Washington Report for 3-10-14

By Steve Kopperud

White House submits FY2015 budget recommendations to Congress

President Obama has sent to Capitol Hill a $3.9-trillion FY2015 budget package and his recommendations on how federal dollars should be spent, including several hundred million dollars in proposed user fees. Sen. Patty Murray (D-Wash.), chair of the Senate Budget Committee, said the package is “realistic” while her counterpart in the House, Rep. Paul Ryan (R, Wisc.), called the proposed budget “a campaign brochure.”

The political rhetoric is mostly noise since appropriators generally use the White House budget to guide their spending work, treating presidential requests as policy statements. They then frame their own spending plans, which may or may not include any of the administration’s requests. For instance, the White House budget recommendation that the federal minimum wage be raised to$10.10 per hour is far too hot an issue to jeopardize overall spending by including it in an appropriation bill.

When it comes to food safety spending, the White House allocates the Food and Drug Administration $4.5 billion overall, but assumes a gaggle of user fees within that number. The Center for Food Safety & Applied Nutrition gets a 2.5 percent increase, while the other centers within FDA – including the Center for Veterinary Medicine – see a general decrease of about 1.5 percent. About $24 million is set aside for food safety programs broadly; however, the administration “assumes” at least $230 million will be generated through food safety user fees. About $170 million will come from new importer service fees authorized in the Food Safety Modernization Act, but the White House also recommends nearly $70 million be raised by charging a new, unauthorized fee for companies to register under FSMA. Registration fees were rejected when FSMA was working its way through Congress, and that rejection has continued through the last few appropriations processes. Agriculture strongly opposes the fees, seen as a de facto tax on the food and feed industries.

The U.S. Department of Agriculture's share of the budget is about $23.7 billion and cuts the Food Safety & Inspection Service by about $10 million. The White House also proposes meat inspection user fees, but every administration going back to President George H.W. Bush has unsuccessfully sought the same goal. About $14 million in cuts to the federal crop insurance are recommended, as is the closing or consolidating of 250 Farm Service Agency county offices.

The U.S. Environmental Protection Agency takes a $310-million cut in FY2015, with the White House recommending agency funding at $7.89 billion. Nearly $200 million will be dedicated to “climate change” to support the President’s Climate Change Action Plan, including CO2 standards for power plants and actions to address hydrofluorocarbons and methane. Money is also allocated to assist states in controlling greenhouse gas emissions in the coming year, and $23 million would be spent on chemical and toxics safety. About $8 million would be spent on clean water initiatives.

CFTC nominees pledge ag sensitivity, strong enforcement

President Obama’s three nominees to replace departing Commodity Futures Trading Commission members, including the panel’s chair, were grilled last week by the Senate Agriculture Committee, including questions by two members regarding the lack of agricultural sector experience among the trio.

The committee met to consider the nominations of Timothy Massad to be CFTC chair and Sharon Y. Bowen and J. Christopher Giancarlo to be commissioners.

Committee Chair Debbie Stabenow (D-Mich.), conjuring the specter of the MF Global and Peregrine Financial bankruptcies, reminded the nominees of the need to ensure markets are free of fraud and manipulation. “You will need to make sure these companies, like commercial end users, energy firms and agricultural producers, are able to use these markets to manage their risks and to find fair prices for a wide range of products from corn to natural gas to aluminum,” she said. Massad pledged “aggressive pursuit of wrong-doers.”

Sen. Saxby Chambliss (R-Ga.) questioned why the CFTC’s Agricultural Advisory Committee has met only once since 2011. The committee was created 20 years ago to ensure commissioners understand ag futures and options trading and to facilitate communications between industry and the CFTC. Massad pledged to ensure the committee gets a new chair and a regular meeting schedule. Giancarlo said he would be “honored” to serve as chair.

All three said they would immediately review comments on the commission’s pending position limits rule, especially in the context of whether the rule is necessary and its proposed limits appropriate. Giancarlo on more than one occasion said he was committed to finding a balance between excessive regulation and cost increases. Bowen acknowledged the need to protect markets from excessive speculation and manipulation.

Sen. John Hoeven (R-N.D.) challenged the trio on their lack of ag background, but acknowledged their commitment to talk with farmers about the markets, urging them to “get out in the field.” Giancarlo, a Republican nominee, acknowledged the importance of ag markets and the need for buyers and sellers to hedge risk.

Sen. Amy Klobuchar (D-Minn.) questioned the three nominees about the CFTC’s ability to oversee the EPA market in Renewable Identification Numbers attached to biofuels refining and blending under the Renewable Fuels Standard. RIN market manipulation has been the subject of much criticism and critics allege the manipulation has distorted the biofuels market. Klobuchar says she believes it was the manipulation of the RIN market that led EPA to lower its proposal on Renewable Fuel Standard blends of biofuels with gasoline.

Stabenow said she fully expects the committee to vote on the nominees before the end of March.  

'Waters of the U.S.' proposal brings pressure on administration

A proposal by the U.S. Environmental Protection Agency to rewrite the definition of “waters of the U.S.” which defines its jurisdiction under the Clean Water Act is bringing new pressure on the White House from agriculture interests and others. The proposal has been at the Office of Management & Budget for review since September 2013, and the White House has given no hints as to when or if the agency proposal will be approved.

EPA proposes broadening its authority by redefining the CWA regulated waters definition from “navigable waters” to essentially all bodies of water across the country. Opponents – including most of agriculture, the transportation industry and energy groups – say the redefinition would allow the agency to impose regulations on ponds, ditch water, etc.

The American Farm Bureau Federation said recently that if the White House approves the EPA proposal “it will undermine some of the administration’s other priorities including jobs creation and energy independence.”

House immigration reform still alive

In the face of social media campaigns, demonstrations and media demands for action on immigration reform, House Republican leadership continues to tease reform supporters with the possibility a reform bill could pass this year. However, House Minority Leader Nancy Pelosi (D-Calif.) said she’s close to leading her caucus in a move to sign up 218 House members on a discharge petition to force the chamber to take up the Senate-passed immigration reform package whether leadership wants to or not.

While the likelihood of Pelosi getting the magic 218 signatures is slim – several pro-reform Republican members have already said they won’t sign the petition – the petition would send a strong message to Republican leaders and the public on the need for immigration reform.

However, action may not be as elusive as previously thought as House Speaker John Boehner (R-Ohio) said immigration reform is an area of potential compromise with the administration this year.

House passes bill to limit EPA on emissions

The ongoing legislative battle between the House and U.S. Environmental Protection Agency over the agency’s authority to regulate greenhouse gas (GHG) emissions from new coal fired utilities was fought again last week as the House overwhelmingly passed a bill that would limit EPA’s emissions authority. The White House has pledged to veto the bill if it reaches his desk.

The bill requires EPA to limit emissions only if it recognizes technologies in use commercially for at least a year in six plants. EPA currently seeks to require coal-fired plants to recapture carbon using so-called sequestration technology that opponents contend is not widely used in the real world and is extremely expensive. Supporters of the bill, authored by Rep. Ed Whitfield (R-Ken.), said the bill does not prohibit EPA requiring technologies developed and used in the United States or overseas.

The full House rejected an amendment that would have enshrined EPA’s finding that GHG pollution is a threat to human health and is a major contributor to climate change.

Ag groups want House hearing on bill to 'fix' RFS; USDA to promote biofuel exports

Eleven ag groups, including livestock and poultry producers as well as the feed industry, sent a letter last week to the leadership of the House Energy & Commerce Committee supporting the U.S. Environmental Protection Agency's proposed reduction in Renewable Fuel Standard blend rates for biofuels and asking for a hearing on a bill by Rep. Bob Goodlatte (R-Va.) to “reform” the RFS overall.

In a related development, Secretary of Agriculture Tom Vilsack announced recently that for the first time, the U.S. Department of Agriculture will include biofuels among U.S. commodities promoted for export in overseas venues. “We think the world is ready for U.S. biofuel so we want to use these resources to promote this great American product,” he said. USDA said the first overseas promotion will be in China with Japan and India also targeted.