Washington Report for 4-28-14

By Steve Kopperud

Highway, water reauthorizations up when Congress returns

On Tuesday the Army Corps of Engineers will watch and wait as the House Transportation & Infrastructure Committee reviews the Corps’ revised report on which federal water construction and renovation projects it intends to move forward in the coming year. If approved, the plan could clear the way for House and Senate conferees to move on completion of the Waterways Resource Development Act reauthorization.

The projects receiving priority for funding and action, including locks/dams and harbors, have been a major sticking point in conference negotiations. The House-passed bill includes the Corps project priorities, but the Senate has sought to add projects to that list. The new report is expected to include many of the Senate projects.

Also getting attention this week will be the federal highway reauthorization battle. It’s expected the White House will unveil its approach to multi-year funding for highway and commuter projects funded by the legislation, but the recommendations are expected to be similar to what the president talked about in his State of the Union address. The House transportation committee is expected to unveil its comprehensive reauthorization bill as early as next month, but Congress is leaning toward a simple reauthorization of current projects at current funding, plus an inflation adjuster.

Still up in the air is the fate of the federal Highway Trust Fund, which the Department of Transportation predicts could run out of money sometime this summer. The fund, which pays for many of the state projects already underway, is going broke because of reduced driving and gasoline sales. The Senate Environment & Public Works Committee punted the trust fund issue to the Finance Committee, which has yet to act.

No U.S.-Japan deal on TPP as president leaves Japan

President Obama met with Japan's Prime Minister Shinzo Abe to try to end a deadlock between the two countries over tariff concessions the United States wants as part of the Trans-Pacific Partnership (TPP) trade deal. The media called the meeting a “setback” while the White House said it was a “breakthrough.”

Japan is the United States' fourth largest trading partner, with the United States selling $12.1 billion in food and ag products in 2013.

Top Japanese negotiators reported “talks have stopped for now, and while there was progress there is much work to be done.” The joint statement issued by Obama and Abe as the president left for South Korea was vague, but confirmed there is no deal. Negotiators continued talking even as Obama and Abe held their press conference and issued the statement, finally wrapping up a marathon 24-hour negotiation session.

The tariff dispute pivots on Japan’s initial refusal to negotiate on eliminating import tariffs in five “sacred” categories – rice, dairy, sugar, wheat and pork/beef. The dispute has brought overall TPP negotiations to a halt, and the Obama-Abe talks are seen as make-or-break for TPP success. The next TPP chief negotiator meeting is set for May in Vietnam, with the United States, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam set to participate.

The president is also under pressure to get a tariff deal with Japan for U.S. car and truck exports. While the White House said “progress has been made,” hampering Obama is the lack of congressional support for granting him trade promotion authority (TPA), particularly among Democrats. Abe is feeling political heat from Japanese farmers, as well as his lawmakers. The Japanese Diet passed resolutions prohibiting the elimination of tariffs, pushing the government to accelerate separate bilateral negotiations with Australia, Canada and the European Union (EU) on pork imports as leverage in Japan-U.S. talks.

The “progress” referred to by the White House may be pegged to a story that ran in the Japan News last week. The paper reported the outline of a tentative deal may have been struck between U.S. and Japanese negotiators to take Japan’s tariff on beef – currently 38.5 percent – and reduce it to 9 percent; the pork tariff at 4.3 percent will be lowered slightly, but the so-called “gate price” – the lower the price of imported pork, the higher the tariff – will remain. For dairy, the current 218 percent tariff on non-fat dry milk and the 360 percent tariff on butter would be lowered slightly, but Japan would agree to a quota on the lower rate; for rice (778 percent) and wheat (252 percent), tariffs wouldn’t change much, but a quota on tariff-free imports would be established. Sugar tariffs at 328 percent and starch tariffs at 583 percent would not change much.

In advance of the Obama's arrival in Tokyo, a U.S. congressional delegation met with Abe and urged him to take “bold steps.” A letter signed by 63 House members was sent to U.S. Trade Representative Michael Froman and Secretary of Agriculture Tom Vilsack as the president prepared to leave for a four-day trip to Asia, urging the administration to pressure Japan to end tariff and non-tariff trade barriers with the United States on ag products. The National Pork Producers Council praised the legislators but also warned pork industry support for TPP hinges on Japan acting to “remove those obstacles to free trade.”

U.S. agricultural groups supporting the TPP fear if the United States exempts Japan from tariff removal, it will show an inconsistency on trade policy, jeopardizing the overall TPP because other nations would likely seek to reopen other sections of the deal seeking exemptions as well.

FDA’s Taylor blogs concession on spent grains under FSMA

In a bow to political pressure, U.S. Food and Drug Administration’s Deputy Commissioner for Foods & Veterinary Medicine Michael Taylor took the unusual step of blogging on an agency website to say FDA will not include spent grains from beer and liquor distillers under new feed or food regulations proposed under the Food Safety Modernization Act.

Acknowledging industry and congressional pressure, Taylor said, “We’ve heard from trade groups and members of Congress, as well as individual breweries raising concerns that FDA might disrupt or eliminate (providing distillers’ spent grains to farmers as feed) by making brewers, distillers and food manufacturers comply not only with the human food safety requirements, but also additional, redundant feed standards that would impose costs without adding value for food or feed safety. That, of course, would not make common sense and we’re not going to do it.”

The April 24 Taylor blog came just hours after Sen. Chuck Schumer (D-N.Y.) issued a press release declaring victory on the spent grains issue, saying he and FDA Commissioner Margaret Hamburg talked on the phone, and he had secured “a commitment from the Commissioner that the FDA would reverse course” on the spent grains issue.

Industry and FDA observers were surprised by the decision to say anything about the spent grains issue before the next version of the rule is published. The agency is normally silent on rulemakings once the formal comment period has closed, with any changes requested reflected in the next version of the rule. Hamberg told Congress on several occasions over the last several weeks FDA will look at the spent grains issue in the context of reissuing a new version of the feed rule in June.

Under FSMA proposed rulemaking, spent grains could have been treated as any other animal food product provided to farmers, just as distillers dried grains (DDGs) from ethanol refining are included. Nowhere in the proposed rule does the agency talk of eliminating the practice to donate spent grains to farmers for feed; however, the companies could cease the practice to stay out of the FSMA regulatory net.

Taylor said “the potential for any animal safety hazard to result from this practice is minimal, provided the food manufacturer takes common sense steps to minimize the possibility of glass, motor oil or other similar hazards being inadvertently introduced, such as if scraps for animal feed were held in the same dumpster used for floor sweeping and industrial waste.

“We understand how the language we used in our proposed rule could lead to the misperception that we are proposing to require human food manufacturers to establish separate animal feed safety plans and controls to cover their byproducts, but it was never our intent to do so,” Taylor blogged. “…this summer we plan to issue revised proposals for comment on several key FSMA issues and we will include changes consistent with the points outlined in this blog.”

Senators challenge White House on immigration deportations; Boehner takes on GOP

President Obama’s recent order to the Department of Homeland Security to review federal deportation policy in the wake of pressure from pro-immigration reform groups has 22 senators concerned. In a letter to the White House, the senators expressed their fear Obama may act “unconstitutionally” by issuing an executive order “incrementally nullifying immigration enforcement” and putting the public at risk.

In related immigration news, House Speaker John Boehner (R-Ohio) is taking media heat for a speech he gave in his Ohio district during which he confessed frustration with Republican House members unwillingly to take on immigration reform legislation.

On the deportation issue, several Democrat lawmakers have called for a suspension of deportation for illegal immigrants during the political tug-of-war over immigration reform. However, the Senate letter said, “According to reports, the changes under consideration (by DHS) would represent a near-complete abandonment of basic immigration enforcement and discard the rule of law and the notion that the U.S. has enforceable borders.” The senators said the administration should be looking for ways to strengthen immigration enforcement, not weaken it.

Boehner, accused in headlines of “mocking” his colleagues, reportedly said in a speech to a Rotary Club on his colleagues and immigration reform, “Here’s the attitude. ‘Ohhh, don’t make me do this. Ohhh, this is too hard.’ We get elected to make choices. We get elected to solve problems, and it’s remarkable to me how many of my colleagues just don’t want to, and will take the path of least resistance.”

The speaker said he’s been working for “16 or 17 months” to get Congress to take on immigration reform, and “I’ve had every brick and bat and arrow shot at me over this issue just because I want to deal with it. I didn’t say it was going to be easy.”

Boehner got support from Rep. Peter King (R-N.Y.), who sent the speaker a letter urging him to bring up immigration reform on the House floor. King said a “confluence of events” makes the time right for immigration reform, action that would benefit the country and the GOP. The plan must include “strong and real” border security and enforcement, as well as a pathway to citizenship for illegal immigrants.

Vilsack: Ag gets too much heat on climate change

Secretary of Agriculture Tom Vilsack said agriculture gets the lion’s share of blame for global climate change even though the industry contributes just 9 percent of greenhouse gas (GHG) emissions. However, agriculture must do its part to adapt to climate change, Vilsack said during a Drake University forum on climate change.

He said problems in other parts of the world are not problems in the United States, according to the Des Moines Register. “Clearly there are challenges globally in terms of agriculture and its contribution to greenhouse gas emissions. That’s not necessarily the case in the U.S.,” Vilsack said. He went on to say farming and ranching contribute fewer GHG than other industries.

Agriculture will need to learn to cope with warmer temperatures, he said, citing lingering drought and shrinking water supplies. “Our challenge is reeducate farmers about the vulnerability of agriculture when it comes to climate change,” Vilsack said.

Vermont governor gets GM labeling bill

The first bill to mandate labeling of foods manufactured using genetically modified (GM) ingredients was approved last week by the Vermont legislature and is expected to be signed by the governor. Unlike other New England states that have passed GM labeling bills, the Vermont law doesn’t require neighboring states to pass similar laws. The law takes effect July 1, 2016.

The state assembly overwhelmingly approved the bill requiring labels on foods sold at retail and “produced or partially produced with genetic engineering.” Further, the bill forbids any food made with GM ingredients to be labeled “natural” or “all natural.”

Supporters of the labeling initiative say the Vermont law will be a model for other states. Currently, 26 states are considering bills to impose some form of GM labeling of foods. The Grocery Manufacturers Association said the Vermont bill is “critically flawed and bad for consumers.”

The food industry is gearing up to challenge the Vermont law in federal court. The Vermont lawmakers included money in the bill for legal defense of the new labeling requirement.

EPA revises cellulosic ethanol blend mandate lower

The U.S. Environmental Protection Agency has dramatically lowered the 2013 Renewable Fuel Standard mandate for blending cellulosic ethanol with gasoline. Through a direct final rule, EPA set the new RFS blend mandate at 810,185 “ethanol equivalent” gallons, significantly lower than the 6 million gallons EPA finalized last year based on production estimates that didn’t materialize.

While the agency said the revision is “noncontroversial,” it nonetheless published a proposed rule allowing EPA to further modify the RFS for cellulosic ethanol.

The change came after EPA received administrative petitions from the American Petroleum Institute and the American Fuel & Petrochemical Manufacturers calling out the lack of actual commercial cellulosic ethanol production that gasoline refiners could access to meet the RFS.