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Washington Report for 12-9-13

By Steve Kopperud

Industry Pushes for FSMA Feed Rule Hill Attention; AFIA, NGFA to Hold Free Webinar

The American Feed Industry Association told lawmakers the current mid-January deadline for a proposed Food Safety Modernization Act rule is unrealistic. AFIA explained that the 400-plus page proposed FSMA rule on current good manufacturing practice, hazard analysis critical control and risk-based preventative controls for food for animals – the “feed rule” – needs more time to be reviewed and analyzed, and for comments to developed. AFIA met with key members of the Senate Committee on Health, Education, Labor & Pensions and the House Energy & Commerce Committee – both with U.S. Food and Drug Administration oversight.

In its Hill meetings, AFIA told lawmakers it also wants to see the feed rule and proposed FSMA rules on foreign supplier verification and third party accreditation coordinated so their implementation takes place at the same time. It’s expected Sen. Lamar Alexander (R-Tenn.), ranking HELP member, will request extension of the feed rule comment period as part of a broader request he’s developing.

In a related matter, AFIA, the National Grain & Feed Association and Feedstuffs magazine are hosting a free webinar on details about the feed rule. The webinar will be held Dec. 11 at 2 p.m. and will focus on compliance and quality directors, mill manager and legal departments. To register, click here.

 
Farm Bill Deal Close as Leaders Express 'Optimism'

House Agriculture Committee Chairman Frank Lucas (R-Okla.) and Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) said that talks between the two chambers – including ag panel ranking members Sen. Thad Cochran (R-Miss.) and Rep. Collin Peterson (D-Minn.) – are back on track after faltering just before Thanksgiving when a grand deal was widely reported. Both the commodity title and cuts to federal food stamps are coming closer to compromises, and the dairy title, which has proved surprisingly controversial recently, may have to be hashed out in open conference committee action, they said. All four ag leaders were mum about the details of agreements reached so far.

The U.S. Department of Agriculture reports its Farm Bill transition team is ready to take on changes in authority and program operation if a deal is reached. The implementation of Farm Bill changes to USDA authority will be headed by Deputy Secretary Krysta Hardin.

On cuts to the Supplemental Nutrition Assistance Program, it’s reported the House has backed away from demanding the full $40 billion in cuts over 10 years included in its bill. The Senate position also has softened, signaling it may accept cuts above the $4 billion included in its bill.

Insiders say the recent expiration of 2009 temporary economic stimulus program expansion of the SNAP program brings $11 billion in savings to the table, allowing the conferees to focus on new overall cuts in the $10-billion area, though that figure could be lower. House conferee Rep. Marcia Fudge (D-Ohio), chairwoman of the Congressional Black Caucus, told a reporter that the last hurdle to clear is the commodity title, not the nutrition title. Most of the savings in food stamp spending would be achieved through changing outdated eligibility rules and modifying a state program that permits automatic food stamp enrollment when an individual qualifies for federal heating oil assistance.

Based on actions in the last two weeks, it’s clear the deep division among national commodity groups has dramatically slowed progress on farm income support rewrites, so much so it inspired the American Farm Bureau Federation to call on all “special interests” to leave the conferees alone to finish their work.

The National Corn Growers Association and the American Soybean Association were the latest to throw a wrench into the Farm Bill conference machinery. NCGA and ASA disagree with other commodity groups and oppose basing the formula for calculating crop payments on actual planted acres. Lucas, for his part, contends to use a historic average “base acres” approach risks paying farmers for not planting anything, reinvigorating a long-time criticism of Farm Bill supports.

In mid-November, the two groups recommended that in both the House and Senate approaches to reworking direct payments, the formula should be based on a “rolling average of recent-year plantings to determine base acres.” On Nov. 26, the two groups reiterated their call for a base-acres approach but said “if agreement cannot be reached on this or some other approach that avoids tying payments to current-year planted acres, we would reluctantly oppose a new farm bill and support an extension of the 2008 Farm Bill.” That extension request would likely be for two years, they said. The groups said to use actual planted acres is “recoupling” payments to planted acres under a price-based program. The U.S. Canola Association joined NCGA and ASA on the letter.

Another contentious issue is production controls on milk production. The House bill carries a new dairy support program predicated on a margin protection insurance product. However, that program – championed by Peterson – included a mandatory production controls program tied to the margin insurance, prompting House Speaker John Boehner (R-Ohio) to describe the program as “Soviet-style.” Those production limits were removed on the House floor. The Senate bill contains the margin insurance/production limit language. Peterson said late last week the issue has been resolved, although producers and processors said they had not been informed of the outcome.

Also likely to be decided in an open session of all House and Senate conferees is highly controversial House language that would pre-empt a state’s ability to set agricultural production practices and then restrict the sale of food from plants and animals from other states not raised in the same manner. The language, added by Rep. Steve King (R-Iowa), is aimed at a California law that says if egg laying hens aren’t raised and housed as its state law dictates, eggs from other states can’t be sold in California. Critics, including the Humane Society of the United States, contend the language is so broadly written it would overturn 176 state environmental and animal welfare laws. Last week, a letter from 35 California state assembly members opposing the King language was sent to conferees. It was immediately followed by a letter from Iowa agriculture and political leaders – including Gov. Terry Branstad – to Sen. Tom Harkin (D-Iowa), a member of the conference and former chairman of the Senate ag panel, urging him to join King in defending the language.

 

End-of-Year Time Crunch Likely Pushing Farm Bill Final Action into January

Out-of-sync House and Senate work schedules will likely turn the 2013 Farm Bill into the 2014 Farm Bill, despite major conference progress. House leadership vows the House will recess for Christmas on Dec. 13; Senate Majority Leader Harry Reid (D-Nev.) said the Senate is set to be in session until Dec. 20 but could go home earlier. Last week the House met, while the Senate continued its Thanksgiving recess. That means only during this week can a conference agreement be signed, approved and delivered to the president’s desk.

This narrow window led House Agriculture Committee Chairman Frank Lucas (R-Okla.) to tell a radio station last week that the task of getting a final agreement by Friday is “Herculean” but still possible.

If it doesn’t happen, Lucas said a deal in the next week or so would allow committee staffs and the Congressional Budget Office to finalize and estimate costs of the conference report so it’s ready for final congressional action the first week of January. The risk, however, is the time gap allows for heavy lobbying of members who are home for the holidays, making the outcome less assured than getting a bill done before they go on break.

House Majority Leader Eric Cantor (R-Va.) said the House could take up the Farm Bill conference report as early as this week, but hinted that floor action may actually focus on an extension since the 2014 scenario means Congress will have to pass a short-term extension of current law before going home for the holidays. An extension is necessary because several long-time U.S. Department of Agriculture programs will simply disappear when current authority expires on Dec. 31. However, Lucas thinks USDA can hold off on implementing any changes if a bill is moving. The marquee impact of reversion to so-called “permanent law” is that milk price supports would revert to a 1949 formula setting them at more than $35 per hundredweight, translating to $7 to $8 per gallon at the grocery store. So far, House Speaker John Boehner (R-Ohio) has acknowledged a one-month extension of 2008 program authority is doable; Reid has quietly told Senate ag leaders he can live with a one-month extension if a hard deal is in hand.

Whether the Farm Bill will move to the House and Senate floors on its own, as part of another bill or will carry other unrelated but “must-pass” legislation has not been determined.

 

RFS Sides Continue to Hurl Allegations; EPA Holds Public Hearing on 2014 Blend Mandate

Both critics and supporters are speaking out about the U.S. Environmental Protection Agency's proposed rule to lower the overall 2014 Renewable Fuel Standard on gasoline blend rates for all biofuels. The proposed rule was published Nov. 29, starting a 60-day comment period on the rule.

The EPA proposal would set the 2014 overall blend rate at 15.21 billion gallons, far less than the mandated 18.15 billion gallons required by the 2007 law that authorized the RFS. Corn ethanol’s RFS would drop from 14.4 billion gallons to just over 13 billion, less than the 13.8 billion called for in 2013.

The first public hearing was held Dec. 4 with more than 140 witnesses seeking to be heard. Both sides of the RFS issue complained loudly about the agency proposal. Opponents of the RFS, including petroleum companies, livestock and poultry producers, food companies and engine manufacturers, gave faint praise to the EPA action but said it should have happened a long time ago and didn’t go far enough. RFS supporters, including ethanol, biodiesel and other biofuel makers, said the agency proposal is short-sighted, will cost jobs and could kill the nascent biofuels industry.

The petroleum industry contends it’s forced to blend an arbitrary amount of biofuel no matter the consumer demand for gasoline, leading to an inevitable “blend wall,” the point at which the percentage blend of biofuel to gasoline must exceed the legal 10 percent for gasoline makers to meet their RFS obligation. Food industry witnesses contend the RFS creates an arbitrary market for corn ethanol and the competition for corn drives up feed prices and contributes to higher food costs. The National Chicken Council said the RFS has been responsible for an $8.8-billion increase in feed costs for poultry producers since 2007.

The biofuels industry contends the EPA action “chills” investment and will cost jobs. The American Farm Bureau Federation said it was very disappointed in the EPA proposed reduction. The American Soybean Association, whose members make biodiesel from soybean oil, said at the hearing that the EPA proposal on the biodiesel RFS was disappointing because the level – 1.28 billion gallons for 2014 and 2015 – is significantly less than what the industry is producing and well below the 1.7 billion gallons the industry requested. This position is shared by the National Biodiesel Board. The Global Renewable Fuels Alliance, Toronto, Canada, said the EPA proposal was the first time the agency had “bowed to petroleum industry pressure.”

On Dec. 3, both sides of the issue held telephone press conferences and luncheons. RFA held a telephone news event that afternoon, which featured individual ethanol and biodiesel producers, as well as the heads of major ethanol and biodiesel trade groups. The telephone press event by those opposed was headlined by the American Petroleum Institute and included the heads of the NCC, the National Turkey Federation, the Environmental Working Group and the Outdoor Power Equipment Institute. That event was followed by a press lunch featuring the same cast of presenters.

 

Researchers: Don’t Repeal RFS, Change only Slightly

The Energy Biosciences Institute, a public-private research partnership, released a report last week by two University of Illinois researchers that says Congress should not consider repealing the RFS, and if changes are necessary, they should be minor.

The institute is a cooperative effort of Illinois, the University of California-Berkeley and the Energy Department’s Lawrence Berkeley National Laboratory. The effort is funded by a 10-year, $500-million endowment from British Petroleum. The paper is set to be published in the New York University Environmental Law Journal.

The two researchers said the RFS is “the only federal policy that directly mandates the use of renewable energy” to replace fossil fuels. They further recommended changes to the RFS to “make it operate as efficiently as possible,” including adjusting the mandates to reflect more accurately real-world biofuel production realities.

 

Boehner, Target of Reform Protests, Says House Immigration Reform is Alive, Well

After immigration reform protestors swarmed through his personal office, House Speaker John Boehner (R-Ohio) said House action on federal immigration reform is not dead, even though he said again he won't negotiate with the Senate over its comprehensive immigration reform bill.

He said there are a lot of conversations among the committees of jurisdiction in the House on how “do we best move on a common-sense, step-by-step basis to address this very important issue.”

Refusing to take on immigration reform as a single, comprehensive package of reforms, Boehner has instructed his committee chairs to work through several individual bills addressing areas in need of reform. He said he was gratified that the president has not rejected this approach. Ag interests said Obama's acceptance of the House strategy is a sign of progress. Boehner was dogged by immigration reform supporters at his favorite breakfast spot, his home and his office where they delivered a turkey and bottle of wine, symbols they said of how immigrant workers harvest the nation's food.

 

USDA, EPA Announce Expanded Water Quality Trading Partnership Effort

The U.S. Department of Agriculture and U.S. Environmental Protection Agency have expanded their partnership to support what is known as “water quality trading” and “other market-based approaches” to improving water quality. 

Both USDA and EPA said this partnership demonstrates “a better bottom line for farmers and ranchers.” Further, the policy is designed to support states, interstate agencies and tribes as they develop and implement their water quality trading programs for nutrients, sediments and other pollutants.

“Water quality trading” is a market-based system for helping companies, towns and others comply with Clean Water Act requirements, including effluent limits in National Pollutant Discharge Elimination System permitting. Trading allows regulated entities to purchase and use pollutant reduction credits generated by other regulated entities in an identified watershed based on cost-savings and “other economic incentives.”

 

High Court to Hear EPA On Toxic Air Emissions

A U.S. Environmental Protection Agency action to require “upwind” states to limit toxic air emissions that could blow across state lines has been in the federal courts for a while, with a federal appeals court most recently killing the agency action. Now, the U.S. Supreme Court will hear an EPA appeal of the lower court ruling. The high court’s ultimate action on the case will impact the agency’s current efforts to limit emissions of greenhouse gases from utilities under what is deemed “cooperative federalism,” the section of law that guides EPA in cooperating with the states on environmental regulation.

At issue is whether the federal appeals court even had the jurisdiction to hear the state and industry cases challenging the EPA action and whether the court misinterpreted EPA’s authority under the Clean Air Act. The specific authority is dubbed the “good neighbor” provision of the CAA, which require a state to cut polluting emissions if they cause a reduction in air quality in a neighboring state.

 

Food Safety, Enviro Issues Focus of White House Regulatory Calendar

The White House has released its fall 2013 “Current Regulatory Plan & Unified Agenda of Regulatory and Deregulatory Actions” – the “Unified Agenda” – and it includes several food/feed safety-related items, as well as a listing of familiar environmental issues. A major part of the agenda is the U.S. Food and Drug Administration rules related to the Food Safety Modernization Act, including produce safety; human food preventative controls; foreign supplier verification; third party accreditation; current good manufacturing practice, hazard analysis critical and risk-based preventative controls for food for animals; intentional adulteration; and transportation sanitation requirements. Next June is the target date for a proposal on pet food labeling of nutritional and ingredient information, as well as changes in formatting and style.

An April, 2014 proposal from FDA is supposed to codify requirements that drug company sponsors of antibiotics submit an annual report on the amount of the active antimicrobial ingredient in the drug that’s sold or distributed for farm animals. The proposal could include a requirement that drug distribution data reporting be enhanced.

On the environmental side of the unified agenda are plans to review 2003 confined animal feeding operation rules in preparation for updating them based on an “extensive comment period.” Other priorities include an effort to clearly define “waters of the U.S.” under the U.S. Environmental Protection Agency's Clean Water Act authority; continuing to work on greenhouse gas emission standards for utilities; revise rules on ag worker protections against pesticides; update its National Pollutant Discharge Elimination System permitting system; finalize source performance standards for grain elevators; and finalize its underground storage tank rules.

 

Stabenow Says No Committee Action on CFTC Nominations until 2014; Groups Sue Commission Over Swaps Rule

Any action on White House nominations to fill vacancies at the Commodity Future Trading Commission will have to wait until 2014, according to Sen. Debbie Stabenow (D-Mich.), chairwoman of the Senate Agriculture Committee. She cited end-of-year pressure to pass the farm bill and complete House-Senate budget negotiations. This means the commission will likely have only two commissioners on Jan. 1.

CFTC Chairman Gary Gensler announced he will leave the commission on Dec. 31, and the White House has nominated Treasury official Timothy Massad to replace him. Former Commissioner Jill Sommers resigned in July, and J. Christopher Giancarlo has been nominated to fill her seat. Sitting Commissioner Bart Chilton said three weeks ago he will depart the commission soon, but the White House has not named a replacement. Several industry groups in town are actively seeking candidates for the Chilton commission slot. 

In a related CFTC development, three groups have sued the commission, challenging the commission’s cross-border swaps rules. The lawsuit was brought by the Securities Industry & Financial Markets Association, the International Swaps & Derivatives Association and the Institute of International Bankers. They contend the rule “unlawfully circumvent(s) procedures, fails to conduct legally required cost-benefit analysis and imposes rules that are contrary to international cooperation.” The lawsuit comes on the heels of broad European regulator criticism of the CFTC requirement that foreign players must follow U.S. rules.

 

Department of Labor Wants Public Input on Chemical Safety Standards

Public comment on potential revisions to its Process Safety Management standard designed to prevent major chemical “incidents” is requested by the Department of Labor. The request for information comes on the heels of President Obama’s Executive Order 13650 issued after the West, Texas, chemical plant explosion that killed 15, with ammonium nitrate identified as the cause.

In addition to comments on the PSM standard, the Occupational Safety and Health Administration wants “input on potential updates” to its explosives and blasting agents, flammable liquids and spray finishing standards. The agency is also seeking information on specific rulemaking and policy options and the workplace hazards they address. The request for information can be read here.

 

Waterways Council Pushes for Olmsted Money in WRDA Conference

As conferees continue to negotiate a compromise bill between House and Senate versions of the Water Resources Development Act, the Waterways Council sent a letter to the conference committee urging it to accept Senate language funding the Olmsted lock and dam project. WRDA provides authority and funding for building and maintaining U.S. waterways, locks and dams and environmental controls.

The Senate bill would dedicate full funding to complete the Olmsted dam, which is still incomplete and carries a price tag of about $3.1 billion. The dam was authorized in 1988 at a cost of $775 million. The council and several state ag groups that signed the letter said this diverts much-needed funding from the other 25 lock and dam projects under U.S. Army Corps of Engineers authority. If fully funded, as called for in the Senate bill, other projects would receive an additional $164 million in Waterways Trust Fund monies that would be freed up as a result.

The group again asked conferees to increase the trust fund user fee to help fund waterways projects, indicating the current 20-cent-per-gallon fuel user fee should be set at 26 cents to 29 cents per gallon.

 

Net Farm Income Up Again; USDA Increases Ag Export Forecast

Net farm income in 2013 will hit $131 billion, the highest since 1973 and 15.1 percent higher than in 2012, the U.S. Department of Agriculture reported recently. Ag exports are partly responsible; they are projected to hit $137 billion in fiscal 2014. The export figure is up $2 billion from August but lags a year ago by $3.9 billion, USDA said. Livestock, dairy and poultry exports are set at $31.8 billion, $700 million higher than projected in the August report.

Net cash income is forecast at $129.7 billion, down more than 3 percent from 2012. Ag imports are projected to hit a record $109.5 billion, $5.7 billion more than in 2012.

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