Washington Report for 3-17-14

By Steve Kopperud

BNSF: Summer will bring end to 'perfect storm' of rail backlog

With grain elevators and ag shippers in North Dakota and neighboring states experiencing up to three-week delays in getting rail service, competing against near-record oil and freight traffic and Mother Nature, the CEO of the BNSF Railroad last week said all will be back to normal before summer.

BNSF CEO Carl Ice met with Sens. John Hoeven (R-N.D.) and Heidi Heitkamp (D-N.D.) in the latest in a series of meetings to discuss backlogged ag shipments and rail safety. Along with Rep. Kevin Cramer (R-N.D.), the delegation has been pushing the BNSF for months to improve service and clear the grain and ag products shipping backlog, with strong support from efforts of the National Grain & Feed Association, the National Association of Wheat Growers and sugar beet cooperatives.

As a result of the meetings with the North Dakota lawmakers and industry, Ice said BSNF will spend $5 billion in 2015 on rail infrastructure, including $600 million in North Dakota and $400 million in the railroad’s northern tier.

Some reports indicate the BSNF backlog has been as long as 40 days; Ice said the delay is now about 19 days, the overall average for the BNSF system. April and May should bring a drastic reduction in past-due cars, and the carrier will be current in June, he pledged.

“We recognize the severe impact our reduced network velocity is having on our customers and their businesses…BSNF is committed to restoring service levels in North Dakota as quickly as possible,” Ice said.

Ice said the delays are due in large part to an unusually severe winter; Heitkamp said until someone tells her she’s wrong, she believes competition between oil and ag for tankers and railcars is the main reason for the delays. She told The Associated Press that BNSF has to keep up with agriculture and “there is no question they need to increase capacity.”

Feed, grain groups ask FDA for time to respond to FSMA feed/pet food proposals

Four national organizations have formally requested the U.S. Food and Drug Administration extend the comment periods on the Food Safety Modernization Act animal food performance standards proposed rule, as well as other FSMA proposed regulations affecting the feed and grain industries. The request was filed by the American Feed Industry Association, the National Grain & Feed Association, the National Renderers Association and the Pet Food Institute.

The groups said the complexity of rules governing animal food performance standards in risk identification/mitigation, FDA’s “high-risk” foods tracing proposal and a proposed regulation on intentional food/feed adulteration require at least another 90 days to prepare and file comprehensive comments. AFIA says the performance standards rule is over 400 pages long and grossly underestimates the cost impact on the industry.

DOT: Highway fund may be broke by July; highway reauthorization moving slowly

The federal Highway Trust Fund, funded by federal gasoline taxes and used to reimburse states for highway, bridge and infrastructure repairs, could be seriously short of cash by July, according to the Department of Transportation. The chair of the House Transportation & Infrastructure Committee also said lawmakers have contingency plans to handle the fund shortfall if the president doesn't sign a federal highway reauthorization package by the first part of July. Current federal highway authority expires Sept. 30.

Appearing before the House committee’s subcommittee on highways and transit subcommittee, DOT’s Deputy Secretary for Policy Peter Rogoff said summer is the season of major state infrastructure project work. DOT will cut back on bridge and road reimbursements when the highway fund balance falls below $4 billion and will cut off reimbursement for public transit projects when the fund balance is less $1 billion, he said. First to be cut off are state projects, Rogoff said.

Chair Rep. Bill Shuster (R-Pa.) told a private audience last week he and his colleagues on the transportation panel have cobbled together the basic framework of a policy/financing package Congress could pass to carry highway and infrastructure projects into 2015. However, Shuster said he hopes to mark up a full highway program reauthorization package by this spring, including new fund financing language. Some in the House want to see an increase in the federal gasoline tax since revenues have fallen now that Americans are driving more fuel efficient cars and trucks and driving fewer miles. Senate Environment & Public Works Committee Chair Barbara Boxer (D-Calif.) reiterated she may be ready to mark up the Senate highway bill next month, but her bill will not address the funding challenge. That responsibility, she said, falls to the Senate Finance Committee.

House ag committee again approves bill to end redundant NPDES permit issue

The full House Agriculture Committee has approved legislation – again – that would end the redundant U.S. Environmental Protection Agency requirement that farmers who spray pesticides on or near water get a National Pollution Discharge Elimination System (NPDES) permit, even though the pesticide is already approved under FIFRA. Similar legislation was approved in the last Congress, but died in the Senate. House conferees on the 2014 Farm Bill tried to retain similar language in the final bill but were unsuccessful.

House committee begins Toxic Substances Control Act overhaul

Debate over draft legislation designed to reauthorize the Toxic Substances Control Act began in the House Energy & Commerce Committee last week, immediately drawing fire over House language on risk/cost/benefit of chemical control and federal preemption of state regulations. A revised draft is expected before the next hearing.

The revamped TSCA draft bill – the update of the 40-year-old chemical safety law – approaches chemical safety by categorizing chemical risk as “unreasonable risk” under intended uses, effectively allowing the agency to classify chemicals as high or low risk for safety concerns that trigger regulation. It would remove existing language requiring EPA to take the least burdensome regulatory approach to chemical safety. In its place would be risk-based requirements based on a chemical’s likelihood to cause human harm. Opponents of the draft said this approach forces EPA to conduct extensive analyses and would “paralyze” EPA.

Also controversial is language similar to its Senate counterpart that would give EPA authority to preempt certain state and local regulations when EPA safety analyses show a specific chemical poses “unreasonable risk to human health.” Sen. Barbara Boxer (D-Calif.), chair of the Environment & Public Works Committee, said she’ll oppose any bill with the state preemption provision; Rep. Henry Waxman (D-Calif.), ranking member of the Energy & Commerce Committee, opposes the language as “going well beyond even the Senate bill.”

House introduces bill to protect farmer/rancher privacy

Following an error in process by the U.S. Environmental Protection Agency in 2013 when it turned over private personal/financial farmer information to three activist environmental groups, four House members introduced the Farm Identity Protection Act of 2014 to protect producers' privacy.

Following two 2013 Freedom of Information Act requests from the three environmental groups, EPA – without notifying affected farmers and ranchers – turned over names, addresses, geographic coordinates of farms and ranches, and in some cases, personal phone numbers and email addresses for more than 80,000 producers in 29 states. The agency said it lacks legal authority to prevent another such release in the future.

The National Cattlemen’s Beef Association praised the House bill. “There is no justification for the blatant disregard of our privacy (by EPA). To turn this type of information over to anyone who has a computer is not just reckless, but it poses serious agroterrorism threats,” said NCBA President Bob McCan.

The House bill is the product of Reps. Jim Costa (D-Calif.), Rick Crawford (R-Ariz.), Lee Terry (R-Neb.) and Mike McIntyre (D-N.C.). A similar bill was introduced in the Senate last July by Sens. Chuck Grassley (R-Iowa) and Joe Donnelly (D-Ind.).

Acting EPA agriculture counselor named

Allison Wiedeman, who formerly worked in the U.S. Environmental Protection Agency's Office of Water, has been named acting agriculture counselor to Administrator Gina McCarthy. She replaces Sarah Bittleman, who left the USDA liaison slot, to become Sen. Ron Wyden’s (D-Ore.) legislative director, as well as counsel handling ag and environmental issues on the Senate Finance Committee, which Wyden chairs. Bittleman, popular with ag interests in Washington, D.C., worked for Wyden prior to joining the Obama administration as a senior advisor to Secretary of Agriculture Tom Vilsack.

Wiedeman was previously in charge of developing national water pollution regulations for energy-related industries, including coal mining and oil and gas drilling. Prior to moving to EPA’s Washington, D.C. headquarters, she worked at the EPA Chesapeake Bay Program for nine years, where she was in charge of directing agency activities to accelerate restoration of the bay through technological innovation and implementation related to both point sources and agriculture.

Stabenow, Hagan ask USDA for small pork producer disaster assistance over PEDv

Sen. Debbie Stabenow (D-Mich.), chair of the Senate Agriculture Committee, teamed with Sen. Kay Hagan (D-N.C.) in urging Secretary of Agriculture Tom Vilsack to immediately approve livestock disaster assistance to small pork producers hit by the Porcine Epidemic Diarrhea Virus (PEDv).

The two senators also strongly encouraged the U.S. Department of Agriculture to increase and focus research efforts in collaboration with the pork industry and industry stakeholders to find a vaccine and other interventions to address PEDv.

Stabenow said PEDv has killed four million pigs across the country since April, 2013, and while the need for help is most immediate for small producers, the spread of PEDv and continued losses has implications for the broader agriculture economy. She pointed to the permanent livestock disaster assistance programs included in the 2014 Farm Bill as key to immediate assistance to producers in the 27 states affected by PEDv. The first case was found in Arizona last week.

In a letter to Vilsack sent March 13, Stabenow and Hagan wrote, “Pork producers impacted by PEDv face economic devastation. These producers are finally experiencing periods of higher margins after prolonged periods of razor-thin profits. If this disease persists, pork herds will continue to diminish and producers risk going out of business.”

NGFA tells CFTC spec position limit proposal could hike limits for ag futures

A long-awaited Commodity Futures Trading Commission proposed rule to set speculative position limits on futures and swaps for various commodities would potentially increase speculative position limits on agriculture futures markets users, the National Grain & Feed Association told the commission.

“We fear that a number of common hedging transactions used for business risk management in the grain, feed and processing sector, but not enumerated in the proposal, could be put at risk,” NGFA said in a statement filed with the CFTC. NGFA said its members need a “consistent and predictable” system and that its use of futures to manage risk is not structured as “investment or speculative tools.”

Further, to change the definition of a “bona fide hedge” could create uncertainty and invalidate several commonly used hedging transactions, including locking in futures spreads, hedging basis contracts and delayed-price commitments.

DOT proposes hours-tracking device in trucks crossing state lines

A recording device, intended to make it more difficult for drivers to alter paper logbooks or keep two sets of driving records showing how many hours they’ve driven, would be mandatory in all commercial trucks and buses crossing state lines under a Department of Transportation proposed rule published this week.

Installing the devices would save 20 lives and prevent 434 injuries a year attributable to drivers who exceed their allowable driving time, according to the Federal Motor Carrier Safety Administration. It will also cut down on paperwork by operating companies, the agency said.

While most big trucking companies already use the devices – they’re mandatory in Europe – most small companies that own their trucks have opposed the mandatory device installation supported by highway safety groups.

The American Trucking Association welcomed the proposed rule. The Owner-Operators Independent Drivers Association said it’s reviewing the proposal but has said such devices are used to “coerce” drivers into continuing to drive regardless of conditions, traffic or the driver’s condition.

Animal drug companies commit to no feed antibiotic growth promotion label claim

In the evolving cooperative program between agriculture and the U.S. Food and Drug Administration over the judicious feed and water use of antibiotics, pioneer and generic animal drug companies said they will file supplemental new animal drug applications and surrender label claims for growth promotion and feed efficiency uses of the drugs.

The Animal Health Institute, which represents pioneer animal drug companies, and the Generic Animal Drug Alliance both confirmed the label changes have been accepted, which effectively changes the drugs’ from over-the-counter status to requiring veterinary oversight through the use of a Veterinary Feed Direction. VFD was authorized in 2006 but has been sparsely used until FDA announced its judicious antibiotics plans. The new VFD system, developed in cooperation between FDA and industry, will be streamlined and much more user friendly. FDA has not published its final VFD rule.

AHI said many companies and producers accepted the FDA recommendations shortly after they were published in the Federal Register in December, 2013, pointing out most antibiotics are used for prevention and treatment of disease, not feed efficiency or growth promotion.

Five states join Missouri to sue California over egg sales law

A lawsuit filed against California by the Missouri attorney general last month over a state law prohibiting the sale of eggs from chickens not raised identically to chickens raised under California regulation has been joined by five more states. Last week, attorneys general from Nebraska, Alabama, Oklahoma, Kentucky and Iowa joined the lawsuit.

The six plaintiff states produce 20 billion eggs a year, with about 2 billion eggs sold in California. Iowa and Missouri are the nation’s leading egg producing states.

Meanwhile, in a related development, the Oklahoma attorney general issued a consumer alert against the Humane Society of the United States after the attorney general received complaints the world’s largest animal rights group misled contributors after 2013’s Moore, Okla., tornadoes, telling donors their money would go to help shelters and local efforts.

In the California egg case, in 2008, state voters approved a ballot question giving laying hens more room in layer cages. The next year the state legislature, fearing California egg producers would be at a competitive disadvantage to other states because their production costs would be higher, enacted a law saying no eggs can be sold in California unless the hens that laid them were raised under identical conditions to those mandated in California.

During 2014 Farm Bill debate, Rep. Steve King (R-Iowa) inserted into the House version of the bill language to federally preempted state laws like California’s as violating the Commerce Clause and interfering with trade among the states. The language did not survive the farm bill conference committee after several state officials complained the language would have negatively impacted more than just farm production laws, preempting state consumer protection and environmental laws, as well.

When Missouri Attorney General Chris Koster filed the original suit against California, he said: “This case is not just about farming practices. At stake is whether elected officials in one state may regulate the practices of another state’s citizens who cannot vote them out of office.”