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Washington Report for 6-2-14

By Steve Kopperud

TFI responds to GAO plant safety report; rails say fertilizer deliveries increasing

The Fertilizer Institute said it supports a Government Accountability Office report recommendation calling for enhanced data sharing among federal agencies, as well as between private industry and the government when it comes to fertilizer plant safety oversight. The TFI statement was in response to a recent GAO report that said federal regulators don’t have a good handle on how many fertilizer plants nationally handle ammonium nitrate and have done a poor job ensuring those plants that do handle the fertilizer ingredient are following existing federal safety regulations.

In a related fertilizer development, the BNSF and Canadian Pacific reported to federal regulators that rail deliveries of fertilizer to underserved areas of the Upper Midwest are increasing. Canadian Pacific said it had “consistent and improved average transit times” for fertilizer deliveries and were ahead of normal for the last four weeks. 

On the TFI response, the trade group said it has created “Responsible Ag,” an independent group that will audit retail facilities for compliance with federal regulations. TFI said the industry is committed to “every fertilizer retailer in the country having access to the information necessary to be in full compliance with all federal regulations.”

 

House appropriations committee approves FY2015 ag bill

The full House Appropriations Committee has approved its FY2015 agriculture/Food and Drug Administration spending package.

Under the measure approved, $20.9 billion in discretionary spending is appropriated for the U.S. Department of Agriculture, FDA and the Commodity Futures Trading Commission. The bill also includes $142.5 billion in mandatory spending, $3 billion less than approved last year.

Rejected in the House bill is the USDA plan to close or consolidate county Farm Service Administration offices.  The bill report calls the plan “flawed and untimely” and requires USDA to conduct workload assessment for all offices slated for shutdown. 

The CFTC gets a total of $218 million for the next fiscal year, $3 million more than last year, but $62 million less than requested by the White House.  Report language accompanying the CFTC spending lines also tells the commission to “provide clarity to market participants” and change the rules governing swaps dealers as required by Dodd-Frank.  The CFTC was provided $53 million to buy new technology but was criticized for not providing a five-year plan on how that money would be spent.

FDA gets $25 million to implement the Food Safety Modernization Act and $2.6 billion in discretionary spending.  Related to FSMA implementation, the spending lawmakers included in the report that accompanies the bill has language warning the FDA commissioner her agency is taking an “overprescriptive” approach to the writing of regulations, including the animal foods performance standard (“feed rule”) proposed rules. Similar language was included in the Senate’s version of the ag/FDA spending bill approved in committee.

“Accordingly, FDA shall ensure all FSMA regulations are risk-based, flexible and science-based, and embrace the well-established and recognized standards for food safety already employed throughout much of the industry,” according to the report. 

 

CFTC sets June 19 position limits roundtable

With three new commissioners expected to be formally confirmed by the full Senate in early June, the first official public meeting for the full Commodity Futures Trading Commission could likely be June 19 at a day-long roundtable on position limits. The roundtable will focus on hedges of a physical commodity by a commercial enterprise, including gross hedging, cross-commodity hedging, anticipatory hedging and the process for getting a non-enumerated exemption. There will also be talk about setting the spot month limits in physical deliveries and cash-settled contracts and a conditional spot-month limit exemption. Details on how to participate can be found at www.cftc.gov.

 

Administration enforcement of immigration law is latest reform battlefield

The Republican side of the House Judiciary Committee took aim at the Obama administration’s enforcement of current immigration law, telling Department of Homeland Security Secretary Jeh Johnson his department’s action are lax and “likely unconstitutional.” The GOP contends the president is working around Congress and likely violating the separation of powers laid out in the Constitution.

Johnson disagreed, saying some DHS actions are necessary to give the House time to act on comprehensive immigration reform legislation. Other critics of the committee’s words said this is just political grandstanding to give credence to House leadership’s contention it can’t move immigration reform legislation until the president gives a public commitment he will enforce the law as Congress enacts it. 

“The Obama administration has taken unprecedented and likely unconstitutional steps in order to shut down the enforcement of our immigration laws for millions of unlawful and criminal aliens not considered high enough priorities … twisting the concept of ‘prosecutorial discretion’ beyond all constitutional recognition,” said committee chair Bob Goodlatte (R-Va.)

At issue is the administration’s 2012 decision not to deport certain classes of illegal immigrants who entered the United States as children, along with a more recent White House announcement it will study the possibility of other executive action as it applies to more “humane” treatment of arrested and detained illegal immigrants.

 

Ethics watchdog group wants RFS investigation

A federal ethics watchdog group, wants the Environmental Protection Agency’s inspector general to investigate the agency’s actions when it first proposed cutting the Renewable Fuels Standard below statutorily mandated levels. Citizens for Responsibility & Ethics specifically wants the inspector general to look at whether the Carlyle Group, a group of private investors, and Delta Airlines “improperly influenced” the draft rule, according to a Reuters report. Carlyle and Delta own two Philadelphia area oil refineries. 

Consensus intelligence and various reports pin the final RFS for corn ethanol, proposed at 13 billion gallons, at around 13.6 billion gallons.  EPA Administrator Gina McCarthy has hinted the ethanol component would increase, having told several audiences recently EPA’s proposal was based upon gasoline production and consumption data from late fall 2013. The final RFS will be based on the most recent data, she said. The petroleum industry currently projects increased gasoline demand through the rest of 2014. 

For the advanced biofuels category, which includes biodiesel from both oilseed and animal feedstocks as well as renewable diesel and non-corn ethanol, the final biodiesel number is expected to be very close to the proposed RFS of 1.28 billion gallons.  The overall advanced biofuel RFS is expected to come in slightly higher than originally proposed at 2.2 billion gallons.

The National Biodiesel Board, the National Renderers Association and the American Soybean Association have pushed for a biodiesel RFS level closer to the industry’s estimated 2014 production of 1.7 billion gallons.  NBB warned President Obama in a letter that to ignore calls for a higher advanced biofuels RFS is to “cause lasting, damaging consequences for the jobs and economic activity supported by the biodiesel industry.” 

Meanwhile, a bipartisan majority of the House has told McCarthy they want to see a reduced corn ethanol RFS along with a rewrite of the RFS authority, according to Rep. Bob Goodlatte (R-Va.), chair of the House Judiciary Committee. Goodlatte is the author of HR 1462, a bill to eliminate the corn ethanol RFS and requires EPA to set the cellulosic ethanol RFS at production levels. 

Goodlatte said that in addition to the lawmakers, 50 organizations representing a broad spectrum of U.S. business and environmental groups also want a lower ethanol RFS.  The Virginia lawmaker’s office said 218 House members have either cosponsored legislation to reform the RFS or have signed letters to EPA calling for RFS changes. 

 

Ag industry expresses concerns about EPA water rule at House hearing

An increasing number of agribusinesses are aligning with crop, livestock producer groups and other ag industries to try and force the Environmental Protection Agency to withdraw its proposal to extend its Clean Water Act authority to “waters of the U.S” (WOTUS). 

At a House Small Business Committee hearing on the rulemaking, Washington State cattle rancher Jack Field said the proposed rule would make mandatory U.S. Department of Agriculture Natural Resource Conservation Service rules on any conservation plan field used on his ranch because several conservation  practices are not on the list of 56 current ag program items exempted by EPA in the proposed rule.

General small businessmen who testified at the hearing said the new rule would greatly increase their companies’ legal exposure, cause construction delays and dramatically increased permitting costs.  

Small Business Committee Chair Sam Graves (R-Mo.) said in a letter that the EPA and the Army Corps of Engineers failed to adequately assess the proposed rule’s economic and regulatory impact on small businesses. Already 231 members of the House have written to the EPA demanding the agency withdraw the rule. Their point is that EPA authority is limited to “navigable waters of the U.S.”  The proposed rule would remove the word “navigable” allowing the agency and the Corps to regulate any body of water they wish, including ditches and ponds on private property. 

The Water Advocacy Coalition, which includes the American Farm Bureau Federation, released a report last week by a University of California economist showing the White House is understating the impact of the proposed rule because it used flawed data to estimate the economic impact of the regulatory proposal.  Further, the study says, the data used by the Corps doesn’t align with sections of the rule and doesn’t address all areas of proposed regulation.

“The errors, omission and lack of transparency in EPA’s study are so severe as to render it (the cost analysis) virtually meaningless,” said the report by Dr. David Sunding. 

Meanwhile, Sen. David Vitter (R-La.), ranking member of the Senate Committee on Environment & Public Works, sent EPA Administrator Gina McCarthy and the Corps a letter telling them the proposed rule is a “federal takeover of private property,” citing cases where landowners are alleged by the agency to have violated the CWA under existing rules.

 

EPA greenhouse gas rule on existing power plants expected this week

The first-ever federal rulemaking to control emissions of greenhouse gases (GHG) from existing power plants – and its implications for all of industry – is expected to be released by the Environmental Protection Agency this week. The rulemaking, expected to dictate not only emissions levels, but technology that must be used to control emissions, is a lynchpin in President Obama’s Climate Change Action Plan because it focuses on utilities, identified as the nation’s single largest source of GHG.

At the same, the agency released the third iteration of its “Climate Change Indicators in the U.S.” report. The first update since 2012, the report lists four developments affecting the country as a result of climate change, including increased Lyme disease incidence, wildfires, heating and cooling degree days and increases in Great Lakes water temperatures.

The expected rulemaking has generated substantial political controversy, with opponents calling it a “war on coal” and citing its expense to consumers, while environmental groups see it as just the first step in controlling GHG emissions and a means of validating climate change as a “nontoxic” political issue.

The U.S. Chamber of Commerce released a report saying the rulemaking, if finalized, would cost the economy $51 billion a year, eliminate 224,000 jobs each year and force consumers to pay $289 billion more for electricity, all through 2030. The analysis is built off a Natural Resources Defense Council recommendation to the Obama White House in 2012 on carbon reduction, and insiders say the proposed rulemaking is expected to follow the NRDC plan.

Another factor in the EPA rulemaking is the inevitability of multiple legal challenges that could take years. Currently, several states are asking the White House to ensure the new rules give them options for meeting GHG control standards, including using carbon trading or “cap-and-trade” programs to meet compliance standards.   

 

Stabenow, Vilsack have new program on conservation

A new five-year conservation effort that would double a $1.2 billion in federal investment through matching private dollars was unveiled by Senate Agriculture Committee Chair Debbie Stabenow (D-Mich.) and Secretary of Agriculture Tom Vilsack. Called the “Regional Conservation Partnership Program,” the new program would provide competitive awards to projects to local government/private partnerships in specific regions of the country.

Qualifying for the matching funds would be companies, universities, non-profit organizations, local and tribal governments and others. The first year of the program already has $400 million in the federal bank thanks to the 2014 Farm Bill, Vilsack said.

Stabenow said the RCPP will streamline four programs now operating into a single water conservation program at the U.S. Department of Agriculture. Under the plan, 35 percent of the monies are focused on critical conservation areas as selected by the secretary.  Another 40 percent go to regional or multi-state projects through the competitive grant system, and 25 percent is reserved for state-level projects through a separate competitive process.   Details can be found at www.usda.gov.

 

Ag tells White House to approve TPP without Japan

Frustrated with Japan’s unwillingness to strike a deal on U.S. ag imports under the pending Trans-Pacific Partnership, several U.S. ag groups with a big stake in opening the Pacific Rim to U.S. ag products told the White House to get a deal on TPP without Japan.

The National Pork Producers Council, the International Dairy Foods Association, the National Association of Wheat Growers, the USA Rice Federation and U.S. Wheat Associates, said Japan needs to be jettisoned from the multinational talks unless “that nation agrees to provide significant market access for the U.S.”, including elimination of Japan’s gate price system and all tariffs.

The four groups cited the original language in the TPP negotiating document agreed to by all participants, including Japan. “It agreed to pursue an agreement that is comprehensive and ambitious in all areas, eliminating tariffs and other barriers to trade and investment,” the groups’ statement said.

Japan has repeatedly said it will not eliminate tariffs on agricultural goods it considers “sacred” – dairy, rice, sugar, beef, pork, wheat and barley.  The U.S. groups said Japan is demanding special treatment, including exempting pork and other “sensitive” products from tariff elimination.

“The U.S. has never agreed to let a trading partner ‘exempt’ as many tariff lines as Japan is demanding – 586…in the 17 free trade agreements the U.S. has concluded since 2000, only 233 tariff lines combined have been exempted from tariff elimination,” NPPC said.  The U.S. cannot agree to Japan’s demands as it would set a precedent for all future trade negotiations that is unacceptable, the pork group added.

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