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Washington Report for 9-23-13

By Steve Kopperud

Business Community Concerned about WTO and Farm Bill Commodity Title

The business community in Washington, D.C., made it public it finds both House and Senate Farm Bill commodity titles concerning. A letter from the National Association of Manufacturers, the U.S. Chamber of Commerce and the National Foreign Trade Council to leaders of both House and Senate ag committees warned of the “unintended consequences” of a final Farm Bill that exposes the U.S. to World Trade Organization noncompliance allegations – and a replay of a WTO-Brazil-U.S. cotton dispute – with the ensuing sanctions, fines and retaliation that could follow.

“… (W)e urge you to consider how both the Senate Adverse Market Payments and the House Price Loss Coverage counter-cyclical programs run the substantial risk of violating obligations the U.S. has undertaken as a signatory to the WTO agreements for the same reasons WTO found the U.S. noncompliant in the U.S.-Upland Cotton dispute,” the letter warned. The three groups specifically called out the intent of both committees to tie their direct payment substitutes to actual acres in production.

The Senate’s AMP program is a shallow loss program; the government pays when crop insurance reimbursement ends. The House PLC program, in a nod to southern producers, retains some deficiency payments and marketing loans paying on 85 percent of all planted acres up to a level equal to the farmers’ historic base or “program acres.” Analysts say this allows for a 17-percent expansion in covered acres. Corn growers are pushing for the conference committee to adopt a program where payments kick in after crop insurance pays, but predicate eligibility on a four-year average of planted acres on a farm, ignoring the old base acres predicate. 

A similar warning about WTO compliance risks was delivered earlier this year by the American Soybean Association, the National Corn Growers Association and the U.S. Canola Association. At the time of committee approval, a group of six bipartisan Senators warned Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) that basing her program on “fixed reference prices” for certain crops created a risk of WTO challenges.

This gives some understanding to the brief statement late last week by House Agriculture Committee Chairman Frank Lucas (R-OK), who said once he gets to Farm Bill conference with the Senate it may take “outside the box” approaches to get the House and Senate bills reconciled. Insiders interpret this statement as referring not only to the controversial nutrition/food stamp titles of the bill, but also the commodity title which is generating increasing controversy. Lucas sees much deeper differences between his bill’s approach to providing a farm income safety net, and said the Senate’s AMP program will need to be modified in a significant way to keep House conferees happy.

Also in play during conference are crop insurance premium subsidies, as well as cross compliance between conservation program participation and crop insurance eligibility. More than 100 House members urged Lucas and his conferees to link conservation program participation to eligibility for crop insurance premium subsidies, an approach embraced in the Senate Farm Bill and supported by a coalition of environmental, recreation and ag groups. Of concern to the majority Democrat letter writers is that because of soaring land prices, highly erodible land and wetlands “are boosting farm income and putting significant pressure on our land and water resources.” Farmer payment limitations will also get its routine Farm Bill debate.

Also escalating is the debate over whether a short-term extension of current U.S. Department of Agriculture authority is politically possible. Senate Majority Leader Harry Reid (D-NV) and Stabenow have both foreclosed on any kind of one- or two-year extension of 2008 Farm Bill authority. However, a short-term extension – 90-120 days – may be doable, though even that abbreviated period has its skeptics.

Reid has said if an extension becomes necessary it will have to kill off direct payments to get Senate support. Farm groups reminded him killing direct payments separately from the Farm Bill robs conferees of the necessary savings to fund other reinventions of USDA authority.

Ranking ag committee member Rep. Collin Peterson (D-MN) called Vilsack last week, urging him to begin preparations for reverting to 1949 law as it’s apparent there is simply not enough time to name conferees, complete conference work and get the bill back to the floor before the current extension in 2008 authority expires September 30. Vilsack says the President will veto an extension, allowing 1949 law to kick in.

If USDA reverts to 1949 law – actually a collection of ag legislation enacted in the 1930s and 1940s – Peterson will renew his warnings over the price of milk; 1949 law requires USDA to support milk prices at 75 percent of parity, or roughly $39 per hundredweight, a level translating to a doubling of current retail milk prices. Corn would be supported at $6.80 per bushel and wheat at $16 per bushels. Soybeans would receive no supports as that program didn’t exist in 1949. 

 

House Passes Stand-Alone Food Stamp Cuts 217-210

With no Democrats voting “aye” and five not voting, along with 15 Republican defections, the House GOP barely squeaked out a victory in passing a stand-alone nutrition bill that seeks to cut the federal Supplemental Nutrition Assistance Program by $39 billion over 10 years. 

Several national agriculture groups, while silent on the bill, released statements after the vote demanding House Speaker John Boehner (R-OH) name conferees to negotiate a final 2013 Farm Bill. Rep. Rosa DeLauro (D-CT), however, in a fiery floor speech against the bill, called out “corporate farms,” income support payments – “members of this chamber may receive these payments” – federal crop insurance subsidies and other aspects of the House-passed Farm Bill as examples of a GOP double standard on spending cuts.

Supporters of federal food stamp benefits – received by 47.8 million people in June – took to the floor to denounce the bill, the brainchild of House Majority Leader Eric Cantor (R-VA), as taking food assistance away from 3.8 million children, elderly and military veterans, particularly in areas of high unemployment. Opponents argued the program is fiscally out of control, has lax eligibility requirements and needs to include work requirements to qualify for federal food assistance. The President said again last night he’ll veto the bill if it reaches his desk, unlikely given statements from Senate Majority Leader Harry Reid (D-NV) – “the Senate will never pass such hateful legislation” – that he’ll not bring the stand-alone bill to the Senate floor. Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) said the bill is dead on arrival in the Senate.

The bill reduces so-called eligibility waivers and increases the requirements to automatically qualify for SNAP benefits. “Anyone subjected to the work requirement under this bill who are able bodied, under 50 will not be denied benefits if only they are willing to sign up for the opportunity for work,” Cantor said.

 

With House Nutrition Bill Complete, What Now for Farm Bill?

House Majority Leader Eric Cantor (R-VA) has his stand-alone nutrition bill cutting $39 billion out of federal food stamp spending, but does this mean the House will name conferees and move quickly to conference? Not likely, given the procedural complexities Cantor created when he carved the nutrition title out of the House omnibus farm legislation.

Both House Agriculture Committee Chairman Frank Lucas (R-OK) and his Senate counterpart Sen. Debbie Stabenow (D-MI), in their own ways, see the nutrition bill as just another halting step toward conference committee action on a 2013 Farm Bill. Stabenow roundly denounced the House action on nutrition, but said in a statement, “The good news is that now that this vote is behind us, we are close to the finish line.” Lucas in his statement said, “Let’s go to conference.”

The stand-alone nutrition bill will move to the Senate on two tracks. First, the bill will be sent over to the Senate for individual consideration, but Senate action is unlikely. The bill will also be combined with the previously approved House Farm Bill as a new nutrition title before House conferees can be appointed. House Agriculture Committee Chairman Frank Lucas (R-OK) said this could happen next week in the Rules Committee. The House will have to vote to combine the two bills by approving the expected Rules Committee action. By combining the Farm Bill-nutrition rule with a larger rule governing other floor action, a replay of yesterday’s bitter floor fight can likely be avoided, staff said.

House Speaker John Boehner (R-OH) said it’s likely Senate Majority Leader Harry Reid (D-NV) will have to reappoint Senate conferees, a largely procedural move. “After we pass the nutrition bill today, we will send it over to the Senate, and as I understand it, the Senate will probably have to reappoint conferees. When they ask for a conference, we will appoint our conferees as well, the sooner the better,” Boehner said. 

Boehner also hinted at a press conference he could name conferees on the bill who are not on the agriculture committee, another untraditional move. When asked about such conferees, his response was “we will see.”

 

Dems Meet with Farm Leaders on Climate Change, Hear Preference for Incentives

The heads of the nation’s largest production agriculture organizations met with House and Senate Democrat members of the Bicameral Task Force on Climate Change and the U.S. Department of Agriculture’s Climate Change Program office, urging government to avoid regulatory mandates on how ag deals with shifting weather patterns.

Sen. Sheldon Whitehouse (D-RI) and Rep. Henry Waxman (D-CA), co-chairs of the task force, heard ag leaders acknowledge the reality of climate change, as well as how their members are dealing with dramatic shifts in weather. They also heard a strong message that to try and federally regulate how farmers and ranchers cope with climate change is the wrong approach. Livestock and crop producers need “incentives and science-based solutions that are economically feasible.”

Meeting topics included ways to “fuel mandates … (how to) incentivize cellulosic and other advanced biofuels,” biotechnology promotion and water issues, said Sen. Al Franken (D-MN) at a press conference following the meeting. The National Farmers Union told the lawmakers it is interested in ways in which producers can sequester carbon, and took the opportunity to link a vigorous crop insurance program to the effects of climate change.

NFU President Roger Johnson spoke for most ag leaders who attended the meeting, saying, “(T)hese technologies … have to be economically feasible for farmers. What farmers want is not to be told what to do. They don’t want to be regulated on this question. They want to have the opportunities to try these new things so they can find ways of being helpful while … making some money in their business.”

 

USDA Won’t Act on Washington State GM Alfalfa Episode

A Washington State farmer who found his non-genetically modified alfalfa crop had been contaminated by a GM strain will not see formal U.S. Department of Agriculture action as it amounts to a “commercial issue” only, the department has decided. 

The contamination was found last August and was reported to state officials, who reported to USDA it confirmed the presence of “low levels” of the GM trait and that it was “within ranges acceptable to much of the marketplace.”

USDA said detection of the Monsanto Roundup Ready trait is a marketplace issue and that is why it does not warrant formal action by USDA. “The agriculture industry has approaches to minimize these occurrences and manage them when they occur,” USDA said in a statement. 

 

Senate May Pull Efficiency Bill over Obamacare Amendments

A bill to set energy efficiency standards by providing incentives to both the private sector and the federal government may be pulled from Senate floor consideration by Majority Leader Harry Reid (D-NV) if an agreement on proposed Republican amendments on the federal health care law can’t be reached. Even with an agreement, however, a week-long delay in floor action on the bill means Reid may have move to other time-sensitive legislation, including a continuing spending resolution, before resuming action on the energy bill.

Debate last week stalled when Sen. David Vitter (R-LA) demanded a vote on an amendment to the new federal health care law to require the President and other specified executive branch officials to enter health care exchanges without receiving any federal offset to their health insurance premiums. Senate Minority Leader Mitch McConnell (R-KY) pushed an amendment to delay the individual health care mandate on the purchase of health care insurance.

Democrats are reportedly developing an alternative amendment to Vitter’s action; Reid has promised votes on the Vitter and McConnell amendments. However, as of Sept. 19, Reid threatened to pull the energy bill off the floor if no agreement over the amendments is reached.

The energy bill, authored by Sens. Jean Shaheen (D-VT) and Rob Portman (R-OH) is likely the only major piece of energy legislation to be considered this session by the Senate. It seeks to boost building code standards, train workers in energy efficient building technologies, help manufacturers be more energy efficient and bolster conservation efforts by the federal government.

The bill was endorsed in a letter from an unlikely group of organizations, including the National Association of Manufacturers, the Natural Resources Defense Council, the Alliance to Save Energy and the Business Roundtable. The groups said the bill “reflects a bipartisan, consensus agreement on a set of energy policies that will benefit the economy, advance energy security and improve the quality of the environment.”

Sens. Roy Blunt (R-MO) and Joe Donnelly (D-unt (R-MO) and Joe Donnelly (D,re'IN) plan to offer an amendment to block any Environmental Protection Agency rulemaking mandating “best available technologies” on carbon capture and storage for new coal-fired power plants if the technology is not broadly commercially “viable” and available. 

The Blunt/Donnelly language would require EPA source performance standards for power plants to set limits tailored to the fuel used to power the plant, but based on “widely demonstrated and commercially viable technology.” Without such language, say supporters of coal powered plants, new plant construction will be impossible.

Expected if floor consideration resumes is an amendment or a joint resolution by Sen. John Hoeven (R-ND) and Sen. Mary Landrieu (D-LA) expressing the sense of Congress that the Keystone XL pipeline project is in the national interest of the U.S. An amendment may carry stronger language, going as far as requiring the approval of the controversial pipeline project. Hoeven pushed a non-binding vote on Keystone project during Senate consideration of its budget resolution earlier in the summer and received 62 votes in favor of the project.

 

Shimkus Says Regulatory, Not Legislative Fixes to the RFS May be Best

The battle over whether Congress or the Environmental Protection Agency should “fix” the Renewable Fuel Standard continued as the leader of a bipartisan House committee RFS working group said EPA could protect the RFS from a legislative overhaul if it made regulatory changes.

Rep. John Shimkus (R-IL), chairman of the House Energy & Commerce Committee’s subcommittee on environment and the economy, was named by full committee Chairman Fred Upton (R-MI) to lead a four-member bipartisan task force to work with the biofuels, petroleum, ag and food industries on RFS improvements. The task force was named after a two-day full committee hearing on the impact of the RFS on food and agriculture, at which Shimkus called out witnesses to acknowledge the RFS is broken and needs improvements, not repeal. 

EPA last month, in releasing its 2013 RFS mandates for the blending of various biofuels with gasoline, acknowledged the RFS mandate levels may be unrealistic given the amount of certain biofuels commercially produced. The agency said it would take this lack of product into consideration and could reduce those RFS mandates in 2014.

Shimkus called on EPA to take that action now, stressing the timing and substance of that decision will make a material difference in whether legislation to adjust the RFS is introduced. Shimkus wants his working group to make its final decision by the end of the year.

 

Food Companies Set Up GM Ingredient Website

A new website intended to give consumers, politicians and the media facts about genetically modified food ingredients was launched by the Grocery Manufacturers Association. The new website can be found at http://www.factsaboutgmos.org/.

The GMA website joins a similar site launched by the Council for Biotechnology Information this past summer, also designed to answer public questions about the technology, its use, its safety and benefits. That site can be found by going to gmoanswers.com/.

GMA, in a statement announcing the site, said, “Genetically modified (GM) food ingredients are not only safe for people and our planet, but they have a number of benefits. This technology has been used safely in the food supply in the U.S. for 20 years, and 70-80 percent of the food we eat in the U.S., at home and away from home, contains ingredients that have been genetically modified.”

The website allows consumers to “research and verify” the safety, prevalence and benefits of various GM ingredients, and the information contained on the site is described as posted by “credible and independent sources.” Among these third party sources of information are the Food and Drug Administration, the American Medical Association, the World Health Organization, Health Canada, U.S. Department of Agriculture and the National Academy of Sciences. All have found GM ingredients are “safe and there are no negative health effects associated with their use.

 

Chemical Technology Safety to Include Guidance, Regulation

The Environmental Protection Agency will continue to issue guidances and regulations to speed adoption of safer technologies at chemical facilities. In a Sept. 12 speech to the National Environmental Justice Advisory Council, Mathy Stanislaus, assistant administrator for solid waste and emergency response, said all options are on the table to enhance chemical facility safety. 

Stanislaus said the West, Texas ammonium nitrate explosion and subsequent Senate attention to that event and others has made chemical facility safety a much higher priority within EPA. In a report in Chemical Regulation Reporter, chemical industry groups said they’d rather see “implementation and coordination of existing regulatory programs rather than imposing new ones.”

Stanislaus chairs an interagency group created by a presidential executive order issued in August directing agencies to streamline information sharing, modernize regulations and set up a federal working group on chemical facility security. Stanislaus said the goal of his group is a “standard operating procedure” for chemical facility regulation.

 

Bipartisan Water Bill Reauthorization Approved by Committee

The House version of a bill to reauthorize the Water Resources Reform & Development Act was approved by the House Infrastructure & Transportation Committee, scarcely a week after committee Chairman Bill Shuster (R-FL) unveiled the bipartisan committee bill. The Senate approved its version of the reauthorization this summer.

The bill increases harbor maintenance spending incrementally over the next seven years, Shuster said. This is a hike in the waterways’ current $900 million annual cost, but less than the $1.6 billion sought by port supporters and $100 million shy of what the Senate envisions in its bill. The legislation also requires Congress to reauthorize the program every two years.

The House bill does not increase the diesel tax paid by barge operators by 6-9 cents per gallon. Tug operators were pushing for the increase – to be paid into the Inland Waterways Trust Fund – as a way of ensuring enough money to pay for half the cost of projects involving major river locks and dams; the federal government pays the other half. Shuster said the tax-writing House Ways & Means Committee must come up with the language sought by the barge operators. Other goals of the bill include the following:

  • Sets hard deadline on the time and cost of reviews and studies
  • Consolidates or eliminates duplicative or unnecessary studies
  • Streamlines environmental reviews
  • Kills off $12 billion in old, inactive projects authorized pre-2007
  • Fully pays for all new authorizations with the monies from mothballed projects
  • Contains no earmarks
  • Sets a program for review and prioritize water resources development projects with new congressional oversight
  • Expands the ability of non-federal interests to contribute funds to expedite evaluations and permit processing
  • Sets up a new Water Infrastructure Public Private Partnership Program
  • Reforms the Inland Waterways Trust Fund

 

Vitter Demands Treasury Turn Over All “Carbon Tax” Documents

Contending costly and unnecessary regulation of carbon emissions is little more than a carbon tax, Sen. David Vitter (R-LA) has written again to the Secretary of the Treasury demanding Treasury turn over all documents related to a carbon tax, including emails, to Vitter’s committee.

Vitter, ranking member of the Committee on Environment & Public Works, cited what he called in his letter President Obama’s clear intention to use “all of his administration’s authorities to execute this regressive agenda,” referring to the President’s administration-wide mandate on carbon emissions reduction.

Vitter’s contention is that the Environmental Protection Agency has issued regulations that increase the cost of electricity generated from coal and other sources, actions that “act similar to a carbon tax.” He cites legislation proposed by Sen. Barbara Boxer (D-CA), the chairwoman of his committee, and Sen. Bernie Sanders (I-VT) to specifically authorize Treasury to impose and collect a tax on carbon at an initial $20 per ton, rising over 10 years and generating about $1.3 trillion dollars.

 

Judge Says EPA Can Go Ahead with Chesapeake Bay Runoff Standards

In a blow to ag interests with implications for future government action, a federal judge last Friday ruled the Environmental Protection Agency can move forward with imposing new regulations to curb runoff into the Chesapeake Bay from a variety of sources, including ag operations. The judge said EPA is within its authority under the Clean Water Act to “partner with six states in the bay watershed to cut the pollution that pours in from sewers and construction developments, and particularly chemical and biological waste from farms.”

The opinion by the U.S. District Court comes two years after the American Farm Bureau Federation, the Pennsylvania Farm Bureau, The Fertilizer Institute, the National Pork Producers Council, the National Chicken Council and the National Corn Growers Association filed suit to stop EPA rulemaking on bay runoff. 

The judge said up front that proving EPA’s setting of runoff total maximum daily loads was arbitrary and capricious was going to be a “heavy burden,” particularly when it came to showing that models and information used by the agency were flawed. 

 

OSHA Numbers Show Ag with Highest Fatality Rate

As National Farm Safety & Health Week ends Sept. 21, OSHA reported its support of the National Education Center for Agriculture Safety effort. It also reported agriculture has the highest recorded fatality rate of any U.S. industry sector. The ag sector recorded 475 deaths in 2012, for a fatality rate of 21.2 per 100,000 full-time workers. 

OSHA reported that in 2010, “at least 26 workers were killed in grain engulfments,” the highest on record. This led OSHA to develop its Local Emphasis Program for Grain Handling Facilities, focusing on the grain and feed industry’s six major hazards, including engulfment, falls, auger entanglement, “stuck by,” combustible dust explosions and electrocution hazards. OSHA reported the Grain Handling Safety Coalition provides training materials, and information is available at http://www.grainsafety.org/.

Farm Safety & Health Week has been commemorated since 1944, and safety information can be found at http://www.necasag.org/. Farm workers are a high risk for fatal and nonfatal injuries, work-related lung diseases, heat exposure, noise-induced hearing loss, skin disease and certain cancers associated with chemical use and prolonged sun exposure. 

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