Home Farm Policy Menu Inside The Beltway -- Spring '99

As we went to press, the Senate and House had just passed emergency supplemental bills (S. 544 & H.R. 1141). These bills contain, in addition to hurricane relief assistance for Central America and money for Jordan, just over $300 million in emergency agriculture funding. The House-Senate Conference and final votes on the legislation will happen after the Easter recess.

The Senate bill provides $106 million to support additional direct and guaranteed farm loans ($200 million and $185 million for direct ownership and operating loans, and $350 million and $185 million for guaranteed ownership and operating loans, respectively), $43 million for temporary staff increases for FSA, $100 million for flood prevention, $20 million in emergency grants to farmworkers in California and Florida, and several other USDA items. Postponing the final vote until April will force delays in farm credit beyond the spring planting dates in many areas.

The emergency spending is offset in the Senate bill with cuts to last year’s emergency spending bill and other programs, including food stamps, Section 8 housing assistance, emergency community development block grants, defense, and border patrol. The House bill includes some of these, but relies more heavily on cuts in foreign aid. Many of the offsets are opposed by the White House and could well result in a showdown over the emergency measure.

Senators Kohl (D-WI) and Harkin (D-IA) offered an amendment [with the approval of Senators Cochran (R-MS) and Lugar (R- MO)] to provide a one-year, $28 million increase in the NRCS technical assistance budget, providing a one-year fix to a longer term problem resulting from the 1996 farm bill. Other efforts to get more conservation incentive money in the supplemental were not successful.

Senator Bond (R-MO) offered a successful amendment to provide $150 million in emergency payments to pork and other livestock producers. We expect this money will be distributed in the same targeted manner as the USDA’s recent Small Hog Operation Payment (SHOP) program. The recess will be an opportune time to communicate with members of Congress on your views on conservation funding and other issues contained in the supplemental.

The Agriculture Committees are the midst of hearings on crop insurance reform legislation, during which USDA has unveiled a more detailed proposal and Senators Pat Roberts (R-KS) and Bob Kerrey (D-NE) have put the first major bill into the hopper.

Costs of the proposals range from $1.5 to $3 billion (over and above the existing $1.7 billion program) per year, figures the congressional budget committees discussed with Clint Eastwood squints glowering under their green eyeshades as they fashioned the budget resolution. The House and Senate Budget Committees prepared budget bills that contain nothing for crop insurance for FY 00 and only $1.5 billion per year for the next 4 years, well short of what the $2.5 billion per year the Administration’s proposal is expected to cost.

In the Senate deliberations, Senators Grassley (R-IA) and Conrad (D-ND) successfully added $500 million for crop insurance in FY 00. Whether and how this $6 or $6.5 billion would be offset with other spending cuts or funded out of the surplus remains uncertain. Both houses passed their budget bills before leaving for recess.

The Administration’s proposal contains the following key points:

• Raise the lowest level of coverage (catastrophic coverage) by 50%, to 60% of yield at 70% of average market price.
  
  
• Increase subsidies for buy-up coverage, including 50% of the additional premium for coverage above 70% of yield at 100% of market price.
  
  
• Offer a new multi-year disaster policy to improve coverage for farmers with successive losses.
  
  
• ; * work with the private sector to speed new products to market, including reimbursing companies for their new product development costs.
  
  
• Authorize RMA to offer pilot projects on a nationwide basis.
  
  
• Start a pilot revenue-based livestock insurance product, with an initial federal cost limit of $50 million per year.
  
  
• Provide $50 million for outreach and information to producers.

The Roberts-Kerrey bill (S. 529) bears many similarities to the USDA proposal. It too would increase subsidies for higher rates of coverage, inverting the current subsidy structure. It would address multiyear disasters by allowing farmers with 3 or more disasters in 5 years resulting in a 25% or greater reduction in production history to exclude one year from the 5 year average used to determine production history. The bill would remove the existing prohibition on insuring livestock, but offers no other proposal on livestock. It also fails to address the issue of whole farm, all crop coverage, although it does not remove USDA’s current limited authority to insure at the whole farm level.

Finally, the bill also:

• Provides flexibility in assigning yields to new farmers and to farmers rotating to new crops.
  
  
• Mandates a pilot program to develop a new rating system.
  
  
• Allows companies who develop new products to receive royalties from other companies who subsequently offer them.
• Authorizes a pilot program to give private companies exclusive marketing rights for new products.
  
  
• Restructures the Federal Crop Insurance Commission board and gives it oversight over RMA.

In kicking off the Senate hearings, Chairman Richard Lugar (R- IN), as is his custom, issued a list of a dozen thought-provoking questions he would like answered. These include:

• Are the better ways to spend money to help farmers manage risk?
  
  
• Will higher subsidies encourage more production and lower prices?
  
  
• Will higher subsidies increase participation, or only further subsidize current participants?
  
  
• Are smaller or larger farms more likely to buy insurance?
  
  
• What are the logistical barriers to livestock coverage?
  
  
• Can RMA be an effective policy developer, regulator, and insurer all at the same time?

What about the three major issues identified by MSAWG committees? We continue to make progress on whole farm revenue insurance coverage, with at least verbal support from some key House and Senate Committee members and potential help from the USDA proposals to allow nationwide pilots and to encourage innovative product development. More definitive language will be needed, however. Limiting subsidies to a moderate-scale of production or including payment limitations has arisen so far only in a tangential way related to restraining overall budgetary cost. And none of the proposals on the table address relinking conservation requirements (highly erodible land and wetland protections) to insurance subsidies.

MSAWG members with concerns about this issue should contact their members of Congress as soon as possible. Remember to make brief but pointed mention of the three points developed by our MSAWG committees.

Despite early year predictions that the post-impeachment atmosphere would lend itself to a degree of moderation and bipartisanship, the annual budget battle bears all the marks of discord and division. The House and Senate budget resolutions envision large tax cuts, big increases in defense spending, smaller increases in education, and level funding for highways, crime, veterans, NIH research, and a few other items.

These plans would result in roughly 10% cuts in all other domestic discretionary spending for FY 00, rising to 35-40% by 2009. The spending plans hold the 1997 balanced budget act spending “caps” in place through 2002 (which for this year’s appropriations bills mean a $35 billion cut from this year’s levels) and then increase social spending cuts by an additional $200 billion from 2003-2009.

Earlier in the year, the chairmen of the Appropriations Committees indicated it was not possible to write bills that didn’t break the caps. Later, they changed their line somewhat, saying they could put together bills within the caps, but it was not possible to find 218 House votes and 51 Senate votes for the products that would result. Now, under pressure from the leadership, they are forced to say it can be done, but do so with a wink and a nod.

What does all this mean for us? Well, if the caps stay in place, or even if they are selectively raised a bit, the appropriators will likely chase after all mandatory funding accounts that are politically ripe for the picking. In agriculture, that means all the 1996 farm bill conservation programs (except CRP) and the 1998 research bill duo of the Initiative for Future Ag and Food Systems and the Fund for Rural America. It also would mean few if any of the proposed increases in the USDA budget request would survive. And finally, it would mean fairly massive cuts in existing appropriated program accounts -- and quite possibly the elimination of entire programs.

Bottom line? We need to redouble our efforts to communicate the importance of programs like SARE, or stand ready to lose them. Today would not be too late to express your views. Everyone in an ag appropriations district or state should have already received an action alert from the Campaign.

On March 9, 1999, the USDA and the EPA released the Unified National Strategy for Animal Feeding Operations, a significant part of the administration's Clean Water Action Plan. A copy of the Strategy is posted on the Web at http://www.epa.gov/owm/finafost.htm.

You can also request a copy from the USDA by calling (202) 720-5974 or by calling Martha Noble at the SAC office (202) 547-5754 or e-mailing her at mnoble@msawg.org. In addition, the EPA has posted comments submitted on the Draft version of the Strategy on the Web at http://www.epa.gov/owm/afos/letters.html.

The Strategy contains a few significant improvements over the draft version but taken as a whole the Strategy still appears to rely primarily on mitigating surface water quality problems arising from Concentrated Animal Feeding Operations (CAFOs), only one of the many problems of large-scale factory farms. The Strategy also defers many major issues to state regulatory agencies under federal guidance documents that are currently being developed. A brief summary of the major changes to the Strategy includes:

• Higher Profile for Sustainable Agricultural Practices and Systems. We here at SAC are gratified to see the efforts of our members at the listening sessions and in comments payoff in the form of additional language in the Strategy concerning sustainable agriculture. A new guiding principle "promote, support, and provide incentives for the use of sustainable agricultural practices and systems" has been added to the Strategy and additional references to sustainable practices are now sprinkled throughout the Strategy. Of course, we still have to work to ensure that our voice is heard in defining "sustainable agricultural practices and systems" and that this principle is actually implemented. But it’s still nice to be noticed. Flattery, they say, is the sincerest form of insincerity.
  
  
• Vertical Integrator Liability. The Strategy contains an important partial victory. EPA recommends that an entity that has "substantial operation control" over a CAFO should be a co-permittee with the CAFO's owner. This provision would most likely cover a vertical integrator who contracts with a farmer to raise livestock and exerts control over the CAFO through contract provisions or requires certain design and operational features as a condition of entering into a production contract. EPA has indicated to us in a briefing, however, that this is only a recommendation and that it will not compel states to require vertical integrator liability.
  
  
• Land Application and Comprehensive Nutrient Management Plans (CNMPs). The final version of the Strategy does not weaken the requirement of the draft version that CNMPs for handling, storage, and land application of CAFO waste be included within the CAFO NPDES permit. The final version makes an important improvement by requiring CAFO owners who move manure off site to keep detailed records and obtain certification from the off site recipient that it has a CNMP.
  
  
• State Program Flexibility and the Concept of "Functionally Equivalent" to NPDES Regulations. In response to the National Governors Association and others, the final version of the Strategy includes numerous references to providing "appropriate flexibility" for States and Tribes to meet the national performance expectation for AFOs. In addition, the Strategy provides that the EPA can review existing state regulatory programs and determine if they are "functionally equivalent" to the federal CAFO NPDES program.
  
  It is not clear if this concept differs from determinations made by EPA in granting state authority over other types of NPDES permits, nor is it clear whether equivalency determinations are for the short or long term. The Strategy refers to EPA’s general regulatory authority for reviewing proposed amendments to state NPDES programs, a process that requires some public notice. We assume that states can begin submitting requests for a "functional equivalent" determination when the EPA guidance on the CAFO permit is finalized in August 1999. EPA has indicated that states, which want authority to administer the CAFO NPDES permits, should submit their requests by October 1, 1999.
  
  
• General v. Individual Permits. The Strategy does not require that all CAFOs over 1000 animal units obtain an individual NPDES permit. Instead, EPA recommends that for most existing CAFOs, states use a statewide general permit. EPA does recommend that states issue individual permits for exceptionally large existing CAFOs and new or expanding CAFOs. The EPA notes in the Strategy that it will consider increasing the amount of public participation in the general permit process but gives no details. The Strategy, however, also includes new references to "confidential business information" which will not be made available to the public.

The next steps in the AFO strategy include EPA's preparation of draft guidance for the states on Round I CAFO NPDES permits and a draft model permit, scheduled for release for public review in May 1999, with finalization in August 1999. In addition, USDA will be reviewing the NRCS conservation practice standards for AFOs, with proposed revisions scheduled for release in September 1999.

Last year, the administration initiated a Unified Watershed Assessment Framework process, under which the states determined which watersheds within the state were not meeting clean water and other natural resource goals. These watersheds were designated as Category I watersheds and the states then were to identify those Category I watersheds most in need of attention in FY1999-2000. For these priority watersheds, the states are required to develop Watershed Restoration Action Strategies. For more details on this Unified Watershed Assessment process, see the EPA guidance on the web at http://www.epa.gov/owowwtr1/cleanwater/uwafinal/uwa.html.

In the FY1999 appropriations bill for the EPA, Congress appropriated $200 million for states to implement nonpoint source management programs under Section 319 of the Clean Water Act, an increase of $100 million over previous Section 319 funding. This incremental $100 million for Section 319 funding is targeted for use by the States in implementing the Watershed Restoration Action Strategies. EPA has completed allocation of these incremental Section 319 funds to the states and has developed a new guidance for the states on how to prioritize the spending of the funds. The guidance entitled "Funding the Development and Implementation of Watershed Restoration Action Strategies under Section 319 of the Clean Water Act" is posted on the web at http://www.epa.gov/owow/NPS/fy19992.html. This guidance includes a list of the funds allocated to each state.

You can look at your state's Unified Watershed Assessment priority list on the Web by entering the site http://www.epa.gov/surf. This site contains a box entitled "Locate Your Watershed". By clicking on this box, you can access a page that includes a provision for "Search by Maps". Click on this selection to get a map of the United States and then click on your home state. This will take you to the Surf Your Watershed homepage (Get it? Surf your WATERshed? Goodness. Why on earth they let web designers write their own comedy material is beyond me.) for you state.

Click on the Unified Watershed Assessments to get to your state government's link for the Assessment. If you find that you have an interest in the restoration strategy for a particular Category I priority watershed, contact the state agency listed on the state Assessments page to find out opportunities available for public participation in the Watershed Restoration Action Strategy for the watershed of interest to you.

On March 9, 1999, the U.S. Army Corps of Engineers (ACE) issued a final rule for an administrative appeals process for Clean Water Act Section 404 wetlands permits. Federal Register, Volume 64, pp. 11707-11721 (March 9, 1999). The final rule provides for an administrative appeals process in which a person who is denied a permit or who declines to accept an individual permit offered by the ACE must seek review at one level higher within the ACE before exercising the right to judicial review of the action in the courts.

This final rule does not allow for administrative review of whether or not the land at issue is a wetland as defined by law. The ACE intends to establish an appeals process for wetland determinations if Congress appropriates funds requested in the administration’s FY00 budget. In addition, third parties who may wish to challenge the issuance of a Section 404 permit cannot initiate this administrative appeals process, although third parties have limited rights to submit information under the process. The rule becomes effective on August 6, 1999 and will apply to permit denials and declined individual permits where the denial or proffered individual permit occurs after March 9, 1999.

The ACE has also issued its Section 404 Regulatory Guidance Letters currently in effect. Federal Register, Volume 64, pp. 13783-13788 (March 22, 1999). These Letters track written guidance issued to ACE field agencies that address evolving policy; judicial decisions; and changes to the ACE regulations or another agency’s regulations which affect the Section 404 permit program. For example, Regulatory Guidance Letter No. 96-02 provides guidance on whether a “deep-ripping” activity in a wetland falls within the normal farming, forestry or ranching exemption from Section 404 permit requirements.

Finally, the ACE is initiating a Programmatic Environmental Impact Statement for the entire Section 404 Nationwide Permit Program to review and evaluate whether the Program as a whole authorizes only those activities with minimal individual and cumulative adverse environmental impacts. The first step is a public scoping process focusing on identifying programmatic and procedural alternatives, methods of collecting and analyzing Nationwide Permit Program data, and other substantial environmental issues to be addressed in the Environmental Impact Statement.

The ACE will be holding public meetings in Sacramento, Fort Worth and Washington in May and is accepting written comments on the scoping process until June 4, 1999. See Federal Register, Volume 64, p. 13782 (March 22, 1999) for details on the public meetings. Written comments should be submitted to Mr. Robert Brumbaugh, CEWRC-IWR-P, Casey Building, 7701 Telegraph Road, Alexandria VA 22315-3868. For further information, contact Mr. Brumbaugh at (703) 428-6370.

The February 9-11 meeting of the National Organic Standards Board produced substantial progress on a number of policy issues that were among the most controversial elements of the first Proposed Rule. In addition to the previously announced prohibition on the use of genetically modified organisms, irradiation, and biosolids, Keith Jones of the National Organic Program outlined significant improvements in standards for livestock, synthetic materials, inert ingredients in pesticide formulations, and ecolabeling.

Important provisions include: a 100% organic feed requirement, no antibiotic use on livestock, access to the outdoors for all animals and pasture for all ruminants with very limited exceptions, NOSB authorization for all approved synthetic materials, a prohibition on all List 2 EPA inerts and all List 3 inerts unless specifically approved by the NOSB, and no restrictions on label claims other than the organic claim.

The changes reflect the broad consensus seen in the more than 275,000 comments that criticized the first Proposed Rule and are much closer to existing state and private certification standards. Keith stated that his office is “dotting the i’s and crossing the t’s” on the next draft which should, after internal clearance, appear in the Federal Register by summer. Keith announced that the Department will seek a one-time authorization to cover the cost of the first round of certifier accreditation. If Congress goes along, this should be very helpful for enabling smaller, private certifiers to work in the national program.

The NOSB also brokered a tentative compromise between the USDA and the private certifier community on provisions for termination of certification. The arrangement would allow private certifiers, after finding a serious violation of standards and an internal appeal process, to revoke the letter of certification through which it authorized the offending operation to use its seal on a particular product. The operation can elect to appeal the certifier’s decision to the Secretary, who retains final authority to terminate certification. A workable resolution to this issue will be a closely watched detail in the next Proposed Rule. Keith also announced that he is negotiating a contract with the Organic Materials Review Institute to conduct the necessary technical reviews on materials being considered for the National List.

On March 18, USDA announced several changes to ease burdens on farmers who had debt forgiven under farm loan programs and now owe or soon will owe the government money under the terms of Shared Appreciation Agreements (SAA). SAAs, part of the 1987 credit act, require repayment of part of the forgiven debt if, after 10 years, the value of the farm property pledged as security has appreciated.

Under the new changes, farmers with SAAs due in 1999 who can demonstrate inability to pay can receive up to a 3 year deferral, with interest accruing during the deferral period. About 2,600 farmers are affected.

USDA also announced plans to issue a proposed rule to reduce future SAAs from 10 years to 5 years and to allow farmers to deduct the value of capital improvements made during the SAA term for existing and future SAAs. The hope is this rule would be finalized in time to help the set of farmers who opt to defer SAAs this year. The USDA announcement did not indicate the proposed rule would also deal with the issue of appraising the farms at ag rather than development value, but we hope to make sure this issue is also accounted for in the new rule.

The Food and Drug Administration (FDA) has issued an advanced notice of proposed rulemaking seeking public comment on its regulations relating to the labeling of foods treated with ionizing radiation. The FDA has authorized the use of irradiation on most foods, including fruits and vegetables. The FDA most recently approved the use of irradiation to reduce microbial pathogens on meat and poultry.

With regard to labeling, the FDA currently does not require labeling of foods with intermixed irradiated components, where the final food product is not completely irradiated. For unmixed foods, i.e. in which all ingredients or components have been irradiated, the FDA regulations currently require that the food be labeled with a “radura logo”, the international symbol that indicates radiation treatment (which barely beat out the very clever “Hiram the Glowbug” logo), and an irradiation disclosure statement that need be no more prominent than the ingredients list for the product.

In its advanced notice, the FDA indicates that it is considering: (1) revising the wording of the current irradiation disclosure statement to a use terms such as “cold pasteurization,” “electronic pasteurization,” or “ Strangelovin’ ” which would not include the word “irradiation”; and (2) allowing any labeling requirements for irradiated foods to expire in the future. The advanced notice of proposed rulemaking can be found in the Federal Register, Volume 64, pp. 7834-7837 (Feb. 17, 1999) or on the Web at http://www.fda.gov/ohrms/dockets/98fr/%0021799a.txt.

The FDA is accepting written comments and supporting material on the proposal until May 18, 1999. Comments should refer to FDA Docket No. 98N-1038 and should be submitted to Dockets Management Branch (HFA-305), FDA, 5630 Fishers Lane, Rm. 1061. Rockville MD 29852. Organizations should submit two copies and individuals need submit only one copy. Comments may also be submitted by e-mail to FDADockets@oc.fda.gov with the Docket Number No.98N-1038 in the subject line

The EPA has fallen behind in making the key decisions needed for FQPA implementation. The Agency postponed a Tolerance Reassessment Advisory Committee meeting scheduled for February, and has yet to release a refined risk assessment for any organophosphate (OP) compound.

The Agency is continuing to accept comments on unrefined assessments for many OPs. The refined risk assessments are needed to complete the risk management process, through which the Agency will determine which products and label uses will be eliminated. The Agency also announced that while it expects to have the first third of all food tolerances reviewed by August 1999 (as required by FQPA), tolerances for the high-risk organophosphates will not be among them.

The EPA’s inability to reach a decision on the OPs is undermining the FQPA, which was specifically designed to expedite review of the highest risk products. The apparent decision to shift the Agency’s resources to low risk products and the registration of newer reduced risk alternatives has left the fate of many widely used OPs unresolved.

In announcing the results of the 18th Sign up for the Conservation Reserve Program (CRP), Secretary Glickman pronounced himself “Shocked shocked! to find that we missed some of North Dakota that last go-round.” They made a stab at rectifying this grievous error in this sign-up, which will bring nearly 5 million additional acres into the program, out of 7.1 million offered in this round. This will result in a total enrollment in the program of 31.3 million acres.

Once again, Plains states led the new enrollment, with continued high sign ups in Montana, the Dakotas, and Kansas. The largest acreages in this sign-up were:

• Montana 638,178 acres
• North Dakota 603,235
• Texas 554,800
• Kansas 403,030
• Minnesota 380,547
• Colorado 290,129
• South Dakota 282,127
• Iowa 229,073
• Washington 193,576
• Nebraska 186,364

As in all of the most recent sign-ups, USDA ranked bids on the basis of an Environmental Benefits Index (EBI) and a cost factor. For the 18th Sign-up, CRP offers with an EBI of 245 or greater are considered acceptable for enrollment, and USDA claims a higher EBI average for this round than for any previous one.

After much delay, the land grant university stakeholder and peer review draft guidelines and plans of work will be published in the federal register for public comment around March 23rd. Last year, in the federal research bill, Congress mandated that in order to receive formula funding, state agricultural colleges (land grants) will be required to follow guidelines and document how they involve citizen stakeholders in agricultural research decision-making. The proposed rule will be open to public comment possibly for as little as 30 days, hence our pre-publication alert.

MSAWG’s research committee will lead an effort to respond to these guidelines and ensure representation of a diverse array of citizens, meaningful input processes, and strong accountability mechanisms. Look for action alerts soon with information including the federal register announcement, sample comment letters, and whom to contact for more information.

Seven long years after the law passed establishing the beginning farmer advisory committee, Secretary Glickman announced the appointment of the 18-member group on February 22nd. Included on the panel’s membership are our own Ferd Hoefner (Sustainable Agriculture Coalition) plus Kathy Ruhf from the New England Small Farm Institute, Calvin King, Sr. from Arkansas Land and Farm Development Corporation, and Greg Smitman from the Intertribal Ag Council.

Also represented are the National Council of State Agriculture Finance Programs, the Extension Service, the Farm Credit System, and the American Bankers Association. The group expects its first meeting to occur in late spring or summer. It is charged with developing greater federal-state beginning farmer partnerships using existing beginning farmer credit programs, and to recommend other methods for creating new farming and ranching opportunities.

At the end of March, USDA will issue a Request For Proposals for the 1999 Community Food Projects grant program. Applicants will have either 60 or 90 days to submit completed proposals. This is a competitive grants program administered by the USDA Cooperative State Research, Education, and Extension Services. The grant program will match an amount up to $250,000 for up to 3 years for a private, non-profit entity project that links farms, food processing facilities and food markets with local low-income rural or urban residents.

Background information on the Community Food Project Grant Program is available on the web at http://www.reeusda.gov/crgam/cfp/community.htm. In addition, Martha Noble plans to attend an information session on the Program at Penn State University on April 23, 1999. If you have any questions you wish addressed at this session or would like a briefing after the session, contact Martha Noble at the SAC office or via e-mail at mnoble@msawg.org.

While it’s a tad late to attend, it’s worth noting that the USDA will co-host a marketing outreach workshop for limited resource farmers March 24-26 at the Agricenter International in Memphis, Tenn. The workshop is a joint effort with Southern University and A&M College, Baton Rouge, La. One hundred fifty-four limited resource farmers from across the south will attend the event on USDA scholarships, and another 600 are expected to participate. As announced, the workshops will focus on steps farmers can take to devise effective marketing plans, as well as information on livestock quality.

Also of note is the release of the one-year report on the results of the Clean Water Action Plan. To read the EPA’s self- congratulatory assessment of year one accomplishments under the CWAP (don’t any of these jokers ever check their acronyms? Or at least listen to Elmer Fud?), you can check the web at http://cleanwater.gov/anniv

• February '99
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• May '98
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• Jan. '98
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Home Farm Policy Menu Inside The Beltway -- Spring '99