Washington Report for 1-20-14

By Steve Kopperud

Dairy deal close, farm bill could head to floor next week

Insiders say a farm bill could be on the House floor next week because a dairy deal is reportedly close.

House Agriculture Committee Chair Frank Lucas (R-Okla.) has reportedly come up with a compromise to end the dairy supports/production control battle between his ranking member Rep. Collin Peterson (D-Minn.) and House Speaker John Boehner (R-Ohio). The dispute has delayed final conference committee action on the farm bill for nearly 10 days.

The completed conference report could now be on the House floor next week but that timetable could slip since House Republicans leave for their annual retreat on Jan. 29.

Word of the Lucas plan emerged early last week, but he did not release details. While Peterson hasn't read the plan's language, he said he may sign off on it because it “sounds like” it sends signals to farmers not to overproduce milk, and support among both Senate and House conferees is reportedly growing. Boehner has not publicly approved of the deal. Details are to be worked out during a week-long Martin Luther King holiday recess.

The dairy battle centers on language requiring milk production controls or what industry calls the “Dairy Market Stabilization Program”. The language is in the Senate dairy title. It says if producers want their margin insurance support – tagged to the price of feed/cost of production – then they agree to periodic, price-related supply controls. Boehner calls it “Soviet-style” industry manipulation; Peterson says supply controls are necessary so the U.S. Department of Agriculture can control dairy program costs.

The Lucas compromise would keep the dairy margin insurance program, but dump the milk supply control component. Further, there is no Milk Income Loss Contract program included as an option either in current or modified form. Reports indicate Lucas’s plan supports dairy farmers based on milk price but limits assistance so it doesn’t push out smaller producers with lower production. The secretary of agriculture would be given annual authority to adjust the margin insurance premium paid by a farmer up to 5 percent up or down. The “gross margin insurance indemnification” would be a so-called “blended payment,” based on whether producers exceed their historical milk production base. Each farm would receive an individual farm calculation. A full payment would be received on a two-month base production calculation; farmers would receive only 75 percent of their payment on production exceeding that base. The Lucas deal may also contain USDA “emergency” authority to buy limited amounts of surplus milk.

Negotiators still wrestling with farm bill payment limitations, eligibility

With many farm bill conferees calling it the last major hurdle, Sen. Chuck Grassley (R-Iowa) continues to battle to keep language in the farm bill conference report limiting federal payments to eligible farmers, but changing that eligibility by redefining what an “actively engaged” farmer is.

Both House and Senate bills contain language – authored by Grassley and Rep. Jeff Fortenberry (D-Neb.) – creating “hard caps” on payments, excluding crop insurance, at $250,000 a year for a farming couple, and $125,000 for a single farmer or for the first time, a single “manager” on a single farm. While Senate Agriculture Committee Chair Debbie Stabenow (D-Mich.) supports keeping the language in the final report, Rep. Frank Lucas (R-Okla.), chair of the House ag panel, and Sen. Thad Cochran (R-Miss.), ranking member of the Senate ag committee, want those limits removed or increased. House Agriculture Committee ranking member Rep. Collin Peterson (D-Minn.), who is not actively negotiating the payment limits issue, said this is a fight “between the North and the South.”

Current eligibility requirements call for demonstrating “involvement” in the farming operation but stop short of a recipient actually stepping foot on the farm. Grassley’s goal is to ensure anyone getting a U.S. Department of Agriculture check has day-to-day active engagement in the farming operation, including actually being on the farm. Rep. Rosa De Lauro (D-Conn.) got into the fray by saying she supports keeping the Grassley language because the current definition “would allow multimillionaires to collect taxpayer subsidies by padding their payrolls with people who’ve never stepped on the farm.”

While the battle was essentially political up until last week, the Congressional Budget Office handed Grassley a major weapon when it released a new “score” on the payment limit savings that pegged dollars saved at $387 million over the next decade, compared with an original estimate of about $177 million over 10 years.

Congress approves $1.1 trillion spending bill heavy with policy add-ons

The House and Senate has approved the FY2014 omnibus spending bill, clearing it for President Obama’s signature and avoiding another potential government shutdown. However, for many in Congress, avoiding the shutdown trumped their opposition to a host of policy riders included in the package, the 2014 equivalent of political earmarks.

The 1,600-page omnibus bill includes 12 individual appropriations bills, but while Obama has pledged to sign the bill, he’s not happy that in real dollars it provides less federal discretionary spending than appropriators President George W. Bush’s during his last year in office.

For agriculture, the U.S. Department of Agriculture receives $20.9 billion overall, about $350 million more than in FY2013. Research gets $2.6 billion, including $316 million for the Agriculture & Food Research Initiative and the National Institute of Food & Agriculture. APHIS gets $821.7 million, about the same as last year, and the Farm Service Agency gets $1.5 billion, again equal to FY2013.

In related agriculture policy actions, the report accompanying the bill includes language by Sen. Mike Johanns (R-Neb.) that restricts the Occupational Safety and Health Administration from regulating small farms by redesignating them as “grain handlers” and defining grain storage, drying and fumigating as OSHA-regulated activities. The bill also withholds money from USDA horse slaughter inspection, prohibits the Grain Inspection, Packers and Stockholders Administration from interfering in contract grower negotiations and disputes and stops the department from releasing regulations designed to regulate the private contract relationship, and the omnibus “warns” USDA to delay implementation of country-of-origin labeling of meat products.

Appropriators allocated $215 million for the Commodity Futures Trading Commission, $10.1 million more than the pre-sequester FY2013 enacted level, but $100 million less than requested by the White House. Of that total, $35 million is designated for information technology investment, but the commission is allowed to “reprogram” up to $10 million for salaries. About $2.55 billion is appropriated for the Food & Drug Administration, $96 million more than the 2013 enacted level. It also preserves user fee funding and returns to FDA lost income due to sequestration.

Appropriators added language on the new Food Safety Modernization Act implementation, saying FDA “significantly underestimates” the potential cost of the new rules to the food/feed industries. “The agency has indicated that significant changes will be needed in key provisions and is encouraged to re-propose a rule that provides the necessity, location, and frequency of testing based upon risk-cost benefit and other established verification activities,” the report says.

A significant increase in funding for waterways also was included in the Energy & Water title, with the Army Corps of Engineers getting $1.6 billion, along with the promised revisions in funding to guarantee completion of the Olmsted Lock and Dam project.

GAO tells EPA to move on ag, stormwater runoff

The Government Accountability Office, the investigative arm of Congress, recently released a report saying the U.S. Environmental Protection Agency needs to write rules that tackle ag operation runoff as well as stormwater runoff if that runoff heads for “impaired waterbodies.” GAO says voluntary measures aren’t working.

However, EPA doesn’t appear to be eager to shift from voluntary to mandatory runoff regulations because when it tried similar action back in 2000, Congress intervened, with the agency adding “this recommendation might be better directed at Congress than EPA.”

The report says the mandatory limits are needed to control maximum daily loads (TMLs) and meet EPA’s obligations under the Clean Water Act. The voluntary program has resulted in only about 20 percent of state programs achieving targets, compared with 83 percent for permitted or mandatory discharge levels, GAO said.

“The goals of the act are not being met,” GAO said. “Without changes to the act’s approach on nonpoint source pollution, the act’s goals are likely to remain unfulfilled.”

House subcommittee acts to limit EPA on greenhouse gas emissions

A subcommittee of the House Energy & Commerce Committee has approved a bill that would restrict how the U.S. Environmental Protection Agency seeks to control greenhouse gas (GHG) emissions from new power plants, action insiders say will affect how the agency tries to control similar emissions in other industries.

The party line vote in the subcommittee on energy and power subcommittee approved a bill that would require any agency rules to control emissions from new coal-powered utilities that rely on “new” control technologies to be built with technology that has been used at several facilities on a full commercial basis over at least the previous year.

While not restricting EPA requiring use of the best and “cleanest technologies” commercially available, supporters argued the current EPA power plant rulemaking is designed to end construction of new coal-power plants and the carbon capture/storage technologies contemplated by the agency are costly and generally not available commercially.

As for existing power plants, the bill would require Congress enact a separate law creating a start date for those actions, with the EPA administrator required to report to Congress. The report would contain the text of the proposed rule, the economic impact of the rule and the level of emissions expected to be reduced compared to similar emissions globally.

Shuster: House highway bill on track for action this year

House reauthorization of federal highway programs will happen in 2014, said Rep. Bill Shuster (R-Pa.), chair of the Transportation & Infrastructure Committee. His statement was designed to satisfy industry concerns that Congress may end without the long-awaited reauthorization.

“We hope to take (committee) action this spring or early summer,” Shuster said. He hopes it will be on the floor shortly after committee action and if the Senate moves as efficiently, the bills could be reconciled and on President Obama’s desk by early fall.

The biggest hurdles right now include how to fund the measure given lagging motor vehicle tax and fuel payments to the Highway Trust Fund and whether the bill should include a rail title. Amtrak wants to see rail language and enjoys White House support. The bill is expected to focus on “multimodal cargo transport,” Shuster said.

Former House member Mary Fallin, now Republican governor of Oklahoma and chair of the National Governors Association, testified at the hearing about action taken by the states to fund their own transportation systems. “Continued federal investment is necessary,” she said. “The burden of maintaining the entire transportation network cannot be left to the states.”

High court won’t hear Monsanto patent case

The U.S. Supreme Court will not hear a lawsuit filed by more than 70 agriculture, farm and food groups challenging Monsanto Corp.’s patent infringement claims against traditional and organic farmers.

Several organic and conventional producer groups filed the lawsuit, seeking Supreme Court review of their challenge to Monsanto’s infringement claims against them due to contamination of fields by nearby biotech production. The high court is leaving in place the decision of a lower federal court that said the farmers and companies cannot try to preempt or protect themselves from possible Monsanto action.

Lawyers from the plaintiff groups said the court’s decision was disappointing and argued the decision does not automatically give Monsanto the right to bring patent infringement suits. Monsanto said it never intended to act against farmers who found traits of Monsanto’s genetically engineered seeds in their fields “by inadvertent means.”