Washington Report for 5-19-14

By Steve Kopperud

Senate highway bill carries grain elevator, ag facilities access language

The Senate Environment & Public Works Committee last week unveiled and quickly approved its draft $50-billion, six-year federal highway reauthorization bill, funded at current levels plus an inflation adjuster. The bill contains new authority to the states to designate certain rural roads as critical freight corridors, particularly if  they access grain elevators or other regionally significant agricultural facilities.

The Senate package puts Congress back in the driver’s seat on project funding.  Previous funding bills removed Congress from having a say in state or federal infrastructure projects.

The bill leaves funding formulas to offset a depletion in Highway Trust Funds expected in late July to the Finance Committee, which now has to find about $18 billion to keep the fund solvent for  another year.  The EPW Committee bill will eventually be merged with sections on highway programs being developed by the Senate Banking and Commerce Committees, as well. 

The U.S Chamber of Commerce said Congress will take two swipes at the funding for the highway bill.  The first action will be to find about $5 billion to tide over the highway fund and come up with another $18 bill by the end of the summer.

The overall bill, which also gives states greater autonomy in how they spend federal dollars, carries a $38.4-billion price tag in 2016 for Highway Trust Fund highway/bridge projects, escalating to $42.6 billion in 2020.  Another $400 million per year is dedicated to federal grants for projects of “national and regional significance” and would allocate another $125 million a year to award states for innovation and as an incentive to bring highway projects in on time and/or under budget. 

The proposed state authority mirrors language from the 2012 highway program extension seeking to set up 27,000 miles of existing highway systems as critical freight corridors, but this time would spend up to $400 million and give the states access to the money in 2016, then increase the spending level by an additional $400 million a year until it hits $2 billion in 2020.

Senators supporting the rural road/freight corridor language said it would be one of the most effective actions to spur economic growth among the states by letting them develop multi-modal freight “investment plans” leading to the biggest commerce benefit for business and the biggest return to taxpayers.

The White House has shared its legislative plan with the Hill, and the House Transportation & Infrastructure Committee is expected to reveal its highway funding reauthorization package next month.

‘Waters of the U.S.’ rulemaking draws more fire

Rep. Frank Lucas (R-Okla.), chair of the House Agriculture Committee, said in a guest editorial in the Tulsa World that the U.S. Environmental Protection Agency “strikes again” as it  moves to expand its Clean Water Act authority, raising doubt about the agency’s intent. He said reading the proposed rule – with an open mind and giving the EPA the benefit of the doubt – raises concerns and “elicits outrage.”

Lucas said the proposed expansion of the agency’s CWA authority “defies the Supreme Court, which has made clear there is a limit to federal jurisdiction under the CWA.” The agency move, Lucas said, will trigger an “onslaught” of additional permitting and regulatory requirements” to protect “our backyard ponds and agricultural ditches.”

Lucas contends that despite EPA Administer Gina McCarthy’s assurances, the proposed rule creates broader definitions for wetland, tributary and brings in new areas, such as adjacent non-wetland. Ponds are now part of tributaries, meaning tributaries now would fall under the agency’s jurisdiction even though the pond is not connected to a navigable waterway. And, Lucas alleges,  for the first time ever, ditches will be considered tributaries for the purposes of EPA regulation.

Ultimately, Lucas wrote, this means new regulation on food producers, along with a lot of confusion and mixed messages from EPA. He also reminded readers that more than 40 House members have written to EPA, telling McCarthy to cease and and desist on expanding EPA authority as proposed.

EPA extends worker exposure rule comment period

The U.S. Environmental Protection Agency has extended the public comment period for its proposed rulemaking on pesticides and agriculture worker exposure protections. The extension is 60 days, less than the 90 days sought by the agriculture industry. The new deadline for comments is Aug. 18. The full proposal can be found at http://www.epa.gov/.  

The new protections contemplated in the 300-page proposal range from restricting worker access to certain areas to prohibiting anyone under 16 from handling pesticides.  EPA said the opportunity for updating the worker protection rules is not likely to come around anytime soon, so it is best to take advantage of the timing.

Energy bill dies a not-so-quiet death

A popular bipartisan Senate  energy conservation  bill – likely the only substantive piece of energy legislation to move this year – died a second quiet death last week when Senate leaders pulled it from consideration, the culprit being yet another battle over amendments, with Majority Leader Sen. Harry Reid (D-Nev.) refusing to accept any Republican or Democrat amendments. 

At issue with GOP amendments was a package offered by Senate Minority Leader Sen. Mitch McConnell (R-Ky.)  seeking among other things to limit Environmental Protection Agency authority in various areas,  as well as an amendment seeking to approve the Keystone XL pipeline.

Democrat senators call for biodiesel guarantees

Six Democrat senators from the upper Midwest are calling on President Obama not to permanently reduce the Renewable Fuel Standard for biodiesel, and to support the extension of federal biodiesel tax breaks. The announcement was made at a National Biodiesel Board press event where NBB released a study showing the industry has slowed down and gone away in some areas.

Supporting the senators’ action is the American Soybean Association, which said in a statement:  “We appreciate and echo the sentiments of these six Senators today, and call to attention the positive impacts the RFS and the biodiesel tax credit have on the production of biodiesel.” 

Signing the letter to Obama were Majority Whip Sen. Richard Durbin (D-Ill.), Sen. Amy Klobuchar (D-Minn.), Sen. Heidi Heitkamp (D-N.D.), Sen. Maria Cantwell (D-Wash.), Sen. Al Franken (D-Minn.) and Sen. Joe Donnelly (D-Ind.).

Chambliss introduces market ‘end user’ protection bill

Former Senate Agriculture Committee Chair Sen. Saxby Chambliss (R-Ga.) has introduced a bill to exempt farmers and ranchers from futures markets trading rules designed to regulate commercial high-frequency traders. 

At a Senate Agriculture Committee hearing on the impact of high frequency market trading on agriculture – part of committee chair Sen. Debbie Stabenow’s (D-Mich.) effort to reauthorize the Commodity Futures Trading Commission – a number of witnesses told the committee of the need for consumer and end- user protections. The House ag panel has passed its reauthorization package.

Chambliss said he’d take his bill – a piece of legislation to protect those traders who are true hedgers, using the markets to protect on risk – and talk to Stabenow about moving the bill as part of the commission’s reauthorization package. The House bill calls for a study on end-user protection.

Former CFTC Commissioner Bart Chilton, now an advisor at DLA Piper LLP, agreed with witnesses at the hearing who said automated and high frequency traders should be registered.  He said it was in the interest of high-frequency traders to “step up” to support “thoughtful regulation.” 

As for farmers and ranchers, Chambliss wants them out from under regulation or registration of high-frequency traders. “Let me just say off the top of that with respect to your concern about the differences in the risks…there is a major difference between one of our farmers and ranchers who is driving from field to field and during the course of that, checks the market and wants to make a trade and a major integrated company who is going to be trading hundreds of millions of dollars in contracts.”

Senate likely to clear tax extenders, House uncertain

A list of 55 federal tax credits and other breaks – including those benefiting biodiesel, renewable diesel and other biofuels –  which expired last December, will likely be approved for a two-year extension. The Senate Finance Committee has cleared the bill as the “last extenders’ bill” to come out of the finance panel 

While the Senate is prepared to clear the bill, the House is hung up on the politics of the tax bill.  Part of the problem is because the tax credits are not paid for but also because the GOP is pushing hard for the unpaid-for, business-friendly extenders, while refusing to approve a paid-for extension of federal unemployment benefits or immigration reform.

Further complicating the situation is the White House’s threat to veto the full tax extenders package, creating an in-fight within the Democrat Party. 

House Ways & Means Committee Chair Rep. Dave Camp’s (R-Mich.) decision to break the 55-break list into “families” of tax breaks slows the process. He said he wants the list vetted individually so obsolete or parochial tax breaks can be eliminated.

Last week, the full House approved on a party line vote a bill that makes the 20 percent research/development tax credit and five other related business tax breaks permanent. The cost of that extension is estimated to be $156 billion over 10 years.

The overarching goal of both the House and Senate tax-writing committees is to get the extenders approved so that in the next Congress beginning in January, 2015, both committees can move forward on comprehensive federal tax reform with a consensus on the 55 tax extenders.

Grocery Manufacturers Association to sue Vermont over GMO labeling

As expected, the Grocery Manufacturers Association said it will sue the state of Vermont to overturn the state’s new genetically modified ingredient (GM) labeling law. The new state law mandates any human food product carry a label declaring it contains any ingredient derived from biotechnology. 

The case will come down to whether the presence or use of GM ingredients constitutes a health or safety risk to consumers, a risk about which the consumer needs to know. GMA’s argument will focus on the underlying decades of science, U.S. Department of Agriculture's review and deregulation and the last 30 years of use across the crop area. In addition to the use of less water and pesticides with GM crops, GMA will point out the expense and confusion of a patchwork of state laws requiring labeling.  

The state will argue consumers' right to know what’s in their food, with support from various activists groups. Expecting the grocery industry to sue, Vermont lawmakers set up a defense fund to which consumers can contribute.