Washington Report for 9-30-13

By Steve Kopperud

Farm and Nutrition Bills Merged – Not Yet (as of Friday) on the House Floor Schedule

Last night, the House Rules committee moved a resolution that included the Farm and Nutrition Bills. The provisions are a small part of a larger “martial law” rule, H. Res. 361, approved 9-3 on a party line vote by the Rules panel. The rule will allow House Republican leadership to move quickly over the weekend on debt and funding bills prior to the fiscal year ending Monday night. 

Having passed the Rules committee hurdle, House leaders can call the measure to the floor for debate and votes at any time. At the moment, the House floor schedule calls for a final vote at 10:30 Friday morning, though reports speculate that it would be voting on both Saturday and Sunday, leaving little time for the Senate to consider any legislation before Monday’s deadline.

Senate to Vote on Continuing Resolution Friday Afternoon

Senate Majority Leader Harry Reid (D-Nev.) announced that the Senate will start voting early this afternoon on a series of measures – cloture on the bill, waiving budget points of order, adopting the Democratic substitute – before voting on final passage of the House continuing resolution. Reid had attempted to hold the votes on Thursday evening, but his request for unanimous consent was blocked by Sen. Mike Lee (R-Utah). 

But, sending an amended stopgap plan back to the Senate is risky because it would bring Congress closer to the brink of a shutdown. Aides said the House may also present the Senate with a one-week spending extension to buy time to continue the negotiations. Senate aides said senators would leave town for the weekend but remain on alert to return to Washington on short notice in case the House acts quickly. 

Stabenow, Grassley Ask Agencies to Investigate Biofuel RIN Markets

In separate actions and requests to separate agencies, Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) and committee member Sen. Charles Grassley (R-Iowa) want investigations into whether ethanol markets are being manipulated by investors.

In a letter to Commodity Futures Trading Commission Chairman Gary Gensler, Stabenow asked him to review recent allegations about possible manipulation of the market for Renewable Identification Numbers, which are numbers assigned to “credits” that can be used by petroleum refiners to prove they’ve met their Renewable Fuel Standard-mandated blend obligations or in lieu of actual blending.

Grassley wrote to Environmental Protection Agency Administrator Gina McCarthy asking her agency to report to him what EPA is doing to prevent manipulation and abuse of unregulated RIN markets.

Stabenow said, “I would like the CFTC to help determine whether factors other than supply and demand have been causing extraordinary volatility in the price of RINs, and to what extent fraud and manipulation have affecting the price of RINS.” She said she’s concerned with the lack of transparency in these markets, a condition that makes them more susceptible to manipulation. “If this is the case, it is a problem that must be identified and fixed,” Stabenow said.

Grassley said RINs are being used “as an investment tool for big banks on Wall Street, helping to inflate the cost of RINs.” He said the high cost of RINs has made it more expensive to produce motor fuels blended with biofuels, costs the oil industry contends have been passed on to consumers at the pump. “EPA needs to provide assurances that this market is functioning for its intended purpose, rather than acting as a profit mechanism for Wall Street banks and other financial institutions.”

Grassley wants to know what EPA is doing to protect against RIN manipulation; what the agency is doing to eliminate existing manipulation and abusive trading practices, including hoarding; whether the agency has considered measures like daily price movements; and restricting the number of credits an entity may hold to reduce volatility. He also called on EPA to increase transparency in RIN markets, including RIN prices and volumes. 

Judge Gives EPA Six Months to Justify Runoff Regulation

A New Orleans federal judge told Environmental Protection Agency it has six months to formally propose federal numeric standards for nitrogen and phosphorous levels in regulated waterways or justify why it has chosen not to set standards. Environmental groups hailed the order as necessary to get the agency to move more quickly to regulate farm runoff that they contend contributes to downstream pollution of the Mississippi River and the so-called “dead zone” in the Gulf of Mexico.

The order was issued in a lawsuit brought a group called the Mississippi River Collaboratives, which filed a 2008 petition with EPA to set “quantifiable standards and clean up plans” for nitrogen and phosphorous runoff. When the agency did not act on the petition, the group sued.

Farm and ranch groups say the order gives EPA the option of standing firm on its current position. They say setting a one-size-fits-all numeric standard isn’t necessary, nor does it do anything to fix the problems in the Gulf.

EPA Continues to Wrestle with “Bodies of Water” it Regulates Under the CWA

After decades of confusion and three Supreme Court rulings, the Environmental Protection Agency is again attempting to clarify the definition of “bodies of water” it can regulate under its Clean Water Act authority. The EPA announced a meeting Dec. 16-18 in Washington, D.C., at which the agency’s Science Advisory Board will review a report titled Connectivity of Streams and Wetlands to Downstream Waters.

That announcement has drawn criticism from those who have complained that EPA is trying to expand its regulatory authority to waters Congress never intended it to regulate. As recently as 2011, a guidance document jointly drafted by EPA and the U.S. Army Corps of Engineers caused an uproar in the agriculture community because producers saw it as trying to regulate “every stream, puddle and pond in America,” and they contend the agency’s authority is limited to navigable waters. Further, they said, by issuing a guidance document instead of a rule, EPA was avoiding rulemaking and public comment.

Media reports indicate EPA has submitted to the Office of Management & Budget a draft rule – that is not available to the public – to clarify its jurisdiction and that action has already drawn fire. Critics contend the December SAB meeting is supposed to critique and review the study upon which the future rule will be based, but now EPA has drafted a rule before it has third-party advice and concurrence.

The National Farmers Union, in commenting on the study and EPA’s rule drafting, said it was pleased that both actions note “agricultural activities named in the Clean Water Act remain exempt from jurisdiction or permitting.” Further, NFU noted the report supports EPA deferring to state laws to regulate bodies of water that are fully contained within a state and are not suitable for transportation.”

FDA Expected to Publish FSMA Feed Rule “Very Soon”

The Food and Drug Administration Center for Veterinary Medicine officials confirm the agency will publish its proposed rule on performance standards as required by the Food Safety Modernization Act “very soon,” and depending on whether the federal government goes through a temporary shutdown Oct. 1, it could publish as soon as this week.

The original statutory deadline for publication of the proposed rule was mid-2012.

The agency announced it will hold public meetings on the soon-to-be-published rule Oct. 30 in College Park, Md. and Nov. 1 in Chicago, with details to be released later. Such meetings must be announced 30 days prior to the date. 

The American Feed Industry Association and National Grain and Feed Association are members of a FSMA coalition coordinated by the Grocery Manufacturers Association. While both groups will comment individually, they will both likely sit on the GMA working group developing coalition comments on the rule.

FDA VFD Rule Under OMB Review

The Food and Drug Administration’ Center for Veterinary Medicine sent the Office of Management and Budget for review its draft proposed rule on how the current Veterinary Feed Directive program will be expanded and refined to be used in connection with antibiotics in feed and water.

CVM’s overall plan for future oversight of the use of antibiotics is based upon a cooperative program with industry rather than new heavy-handed regulations or elimination of products. This program involves two major departures from traditional practice. The first is the elimination of all approved single-label claims for “feed efficiency” and/or “growth promotion” for feeds containing antibiotics. Under a compliance policy guide, most drug company sponsors with approved antibiotic products are in the process of giving up those singular claims in favor of a rewritten and contemporary definition of “prevention” as an approved use and label claim for antibiotics in feed.

The second major shift is expansion and refinement of the VFD program. Currently used with only a handful of approved animal drugs, all antibiotics used in feed and water will require VFDs issued by attending veterinarians. A VFD stops just short of prescription status, and FDA has worked with industry to ensure the VFD process is efficient for the vet, the producer and the feed company, and provides adequate veterinary oversight of the use of antibiotics on farm.

In a related development, FDA announced it will reinvent the manner in which it reports antibiotics-in-agriculture data mandated by law. Rather than a simple summary report, the agency will include more data on antibiotics used in both human and veterinary medicine, which will be broken down by drug class, route of administration, dispensing status and indication. The new format will not list producers, veterinarians, animal diseases, etc.

Ag Groups Call on CFTC to Change Customer Protection Proposal; Congress Weighs In

In the wake of massive futures commission merchant bankruptcies (FCM) and billions of dollars in lost customer investment, 21 national agriculture groups – including producers, feed makers and lenders – called on the Commodity Futures Trading Commission to modify its proposed rules on customer protection.

In a related development, the chairs and ranking members of both the House and Senate Agriculture Committees wrote to the full CFTC in support of agriculture’s concerns, warning the commission, “… as you work to finalize the rule on customer protections, we ask that you weigh the benefits of these regulations against both the cost to America’s farmers and ranchers and the potential impact on the consolidation of the FCM industry.”

The House Agriculture Committee’s subcommittee on general farm commodities and risk management also announced it will hold a hearing at 9 a.m. on Wednesday, Oct. 2, to review “The Future of the CFTC: Perspectives on Customer Protections.” The hearing can be viewed live by going to http://www.agriculture.house.gov/ and following the hearing links.

While both the groups and the lawmakers praised CFTC efforts to strengthen customer protections in the wake of the MF Global and Peregrine Financial Group failures, the ag groups and lenders said the capital charge and residual interest requirements of the proposed rule will have the opposite of their intended effect, namely customer risk and FCM costs will increase and not diminish.

Among the groups signing the letter are the American Feed Industry Association, the National Grain and Feed Association, the American Farm Bureau Federation, National Council of Farmer Cooperatives, CoBank and several national crop production and processing groups.

USDA Seeks Comment on “Coexistence”

Agriculture Secretary Tom Vilsack announced that the Animal and Plant Health Inspection Service will soon publish a notice in the Federal Register asking for public comments on “how agricultural coexistence in the U.S. can be strengthened.”

“Coexistence” is the term used to describe how farmers using genetically modified (GM) seed can operate near producers who do not use the GM seed, including traditional, organic and “identity preserved” producers. Over time, non-GM seed users have complained their crops are contaminated by seed drift, and have gone so far as to demand compensation for contaminated crops.

U.S. Department of Agriculture/APHIS effort is coordinated through the Advisory Committee on Biotechnology & 21^st Century Agriculture. “We are asking all those with a vested interest in coexistence to help us learn more about what coexistence means to them, how they are already contributing to it and what more is needed to achieve coexistence,” Vilsack said.