While there will continue to be rhetoric about the need for a Farm Bill, when trying to re-authorize a five-year law like the omnibus ag program bill – one that costs in excess of $1 trillion when all is said and done – it’s good to know how much money you can spend. This is the unknown and the roadblock facing both House and Senate Agriculture Committees in trying to move toward a markup of the now 2013 Farm Bill. While the Congressional Budget Office said there will be less money to spend in the next five years than there was in the last five, Congress must first pass a new continuing resolution (CR) to keep the federal government operating at last year’s spending levels, and the deadline for that action is March 27. Then, both chambers are required to pass budget resolutions – non-binding guidance on how the chamber believes money should be spent – and the deadline for those actions is April 14. By then Congress will have received the President’s budget recommendation, due on the Hill February 2, and that will send additional signals on how dollars should be allocated. Around that time, Congress will be confronting another round of political boxing over the debt ceiling, or how much money the Administration can borrow to keep its programs up and running. Bottom line: No real Farm Bill action is expected until late-April to early-May, at the earliest.
As he did last year around this time, Rep. Paul Ryan (R-WI), Budget Committee chairman, cited record on-farm income from alternative fuels and exports and said it was time federal ag spending was re-allocated to reflect this “record-breaking prosperity,” all by way of explaining why his committee-passed budget resolution cuts $31 billion to farm programs and crop insurance subsidies as part of an overall reduction in ag spending of $209 billion for FY2014. Of that total, Ryan’s panel proposes to take a whopping $135 billion out of the U.S. Department of Agriculture’s various nutrition programs, including the Supplemental Nutrition Assistance Program (SNAP), better known as federal food stamps. On the Senate side, the Budget Committee approved its first budget resolution in more than four years, targeting ag cuts at $23 billion, or the amount Sen. Debbie Stabenow (D-MI) and her panel achieved in the Senate-approved bill in 2012. House Agriculture Committee Chairman Frank Lucas (R-OK) put the Ryan plan in context: “Because we need to write a new comprehensive five-year Farm Bill, the House budget I view as guidance … and we’ll craft a balanced bill that provides a safety net. The Budget Committee gave us a number, not a long list of instructions. That’s the key … they gave us a number and we’re going to do our best to meet it.” Part of that “guidance” is a recommendation the committee “revisit” the current federal crop insurance program structure to reflect that farmers need to assume the same level of insurance risk as other non-ag companies. Rep. Collin Peterson (D-MN), committee ranking member, said the Ryan budget was difficult to fully understand, and said last year’s committee-passed Farm Bill actually achieved $35 billion in overall savings. Peterson said his read of the budget includes $18 billion in conservation “savings,” and $130-150 billion cuts in nutrition programs, a number he said will not get his party’s support. Peterson reiterated his desire that House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) “make a deal and give us a number (on non-nutrition savings), and whatever that number is, if it’s $30 billion, $35 billion, $25 billion, we can do it. But give us a number that’s agreed to so we don’t get caught up in this war between the two chambers … (then) give us a number on SNAP … and we’ll do it.” On the Senate side, Sen. Chuck Grassley (R-IA) said payment limitations will be part of the Senate Agriculture Committee’s move to achieve the recommended $23 billion. “All Farm Bill spending will be on the table for spending reductions, including nutrition programs, Grassley said. However, it’s expected the ultimate savings number will mirror what the committee approved last year.
Sen. Barbara Mikulski (D-MD), chairwoman of the Senate Appropriations Committee, is working with Senate Majority Leader Harry Reid (D-NV) to keep her committee’s FY2013 continuing resolution (CR) on track despite her colleagues’ lining up to amend a bill crafted to get Senate approval and fairly quick House agreement. While the House bill takes the current CR and adds additional spending for the Department of Defense and for military construction the last six months of FY2013, Mikulski broadens her bill to include additional money for the U.S. Department of Agriculture/Food and Drug Administration, the Departments of Commerce and Justice, and new dollars for federal science programs. The House has quietly signaled it can live with Mikulski’s additions. She is also trying to preserve language in her bill that would give federal agencies additional flexibility on how to administer spending reductions required under sequestration. At the same time and despite House Speaker John Boehner’s (R-OH), warning to the Senate to not “load up” its bill with special interest language, more than 100 amendments have been filed ranging from how USDA approves biotech crops to the labeling of genetically enhanced Atlantic salmon. Only a few amendments received votes when the Senate took up the bill on Thursday, with an amendment by Sen. James Inhofe (R-OK) to exempt farmers from the Environmental Protection Agency’s oil spill prevention regulations being accepted by unanimous consent despite strong opposition by Sen. Barbara Boxer (D-CA), chairwoman of the Senate Environment & Public Works Committee, on which Inhofe sits. Another controversial section of the Mikulski bill is a provision carried over from the current CR that would require USDA to approve the sale and use of biotech seeds even if a court has deemed the environmental assessment of the seeds inadequate. While the Biotechnology Industry Organization says the provision provides farmers “certainty” in making planting decisions, Sen. Jon Tester (D-MT) is trying to kill the language. Unresolved between Reid and Senate Minority Leader Mitch McConnell (R-KY) is how many more amendments will be acceptable to both sides for debate and votes and this pushed action on the package from into the next week, with Reid hoping to resume consideration early this week. Reid contends most of the amendments should not be part of a six-month CR.
Deputy Secretary of Agriculture Kathleen Merrigan, the department’s number two executive, surprised the Washington, D.C., ag community by announcing her resignation from the U.S. Department of Agriculture. She did not give a reason for her leaving or a time line on her departure. Secretary of Agriculture Tom Vilsack praised Merrigan’s leadership as the budget officer for USDA, her direction of the “Know Your Farmer, Know Your Food” program, and her shepherding of protections for the department’s organic program. Merrigan, in a statement released after the announcement and after Vilsack’s statement, said she was grateful for the opportunity, and cited “implementation of the 2008 Farm Bill, improving school meals, expanding opportunities for American farmers, spending countless hours in the White House situation room, shepherding budgets through challenging times, and it has been an honor to play a small part in history … I hope that during my tenure I was able to help open USDA’s doors a little wider, inviting new and discouraged constituencies to participate in USDA programs. With Secretary Vilsack at the helm … I am able to leave fully confident ... USDA will thrive.”
A bipartisan group of Senators sent a letter to Daniel Elliott, chairman of the Surface Transportation Board, challenging an assertion by Berkshire Hathaway, Inc. (BH) “that it did not realize that it’s acquisition of BNSF Railway in February, 2010, was subject to the jurisdiction of the Surface Transportation Board … ” The essence of the Senator’s challenge is that under federal law, BH could not own or control “multiple rail carriers without Board approval,” and the purchase should only have gone forward once the STB had determined it was in the public interest. “We have written to you previously to express our concern that the $8-billion acquisition premium that was paid by BH to BNSF could be used to artificially inflate the railroad’s regulatory rate base and could also be passed on to captive shippers in the form of higher rates,” the group wrote. “We urge the Board to exclude the acquisition premium for the two years that the transaction was not approved by the Board, as well as all subsequent years that the railroad is owned by Berkshire.” The group also found it “significant” that BH was able to pay a “substantial premium” for BNSF – 30 percent above share value – and yet “BNSF is still considered revenue inadequate by the Board.” The seven cited BH communications to shareholders touting the railroads “record operating earnings.” The letter was signed by Sens. Al Franken (D-MN), Amy Klobuchar (D-MN), David Vitter (R-LA), Mary Landrieu (D-LA), Mark Pryor (D-AR), Tammy Baldwin (D-WI) and Tim Johnson (D-SD).
Requirements to strictly regulate derivatives trading included in the Dodd-Frank law are under assault in the House Agriculture Committee as the panel held a hearing to review seven bills aimed at modifying current law. The goal, said Chairman Frank Lucas (R-OK), is to make sure derivatives trading does get so expensive as to discourage companies from using it to hedge risk. The ag panel held the hearing, featuring testimony by Commodity Futures Trading Commission Chairman Gary Gensler and a panel of financial companies, to examine “legislative improvements” to the Dodd-Frank requirements on derivatives. Dodd-Frank regulates the $600-trillion derivatives market for the first time, and its requirements were supposed to increase “transparency” and reduce risk. One bill under review would exempt end users, those who actually use the markets to hedge risk and are non-financial companies, from new margin requirements under Dodd-Frank. Another would ensure that “inter-affiliate” transactions, those within the same company, are not regulated as swaps so as not to subject companies to double margin requirements. There’s also a bill to “soften” requirements that banks spin off their derivatives trading arms as separate businesses. The CFTC and the Securities & Exchange Commission have wrestled with how to implement the new requirements. Most of these bills were approved by the full committee last year, and some of them actually passed the House, but saw no action in the Senate. As to whether any of the bills will be enacted by Congress this session, ag committee ranking member Rep. Collin Peterson (D-MN) said, “Despite the bipartisan support that some of these may have, I just don’t see how they have a chance of passing the full House.”
Sen. Barbara Boxer (D-CA), chairwoman of the Senate Environment & Public Works Committee, and her panel’s ranking member, Sen. David Vitter (R-LA) have cut a deal on re-authorizing a new Water Resources Development Act, setting markup on the bill for March 20. WRDA controls project designation and funding for locks, dams, flood control and ecosystem restoration projects across the U.S. waterway system. Key aspects of the draft bill include all tax revenue collected from the Harbor Maintenance Trust fund will be spent on actual port maintenance and dredging projects; a pilot program that would allow the Corps to hand off management of some projects to state and local governments; any cuts in the annual appropriation for the U.S. Army Corps of Engineers below the previous year’s level would require two-thirds of the Senate to approve; environmental reviews of waterway projects would be streamlined; heavy budget penalties would be imposed on the Corps and other federal agencies for missing construction deadlines; and the Corps would be allowed to dredge eligible ports and harbors to 50 feet to accommodate larger cargo ships that will transverse the expanded Panama Canal. The draft does not include an increase in diesel barge taxes since that issue is the jurisdiction of the Senate Finance Committee.
The Department of Transportation published its final rule on hours of service and formally designating statutory exemptions for drivers hauling agricultural commodities included in last year’s enacted surface transportation law. The rules are effective March 15. States are to adopt their rules as quickly as possible. The two exemptions are carriers transporting ag commodities and farm supplies, as well as a statutory exemption from most regulations for covered farm vehicles by farm and ranch operators, their employees and certain other specified individuals under certain circumstances.
Rep. Louise Slaughter (D-NY) has introduced for the third time her Preservation of Antibiotics in Medical Treatment Act. The bill, which lays the root cause of antibiotic resistant bacteria in humans at the feet of animal agriculture, would eliminate “critical” antibiotics used in human medicine from use in feed and water for livestock and poultry. In public statements about the new bill, Slaughter contends the Food and Drug Administration knows there’s a human health risk from agricultural use and is choosing to ignore it. The bill has never seen action in either chamber. In a related development, Germany’s Bundestag – the equivalent of Congress – approved a measure that would reduce or eliminate the use of antibiotics in livestock production. While the measure has a long way to go before it becomes law, the action parallels laws in Denmark and the Netherlands that ban antibiotics for feed efficiency and growth promotion.
The Food and Drug Administration and the U.S. Department of Agriculture will cooperate in a series of five public meetings to talk about “challenges faced by the animal agriculture industry and practicing veterinarians as FDA implements its initiative for the judicious use of medically important antimicrobials in medicated feed and drinking water of food producing animals.” The meetings will be held April 9 in Bowling Green, KY; April 23 in Olympia, WA; May 8 in Ft. Collins, CO; May 21 in Pierre, SD; and June 4 in College Station, TX. Additional information on the meetings can be found at www.gpo.gov/fdsys/pkg/FR-2013-03-07/pdf/2013-05339.pdf.