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Conveyor Currents                                October 4, 2013
In This Issue
Big Chunk of Government Shut Down; Congress Chases "Grand Bargain"
Farm Bill Caught in Financial Tug-of-War; No House Conferees Named
Federal Government Shutdown Continues
House CFTC Hearing Points out Rule Threats
Immigration Action Seen on Democrat Side of the Aisle
23 Activist Groups Tell Congress to Repeal RFS
Governor Brown Signs AB 60
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January 15-16, 2014   Grain & Feed Industry Conference, Embassy Suites, Monterey, CA

April 23-26, 2014  CGFA Annual Convention ~ The Sheraton Resort, Maui, HI 
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May 14-15, 2014 California Animal Nutrition Conference,  Radisson Hotel in Fresno, CA

April 22-25, 2015   CGFA Annual Convention - The Monterey Plaza Hotel on Cannery Row.

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Big Chunk of Government Shut Down; Congress Chases "Grand Bargain"

In the wake of a partial government shutdown this week, the looming October 17 federal debt ceiling deadline and a desire to "fix" the sequester requirements in current spending law, the House will try and tie all three into the same legislative package, or what some are calling "the grand bargain."


There was no word on the timing of this scheme, indicating the federal government shutdown will last at least into next week.  The last government shutdown was 17 years ago, lasting three and a half weeks.   


Both House and Senate have announced they'll be in session through the weekend, with Senate Majority Leader Harry Reid (D, NV) reiterating his call to House Speaker John Boehner (R, OH) that the House pass a "clean" continuing resolution (CR) - just dollars - to reopen the government, and then begin negotiations on a broader slate of financial issues.


Secretary of the Treasury Jack Lew this week reiterated his warning that the nation's borrowing ability expires on October 17, when the Treasury reaches its debt ceiling.  Lew restated his warning from September that without an increase, the nation will default on some obligated debt, cut off entitlement payments, risk a recession and trigger a 2008-like economic crisis.


After a series of unsuccessful attempts over the last week by the House to link defunding or delaying Obamacare to a short-term CR through November 15, about a third of the federal government shutdown at 12:01 a.m., October 1.  With about 800,000 federal workers furloughed, the House this week passed several bills to fund specific agencies and departments within the government, but the Senate refused to go along.


President Obama, who over the last weeks has refused to enter discussions over the CR if defunding or delaying the Affordable Care Act (ACA) was part of the negotiations, invited the four House and Senate leaders to the White House October 2, to discuss the shutdown as well as the approaching federal debt ceiling deadline. Reports indicate the White House meeting was unproductive.


Rep. Paul Ryan (R, WI), chair of the House Budget Committee, has been tasked by House Speaker John Boehner (R, OH) to quietly draft the broader legislation.  Ryan has been polling his GOP colleagues on what spending and entitlement concessions from the Democrats they want to see if the House is to approve an increase in the debt ceiling as well as a short-term CR.  Ryan also sees an opportunity to include what he calls "revenue-neutral" changes to the tax code. Overall, the plan is to horse trade dollar for dollar increases in the debt ceiling for decreases in overall spending and repairs the GOP believes are necessary to entitlement programs. Several items for inclusion in the House plan have been talked about, but a list is not final. One GOP staffer called this strategy "a path to balance."


GOP leaders believe Democrats so dislike mandatory sequestration cuts and fear inaction on the debt ceiling in the wake of the CR fiasco they may strike a spending cut deal with GOP demands simply to see those deeper cuts disappear.  Senate Majority Whip Richard Durbin (D, IL) told Congressional Quarterly this week that the continuing resolution and debt ceiling are "now all together."  "We need to fund not only the funding of the government, but also make sure we stand behind our economy and the full faith and credit of the U.S.," Durbin said.  

Farm Bill Caught in Financial Tug-of-War; No House Conferees Named

The 2013 Farm Bill continues to languish despite action this week by the Senate to spur action.  The House-passed bill, including the stand-alone nutrition bill approved by the House, has been formally conveyed to the Senate, Senate Majority Leader Harry Reid (D, NV) renamed his conferees, sent the bill back to House and requested a conference.   


However, House Speaker John Boehner (R, OH), who pledged to name conferees the "sooner the better" after the House passed its nutrition bill, has not acted.  At the same time, Reid is now pushing to include in any broader budget agreement, action on a "final savings figure for farm programs."   


Secretary of Agriculture Tom Vilsack told an industry audience this week USDA is struggling in the wake of the government shutdown - which has left the department almost silent because it cannot issue scheduled reports - because he has no Farm Bill and no immigration bill.  He urged his audience to become "citizen patriots" and urge Congress to reauthorize USDA programs and authorities quickly.


Rep. Collin Peterson (D, MN), ranking member of the House Agriculture Committee, said this week the path forward on the Farm Bill is "unclear," and he believes it will be the end of October before conferees are named.  Nevertheless, some outside observers now contend the commodity and nutrition titles of the respective chamber bills may be "irreconcilable," according to one academic. This could signal action to extend for at least a year and possibly two years the just-expired 2008 Farm Bill authorities.  However, Reid has said he will not entertain an extension that does not kill off direct payments, a move ag groups say will suck $20 billion in savings out of the bills, leaving no money to fund new programs or reinvention authorities.  Nevertheless, 28 Senators sent Reid and Senate Minority Leader Mitch McConnell (R, KY) a letter this week telling them any extension must contain an end to direct payments.


Meanwhile members of Congress, along with farm and agribusiness groups with a stake in getting a new Farm Bill into law continued their battle of press releases.  The National Farmers Union (NFU) has called on House leadership to name conferees immediately.  The American Soybean Assn. (ASA) said in a press release, "Congressional gridlock has cost farmers yet again. We demand a stop to the political gamesmanship. It's time for our elected officials to remember who they represent."  At the same time, 28 members of the International Dairy Foods Assn. (IDFA), representing the dairy processing industry, sent a letter to Senate Farm Bill conferees and others urging them to accept the House dairy provisions because it does not include a production limit. 

Federal Government Shutdown Continues as Senate Democrats Reject Negotiations with House on Funding Impasse


The impasse on Capitol Hill over funding the federal government for the new 2014 fiscal year continues today, with no path yet apparent for resolving the significant divide between the House Republican and Senate Democratic leaders.


On Oct. 1, the Senate tabled by a 54-46 party-line vote, a House request for a conference committee on a continuing resolution that would have maintained sequestration-level funding for the federal government until Nov. 15, while delaying the individual mandate to purchase health insurance for one year and requiring members of Congress and the administration to purchase insurance through the exchanges established under the Patient Protection and Affordable Care Act - better known as "Obamacare."


On the Senate floor, Sept. 30 began with the chamber voting 54-46, along party lines, to strip out a Republican-proposed one-year delay of Obamacare, and to keep the date of the end of the continuing resolution at Nov. 15.  The House has been pressing for a Dec. 15 expiration date.  The House then voted 225-204 to reject the Senate version and send it back to that chamber with the one-year Obamacare delay.  During the House vote, six Republicans joined 198 Democrats to support the "clean" Senate bill.  The Senate then again voted down the House bill on a 54-46 vote, sending it back to House.


Later in the day on Oct. 1, House leaders offered three separate bills to provide funding for certain federal government functions - specifically the National Park Service, the Department of Veterans Affairs and operations for the District of Columbia.  But each of the measures failed given that they were offered under a suspension of the House rules, which required a two-thirds majority to pass.  House leadership was mulling plans this morning to offer each of the same bills for a vote today under a rule that would require only a simple majority vote to pass.  But the Senate Democrat leadership already has said it will not consider bills that would restore funding "piecemeal" to selective federal departments, and President Obama served notice he would veto any such bills should they reach his desk.


Impacts on Grain, Feed, Processing and Export Sectors


Generally, the impact of the federal government shutdown on the grain, feed and processing industry appear to be minimal.  But there are some significant functions that have been suspended - including the issuance of statistical economic reports by the U.S. Department of Agriculture (USDA) - until Congress approves funding for the new fiscal year.

Source:  National Grain & Feed Association
House CFTC Hearing Points out Rule Threats; Gensler to Step Down


The fourth hearing in the House Agriculture Committee subcommittee on general farm commodities and risk management this week prior to formal reauthorization action on the Commodity Futures Trading Commission (CFTC) gave futures market players an opportunity to tell the subpanel that pending market protection rulemakings will harm the very people they're designed to help.


In a related event, CFTC Chair Gary Gensler announced this week he will not serve as commission chair past December 31. In other CFTC news, commission enforcement chief David Meister announced he'll leave the commission to join a university faculty.


The CFTC moved quickly in the wake of the MF Global and Peregrine Financial Group bankruptcies to implement rules and recommendations from industry on how to better protect traders and their customers from such disasters. The groups testifying this week said, however, one part of a pending customer protection rule would drastically reduce from the current three days to one day the timing margin call payments must arrive at future commission merchants (FCMS).  The same rule changes the definition of "residual interest" or the use by FCMs of their monies to cover margin calls until payments arrive, requiring all customers to be completely margined at all times. The National Grain & Feed Assn. (NGFA) told the subcommittee such actions increase customer risk.  The CME said the residual interest rule is unnecessary to protect customer funds.  


Several House committee members sent a letter two weeks ago to the CFTC echoing these concerns. Several ag groups also sent a letter to the commission detailing their concerns.   


For Gensler, his announcement confirms what's been widely known in the industry for several weeks.  His term ended in early 2013, and he can stay through the end of the year or until Congress confirms his replacement.  The White House asked Gensler to accept a second term as chair, but he has rejected the request.

Immigration Action Seen on Democrat Side of the Aisle


With the House leadership's statements about autumn floor action on immigration reform, the White House is gearing up for a major legislative push this fall, and House Democrats this week introduced legislation to grant a path to citizenship for illegal immigrants.


However, the continued battles over federal spending, the debt ceiling and sequestration will likely push that schedule back, causing a growing number of observers to contend it won't be until 2014 before the House acts on its first immigration reform bill.


The House bill very closely mirrors language included in the Senate-passed omnibus immigration reform package.  For farm workers, the bill would create a new immigrant visa status called a "blue card" which replaces the H-2A guest worker program. To qualify, a worker must have done at least 575 hours or 100 work days of ag work during a two-year period ending December 31, 2012.  Background checks are required, as are penalties.  Blue card holders would get permanent resident status after five years if they pay taxes, fines and continue to work in agriculture.  After five more years, they could apply for citizenship.  Workers could move among employers by obtaining a W-2 visa for contract workers or a W-3 visa for at-will employees.  Visas would be valid for three years and renewable for another three years. All employers would be required to use the E-Verify system.


The House Judiciary Committee approved its own ag guest worker bill in June. It replaces the current guest worker visa program with a new H-2C visa program, would allow up 500,000 temporary ag workers into the country each year, and those workers can stay for up 18 months.


23 Activist Groups Tell Congress to Repeal RFS


A letter to Congress sent late last week calling for a repeal of the Renewable Fuel Standard (RFS) carries the signatures of 23 social, tax reform and other groups, ranging from Americans for Tax Reform to the Independent Women's Voice to Congress on Racial Equality.


The letter is the latest salvo in the ongoing battle over the future of the RFS, the federal mandate on how much biofuel must be blended on an annual basis with gasoline.  The House Energy & Commerce Committee continues a task force effort, in cooperation with the biofuels and ag industries, to find ways to change the RFS to make it less onerous on food and feed production.


The letter tells Congress of the "unintended consequences" of the RFS, including higher fuel and food prices and increased damage to the environment, calling the RFS a "horrifically bad idea."

Governor Brown Signs AB 60


LOS ANGELES - Joining immigrant rights, community, faith, law enforcement and local elected leaders in Los Angeles and Fresno, Governor Edmund G. Brown Jr. today AB 60, extending the legal right to drive on the state's roadways to millions more Californians.


"When a million people without their documents drive legally and with respect in the state of California, the rest of this country will have to stand up and take notice," said Governor Brown. "No longer are undocumented people in the shadows. They are alive and well and respected in the state of California."


AB 60 by Assemblymember Luis Alejo (D-Salinas) requires the California Department of Motor Vehicles (DMV) to issue a driver's license to undocumented persons who can prove identity and California residency and meet all other licensing requirements, such as passing the written and behind-the-wheel driving exams. The law becomes operative no later than January 1, 2015.


Studies done by the DMV and AAA Foundation for Traffic Safety found that unlicensed drivers were more likely to be involved in fatal crashes than validly-licensed drivers. AB 60 will help make the roads safer by broadening the state's effort to ensure that all California drivers are properly trained, tested, licensed and insured.


To implement the new law, the DMV will immediately begin the process of adopting regulations that will detail how applicants can prove identity and California residency. Generally, this process will involve public notice of draft regulations, a public comment period and a final decision by the Office of Administrative Law. The DMV will also propose a license design that complies with federal requirements for state driver licenses under the REAL ID Act of 2005.


AB 60 makes it a violation of law to discriminate against anyone on the basis of having the new license. The law also explicitly prohibits using the license for criminal investigation, arrest or detention based on immigration status.


Governor Brown was joined by hundreds of Californians at today's signing ceremonies, including Archbishop José Gómez, Los Angeles Police Chief Charlie Beck, Assembly Speaker John A. Pérez, Senate President pro Tempore Darrell Steinberg and Los Angeles City Councilmember Gil Cedillo, who gave remarks in Los Angeles, and State Center Community College District Board of Trustees president Isabel Barreras, Assemblymember Luis Alejo, Masumoto Family Farm president David Mas Masumoto and Modesto City College student Estefania Hermosillo, who gave remarks in Fresno.


For full text of the bill, visit:

Affordable Care Act Webinar - What Employers Need to Know to be in Compliance in 2014

Calculating your company's health care reform strategy under the Affordable Care Act (ACA). In our ongoing effort to provide the most current and relevant information on the Affordable Care Act (ACA), we have developed a series of educational webinars. The information provided in this webinar will help you prepare for the Affordable Care Act provisions which will become effective January 1, 2014.

About your presenter:

Stacy Barrow is an Associate in the Labor & Employment Law Department and a member of the Employee Benefits, Executive Compensation and ERISA Litigation Practice Center and the Health Care Reform Task Force.

This is the final webinar in our 2013 series on the Affordable Care Act. Please check our website for future sessions.  


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