Washington Report for 5-5-14

By Steve Kopperud

Livestock, poultry industries vent at House subcommittee hearing

A hearing on the “state of the livestock industry” before the House Agriculture Committee subcommittee on livestock, rural development and credit provided national producer group witnesses an opportunity to detail the policy and program challenges they believe are hindering their ability to be more profitable.

Dr. Joseph Glauber, USDA’s chief economist, took question after question on major issues addressed in industry testimony that followed his testimony. Subcommittee Chair Eric Crawford (R-Ark.) questioned Glauber about country of origin labeling (COOL), a perennial target of the industry. Both agreed there is no direct evidence of consumer benefit in the labeling scheme. Crawford said he’s concerned on how COOL affects global livestock/poultry trade, while subcommittee ranking member Rep. Jim Costa (D-Calif.) said ongoing World Trade Organization formal dispute complaints by Mexico and Canada can be catastrophic, especially to states bordering those two countries.

Rep. Michael Conaway (D-Texas) wanted to know the impact of Brazilian beef imports, asking Glauber what the damage would be to the U.S. industry if imports brought food and mouth disease, a state-by-state problem in Brazil. Glauber said risk analysis studies said imports are safe, but if an outbreak did occur in the United States, the impact would be substantial, similar to the significant negative impact of the disease in the United Kingdom in 2007.

Bill Roenigk, senior vice president and economist for the National Chicken Council, said while his industry’s net margins for surviving companies are good, the industry continues to be frustrated by an inflexible federal renewable fuels policy and program. As one of the founding groups of a coalition that’s pushed for either repeal or rewrite of the federal Renewable Fuel Standard, Roenigk’s remarks echoed most other livestock industry witnesses.

The chicken industry has been stymied in production increases because of what Roenigk called “deep and sustained damage” to chicken production by the RFS, calling it “broken beyond repair.” Since 2006, he said, chicken companies have sustained an additional $44 billion in higher feed costs. He said the “blend wall,” food versus fuel, mandates for near-nonexistent cellulosic ethanol and other RFS issues won’t go away “until Congress deals with the reality of the unworkable, unsustainable, imbalanced and misnomered (sic) RFS.”

On the impact of corn ethanol on feed prices – an issue on which the subcommittee is split – Rep. David Scott (D-Ga.) was interested in recent reports that contend ethanol is more destructive to the environment than petroleum. Glauber said the ethanol industry is a “vibrant industry” and offers more than just fuel. Rep. Steve King (R-Iowa) asked about ethanol byproducts. Glauber explained about half of the refining byproduct is dried distilled grains (DDGs) used for animal feed. Glauber said that while corn prices have risen, current ethanol production has paved the way for other biomass fuels such as grasses and wood chips.

Witnesses generally spoke strongly in favor of comprehensive immigration reform, improved rail service and congressional action on propane gas shortages. On the pending U.S.-European Union free trade agreement, as well as quick resolution of disputes holding up the Trans-Pacific Partnership, the industry urged approval of these agreements. These are “jobs creators” for the industry, resulting in higher domestic production. Livestock and poultry witnesses also called on Congress to grant President Obama trade promotion authority.

The ongoing western drought was also a hot topic. Rep. Michelle Grisham (D-N.M.) said she does not know what ranchers can do to maintain production as this drought is entering its fourth year. Glauber recognized the challenge, as the national herd is down 5 million head with 35 percent of herds in drought areas. He went on to say this problem will compound itself, as

processing plants will begin to close and it will be even harder to get these animals to market.

House members say kill EPA water authority action

With the controversy surrounding the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers’ move last month to dramatically expand their authority under the Clean Water Act, more than 200 House bipartisan members have called on the White House to rescind the rulemaking.

The so-called “waters of the U.S.” rule is a particular concern to agriculture groups, and the American Farm Bureau Federation made it the group’s No. 1 regulatory priority. Despite EPA assurances that nothing changes for ag in the proposed expansion of water authority, AFBF has set up a “Ditch the Rule” website to oppose the rule as currently written.

The House action was led by Reps. Chris Collins (R-N.Y.) and Kurt Schrader (D-Ore.). Their letter

to EPA and the Corps has a simple request – withdraw the rule. “Under this plan, there’d be no body of water in America – including mud puddles and canals – that wouldn’t be at risk from job-destroying federal regulation,” said Rep. Doc Hastings (R-Wash.), chair of the House Natural Resources Committee.

Senate energy bill again threatened by amendments

A popular bipartisan Senate energy efficiency/conservation bill – supported by more than 80 energy organizations – looks to be threatened by the amendment curse this year. The bill, authored by Sens. Jean Shaheen (D-N.H.) and Rob Portman (R-Ohio), would create a federal program under which private and government buildings would receive assistance to retrofit and embrace new technologies to make them more energy efficient.

Senate Majority Leader Harry Reid (D-Nev.) said he’ll try and get agreement on cloture this week in hopes of finishing the bill. However, which amendments will be accepted and which will get floor votes remains a major process hurdle.

Likely not to get the Democrat leadership nod for a vote is an amendment by Sen. John Hoeven (R-N.D.) and Sen. Mary Landrieu (D-La.) to get the Senate on record approving the Keystone XL pipeline. Fifty-six Senators have cosponsored a freestanding bill by Hoeven and Landrieu. Negotiations on the Keystone bill continue and will likely be voted on separately from the energy bill. The White House, which recently ordered another delay to the Department of State’s study and recommendation on Keystone, strongly opposes the Hoeven-Landrieu legislation.

Sen. David Vitter (R-La.), ranking member of the Senate Environment & Public Works Committee, was the reason the Shaheen-Portman bill was pulled from the floor last September as he worked to add an amendment to the Affordable Care Act that would kill special exemptions in the health bill for congressional staff. He said he’ll attempt to offer the health care amendment again. Hoeven, however, said any deal between the two parties to move the energy bill will not include non-germane amendments.

Hoeven also wants a vote on his amendment that would prevent the U.S. Environmental Protection Agency from requiring carbon recapture and sequestration technology at power plants to capture greenhouse gases with certain benchmarks. Sen. John Barasso (R-Wy.) wants to require the Department of Energy to approve liquefied natural gas exports to World Trade Organization member countries.

DOT sends highway bill to the hill

The Department of Transportation has sent to the Hill a $302-billion, four-year reauthorization package designed to head off the imminent shutdown of the Highway Trust Fund for lack of funds. Several transportation groups approved of the package since it’s the first concrete signal of where the White House wants to go on federal highway programs.

The bill tracks – with some notable exceptions – President Obama’s infrastructure plan outlined in the 2014 State of the Union address. At the heart of the bill is an administration plan to fund projects through a “tax windfall” – enticing corporations to bring taxable overseas profits back to the United States – to shore up the trust fund, increase spending in some areas, while immediately spending about $87 billion on repairing bridges, transit systems and facilities.

One surprise recommendation was the administration’s willingness to walk away from federal prohibitions on charging tolls for using the interstate highway system. Tolls were prohibited in the original interstate highway authorization signed by President Eisenhower in 1956.

DOT Secretary Anthony Foxx said to not reauthorize federal highway and commuter programs before the trust fund runs out of cash – some say that could happen by June – is “unacceptable” due to the disruption of state and federal projects a trust fund bankruptcy would cause. The White House hopes by sharing its goals it can jump start the congressional process. The House Infrastructure & Transportation Committee is expected to unveil its bill next month, with committee leadership on both sides of the aisle cautious on the White House proposal. The Senate Environment & Public Works Committee has already laid out a much narrower reauthorization plan than the White House or likely, the House panel, but without a funding mechanism.

Rahall: Water bill in two weeks; ag shippers pressure Senate on barge tax

The lead Democrat on the House Infrastructure & Transportation Committee says he’s confident the conference report on the federal waterways reauthorization will be ready in two weeks. Rep. Nick Rahall II (D-W.Va.) said it’s now down to how many projects – and which ones – Congress will write into the law as direction to the U.S. Army Corps of Engineers on how to spend its money and where.

Also on the table is a long-requested increase in the fuel user fee barge operators pay to help fund waterways projects. The industry wants the increase, but House and Senate authorizers said only the tax-writing committees can authorize an increase in the fee. This week, 82 ag shipper and ag producer groups sent a letter to Sen. Ron Wyden (D-Ore.), chair of the Senate Finance Committee, and ranking minority member Sen. Orrin Hatch (R-Utah) urging them to back a 6- to -9-cent increase in the current 20-cent-per-gallon barge fuel tax. A similar push is planned for the House, where House Ways & Means Committee Chair Dave Camp (R-Mich.) has introduced a bill to raise the federal user on ag shippers to 26 cents.

The ag shippers’ willingness to pay higher user fees may be looking better all around. Getting that project list in place isn’t the only challenge, insiders say, but conferees must then figure out how to pay for them. Many of the projects being pushed on both sides of the Hill are home state projects in an election year.

Also in dispute is a provision in the Senate bill that would create a federal “oceans endowment.” There’s no similar language in the House bill and House conferees want to dump the provision.

USDA pushes immigration reform

Secretary of Agriculture Tom Vilsack said he sees an opening to get comprehensive immigration reform legislation to the president’s desk this year. Vilsack says that now most congressional midterm election primaries are over, it's the time to act.

He said all Republican House leaders understand the importance of getting the job done quickly, and in that they’re in lock-step with House Democrat leaders. The coalition of groups backing immigration reform is broad and diverse, he said, and up until now, the House effort has been blocked by a “small and ever-shrinking minority of people in Congress.”

House Speaker John Boehner (R-Ohio) and his lieutenants continue to demand assurances that whatever reform bill is passed, the president will enforce it as Congress writes it. Vilsack said this is a “phony, flimsy excuse” for not acting.

An apple grower from Virginia told Vilsack he’s concerned he won’t be able to find the 115 workers he needs to harvest his crop and said this inability to get labor prevents him from expanding his operation. Phil Glaize of Winchester, Va., said he and other growers have talked with House Judiciary Chair Bob Goodlatte (R-Va.) about the need for the immigration bill.

Senators look at propane shortage

At a hearing of the Senate Energy & Natural Resources Committee, senators heard about several factors that contributed to the shortage of propane for homes and ag operations this winter and steps need to be taken to ensure it doesn’t happen again this winter.

Sen. John Hoeven (R-N.D.) asked witnesses why there was such a severe propane shortage in the Midwest and Northeast last winter. A Department of Energy witness told him it was a “confluence of events” that affected both agriculture and residential users. Sen. Al Franken (D-Minn.) said the farmers in his state were hurt and many went into debt just to heat their homes.

The DOE witness said demand first spiked for drying a large, wet corn crop, followed by an extremely cold winter. There were no special steps taken to replenish supply after crop drying, she said, because the severe winter weather wasn’t anticipated. Propane groups are meeting to ensure this situation does not repeat itself, she said.

Transport issues continue to plague movement of propane, said one propane company executive. Other fuels move through pipelines, but propane relies on rail and truck movement, he said, adding that freight competition issues contributed mightily to the shortage just as “rail transport became more unreliable” during colder months. He asked Congress to look at suspending hours of service rules for propane truck drivers during high demand months.

The National Turkey Federation said Minnesota propane use alone increased by 30 percent from the year before, and prices jumped from $1.30 per gallon to $5 per gallon, leading to $25 million in higher heating-related costs for turkey growers.

Diverse shippers group wants change in federal rail policies

A coalition of energy, agriculture and manufacturing industries sent House Speaker John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.) a letter last week calling on them to reexamine and modernize federal policies so the rail industry can meet the needs of the carriers, shippers and public.

Safety was listed as the first priority, with the shippers pointing out they partner with rails to invest billions in upgrades to new and existing rail cars. They also point out the original Staggers Rail Act of 1980 needs to be modernized given freight traffic has doubled and “the economic strength of railroads has great improved.”

But the shippers also pointed out the rail industry has dramatically consolidated in that same period, reducing the number of Class I railroads from 26 in 1980, to just seven today. Calling for policies to improve efficiency and competition among the carriers, the shippers pointed out four carriers dominate the current market and this alone makes it necessary to “reexamine and modernize our regulatory framework.”

The shippers also told the lawmakers they are increasingly held captive to rail carriers, lacking competitive access. Rail rates have increased dramatically, rising three times as fast as inflation and truck rates, they said, adding that to challenge a rate before the Surface Transportation Board is “extremely expensive and complex, and particularly burdensome to small businesses.”