Washington Report for 7-14-14

By Steve Kopperud

White House Wants $4.3 Billion for Immigration Crisis, Wildfire Control Programs

House and Senate appropriators expected President Obama to formally request about $2 billion this week in an emergency supplemental spending bill to deal with the ongoing Texas border illegal immigration crisis. They were surprised, however, when the request from the White House totaled $4.3 billion, with money included for USDA’s program on preventing and fighting wildfires.

The supplemental request is highly politically charged given the back-and-forth accusations over who is at fault. Some blame the White House for not enforcing border security while others point to the GOP-controlled House for refusing to act on comprehensive immigration reform. Getting the package approved could take weeks, especially in a disagreeing Congress.

The request riled GOP budget hawks and border security proponents who said the additional spending would need to be offset by cuts in other federal programs. They want more money to be dedicated to beefing up border security in the wake of over 60,000 unaccompanied children crossing the border in recent weeks, a total that’s expected to hit 90,000 in the next month.

Democrat appropriators contend there are no offsets available. Both sides of Capitol Hill agree money is needed to deal with the border crisis, but the battle over how much, how to pay for it and how it will be spent will consume Capitol Hill work time for at least the rest of this month.

The White House fact sheet accompanying the formal request to Congress details administration actions to date, including separate meetings by Vice President Joe Biden and Secretary of State John Kerry with the leaders of Guatemala, Honduras and El Salvador to get commitments to work with the U.S. to stem the movement of children and adults northward to Texas.

The $3.7 billion the President seeks would be spent on a “whole government” response to the border crisis, including deterrence, enforcement, foreign cooperation and “capacity” to handle current illegal detainees on the border.  About $1.8 billion would go to the Department of Health & Human Services (HHS) for health care and disease prevention and treatment. $1.1 billion would go toward immigration and customs enforcement, with the Justice Department receiving $64 million and the State Department getting $300 million. The President has said he will move interior law enforcement and immigration judges to Texas to help deal with processing of the children.

The priorities in the bill were attacked by major GOP immigration lawmakers. Rep. Bob Goodlatte (R-VA), chair of the House Judiciary Committee, who traveled with a House delegation to Texas to view the situation first hand, said this week, “Most of the money…seems geared toward processing Central Americans rather than stopping the surge itself. It’s clear that law enforcement officers at the border need more resources to deal with the crisis, but resources are only useful if there are consequences for illegal immigration.”

EPA’s McCarthy Tries to Calm Ag Fears over WOTUS; Ag Exemption ‘Guidance’ may be Withdrawn

In a tour this week to Missouri and Kansas City, EPA Administrator Gina McCarthy tried to calm agriculture concerns over the agency’s proposed “Waters of the U.S.” (WOTUS) rulemaking, but even before she left Washington, she’d fanned the flames of the controversy. However, she hinted at least a part of the agency effort may be revisited.

In a call with reporters this week prior to heading to the Midwest, McCarthy said the reason for her trip is to counter misinformation in the country. “There are some legitimate concerns out there, but we’re hearing some concerns that are just ludicrous,” she said. “Some say EPA will regulate small, unconnected waters, including puddles on lawns, driveways and playgrounds, (and) that’s just silly.” She said some groups opposing the rulemaking are doing so to get themselves attention.

The head of the Missouri Farm Bureau took issue with McCarthy’s use of “ludicrous” and “silly” to describe opposition to the WOTUS rulemaking, saying it “poisoned the well” in advance of her appearance on a Missouri farm. However, he stressed his group is still willing to sit down and discuss how the WOTUS rulemaking – and accompanying rules – can be improved.

The EPA rulemaking is a two-part effort. First, there is the joint proposal from EPA and the Army Corps of Engineers to shift Clean Water Act (CWA) permitting authority from “navigable” U.S. bodies of waters, to the WOTUS definition, essentially deleting “navigable” from the scope of authority. Second, there is the so-called “interpretive rule,” an agency guidance that would take effect immediately when or if the rule is finalized, on preserving 56 agency agricultural exemptions for “normal farming practices.” Its purpose is to coordinate EPA’s exemptions with USDA’s Natural Resource Conservation Service (NRCS) programs.

Congress states that the WOTUS rulemaking is overreaching by EPA and threatening farms and ranches. Both the House Interior-Environmental and Energy-Water FY2015 appropriations bills carry language blocking the rule. Sen. John Barasso (R, WY) will try next week to amend a bill to expand hunting and fishing on federal lands with similar language – the ag focus is the interpretive rule.

Over 90 ag groups this week sent EPA, USDA and the Corps a letter detailing why they believe the EPA-NRCS connection the agency believes will expand agricultural exemptions will have the opposite effect, creating a bureaucratic Catch-22 that will force farmers to abandon current NRCS conservation practices out of fear of legal liability.

What ag groups read in the interpretive rule is a new jurisdictional and enforcement role for NRCS to make the EPA effort work. NRCS is viewed by farmers and ranchers as a resource at USDA to which they turn for voluntary assistance and advice on conservation practices. Now, they say, in order to qualify for the ag exemptions listed by EPA in the interpretive rule, these voluntary NRCS practices and programs will become mandatory, and NRCS will enforce specific requirements and report infractions to EPA in addition to taking its own “enforcement actions.”

McCarthy said, “All normal farming practices are exempt; let me be clear, those practices, along with countless others, that are normal farm practices – they do not require a permit. The bottom line is that, if you weren’t supposed to get a permit before, you don’t need to get one now, period.”

The nearly 100 ag groups, including the National Pork Producers Council (NPPC), National Cattlemen’s Beef Assn. (NCBA), the National Milk Producers Federation (NMPF) and the American Farm Bureau Federation (AFBF), with support from over 40 GOP Senators and several House members, have called on EPA to withdraw the interpretive rule, or at the very least reissue it as a formal rulemaking, not a guidance, with the legally required public comment process.

McCarthy said she’s surprised by the reaction to the interpretive rule because its intent was to link EPA exemptions to NRCS voluntary practices and expand, not narrow, protections for normal farming practices. She said the confusion may be legitimate and hinted EPA could withdraw the guidance because she’s “all about results, not process.”

Boehner Sees Late July to Move House Suit Against President Obama

The House will file suit against the President for exceeding his legal authority, but the House will not seek articles of impeachment against President Obama. House Speaker John Boehner (R-OH) said this week he’s moving carefully to bring a bill to the floor to authorize the suit by late July. House staff are examining several executive actions the House would target in such a suit, with the goal to create a short list that will increase the bill’s chances in federal court rather than being dismissed by the court being seeking to settle political scores.

Democrats, chief among them House Minority Leader Nancy Pelosi (D, CA), continue to characterize the prospective suit as a “stunt” designed to deflect attention from a House that has failed to do its job. The White House does not take the suit seriously, saying, in effect, anything the House does will not affect the President’s actions or strategies.

Boehner told a CNN interviewer over the weekend those areas in which he believes the President has exceeded his constitutional authority include health care, energy, foreign policy and education. He did not mention immigration enforcement, according to reports. Insiders think the suit will likely target the Affordable Care Act (ACA) and a number of White House actions taken to delay implementation, add programs financed through tax dollars and the expansion of eligibility beyond the scope of the enacted law.

Highway Project Funding Fix Evolving as Tax Committees Approve Short-Term Fix

Both House and Senate tax writing committees this week approved their respective $11-billion versions of a short-term deal to avoid the bankruptcy of the federal Highway Trust Fund (HTF), which pays the states for their repair and building costs for highways and bridges. Both deals keep the HTF solvent through spring 2015, but the challenge of fixing the HTF for the long-term is nowhere close to resolution.

The bills achieve spending by shifting the tax status of several alternative fuels, including liquefied natural gas and propane, along with excise tax adjustments, to bring them closer to gasoline. In addition, the Senate adopted a House Ways & Means Committee provision that shifts $1 billion from the federal leaking underground storage tank fund to the HTF. There are also income-producing provisions that include, according to House Ways & Means Committee Chair Dave Camp (R-MI), “pension smoothing, customs user fees and the storage tank transfer.” The Senate bill contains some tax compliance provisions, as well as other provisions not in the House package. It’s expected it will take the rest of the month to get a single, agreed-to funding package to the president.

Both the House and Senate committees saw bipartisan support for their packages and both were approved on voice votes.

RFS Rule Expected “Soon,” says McCarthy; EPA Expands List of Eligible Biofuels

The final rule setting the 2014-2015 renewable fuel standard (RFS) mandates for alternative fuels in gasoline is expected “soon,” said EPA Administrator Gina McCarthy this week. She said the delay in release of the final rule – it was expected last month – was to give the administration time to ensure the action would not negatively impact the increased use biofuels long term.

McCarthy said she was well aware of concern by various alternative fuels groups about the relatively low volumes contemplated by the agency in last February’s proposed rule. She said the rule would be published to ensure those concerns are considered, and “as soon as we can get it right.”

In a related development this week, EPA announced it has approved an expanded list of alternative fuels eligible to satisfy mandates, particularly the cellulosic biofuels RFS. The move will help mitigate fuel industry complaints that insufficient commercial cellulosic biofuel is available for gasoline makers to meet the RFS mandate. The agency will allow liquefied natural gas (LNG) produced from biogas in landfills, manure digesters and sewage treatment plants to qualify as a cellulosic biofuel. Electricity generated from biogas that powers electric vehicles will also meet the requirements of the cellulosic biofuel RFS.

Substandard Rail Service, New NGFA Rate Challenge Proposal Part of Concerns over Grain Service

The Surface Transportation Board (STB) heard a lot this week about substandard rail service, delayed grain shipments and the need for new rules to allow grain shippers to challenge freight rates.

The National Grain & Feed Assn. (NGFA) submitted to the STB a “rate-reasonableness methodology” to overhaul how grain shippers can challenge rail freight rates, arguing the current system allows rails to make “excessive monopoly profits” from captive and other ag shippers.

Based upon information available from the STB or publicly, the NGFA proposed system can be used for rate cases involving commodity shipments – grains, oilseeds, meals, oils, flours, distiller’s grains and other feed ingredients, along with biodiesel and ethanol – that are eligible for NGFA’s successful rail arbitration rules program. It would also eliminate current gambits used by rails to dodge rate complaints. The proposal is in response to STB’s ongoing proceeding on how the current system can be improved given the number of ag complaints about the “unworkable” system now in place.

Growth Energy, an association of ethanol producers, told the STB in its filing this week that board orders to Class I U.S. and Canadian rails to eliminate the current backlog of grain shipments, fails to address “the substandard rail service for delivery of ethanol,” according to Tom Buis, the group’s CEO.

“We are concerned that this (the recent STB order to the Canadian Pacific and BNSF railroads to file reports on grain shipment backlogs) did not directly address the shipment of ethanol. With over 61% of all ethanol delivered by rail, it is imperative that these issues be directly addressed and given the same priority as grain shipments,” Buis said.

Buis said the backlog in rail equipment and reduction in service caused some ethanol plants to reduce production, forcing supplies to drop and prices to increase dramatically. This has hurt consumers through higher gasoline prices, impacting the economy broadly.

Finally, an Associated Press story in the Minneapolis Star Tribune this week reported rail grain shipment delays cost state farmers nearly $100 million and “cut deeply into the value of grain still in storage at farms across the state.” The story was based on a University of Minnesota study released at the state ag freight conference.

The study, released by the university’s Center for Farm Financial Management, said rail delays cost state corn farmers $72 million in lower prices from March to May, an average loss of 30 cents per bushel. The loss to soybean growers was pegged at $18.8 million overall, or 40.5 cents per bushel, with a loss of $8.5 million for Minnesota wheat growers who took a per-bushel loss of 41 cents.

House Passes Chemical Plant Safety Bill

This week, the House passed a bill to give the Department of Homeland Security (DHS) the authority to set standards and direct actions to protect chemical plants from terrorism. The bill only applies to those chemical plants designated by DHS as “high risk.” While touted as a terrorism protection bill, Rep. Mike McCaul (R-TX), chair of the Homeland Security Committee, said the bill will also help prevent explosions, such as the one in west Texas in 2013.

The Chemical Facilities Anti-Terrorism Standards Act (CFATS) is formally authorized through 2017. A CFATS precursor program has been a DHS administrative program since 2006, but supported through appropriations bills on a year-to-year basis.

The bill protects specific protection standards from public dissemination, allowing only state and local officials with security clearances to know what DHS requires plants to do. Further, DHS is authorized to conduct risk assessments on “chemical facilities of interest,” and gives DHS first-time authority to coordinate with federal and state agencies, as well as with industry, to define a facility eligible for the “high security” list. The bill also authorizes regulator inspections and audits by DHS.

Senate Confirms Vetter for USTR Ag Post

Darci Vetter is the new chief agriculture negotiator for the U.S. Office of the Special Trade Representative (USTR) after the Senate confirmed her nomination on a voice vote this week.  Vetter, who is very popular with the agriculture community, is the former USDA Under Secretary for Farm & Foreign Agriculture. Her nomination had no serious opposition throughout the nomination process.