July 26, 2013
Farm Bill Conference in Limbo; Stabenow Predicts Deal, House Talks Extension
Senate Agriculture Committee Chair Debbie Stabenow (D, MI) is ready for a Farm Bill conference committee. She’s got a Senate-passed bill – with a nutrition title – she’s got her the seven most senior committee members for conferees, and her boss, Senate Majority Leader Harry Reid (D, NV), has taken care of the procedural hurdles. She’s even confident enough to predict this week a deal with the House, a finished conference report by September. Now, she’s waiting on the House – again.
The Senate took the House-passed bill it received last week and sent it back to the House with the Senate language substituted for all but the bill’s number, necessary because the Senate-passed bill contains revenue language the Constitution requires originate in the House.
It’s not clear when House leadership will clear the Farm Bill for conference action. If action isn’t taken quickly to get the two chambers together, a second extension of 2008 authority might be necessary as the current extension expires at the end of September. House Agriculture Committee Chair Frank Lucas (R, OK), who will eventually name five House conferees, says he wants a Farm Bill completed by the end of September, but admits a short-term extension may be needed. However, his ranking member Rep. Collin Peterson (D, MN) and Reid have publicly said they’ll not support another short-term extension.
Stabenow also dismissed an extension, saying “eventually” the House will name conferees. Meanwhile, she said her committee will meet “informally” with the House ag committee during the five-week August recess. Stabenow confirmed she and her committee ranking member Sen. Thad Cochran (R, MS) met with Peterson and Lucas this week, and that respective committee staffs are setting meetings to begin discussion, but no firm schedule has emerged. There are only nine legislative working days in September, so her window of opportunity is small, and ag lobbyists close to the Farm Bill peg December for final action.
Peterson told reporters he’s not seeing a lot of action among Republicans, either at the member or staff levels. The question is whether House Speaker John Boehner (R, OH) and Majority Leader Eric Cantor (R, VA) can come up with a consensus stand-alone nutrition program reauthorization bill that will pass the full House. Cantor reaffirmed that stance late in the week, saying nothing will happen on the Farm Bill until efforts “forging a consensus on a nutrition bill are complete.”
There’s a 20-member GOP nutrition program working group, but no consensus has been reached and no meetings scheduled until after the August break. Rep. Marcia Fudge (D, OH), chair of the Congressional Black Caucus and member of the ag committee, said she met with Cantor this week on the nutrition bill and came away believing there’s no plan to move the nutrition bill because Cantor “doesn’t want a bill.”
Two-Day RFS House Hearing Leads to “Work Together” Pledge
In a two-day hearing this week in the House Energy & Commerce Committee subcommittee on energy and power on whether the federal Renewable Fuel Standard (RFS) is saving America’s environment and reducing foreign oil imports or is a give-away to ethanol producers and forcing food prices higher, the outcome was a grudging agreement that all sides will “work together.”
Sixteen witnesses ranging from the American Petroleum Institute (API) to the Renewable Fuels Assn. (RFA) to the National Chicken Council (NCC), the Environmental Working Group (EWG) and the National Corn Growers Assn. (NCGA) continued their battle of conflicting views on the value of the RFS, and with a couple of notable exceptions, committee members from both sides of the aisle were desperate to find a middle ground.
Acknowledging the House is unlikely to repeal the RFS, several members said the law mandating how much alternative fuels must be blended with gasoline needs to be “fixed.” Full Committee Chair Fred Upton and subcommittee Chair Ed Whitfield (R, KY) both said the RFS is clearly “broken” and is need of reinvention. Rep. John Shimkus (D, IL) said he’s caught in the middle between his farmers and his ethanol producers, and asked the fuel industry witnesses if they’d be willing to negotiate a rework of a bill to repeal the RFS. While the witnesses hedged initially, they eventually agreed to work with the committee on a new RFS amendments package.
NCGA President Pam Johnson, whose members grow corn as a feedstock for ethanol, reminded the subcommittee that 10 years ago corn was $2 a bushel and farmers were facing a financial crisis, but livestock producers were “benefitting from below-market prices.” She called the RFS a critical piece of U.S. energy policy that’s created jobs, lessened the U.S. dependence on foreign oil and reduced the “environmental footprint” of the transportation fuels sector.
Bill Roenigk, NCC senior vice president, said if the RFS can’t be fixed, it needs to be repealed. He said the bill is not only overly broad and complex, “but is a statute that has outlived its usefulness.” Roenigk said that in the last seven years, his industry has paid $50 billion in increased costs for corn and soybeans – the main ingredients in poultry feed – and that growers find it increasingly difficult to pass the cost increases on to consumers.
House, Senate Continue CFTC Reauthorization Hearings
Market end-users told the House Agriculture Committee this week that Dodd-Frank rulemakings to strengthen protections for customer funds are a vital part of new authority needed by the Commodity Futures Trading Commission (CFTC), but that futures commission merchant (FCM) proposed rules are problematic.
The National Council of Farmer Cooperatives (NCFC) told the House ag subcommittee on general farm commodities and risk management this week it is concerned about capital changes, residual interest and establishing risk management systems that could be “financially and operationally burdensome” for smaller FCMs. It also said it continues to have concerns about the swaps rules about to be finalized – farmers are now defined as “end users” – due to increased recordkeeping requirements. The Commodity Markets Council (CMC) echoed the concerns, saying the new swaps regulatory regime has “now morphed into a crusade” and is rewriting longstanding and workable futures market rules. CMC said the changes are being written without consideration of the impact on producers or consumers.
The Commodity Markets Oversight Coalition (CMOC), in which the American Feed Industry Assn. (AFIA) participates, told the subcommittee it needs to strengthen prohibitions on manipulation and excessive speculation, investigate automated computer trading in commodities, enhance customer fund protections, require the CFTC to reestablish the Energy Markets Advisory Committee and fix a provision requiring small hedgers to maintain at least $1 million in assets in order to be considered a counterparty to a swap.
Last week the National Grain & Feed Assn. (NGFA) told the Senate Agriculture Committee new margin requirements as part of a proposed CFTC rulemaking will adversely hit farmers and the grain trade. Post-MF Global and Peregrine Financial Group cases, NGFA said two parts of proposed rules to protect customer funds “would dramatically increase customer risk.”
The first provision to which NGFA objected would lessen the time in which customers’ margin calls must arrive at the FCMs. The current three-day allowance would be cut to one day; NGFA says the three-day period must be maintained. If it isn’t, then FCMs could force customers to “pre-margin their hedge accounts,” NGFA said, resulting in customers sending more money to their brokers and potentially putting more funds at risk.
The second NGFA objection centers on a proposal on how FCMs calculate “residual interest,” a phenomenon resulting from FCMs contributing their own money to maintain customer account balances until margin money is received. NGFA says the CFTC is abandoning a “consistent historical interpretation” of the Commodity Exchange Act (CEA) allowing FCMs to maintain full account balances. The CFTC proposal means all customers would be required to be fully margined 24 hours a day, seven days a week. “Contrary to the commission’s intent, this actually exposes futures customers to much more risk,” NGFA said.
House Increasingly Open to Immigration Reform
Both sides of the political aisle in the House appear to be mellowing to the notion of federal immigration reform, with the GOP this week saying there’s a willingness to create a path to citizenship for the nation’s 11 million undocumented workers, while the Democrats said they’re now willing to forgo a single, comprehensive legislative package in favor of moving reform “in chunks.” Both positions are key reversals from earlier, entrenched positions.
The House Judiciary Committee chaired by Rep. Bob Goodlatte (R, VA) is the center of all immigration reform action, with the panel having cleared already five bills, including an ag worker reform bill. Goodlatte and House Majority Leader Eric Cantor (R, VA) are also working on what’s called “the KIDS Act,” legislation that would grant citizenship to the children of undocumented immigrants who brought minor children to the U.S. or who had their children after they entered the country illegally. A Judiciary Committee subcommittee held a hearing on the issue this week. The House Homeland Security Committee has also passed a bill on creating a system for measuring increases in border security.
And while even House Speaker John Boehner (R, OH) referred to the KIDS Act as “compassionate” – while criticizing the Senate bill as overly ambitious and lacking sufficient border controls – House Democrats were not willing to embrace the Goodlatte-Cantor approach, with most taking a wait-and-see attitude before endorsing the action.
EPA Wants Comments on Barley as Ethanol Feedstock – EPA this week published a request for comments on a proposal to allow barley to be used as an ethanol feedstock. The agency’s draft analysis shows ethanol made from barley has a 47% reduced greenhouse gas emissions rate compared to conventional fuel if the barley-based fuel is produced in a dry mill facility using natural gas for all process energy, and “dries up to 100% distillers grains.” There are two other barley ethanol options discussed in the request as well. Details can be found at www.gpo.gov/fdsys/pkg/FR-2013-07-23/html/2013-16928.htm.
Grassley, Donnelly Introduce Bill to Protect Producer Information – A bill that would “keep check on EPA” by limiting personal information collected by the agency that can be released under the Freedom of Information Act (FOIA) was introduced this week by Sens. Charles Grassley (R, IA) and Joe Donnelly (D, IN). The bill is needed, the two said, because of EPA’s release to three activist groups seeking information on Consolidated Animal Feed Operations (CAFOs) of personal data on 80,000 livestock and poultry farmers, many of whom don’t meet the federal CAFO definition. The bill doesn’t prohibit EPA from collecting data or releasing information in the aggregate.
House Approps Panel Cuts Deep on EPA – The House Appropriations Committee subcommittee which sets EPA’s spending this week cut deep into the agency’s available dollars for FY2014, slashing spending by $5.5 billion. EPA’s total appropriation was set at $24.3 billion; President Obama requested about $30 billion. Democrats called the cut an “embarrassment,” while GOP members said they were making the hard choices to control spending and ensure agency regulations don’t put businesses out business. The committee said that every rule with a $1-billion-plus compliance price tag costs the economy 16,000 jobs.
Committee Approves Bill on DOE Review of EPA Reg Impact – A bill that would require the Department of Energy (DOE) to review pending energy-related regulations before EPA could finalize any new rule with a price tag of over $1 billion was approved by the House Energy & Commerce Committee. The bill would require DOE to look at a proposed rule’s impact on energy supplies, distribution and use, consumer energy prices, fuel diversity and electricity reliability. The bill was changed to include language instructing DOE to also list the benefits of any EPA energy rule.
EPA Threatened with Subpoena over Air Data – The House Science Committee this week said if EPA doesn’t voluntarily turn over committee-requested scientific data underpinning existing and proposed regulations under the Clean Air Act (CAA), the committee will formally subpoena the information. The agency has until the end of the month to comply with committee requests. The committee also said the studies in question can’t be used to justify rulemakings until the committee has completed its “independent re-analysis.”
Smithfield-Shuanghui Deal Getting Broader Federal Scrutiny; House Committee wants Answers on Heparin Component Exports
Following bipartisan congressional requests led by Sen. Debbie Stabenow (D, MI), chair of the Senate Agriculture Committee, the federal Committee on Foreign Investments in the U.S. (CFIUS) will take on a closer “second phase” review of the proposed purchase of Smithfield Foods by Shuanghui International Holdings Ltd. Smithfield announced the CFIUS scrutiny this week in a press release after it was notified by the committee.
CFIUS, which is charged with only looking at the national security implications of foreign purchases of U.S. companies, said it will take an additional 45 days to review the deal submitted to it on June 18. Deals that have moved to this rare second-phase review are generally approved, insiders said.
In a related development, the House Energy & Commerce Committee this week sent Smithfield President Larry Pope a letter, informing him the committee was investigating “an unsolved case of contamination of the U.S. heparin supply (a blood thinner)…linked by FDA and other authorities to intentional adulteration during the manufacture of heparin in China.” Smithfield is a major global supplier of “crude heparin” used in the manufacture of medical heparin. Crude heparin components can be derived from pig intestines.
On the heparin issue, the House committee said the blood thinner is used by 12 million people in the U.S., mostly for surgery and dialysis patients. The committee letter to Pope said, the Shuanghui proposed purchase of Smithfield “raises questions related to the safety and adequacy of the U.S. heparin supply…we are concerned how Shuanghui’s acquisition would impact Smithfield’s heparin operations.” The letter goes on to say the heparin markets in both the U.S. and China are “stressed,” and “Smithfield Foods, under Shuanghui control may be pressured to export its crude heparin product to China instead of supplying U.S. companies.” At the same time, crude heparin exported by Smithfield, further processed in China and then shipped back to the U.S. “raises additional safety concerns” due to the unsolved case of intentionally contaminated heparin produced in China.
The committee also said it’s “further troubled by the linkage of Shuanghui International to the clenbuterol scandal,” referring to the animal drug used illegally in China in 2011 to grow leaner pigs. The drug is not approved in the U.S. for food-producing animals. Shuanghui’s business practices “led to such contamination,” and this increases the committee’s concern over safety of heparin exports to the U.S.
Senate Ag Committee Approves Hardin, Bonnie Nominations
The Senate Agriculture Committee this week, saying it was “impressed by the nominees,” quickly approved the nominations of Krysta Hardin to be USDA deputy secretary of agriculture, and Robert Bonnie to be undersecretary for natural resources and environment.
Hardin, who is currently Secretary of Agriculture Tom Vilsack’s chief of staff, was former assistant secretary for congressional affairs. Bonnie is a former senior advisor to Vilsack.