced his list of 10 priority bills for the 113th Congress and included re-authorization of a five-year Farm Bill as part of that list. Meanwhile, the House Agriculture Committee held its organizing business meeting, with leadership pledging Farm Bill action as well. Other bills that made it on to Reid’s priority list reflect known policy priorities, and include immigration reform, gun control, infrastructure spending, veterans employment, disaster preparedness, tax reform and election reform. Key to Farm Bill action by both Senate and House Agriculture Committees, however, will be the size of the pot of federal money available to them to craft their respective Farm Bills. The Congressional Budget Office will release in early March the FY2013 budget baseline for the Farm Bill – available dollars based on previous program costs – and while the House has approved annual budget resolutions, the Senate hasn’t passed a budget resolution for nearly four years. That changes this year given the Senate will likely “return to regular order” and approve its own budget resolution, according to Sen. Patti Murray (D-WA), new chair of the Senate Budget Committee. The fact that the Senate will pass a budget resolution was confirmed by the Senate’s third ranking Democrat, Sen. Chuck Schumer (D-NY), a senior member of the Senate Finance Committee. However, mandatory action to cut $1.2 trillion in federal spending over the next decade by March 1 – the 11th-hour fiscal cliff agreement – will complicate CBO’s calculations and could delay Farm Bill actions in both chambers until at least the first part of April. Ideally, both the House and Senate would agree to identical budget resolution numbers, require the same level of savings to be reconciled, and set identical target dates for action.  These procedural issues, however, have not been addressed. Reid’s action nonetheless drew immediate praise from Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) who called the Reid list “privileged, top priority bills, underscoring his support for and commitment to enacting a new five-year Farm Bill.” Stabenow, in a statement released by the committee, reiterated that her committee’s Agriculture Reform, Food & Jobs Act from the 112th Congress was approved by a wide bipartisan majority of the committee and passed overwhelmingly in the Senate. Stabenow said she’s “committed to convening a committee markup as soon as possible.” Once the committee marks up its Farm Bill, it will be substituted for the bill introduced by Reid this week. In the House – which failed to take full chamber action on a House Agriculture Committee-approved five-year Farm Bill in the 112th Congress because leadership didn’t see the votes for approval – the ag panel this week held its first formal organizing committee meeting of the new Congress following the naming of Democrat members. The committee has eight new GOP members and 11 new Democrats, with one Democrat vacancy left to fill. Chairman Frank Lucas (R-OK) told his new committee that last year “we advanced a strong, reform-minded, fiscally responsible farm bill … that demonstrated the true spirit of bipartisanship … this is a new Congress and a new opportunity to re-authorize a five-year comprehensive farm bill.” He stressed his commitment to ranking member Rep. Collin Peterson (D-MN) to repeat the feat this session, explaining to his newly minted committee members that ag is not a partisan issue, but has its share of regional and commodity challenges. For his part, Peterson told the committee, “I think we’re going to figure out some way to sit down and see how we’re going to move ahead with this.” Lucas did not give a date for his first Farm Bill markup. Peterson alluded to conversations he’s had this month with House Speaker John Boehner (R-OH) seeking House leadership’s commitment to provide floor time for a new Farm Bill once the committee completes its action. Boehner personally is no fan of House dairy support programs, championed by Peterson, and the Speaker at one point called the market stabilization approach favored by the National Milk Producers Federation a “Soviet-style” supply management effort. Peterson sent Boehner and Majority Leader Eric Cantor (R-VA) a strong letter in early January demanding a commitment or he would not participate in the “fool’s errand” of a Farm Bill markup. Lucas, in press interviews following the committee meeting, said he shares Peterson’s priority on “getting management’s attention” on full House Farm Bill action.

FSA Announces Extended Program Sign-up

Now that Congress has extended most 2008 Farm Bill authorities through the end of September, the Farm Service Agency this week announced that it is extending deadlines for program sign-up beginning in February. Included as “extended programs” are the direct and counter-cyclical payment programs, the Average Crop Loss Election Program, and the Milk Income Loss Contract Program. Sign-ups for DCP and ACRE – with no changes in program provisions – for 2013 crops will be on Feb.19; DCP sign-up will end Aug. 2. The ACRE sign-up will end June 3. All dairy producer MILC contracts are automatically extended to Sept. 30. House Agriculture Committee Chairman Frank Lucas (R-OK) praised the announcement, saying it gives producers “certainty for the 2013 crop year.”

Short-Term Debt Ceiling Deal Holds Congressional Pay Hostage to Budget Action

Avoiding yet another political showdown with the White House, the House hammered together a short-term extension of the federal debt ceiling – the government’s borrowing authority – extending the authority through May 18, but adding a condition that both the House and Senate must pass budget resolutions by April 15 or face suspension of member paychecks. The action is expected to be approved in the Senate and the President has said he will sign the measure. The deal effectively pushes the debt ceiling debate beyond the March 31 deadline for achieving spending cuts to meet obligations under the Budget Control Act of 2011, a measure which requires the government to chop $1.2 trillion from federal spending over the next decade.

Committees Say Waterway Infrastructure a Priority

During organizing meetings of the House Transportation & Infrastructure Committee and the Senate Environment & Public Works Committee, industry heard encouraging words about the priority both committees have placed on waterway infrastructure improvements and modernization. New House committee chairman Rep. Bill Schuster (R-PA) said waterway infrastructure improvement is a “top priority” for his committee, and Rep. Bob Gibbs (R-OH) – chairman of the subcommittee on water resources and the environment – has an ag background and a long-term interest in ports and inland waterway issues. Sen. Barbara Boxer (D-CA), chairwoman of the Senate committee, drafted a bill in the last Congress to re-authorize the Water Resources Development Act, and said it will be the first bill marked up by her committee this year. WRDA funds waterway infrastructure, including locks, dams and other systems and is long overdue for full re-authorization due to “challenges” over funding. 

CFTC Commissioner Sommers Announces Resignation

Commodity Futures Trading Commission member Jill Sommers, who’s headed up the CFTC’s MF Global bankruptcy investigation, announced this week she is resigning from the commission in the next few months. Sommers is a well-respected CFTC commissioner, praised by Capitol Hill and industry for her MF Global work, her balanced approach to regulatory reform and her understanding of the commission’s actions to implement the Dodd-Frank Act. House Agriculture Committee Chairman Frank Lucas (R-OK) said Sommers is “a friend of agriculture,” and Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) said Sommers’ contributions are “greatly appreciated and she will be missed.” She joined the commission in 2007, and was nominated by President Obama in 2009 for a five-year term, expiring in 2014. She told Bloomberg News that she’s been considering resigning for several months, but that she’ll stay through the end of the commission’s work to finalize regulations required under the Dodd-Frank Act, likely “until sometime after the first quarter.” Her departure will require the President to nominate two commissioners to fill vacancies on the five-member CFTC. Sommers was nominated by her fellow commissioners to lead the MF Global investigation when CFTC Chairman Gary Gensler recused himself from the investigation because he previously worked with MF Global CEO John Corzine at a financial company. It’s expected that MF Global investigation duties will be passed to CFTC Commissioner Bart Chilton, now the senior CFTC commissioner. She’s made no statement about her plans, but it’s been reported that Sommers wants to spend more time with her family. Her husband, Mike Sommers, serves as House Speaker John Boehner’s chief of staff. 

Climate Change Initiative Shaping Up as First Major Push by the White House, Senate

Having clearly stated his priority on substantive action to cope with climate change, President Obama and Senate Democrats are currently weighing options on how to proceed. Obama says his initial focus in curbing greenhouse gases will be through Environmental Protection Agency regulations; the Clean Air Act gives the agency authority to regulate about 70 percent of CHG emissions. The House and Senate, however, are expecting a flood of bills aimed at the same goal. This week, several members of the House and Senate, with a priority on climate change legislation, formed a bicameral task force that will work to influence the Administration’s approach to regulating GHG and other climate change initiatives. Rep. Henry Waxman (D-CA) – who chaired the House Energy & Commerce Committee in 2009 and was author of comprehensive climate change legislation – eventually approved in the House but died in the Senate, said the group’s goal is to get the President to “develop a plan for the administration under existing CAA authority to take action without Congress.” He said such an initiative “may spur Congress to act.” The group said it’s imperative for Congress to accelerate efforts to assist in clean energy development while alerting the public it’s time to adapt to a future that includes more extreme weather. Most congressional observers believe a sweeping federal approach to CHG reduction – including some proposals to resurrect the highly controversial and ultimate unsuccessful cap-and-trade schemes of 2009, and new proposals on creating a federal carbon tax – are politically impossible to get through both chambers. Sen. John Kerry (D-MA), during his first confirmation hearing this week before the Senate Foreign Relations Committee as nominee to be Secretary of State, pledged to be a “passionate” advocate of programs to combat global warming in answering a question from Sen. John Barasso (R-WY) related to the State Department’s role in the review of the Keystone XL Pipeline application. The department reviews the application because the line crosses international borders. Kerry tried in 2010 to develop a bipartisan Senate climate change bill, and told the committee “the solution to climate change is energy policy,” adding he’ll work to persuade coal state Senators and others in both parties that change is good. Sen. Barbara Boxer (D-CA), chairwoman of the Environment & Public Works Committee, said her first action will focus on reducing carbon emissions from buildings and homes, saying 11 percent of U.S. emissions are from energy inefficient commercial and residential structures. She’s planning legislation that would have the federal government lead by example, requiring the General Services Administration to conduct federal building energy audits and to develop plans to upgrade the buildings. Her bill would also provide a combination of private and federal monies to help local communities. Sen. Barney Sanders (I-VT) said this week he’ll introduce an “extraordinarily extensive” climate change bill in March that will include a “price on carbon” and heavy investment in sustainable energy.

Chamber Wants Obama to Prioritize Trade Promotion Authority

The U.S. Chamber of Commerce this week urged President Obama to be more aggressive in seeking expanded U.S. trade, urging him to prioritize his request for fast-track trade promotion authority. Trade promotion authority, or “fast track” as it’s also known, allows the President to negotiate directly with other nations on trade treaties, and calls for expedited congressional consideration within 90 days of a treaty being submitted, but restricts the House and Senate to voting on the finished product on straight up or down votes – no amendments allowed. The Chamber’s request comes as the White House is moving to complete negotiations on the Trans-Pacific Partnership agreement, its top trade priority, but the business group says the Administration should push for fast track authority before the deal is done, expected by October. Trade promotion authority for the President lapsed in 2007.

Deal with Russia to Facilitate Feed Exports Signed by APHIS

The U.S. Department of Agriculture’s Animal & Plant Health Inspection Service announced this week that it signed a deal with its Russian counterpart to facilitate feed imports by Russia. The deal follows congressional enactment of the Russia permanent normal trade relations agreement, and will facilitate the sale of animal feeds and ingredients, particularly feed supplements and vitamin premixes containing plant-based carriers. The feeds will be for cattle, pigs, poultry, sheep, goats, horses and other animals. 

Feed, Grain Support House Bill to Reform CRP

Nine ag input and producer groups – including the American Feed Industry Association, the National Grain & Feed Association and The Fertilizer Institute – signed a letter to House Agriculture Committee Chairman Frank Lucas (R-OK) and committee ranking member Rep. Collin Peterson (D-MN) pledging support for HR 349, a bill by Rep. Martha Roby (R-AL) to reform the Conservation Reserve Program, and asking the committee leaders to include the bill as part of the committee’s Farm Bill efforts. The bill would reduce the annual acreage cap in the CRP over a five-year period to 24 million acres, down from the current 32 million. It would also better target the CRP to truly environmentally fragile lands by removing Class I and Class II land capability classes from eligibility and exempt land enrolled as buffers, filterstrips and wildlife habitat. Finally, the bill would mandate that U.S. Department of Agriculture, for FY2014, give existing contract holders the freedom to begin restoring production – before contracts expire and without penalty – on CRP acres enrolled for at least five years. The groups urged the committee to consider extending this “early out” provision beyond FY2014.

Bill to Change Spill Control Reg Impact on Farms Introduced

Controversial federal “oil spill” regulations will be modified as they pertain to farms and ranches under legislation introduced this week by Rep. Rick Crawford (R-AR) and 33 bipartisan colleagues. Basically, the Crawford bill would require certification of compliance with the Environmental Protection Agency’s spill prevention, control and countermeasure rule by a professional engineer only if the farm’s aboveground storage tank holds more than 10,000 gallons, aggregate aboveground storage is more than 42,000 gallons or the farm has a history of spills. Owner/operators can self-certify if aggregate aboveground capacity is greater than 10,000 gallons but less than 42,000, and there is no history of spills. Exempt would be farms where storage is less than 10,000 gallons and there is no history of spills. 

Legislation to Curb High-Cost Rules Re-Introduced

More than 120 House Republicans, led by Rep. Todd Young (R-IN), this week introduced legislation to give Congress override authority when it comes to agency and department regulations costing at least $100 million. The bill, the Regulations from the Executive in Need of Scrutiny Act, was approved by the House in the last Congress, but languished in the Senate. The bill would require a straight up or down vote by Congress on any regulation deemed a “major rule” – bills with at least a $100-million impact on the economy.

Fertilizer Trends Outlined by Rabobank

Rabobank’s newest report on global fertilizer trends indicates a product oversupply through the first quarter of this year, with resulting downward pressure on prices. The bank says reduced demand and inventory restocking during the last quarter of 2012 are the reasons for the oversupply situation, a situation considered “normal” during the harvest-planting interval. World fertilizer markets are expected to remain “relatively balanced” through 2013, Rabobank said, but a general oversupply, particularly in potash and phosphate complexes, will provide “some potential downside price risk.” Urea is the exception to this trend, Rabobank said.