Washington Report for 10-14-13

By Steve Kopperud

Negotiations on Fiscal Mess Continue, Money Found for Waterways, Not for EPA, OSHA

Will it be a six-week or a six-month debt ceiling increase? Will the debt ceiling package include a continuing resolution to reopen the federal government? Will tax reforms, the Farm Bill and entitlement cuts be part of any package? All of these questions continue to roil on Capitol Hill as lawmakers finally decide to abandon political rhetoric and fix the fiscal challenges now in play. No deal is done, but leaders and key committee chairs are talking. Progress is expected on details and it’s possible an agreement on “framework” or “direction” will be announced soon.

The good news is that when pushed to the wall, federal agencies can master their budgets. Drawing from surplus money in its FY2013 appropriation, the Army Corps of Engineers said it will continue normal operations of locks and dams in the inland waterways system, delivering some consolation to shippers and barge operators. The apparent priorities are moving newly harvested grain and coal for power plants, along with fertilizers and rock salt for the coming winter. Businesses feared the Corps would scale back operations to skeleton crews, dramatically slowing barge movement and creating safety issues for lock workers. 

As of Oct. 1, Occupation Safety and Health Administration furloughed more than 90 percent of its workplace inspectors, saying it would respond to only workplace emergencies. Each of OSHA’s 92 regional offices will retain two inspectors, the administration said. Overall, they will retain just 232 of its more than 2,300 employees. The federal shutdown, however, does not affect states with their own workplace safety and health operations. OSHA has approved plans in 25 states, four of which protect only public employees.

On the Environmental Protection Agency front, the agency has furloughed about 96 percent of its personnel, causing overseas shipments of ag chemicals to the U.S. to be stuck at ports because EPA does not have the manpower to inspect and clear the shipments for entry. Chemicals stuck at ports and borders include fertilizers, pesticides and “active ingredients” for formulating on-farm products. Compounding this delay are the fees ports will charge shippers for containers sitting on docks and in warehouses awaiting the federal green light. 

Baby Steps on Farm Bill Conference, but Conferees Expected Soon

The spending/deficit/budget ballyhoo yielded at least some benefit for those pushing for a 2013 Farm Bill; the Hill spending gurus are talking about including the farm package in any budget/spending reform effort because it yields nearly $30 billion in budget savings.  Meanwhile, speculation continues on when House Speaker John Boehner (R-Ohio) will name House conferees to a conference committee with the Senate.

Rep. Kristi Noem (R-S.D.), a House Agriculture Committee member, told one radio outlet she expects conferees to be named Oct. 11. Sen. John Thune (R-S.D.) sent a letter to Boehner urging him to name conferees as soon as possible, saying the Livestock Indemnity Program is crucial to his cattlemen in the wake of the historic blizzard that devastated western South Dakota, killing an estimated 45,000 cattle. However, Boehner is expected to name conferees when the debt ceiling/spending wrangle is over. Rep. Collin Peterson (D-Minn.), House Agriculture Committee ranking member, said he expects 12 GOP and nine Democrat conferees will be named.

It’s expected House leadership will name one GOP conferee who is not an ag committee member. Rep. Steve Southerland (R-Fla.) will reportedly be named a “leadership” conferee. It was Southerland’s Farm Bill floor amendment – with Majority Leader Eric Cantor’s (R-Va.) blessing – to require food stamp recipients to be working or training for work that took down the entire bill, with both GOP and Democrat critics calling it a “step too far” in trying to “reform” food stamps.

GOP conferees will be led by House Agriculture Committee Chairman Frank Lucas (R-Okla.), and will likely include the five subcommittee chairs: Reps. Michael Conaway (R-Texas), Rick Crawford (R-Ariz.), Steve King (R-Iowa), Austin Scott (R-Ga.) and Glenn Thompson (R-Pa.). The list is complete with the addition of Reps. Mike Rogers (R-Ala.), Martha Roby (R-Ala.), Kristi Noem (R-S.D.), Rodney Davis (R-Ill.), Jeff Denham (R-Calif.) and Southerland.

Peterson said the naming of Southerland was a mistake because non-ag members blew up the bill in the first place. Democrat conferees will all be committee members, he said; however, in 2008, non-ag committee member Rep. Rosa DeLauro (D-Conn.) sat as then Speaker Nancy Pelosi’s (D-Calif.) conferee on nutrition programs.

Members, Groups Begin Jockeying for Position on Farm Bill Issues

As there now appears to be light at the end of the 2013 Farm Bill conference committee tunnel, both members of Congress and various special interests have ramped up the volume of press releases and have begun staking out issue turf. 

Concerns over whether the House and Senate can come to a conference agreement that will pass muster in both chambers and get the President’s signature continue. However, a solution to that dilemma was delivered when Sen. Harry Reid (D-Nev.), Senate Majority Leader, told House Speaker John Boehner (R-Ohio) the farm bill is a candidate for inclusion in a broader budget package needed by the end of the year.

The South Dakota congressional delegation is pushing for immediate reauthorization of the Livestock Indemnity Program after approximately 45,000 cattle were killed in a freak blizzard that hit the western third of the state. The House bill would reimburse owners for 75 percent of the market value of their animals, while the Senate bill holds reimbursement to 65 percent of fair market value.

A conservative GOP senator – Sen. Jeff Flake (R-Ariz.) – and two liberal House democrats – Reps. Ron Kind (D-Wis.) and Earl Blumenauer (D-Ore.). – told their colleagues that direct farm program payments must end, whether a Farm Bill is concluded or not. They served notice to leadership they would work against any extension of current authority that includes direct payments. Both bills end direct payments per se; however, the House and Senate bills include differing marketing loans and deficiency payments for rice, peanuts and barley. 

Sen. Charles Grassley (R-Iowa) said the Farm Bill must better define what it means to be “actively involved” in a farming operation, citing a Government Accountability Office report that says the current definition for payment purposes is too vague and is “often misused.” GAO talked with the U. S. Department of Agriculture about the definition, which some contend allows investors and absentee landlords to receive farm program payments. USDA has authority to change the definition, but the department said it would not alter it without instructions from Congress. Both versions of the Farm Bill would also set a $250,000-per-year limit on couples who farm and ban payments to the nation’s wealthiest farmers.

On the crop insurance front, 47 groups sent House leaders a letter opposing any move to include a means test to measure adjusted gross income as part of insurance participation or premium subsidy eligibility. The Senate bill includes the means test; the House bill does not. However, a sense of the House resolution expected from Budget Committee Chairman Paul Ryan (R-Wis.) may carry language very similar, if not identical, to the Senate Farm Bill means test requirement. The groups who are opposed said a means test will reduce participation, creating a higher risk pool of insured producers, higher loss ratios over time and increased premium rates for those who stay in the program. It also increases the likelihood of emergency congressional disaster funding. Senate Farm Bill language adopted on the floor would reduce premium subsidies for farmers with adjusted gross incomes more than $750,000 ($1.5 million per couple). The National Sustainable Agriculture Coalition sent a letter to the House urging conference on the Farm Bill as soon as possible, but also calling for a reduction for federal subsidies of crop insurance premiums paid by farmers and implementation of means testing. 

The American Farm Bureau Federation reversed itself and no longer supports linking federal crop insurance to conservation program compliance. House Agriculture Committee Chairman Frank Lucas (R-Okla.) praised the move, while the Environmental Working Group says AFBF’s defection will have no effect on the broader push to connect the two programs. AFBF was the organizer of a large coalition of ag and conservation groups earlier this year in support of cross compliance between the two programs, and the agreement was included in the Senate Farm Bill. Lucas announced the AFBF decision – the group put out no public statement – saying the cross compliance approach is “misguided and redundant.” He said both programs are “the law of the land” and both programs carry very specific requirements for participation. Tying them together creates just “another layer of bureaucratic red tape.”

EPA Floats Mandate Cuts, API Sues over RFS Programs, Groups Urge Leg Action

The Environmental Protection Agency floated a draft plan to scale back its 2014 mandate on how much renewable biofuels must be blended with gasoline under the federal Renewable Fuels Standard. The announcement and draft plan came two weeks after the petroleum industry met with White House aides urging the administration to ratchet back its plans for biofuel-blending next year. 

The industry called the RFS unworkable and asked for a waiver, an action necessary so the industry does not hit the co-called “blend wall,” the point at which the petroleum industry cannot blend enough biofuel to meet the mandate based on gasoline demand and other factors.

Reports indicate the agency is considering an overall mandate of 15.2 billion gallons, less than half of the current overall blending mandate. The total would be achieved by requiring 13 billion gallons of corn-based ethanol, 2.2 billion of advanced biofuels (biodiesel) and 23 million gallons of cellulosic ethanol.

Meanwhile, the American Petroleum Institute sued EPA in federal court over its RFS actions, citing the mandate’s “bad public policy” due to the agency’s tardiness in issuing this year’s requirements and mandates for more cellulosic ethanol than exists in the market. Bob Dineen, President of the Renewable Fuels Association called the lawsuit “frivolous” and the API’s effort to kill the RFS mandate “slavish.” “This is a lawsuit in search of a problem,” Dineen said.

Lastly, 45 national and state ag, food, boating, equipment, environmental, taxpayer and hunger groups wrote to members of the House Energy & Commerce Committee, urging the panel to “recognize and address the havoc that the corn ethanol mandate has placed on the multitude of stakeholder interests represented on this letter.”