Legislative Outlook
3/10/2014
Steve Kopperud, government affairs consultant
Monday, March 10, 2014
by: Steve Kopperud, government affairs consultant

Section: Spring 2014




"We're lookin at a double whammy affecting the congressional agenda as we proceed into 2014; it's the second year of the two-year 113th Congress, and it's an election year. This means any legislative initiative not completed by adjournment..."

The overall agenda will be colored by republicans fully focused on taking control of the Senate and retaining and increasing their House majority, and democrats fighting to preserve/increase their Senate majority while trying to erode the GOP majority in the House. We can also expect 2014 will bring the kick off to the 2016 run for the White House.

 
With those two caveats in place, here’s a look at the American Feed Industry Association’s priorities as 2014 progresses: 
 
FDAAA/FSMA: 
A push by AFIA to overcome a one-word snafu in legislative language contained in 2007’s U.S. Food and Drug Administration Amendments Act threatening future feed/pet food ingredient approvals and could place approved ingredients in regulatory limbo continues. Because the law orders FDA to create pet food ingredient “standards”—the first time that word appears in the Food, Drug and Cosmetic Act—FDA seems set on an unnecessary review of the feed/pet food ingredient definitions/approval process. 
 
Despite a face-to-face meeting between AFIA’s Board of Directors and FDA Deputy Commissioner for Food and Veterinary Medicine at which the board urged Taylor to administratively fix the language confusion; FDA has made no progress in solving the problem. In addition to the AFIA Board’s plea, Taylor was told by Congress—in a letter signed by 34 members of the House, and individual letters from the author of the offending language in FDAAA from Senate Majority Whip Dick Durbin (D-Ill.), House Agriculture Committee ranking member Rep. Collin Peterson (D-Minn.) and Senate Minority Leader Mitch McConnell (R-Ky.)—Congress never intended the ingredient approval process to be changed, and that the agency has the administrative authority to fix the language problem without congressional involvement. AFIA is now finishing a stepped-up strategy to get FDA to act in the most efficient manner and in accordance with the intent of Congress. 
 
Momentum seems to be building—no formal action has been proposed—for a possible push to reopen the Food Safety Modernization Act. Between complaints from produce farmers the law goes too far in putting federal inspectors on farms to general discontent with FDA’s badly handled rulemakings and their inconsistent deadlines, some members of Congress, particularly in the Senate, are talking about “fixes” necessary to the law deemed the most sweeping changes in federal food safety authority in 70 years. While the focus for some form of FSMA “relief” is on produce farmers, the conversation includes FDA’s failure to meet statutory deadlines for proposing implementing rules has hamstrung regulated industry in drafting and file comprehensive comments on proposed rules which run into the hundreds of pages. AFIA was successful in getting a 30-day extension to the feed rule, but still has just five months to comment on the animal feed and pet food performance standards proposal, while the human version enjoyed an 11-month comment period. Hearings on FSMA implementation can be expected.
 
FY2015 Budget/Appropriations: 
Congress is relieved it finally enacted a fiscal year 2014 budget, the first in over a decade, as well as enacting an omnibus spending bill for the remainder of this federal fiscal year. Having achieved these goals in January, the appropriators must immediately dive in to FY2015 spending, and both chambers should be working on the next budget resolution. Will we see the same bipartisan, bicameral fiscal comity in 2014? Likely not. The focus will shift to establishing, in the voters’ eyes, which party is the most fiscally responsible in reducing the deficit by cutting spending. President Barack Obama, who’s supposed to submit his budget to Congress by Feb. 15, has already notified Capitol Hill to not expect his budget until late March or early April. So expect the budget/spending battles to begin in early spring, with both parties strategizing on how to demonstrate fiscal “responsibility” without shutting down the federal government. Neither side of the aisle wants the blame for repeating the 12-day October 2013 shutdown this year.
 
The next hurdle comes in May when Congress must act on raising the federal debt ceiling.  Again, because it’s an election year, you won’t hear as much moaning and groaning about spending—save for the noise the House Tea Party members will make—but expect a relatively quick resolution to raise the ceiling in exchange for symbolic spending cuts, the kind of deal that will allow both sides to declare “victory.”   
 
Tax Reform/Extenders: 
The likelihood Congress and/or the White House will make good on their commitments to personal and business federal tax reform is rapidly lessening. The rhetoric about the need for comprehensive tax reform will continue to be made; actual legislative action to achieve reform will be absent. A major reason the air has all but gone out of the tax reform balloon is that the sitting chairs and champions of tax reform—Senate Finance Committee Chair Max Baucus (D-Mont.) and House Ways & Means Committee Chair Dave Camp (R-Mich.)—will vacate those chairs at the end of the session. Baucus, having announced he won’t run for reelection, has been nominated by President Barack Obama to become U.S. ambassador to China; Camp is term-limited out of another Ways & Means chairmanship. Sen. Ron Wyden (D-Ore.) is set to replace Baucus, and sitting Budget Committee Chair Paul Ryan (R-Wis.), who also loses his current chair due to term limits, is likely to take the helm of the House Ways & Means Committee. 
 
Once again Congress allowed a package of federal tax breaks to expire at the end of 2013. These include not only research and development, depreciation and a number of personal tax credits to expire, but also biodiesel/renewable diesel blenders’ tax credits at $1 per gallon. In years past when the credits expired, they were generally re-extended within months, the benefits retroactive to Jan. 1. However, that simple fix in an election year, with a lot of noise being made about reducing spending is more elusive.
 
The business community wants the tax breaks extended quickly or publicly declared dead, claiming business needs tax certainty one way or the other to plan expansions, hiring, etc. The Ways & Means Committee members say it has no plans to act on the extenders. The most the Finance Committee members will say is, “it’s all being worked out,” leaving supporters wondering if all the tax breaks will be extended or only some subset of the list will get congressional blessing. 
 
Wyden favors renewal of the tax credits “the earlier the better.” Ryan supports broad tax reform, but ran as a 2012 vice presidential candidate on a GOP platform opposing all energy tax credits.
 
Baucus unveiled in early January his proposal to reinvent by 2016 how the Internal Revenue Service handles existing  energy tax credits, saying to simply extend current incentives—at different rates, for different periods, and some with little policy rationale—would cost the government $150 billion over 10 years. Baucus wants to see a system that would create one “incentive” for transportation and another for clean energy. Existing credits would continue until 2016, replaced by phased-in investment tax credits or production tax credits—a business would choose. The amount of credit would be tied to how “green” the technology to generate power or fuel an 
engine is.
 
CFTC Reauthorization/New Commissioners: 
Despite expiration of its authority, the chaos of trying to get a farm bill to the president’s desk sucked up the time and energy of the respective agriculture committees in 2013, meaning no action on reauthorizing the Commodity Futures Trading Commission or on nominees to replace retiring commissioners. Sen. Debbie Stabenow (D-Mich.), chair of the Senate Agriculture Committee, said CFTC issues will be a 2014 priority. The House Agriculture Committee, chaired by Rep. Frank Lucas (R-Okla.), held oversight hearings on CFTC rulemakings under Dodd-Frank, but took no formal action on reauthorization. Lucas joined Stabenow in announcing 
the CFTC priority in the coming year.
 
After or during the reauthorization process, the Stabenow’s committee will need to hold hearings on several Obama nominations to fill vacancies on the commission. CFTC Chair Gary Gensler left at the end of 2013, and President Barack Obama has nominated Treasury Department Assistant Secretary Tim Massad to be commission chair. Massad will face pressure from one side of the Senate to be a tough regulator similar to his predecessor. On the other hand, more moderate Senators will push him to be tough, but to be particularly aware of the parochial needs of regulated industry, particularly agriculture.
 
The most recent nominee is Sharon Y. Bowen, a New York City law firm partner, to replace agriculture industry favorite Commissioner Bart Chilton, who has said he’ll leave his spot “soon.”  Bowen will face tough ag panel questioning as the regulated industry lobbied the White House hard for a nominee with a strong agriculture futures market background. Already nominated is brokerage executive J. Christopher Giancarlo to fill the GOP seat vacated by Commissioner Jill Sommers last spring. If all are successfully confirmed, they will join sitting commissioners democrat Mark Wetjen and republican Scott O’Malia.
 
Farm Bill: 
The 2014 Farm Bill was approved easily by both chambers of Congress, and was signed into law by President Barack Obama just days later at a ceremony at Michigan State University on Feb. 7. Senate Agriculture Committee Chair Debbie Stabenow (D-Mich.) invited her committee’s ranking member Sen. Thad Cochran (R-Miss.), along with House ag panel chair Rep. Frank Lucas (R-Okla.) and ranking member Rep. Collin Peterson (D-Minn.) the White House also invited 50 other lawmakers but it was a democrats-only event.
 
While it would be tough to find a republican willing to be photographed with the president during an election year, Lucas begged off with a scheduling conflict and Peterson said he didn’t have enough time to make arrangements. Perhaps the most honest response was Cochran’s, when he said, “It’s a long way to go. It’s going to be signed whether I’m there or not.”
 
AFIA is satisfied by Congresses decision to dedicate more than $600 million in mandatory funding to vital basic and applied animal health and disease research, as well as crop protection, beginning farmer and various USDA research programs. The organization was also pleased with the inclusion of the new public/private matching funds research initiative. 
 
Climate Change: 
The White House has prioritized what it once called “global warming” and now calls “climate change,” and Congress is weighing in on the effort. In 2013, President Obama by executive order instructed all departments and major agencies to develop programs using their current authority to devise plans to minimize the impact of climate change on various industries and infrastructure components and to assist the general population in “adapting” to weather changes.
 
White House attention centers on the control of greenhouse gas emissions by industry, a long-standing battleground in Congress.  The Environmental Protection Agency attempted to draft proposed rules to require new utility plants to adapt “new” technology to reduce emissions, including reexamining fuel sources, and found itself in a series of rewrites and court cases. The overall effort has drawn the ire of coal-producing states. At the same time there is a less controversial push for industry and the private sector to reduce energy consumption and convert to “green technologies.” The House may move to try again to limit EPA’s authority, focusing initially on programs to limit greenhouse gas emissions and power plant proposed rules, but the Senate will likely not go along. At most the only approach around which consensus might be built is the “green technology” angle, incentivized through federal tax credits.
 
Trade: 
When it comes to trade issues in 2014, all eyes are on the “Ts,” as in the Trans-Pacific Partnership (TPP), trade promotion authority (TPA) and the Transatlantic Trade & Investment Partnership (TTIP). 
 
TPA allows the president to directly negotiate trade deals; congressional approval of the treaties is limited to up-or-down votes, no amendments. Previous administrations enjoyed TPA, but the law expired and Congress has been reluctant to give the Obama White House such unilateral trade power, and during the president’s first term, the White House didn’t push for TPA.  However, when Obama’s midterm trade focus strongly shifted to Asia and the Pacific Rim market potential for the U.S., the policy shift gave birth to U.S. participation in TPP, a mega trade deal with players from Asia, South America and North America. The White House makes no secret now it strongly wants TPA in the context of TPP negotiations.
 
While the U.S. Trade Representative hoped to get a TPP agreement before the end of 2013, the pact began to unravel in the last quarter of 2013. In mid-January, TPP was dealt a blow when WikiLeaks released chapters of the TPP draft agreement showing the U.S. as a lone voice among participating nations in demanding inclusion of tough environmental protections, similar to those the U.S. has won in other bilateral treaties. This set off a wave of protests from U.S. environmental groups; equally loud voices opposing the tough penalty provisions were heard from developing nations participating in the trade talks, explaining they don’t have the level of environmental law to meet the U.S. demands.  
 
Agriculture interests stand to gain huge new markets in a Pacific Rim trade pact, particularly with nations such as Malaysia and Indonesia. These groups want the deal soon and support TPA for this White House. However, several members of Congress—bipartisan voices both for and against TPP and TTIP—said these mega trade deals must have thorough congressional oversight, calling previous grants of trade authority were “failed experiences.” These critics want the ability to amend the deals during floor consideration, so giving President Obama TPA authority before TPP is finalized is iffy at best.
 
To win allies, the White House met with 40 lawmakers in mid-January to talk TPA. The day after that meeting, Senate Finance Committee Chairman Max Baucus (D-Mont.) said he plans to mark up a TPA bill “soon.” The markup may be preceded by a hearing on the issue, but the question of whether the administration will testify was still unanswered at this writing.  Finance committee ranking member Sen. Orrin Hatch (D-Utah) said if the White House wants TPA, it has to campaign to get the authority.
 
Little new congressional attention is expected to be paid to the TTIP, U.S.-European Union bilateral trade negotiations. This effort is still relatively new, with negotiators having only completed their third negotiating session. These talks are expected to last well into 2014, and could survive past the scheduled October adjournment of this Congress. Both sides place a heavy emphasis on the talks. In late January, the EU Ambassador to the U.S. called TTIP the “mother of all free trade agreements…a game changer for bilateral relations between the EU and the U.S…it also has the potential to be a game changer globally, as Americans and Europeans work to reenergize the world’s system, and do it according to our values and principles.” 
 
Immigration Reform: 
The Senate passed a comprehensive immigration reform bill by a strong bipartisan majority in 2013, but House Speaker John Boehner (R-Ohio) opted to ignore the Senate bill—despite heavy pressure to simply take up the Senate bill to short-cut the process—instead instructing House committee chairs to examine the areas of federal immigration law in need of reform, including ag guest worker visas, employer verification, etc., and develop a series of shorter, focused bills to be rolled into a single package on the House floor. Rep. Bob Goodlatte (R-Va.), chair of the Judiciary Committee, has guided four bills through his committee, including an ag workers bill.
 
House leadership promised it would begin floor consideration of these bills last fall, but no action was taken. Boehner has promised a series of “principles and standards” the GOP connect to successful immigration reform, and House leaders continue to make media statements about their party’s priority on immigration reform and the need to complete comprehensive immigration reform before the end of 2014. 
 
Where the two chambers agree is a priority on increasing border security before any of the other reforms kick in. The House plan for enhanced border security has not emerged yet. Also of concern to immigration reform supporters, including the White House, is whether the House will consider a so-called “path to citizenship.” The Senate bill includes a multi-step, multi-year process by which an undocumented worker in the U.S. can gain a green card and eventually apply for U.S. citizenship. The requirements include acknowledging their illegal status, paying all back taxes and fines, undergoing a background/criminal check, learning English, etc. Goodlatte, however, stops short of talking “citizenship;” instead referring to a system under which undocumented immigrants could gain “legal status” in the U.S.
 
With the republican House having pushed immigration reform into an election year, you can expect to see action to enact some form of reform just before the midterm elections in November. While critics contend the lack of House action is symptomatic of GOP antipathy to immigration reform generally, it comes down to the republicans wanting to impress immigrant voters just before the election.  
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