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Conveyor Currents
                     January 29, 2016

In This Issue
CGFA District Meeting & Golf Tournament
California Drought Legislative Battle Continues with Feinstein's Latest Draft
Senate Override Vote on WOTUS Veto Fails, but Will Try Again
California Agri Inspection Fee Increase
House Ag Hearing on EPA Impacts Postponed; Ag Groups Let Panel Know Opinions
Crop Payments Increasing on Falling Commodity Prices; Critics Call for Reform
USDA Deputy Secretary Harden Resigns; APHIS Chief Vet Clifford Goes International
Trade Notes
Last GOP Debates before Iowa Caucuses Heavy on Ag Play
Chemical Safety Board Says Texas Explosion Means Changes Needed at EPA, OSHA
No Middle Ground on GE Labeling Fight
Upcoming Dates
Feb. 29, 2016:
Ridge Creek Dinuba Golf Club
Dinuba, CA

April 27-30, 2016:
CGFA Annual Convention The Manchester Grand Hyatt San Diego 

May 4-5, 2016:
 California Animal Nutrition Conference at the DoubleTree by Hilton Fresno Convention Center      
Fresno, CA 

March 8-10, 2016:
2016 Golden State Dairy Management Conference
Seaside, CA
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CGFA District Meeting & Golf Tournament
District Chair Nicole Dominguez of ADM invites all CGFA members to the upcoming district meeting on Monday, February 29, 2016 at the Ridge Creek Golf Course in Dinuba.
This is a perfect opportunity to get in a round before the annual convention AND a perfect excuse to spend your "extra" Leap Day golfing! 
Join us for the Northern/Southern San Joaquin Valley/Sacramento Valley/South Bay District Meeting and Pre-Convention Golf Tournament! Registration includes a taco bar buffet lunch in the Clubhouse, tournament, range balls and cart followed by a dinner and prize ceremony. Please register by February 19th.
California Drought Legislative Battle Continues with Feinstein's Latest Draft
A new draft of legislation to bring relief to California's drought-stricken central and southern agriculture regions was unveiled this week by Sen. Diane Feinstein (D, CA), but no sooner had the draft appeared than a California GOP House member said the bill won't do what it says it will.

The Feinstein draft is designed to allow agencies to push as much water as possible into the southern and central parts of California without harming fish, but does not mandate any specific level of water transfer from the Sacramento-San Joaquin Bay Delta, a move agriculture and the House GOP members want to see.  It also carries two-year provisions to encourage water transfer and control salinity in the delta region, and provides $1.3 billion for desalinization, water storage, water recycling as well as aid to communities hardest hit by the drought. 

Rep. David Valadao (R, CA), who authored a California drought bill approved by the House last year, said there's a lot of work to be done, telling reporters he hopes Feinstein can get her bill through the Senate so the two measures can be reconciled in conference committee. Some western Senators are pushing for broad drought legislation with or without California on board.  
Senate Override Vote on WOTUS Veto Fails, but Will Try Again
The Senate's attempt last week to override President Obama's veto of a joint resolution to kill EPA's "waters of the U.S. (WOTUS)" rule failed when Democrats blocked the measure on a 52-40 vote, well short of the two-thirds majority needed to override.  However, the WOTUS wars continue, as Senate GOP leaders are calling for an investigation of EPA and its handling of the rule.

Sen. James Inhofe (R, OK), chair of the Senate Environment & Public Works Committee, and Sen. Ben Sasse (R, NE) sent a letter late last week to the Department of Justice requesting an investigation of whether EPA officials broke federal laws in promoting public comment on the agency's proposed final WOTUS rule.  The request is based on a Government Accountability Office (GAO) report that found EPA likely violated federal rules against overt lobbying, as well as formal alliances with environmental and other activists supporting the agency's rulemaking.  EPA denies any wrongdoing.

In a related development, both House and Senate are trying to push an energy bill that will increase use of alternatives.  In the Senate, Sens. John Barasso (R, WY) is considering offering an amendment to kill WOTUS, but is skeptical of success because amendments need 60 votes to pass.
The House previously passed stand-alone legislation requiring EPA to withdraw the current rule and start the process from scratch, with an emphasis on greater stakeholder input, particularly from agriculture.  The Senate failed to approve similar legislation, so the joint resolution option, available under the Congressional Review Act, was pursued.

President Obama said in his statement of administration policy (SAP) accompanying his veto that "the rule, which is the product of extensive public involvement and years of work, is critical to our efforts to protect the nation's waters; is responsive to calls for rulemaking from the Congress, industry and community stakeholders, and is consistent with decisions of the U.S. Supreme Court."
The rule, which technically went into effect August 28, 2015, has been stayed by the courts given nearly two dozen states and several national associations, companies and individuals have brought suit against EPA over the rulemaking.  
California Agri Inspection Fee Increase
Please find a letter to the industry which notifies and explains the fee increase which is in the works for the upcoming seasons below.

House Ag Hearing on EPA Impacts Postponed; Ag Groups Let Panel Know Opinions
Washington, DC's "snowzilla" this week - a blizzard which dumped over two feet of snow on the city - forced the postponement of a House Agriculture Committee oversight hearing on EPA, its rulemakings and the agency's impact on the rural economy.  While no new date has been set for the hearing, nearly 40 agriculture groups have let the committee know what they think.

In a joint letter to committee Chair Mike Conaway (R, TX) and ranking member Rep. Collin Peterson (D, MN), 38 agriculture groups told the committee leadership that while EPA has done some good things - protecting the monarch butterfly and pollinator protection plans - the agency's "general conduct" continues to rile the groups.  The full text of the letter can be found here.
Issues raised by the group include the EPA use of "inaccurate" modeling in its broad rulemaking to put in place total maximum daily loads (TMDL) limits in the Chesapeake Bay watershed; publication of an agency paper on neonicotinoid seed treatments for soybeans, which showed "negligible overall benefits" and was criticized by USDA, as well as the final so-called "clean water rule" known as WOTUS.

"These specific items are not exhaustive, but do represent some of the most pressing issues farmers and ranchers currently face from EPA regulations," the groups wrote.  "We commend the committee for undertaking this oversight hearing, and we stand ready to work with you on common sense reforms that reflect congressional intent without infringing on the legitimate rights of the agriculture community." 
Crop Payments Increasing on Falling Commodity Prices; Critics Call for Reform
Due to falling commodity prices, payments under USDA's Agriculture Risk Coverage (ARC), Price Loss Coverage (PLC) and dairy margin protection programs are rising fast and will likely exceed last year, says a report from the Congressional Budget Office (CBO).

Total payments will cost the government about $5.6 billion this year, compared to $4.7 billion predicted in January, 2015.  Through fiscal 2018, payments could total $21.5 billion, CBO said, nearly $1 billion more than forecast in January, 2015.

Critics of farm income safety net programs, including the Environmental Working Group (EWG), said in a statement: "Despite promises, we are now seeing that subsidies in the 2014 Farm Bill will cost much more than advertised.  The CBO projection should be a major wake-up call that Congress needs to enact meaningful subsidy reform."

Reports indicate falling prices across the commodity spectrum, but particularly for corn, are a big part of the increase in income protection payments.  The increase in payments, CBO said, will be partially offset by a drop in federal crop insurance payments, with the budget office projecting crop insurance will cost USDA about $24.1 billion for fiscal 2016-2018, or about $1.8 billion less than projected in 2015.  
USDA Deputy Secretary Harden Resigns; APHIS Chief Vet Clifford Goes International
Krysta Harden, USDA deputy secretary, announced this week she'll leave her post at the end of February, giving no details of her plans post-USDA.  Undersecretary for Farm & Foreign Agricultural Services Michael Scuse will become acting deputy secretary.

Harden became deputy secretary in 2013, when Kathleen Merrigan resigned to return to academia. Prior to that Harden served as chief of staff to Secretary of Agriculture Tom Vilsack, moving to that slot from USDA assistant secretary for congressional affairs.

Dr. John Clifford, USDA's chief veterinary officer and deputy administrator of the Animal & Plant Health Inspection Service (APHIS) will leave March 1, to become USDA's chief trade advisor for Veterinary Services/National Import Export Services, working on global trade issues.  He will remain the U.S. delegate to the OIE, the world animal health organization.  No successor for Clifford has been named.  

Trade Notes

TPP Needs Early Vote:  Froman - U.S. Special Trade Representative Michael Froman this week told reporters Congress must vote on the Trans-Pacific Partnership (TPP) trade deal earlier rather than later because there's a cost to the U.S. if Congress delays.  Word on Capitol Hill is that neither GOP-controlled chamber is of a mind to take up TPP until the post-election lame duck session or perhaps until a new president is in office.  "There's a clear cost to delaying TPP," Froman said, referring to a report from the Peterson Institute for International Economics saying the Pacific Rim trade deal will only "slightly" boost U.S. wages and increase jobs.  However, the Peterson report estimates a $357-billion increase in U.S. exports by 2030.  "If TPP is delayed even one year, the U.S. will see an estimated one-time national cost of $77 billion," Froman said, translating that figure into $600 per U.S. household.  He also said that by 2030, the U.S. will see nearly 800,000 export-related jobs created, though he could not give a timeline on when the White House will formally send the agreement to Congress.  Ag groups echoed Froman's warning, with American Soybean Assn. (ASA) saying the Peterson report shows "explicit benefits of TPP, (and) the risks of delay in its approval."  The National Cattlemen's Beef Assn. (NCBA), at its annual meeting this week, "We can't afford to wait until next year or later to move TPP."

New U.S. Moves on Cuba Trade - In the wake of lagging exports to Cuba, the Treasury Department this week announced banks may provide direct financing on export sales - except for agriculture products - as well as facilitate "people-to-people" contacts.  The new rules lift restrictions on financing for most approved products sold to Cuba, and allow less-restricted travel for business purposes.  The reforms broadly cover new or relaxed rules on bank financing for authorized exports, travel and air carrier services.  Bank direct financing changes don't cover agricultural products because such financing is banned by the U.S.-Cuba trade embargo, a federal law.  U.S. companies can also do business directly with government agencies, organizations and state-owned enterprises, but only under close watch by the U.S. government to ensure the benefits of trade go to the people, not the government, Treasury said.  At the same time, the White House warned Cuba that it must step up the pace of its domestic reforms to match actions by the U.S.  The new rules took effect January 27, but were criticized by anti-Cuban lawmakers for ignoring Congress.  Sen. Robert Menendez (D, NJ) said the changes "do nothing to empower the Cuban people."   

Colombian Beef Deal Announced - With less red tape, the U.S. will be able to sell more beef to Colombia, according to a trade agreement announced this week by USDA and the U.S. Special Trade Representative's office (STR).  The new deal means Colombia will now allow beef from all federally inspected U.S. facilities to enter the country.  Previously, only meat from companies participating in USDA's BSE verification program were eligible for sales to the South American nation, with the new deal reflecting the U.S.'s negligible risk status for BSE as determined by OIE, the world animal health organization.  U.S. beef exports to Colombia totaled $14.4 million in 2014, a 260% increase from 2011 when the U.S.-Colombia Trade Promotion Agreement went into effect. 

Last GOP Debates before Iowa Caucuses Heavy on Ag Play
A scant three days before the February 1 Iowa caucuses - and without frontrunner Donald Trump - the last Republican presidential debates were, all of sudden, a lot about agriculture though ethanol and the Renewable Fuel Standard (RFS) got most of the air time.

The RFS focus wasn't surprising given the well-coordinated and well-financed push by state ethanol interests to ensure protecting the RFS for ethanol is front and center among all presidential hopefuls, regardless of party.  However, Iowa appearances by both Republican and Democrat candidates have been criticized as short on broader agriculture issues in one of the nation's most important farm states.

Iowa caucus veteran former Sen. Rick Santorum (R, PA), who won the 2012 caucuses, vowed during the "undercard debate" to protect the RFS, and "repeal" both the controversial EPA "waters of the U.S. (WOTUS)" rule and the agency's new proposal on tougher ground ozone levels.  For his part, Mike Huckabee told the crowd "you can't win unless you go out and talk to the farmers," denouncing the notion of a president who'd "never met people who have to struggle to make a living and put food on the table."

The spotlight during the January 28 GOP debate was on Sen. Ted Cruz (R, TX), one of the few frontrunners in Iowa to take on the RFS and its mandates on how much biofuels must be blended with gasoline.  Cruz, despite heavy lobbying by the ethanol industry, remains opposed to the RFS and wants to see it phased out over five years.  He said if elected he'd "break down the blend wall," a move he contended will increase ethanol markets by 60%.  However, the blend wall is not an EPA creation nor does the agency enforce a blend wall.  The blend wall is an RFS factor defined by the petroleum industry which holds that falling gasoline use means fuel companies must blend beyond the current 10% legal limit to meet their RFS obligations. 

Cruz's statement about the blend wall was called "smoke and mirrors" and a "ploy to fool Iowans" about his real position on the RFS, said America's Renewable Future (ARF), a pro-RFS/ethanol group in Iowa.   ARF said Cruz "actually stands with (his) oil industry donors."  In a related development, Sen. Bill Cassidy (R, LA) may offer an amendment to pending energy legislation to kill the RFS, though the 60-vote threshold for success makes approval unlikely.

Immigration reform was also a debate focus, but wound up as an issue on which Sen. Marco Rubio (R, FL) found himself on the defensive, trying to explain his role in crafting the 2013 Senate comprehensive immigration reform bill, which includes a so-called "path to citizenship" for undocumented workers.  Jeb Bush accused Rubio of flip-flopping on the issue; Rubio reiterated his push for border security before all else in the immigration debate, claiming he brought a long list of amendments to floor to fix the bill.  Sen. Rand Paul (R, KY) went after Cruz on the same issue, saying the Texas lawmaker supported the Senate bill.
Chemical Safety Board Says Texas Explosion Means Changes Needed at EPA, OSHA
A 265-page report written by the U.S. Chemical Safety & Hazard Investigation Board (CSHIB) after a nearly three-year investigation into the West Fertilizer explosion in Texas, was released this week, with the panel saying EPA, OSHA and the Federal Emergency Management Agency (FEMA) need to change the way they do business when it comes to ammonium nitrate.  

CSHIB says EPA must make clear that fertilizer storage facilities are not exempt from emergency management rules, and the agency must better regulate fertilizer-grade ammonium nitrate; OSHA needs to include ammonium nitrate on the agency's list of highly hazardous chemicals putting stricter storage requirements on the chemical, or it has to come up with tougher requirements for buildings which store the chemical.
No Middle Ground on GE Labeling Fight
A second USDA-brokered meeting between those who want food/feed labels to talk about genetically engineered (GE) ingredients and those who oppose such mandatory labeling yielded no middle ground last week.  For its part, USDA wants a single consistent solution to the labeling fight, one that gives consumers the information they want while not costing food companies millions in new costs.

Representatives from the Coalition for Safe & Affordable Food (CSAF), an ag/food industry coalition, and the Just Label It! campaign led by the Environmental Working Group (EWG) are battling over how food companies can inform consumers about the presence of GE ingredients without mandating labeling.  The Grocery Manufacturers Assn. (GMA) has come up with a Smart Label program, open on a voluntary basis to food companies who want to put QR codes on labels that allow consumers to scan for GE ingredient information.  The labeling campaign wants that program to be mandatory.

The same "smart" label controversy scuttled last-minute legislative language in December to federally preempt state GE labeling laws.  Sen. Debbie Stabenow (D, MI), ranking agriculture committee member, demanded mandatory QR codes, but the industry balked.