Regulatory fights loom large in 2014 (via The Hill)

Battles lines are being drawn for a series of upcoming clashes over new regulations on the horizon in 2014.
The year promises to be chock full of contentious fights over scores of new rules stemming from ObamaCare, Dodd-Frank and a host of other laws.

Many of the provisions have already drawn fire, and opposition to high profile measures on the environment and healthcare is sure to increase ahead of the midterm elections.  Republicans will point to the efforts as “job killing” overreach from President Obama, and some Democrats have already begun to distance themselves from controversial regulatory efforts.

Some lawmakers and public interest advocates, meanwhile, have launched another attack against the executive branch, claiming that delays or weakened new rules have harmed the public.

Here’s a glance at ten of the biggest regulatory fights expected in 2014:

Emissions standards for existing power plants

Obama has given the Environmental Protection Agency (EPA) until June to propose regulations limiting carbon emissions from existing power plants, setting the stage for a high-stakes brawl over the centerpiece of the president’s climate change plan.

Critics say the regulations would decimate the coal industry, which supplies a major portion of the nation’s electricity, and are vowing to mount a legal challenge to strike down the regulations on grounds that the EPA is exceeding its authority.

The administration argues that it can regulate power plant emissions under the Clean Air Act, a position that has found backing in the courts. EPA administrator Gina McCarthy has insisted the forthcoming rule will give states flexibility in how they meet the standards.

But such assurances aren’t likely to keep opponents of the regulations from assailing the Obama administration’s “war on coal” during the coming election year, especially in states like Kentucky, West Virginia and Ohio.

Regulation coming to e-cigarettes, cigars

Regulations on tobacco cigarettes don’t apply to electronic cigarettes, cigars or hookah, but that could soon change.

The FDA is working on a regulation that could extend current rules to e-cigarettes, which produce vapor instead of smoke, as well as other forms of tobacco.

Opponents of the effort say that fees and restrictions on marketing that apply to cigarettes shouldn’t be extended to other forms of tobacco, since they aren’t necessarily as dangerous.

But public health advocates counter that the FDA should do its best to protect the public if it fears there may be any question about the products’ health effects.

ObamaCare’s birth control mandate heads to court

The Supreme Court agreed in November to hear a challenge to the Affordable Care Act’s so-called birth control mandate.

The healthcare law’s requirement that workers be offered contraception as part of their employers’ insurance coverage has come under fire from conservatives and religious groups who call it unconstitutional and compels employers who object to contraception to violate their principles.

The High Court is expected to hear arguments in the case some time in spring.

The White House, which argues the provision is both lawful and essential to women’s health, insists it is confident the regulations will be upheld.

Turbulence for plan to allow phones on planes
The Federal Communications Commission (FCC) voted in mid-December to consider lifting the longstanding ban on in-flight cell phone use.

While a similar proposal to allow the use of tablets and other devices on planes won praise from the public, the prospect of loud conversations has sparked fierce opposition – and a baptism by fire for new FCC Chairman Tom Wheeler.

Wheeler has said the rule change would mean simply that fears about interference are no longer an issue, but he stressed that it would be up to airlines to decide whether to allow the practice.

Still, outrage prompted federal legislation that would ban in-flight calls, and Transportation Secretary Anthony Foxx has suggested his agency might step in to prohibit in-flight calls by imposing a new regulation.
The debate is expected to play out on both fronts in 2014.

EPA to assert power over streams and ponds

The EPA has started the process of declaring that it has the power to regulate streams, brooks and small ponds.
The agency says that issuing a new rule is necessary to clear up uncertainty about its powers under the Clean Water Act, after Supreme Court rulings cast doubt on the extent of the EPA’s authority.

Regulating smaller bodies of water is necessary to protect larger rivers and lakes downstream, the EPA and environmental groups assert.

But Republicans have been quick to criticize the effort.  They have already begun to label the effort a “power grab” that could allow the EPA to control privately owned waters and questioned the science underpinning the agency’s effort.

Their opposition will only increase in 2014, as the public gets a chance to comment on a forthcoming draft regulation.

Smog rule on the way

Obama dealt to a blow to environmental activists in 2011, when he killed an EPA attempt to issue new standards on ozone, the main contributor to smog.

The White House said at the time that the regulatory burdens could hurt the still-struggling economy, and that new rules were unnecessary since the EPA was already scheduled to review them in 2013.

The EPA is behind on that effort, but is likely to make significant strides in 2014.

Advocates say that tougher standards could prevent up to 12,000 premature deaths each year, but business groups that oppose a strong regulation warn it could cost up to $1 trillion. Critics say it might also be especially hard for Western states, which have higher natural levels of ozone, to comply with a strict rule.

SEC to force executives to disclose pay

Fewer than half of hundreds of rules required by the Dodd-Frank Wall Street reform law have been implemented, and 2014 will see plenty of action on regulations meant to tighten the government’s reins on the financial sector.

Among some 40 items on the Securities and Exchange Commission’s rulemaking agenda is a particularly contentious regulation to require companies to disclose the gap in pay between their chief executives and average employees.

Businesses groups strongly oppose the measure, saying it would be overly burdensome to calculate and unnecessary. But unions and liberals have pushed for the proposal as a way to shame companies and help workers negotiate their salaries.

The regulation is one of many Dodd-Frank provisions whose fate may ultimately be decided in the courts.

Calorie counts coming to restaurant menus

One of the lesser-known provisions of the Affordable Care Act was a requirement that chain restaurant menus and vending machines say how many calories are in the food they offer.

The provision was meant to combat obesity and help Americans make healthier choices.

Major restaurant groups support the effort, which the Food and Drug Administration (FDA) has delayed for more than a year, but major pizza parlors and grocery stores have fired back.

Requiring the calorie counts for every variety of prepared food they sell could be a massive expense and be too difficult to calculate, they argue. Those industries hope that a final FDA regulation, expected to be issued in February, give them a fair amount of flexibility.

Delays to rearview camera rule under attack

The Department of Transportation (DOT) is already two years late on a regulation requiring all cars to have rearview cameras or similar technology, and aren’t likely to be done with the rule any time soon.

By law, the department was supposed to issue the regulations in 2011, as a way to prevent children from being backed over. But this year, the DOT further pulled back its effort to issue the rule, claiming it needed until 2015 to do further analysis.

Public safety advocates, who estimate that two children a week are killed in backover accidents each week, filed a lawsuit shortly after that delay was announced.

They argue that the DOT has repeatedly broken the law by slowing down the rule, and that the delay has cost children’s lives.

Public pressure on the administration is only likely to increase as that case makes it way through the court.

OSHA to rekindle combustible dust debate

The Occupational Safety and Health Administrator has come under fire from safety groups, who say it is dragging its feet on long-sought standards for combustible dust.

Even materials that don’t burn in large pieces – like aluminum or iron – can ignite and explode in dust form,  and is seen as particularly dangerous for many industries, including food, textile, metal, pesticides and coal.

Citing scores of deaths and more than 700 injuries since the 1980s, OSHA began work on a rule to regulate the dust in 2009, but has not yet completed the process.

But OSHA has placed the item on its rulemaking agenda for 2014, listing spring as a target date to propose a draft regulation.

Business groups are likely to protest, given that OSHA estimates put the annual cost of implementing the forthcoming rule above $100 million.

Radio Interview: A chance at a new Farm Bill?

Dave Ladd, President of RDL & Associates was recently a guest on Rural MN Radio.  Show hosts Jim and Marnie continue their conversation regarding how the Farm Bill debate will go forward and the chances of getting legislation passed in the new year.

The second half of the interview can be accessed by visiting http://ruralrealitymn.org/

Scientific Advisory Board Considering EPA Draft Report on Water Connectivity (via National Corn Growers Association)

This week, the U. S. Environmental Protection Agency convened a Scientific Advisory Board to conduct a peer review of the Water Body Connectivity Report draft released by that agency in September. The panel, which includes a broad variety of independent scientific experts, is assessing the scientific validity of that report, upon which the agency will base their rule defining Waters of the United States. This rule seeks to expand EPA’s regulatory authority under the Clean Water Act. The review, which began on Monday, has thus far proceeded in a constructive yet inquisitive manner that the National Corn Growers Association hopes will lead to findings that positively impact the final rule.

“While the debate going on in Washington may seem academic and ephemeral, it will have real-world implications for farmers in their fields,” said NCGA Production and Stewardship Action Team Chair Don Glenn, who farms in Alabama. “Farmers take their responsibility to care for natural resources very seriously, and we depend upon clean water to maintain thriving operations. At the same time, we urge all involved to consider the vital question of how large a body of water has to be to have a significant impact. To be effective, rules need to be both practical and have a basis in credible science. Our goal is to find effective, practical solutions that will lead to a bright future for our land, air and water.”

Prior to this panel, NCGA submitted comments to the EPA outlining the positive and potentially flawed portions of the draft report. In those comments, the association urged the Scientific Advisory Board to consider a handful of crucial concerns.

“While the considerable amount of science makes a contribution to our understanding of the need to work in the entire watershed to achieve water quality goals, there is a marked lack of science that allows the report to guide decisions as to what is or is not a water of the United States,” the association noted in its comments. “The connectivity report does not address the problem of when and where and how there might be a significant nexus between remote drainage features or isolated waters like wetlands and the downstream navigable waters or their tributaries.  The report does not make critical distinctions between drainage features and streams or other waterways, and as a result implies that essentially every drainage feature in agricultural areas could merit designation as a water of the United States, which carries with it a host of mandatory measures under the CWA.  We encourage the SAB to consider carefully the legal and policy context of the physical challenges of identifying waters of the United States and then offer to EPA recommendations about the appropriate scientific context and the questions to be asked to properly address those challenges. “

Additionally, NCGA, as a member of the Waterways Advisory Council, submitted a letter to the board last week encouraging the panel to go beyond the narrow questions posed by the EPA. Specifically, the letter urged the board “to go further to address whether the report and underlying scientific studies it reviews provide a real scientific basis for determining to what extent such connections may or may not significantly effect downstream waters.”

The Waterways Advisory Council comment letter can be accessed by visiting http://www.ncga.com/upload/files/documents/pdf/letters/121113-sab-ltr-re-agenda-wacfwqcuwag.pdf

The Dairy Safety Net Debate of 2013 Part II: Questions and Answers (via Farmdoc.com)

Key Findings

  • Margin insurance benefits will tie directly to the distribution of milk production for participating farms and will result in the largest dairy farm operators receiving the greatest income support.
  • Farm survey data on net farm income provided by USDA revealed that for dairy farms with 1000+ head of milking cows the top 25% had an average total household income of at least $1.8 million dollars during 2011. This raises the compelling question as to the reach of a dairy farm ‘safety net’.
  • A combination of MILC and margin insurance offers more choices to accommodate the assortment of U.S. dairy farm operations. By limiting both the amount of income support and adverse gaming incentives our independent analysis reveals MILC-Insurance could cost significantly less than the currently debated margin insurance programs.

In Tuesday’s post we made the argument that an insurance-style target index-deficiency payment program without premium oversight from USDA’s Risk Management Agency may result in farmers using the insurance program strategically to extract subsidies. Additionally, our research supports the view that the dairy market stabilization program may have unintended consequences with respect to the equity of the revenue penalty and free-rider incentives to expand milk production. In today’s post we will build on Tuesday’s post by providing additional evidence on functional equity to make the case why we believe that a combination of the countercyclical payment program and a slightly modified income-over-feed-cost (IOFC) margin program is a better path forward and common sense dairy safety net alternative.

The big questions to be addressed in today’s farmdoc daily post include:

  • Who benefits with an all-inclusive safety net program?
  • How much of a safety net for dairy farms should society provide?
  • Is there a better way forward?

In addressing these questions we will make the claim that a variant of Pareto’s 80-20 rule also applies to the margin insurance program and that a majority of the benefits of will accrue to the largest, and wealthiest, dairy farm operators. The aforementioned questions on the role of society in providing a farm safety net should be carefully considered before advancing alternative safety net programs as proposed by either the U.S. House or Senate. Failure to consider potential implications of proposed reform may result in irreversible structural changes to the industry.

 Who Benefits With An All-Inclusive Safety Net Program?

 The current dairy farm safety net program, Milk Income Loss Contract (MILC), is available to any producer with an adjusted gross non-farm income under $500,000. Additionally, the limit for benefits each fiscal year is capped at 2.985 million pounds of milk shipped to market. Contrary to MILC, margin insurance does not include adjusted gross income limitations or have fixed caps on production eligibility. Instead all U.S. dairy farms would be eligible to insure up to 80%-90% of their annually updated milk production history. This “all-inclusive” mandate for insurance would provide considerably more financial assistance than the current dairy farm safety net program for the largest dairy farm operations.

For expositional purposes consider the following: under margin insurance a 3,000+ cow dairy producing 70 million pounds per year could insure approximately 63 million pounds. Assuming a $1.00 per cwt average net benefit for the year margin insurance would provide an annual payment of $630,000 to this dairy. Under MILC, and a similar $1.00 per cwt annual average payment, this same dairy would be limited to $29,850 in income support.

To provide additional evidence on the distribution of margin insurance benefits our recent economic and financial farm analysis found that expected outlays favor large farm operations and, depending on the risk environment and actual program enrollment, may be two to three times higher than those under the existing countercyclical payment program. Under MILC, we estimated that farms with less than 100 cows (approximately 70% of farms) account for about 39% of net expected benefits and farms over 1000 cows (3% of farms) account for 9% of net expected benefits. Under margin insurance, we projected that farms with fewer than 100 cows would get approximately 23% of net program benefits, and farms over 1000 cows would account for 36% of benefits during low margin outcomes (Figure 1). While the size of the farm safety net has grown in total dollars and smaller farms may stake claim to a larger portion of this income support relative to the existing programs, the majority of the total benefits will flow to the largest dairy farmers. Thus, under margin insurance the distribution of benefits will follow closely to the distribution of milk production and the largest dairy farm operators will receive the greatest income support.

fig1.jpg

How Much Of A Safety Net Should Society Provide?

 To address this question we require information on the level and distribution of net farm income by herd size. Using farm survey data on dairy farm financial structure provided by the USDA Economic Research Service we find that on dairy farms with 1000+ head of milking cows the top 25% had an average total household income of at least $1.8 million dollars in 2011, and averaged $1.3 million dollars over the 2008-2011 period (Figure 2). Farms this large typically support more than one operator. Using data from farm financial record programs we know that for these large farms this is typically about two operators. Adjusting for multiple operators the total household income data still indicates very high average total household income per operator of $650-$900 thousand dollars over 2008-2011. On dairy farms with 1000+ cows the median household net worth, a more encompassing measure of farm wealth, exceeds $5 million dollars when averaged over this period, and is $9.7 million for those larger scale farms in the top 25%.  Even for medium sized dairy farms, those in the 100-499 herd size, median net household net worth was over $2.4 million dollars.

fig2.jpg

In a July farmdoc daily post Dr. Carl Zulauf examined the income of U.S. farm vs. nonfarm population for 2011. Zulauf found that for the largest U.S. farm operations with gross sales over $250,000 the total household income was 194% more than the U.S. household income for 2011. Farm households generate two sources of income: farm income and non-farm income. Zulauf found that this off-farm portion of income for these same farms was $50 thousand dollars, approximately 72% of U.S. average household income in 2011. While total household income is not a direct indicator of farm profitability, recognition that farm incomes exceed nonfarm incomes, and for the largest producers substantially so, the stage is set for a compelling discussion on the nature and extent of a farm safety net and a safety net for whom.

Is There A Better Way Forward?

In examining the current proposals what we find is that margin insurance can be an effective safety net program. However, we’ve also made the argument that design flaws such as the fixed premium structure, the lack of means testing or production eligibility constraints, and the absence of uniformity in dairy market stabilization across the U.S. will likely lead to the program exceeding budget expectations and accelerating industry consolidation.

So while margin insurance may work in providing needed financial relief to U.S. dairy farmers, it may have unintended and unwanted consequences. Perhaps a better way forward is not a giant step, but a small step in the desired direction. We propose keeping the existing MILC safety net program and offering as additional support a limited protection margin insurance program. This option, which we call MILC-Insurance, would offer farmers an annual choice between an enhanced MILC program and a limited IOFC margin insurance program.

By capping insurance premiums at $6.00 or $6.50 per cwt, and reducing the subsidy on premiums, adverse gaming incentives are substantially reduced. Additionally the amount and frequency of income support is limited to times of low IOFC margins at or below 78% of the historical average. Our independent analysis demonstrated that by limiting both the amount of income support and adverse gaming incentives MILC-Insurance could cost significantly less than the currently debated programs while offering the best of both countercyclical revenue support and catastrophic margin insurance.

Using data provided by USDA we’ve broken down the U.S. dairy farm population into various size categories (Table 1). 85% of the dairy farms in our sample milk less than 200 cows and supply less than 30% of the milk, while more than 43% of the milk is produced by the largest 3% of dairy operations. These differences in farm sizes and productivity demonstrate that a one size fits all safety net does not match the diversity of U.S. dairy farm operations. MILC-Insurance offers more choices to accommodate the assortment of U.S. dairy farm operations. Small scale dairy farmers or farmers who grow their own feed and find MILC to be a useful safety net would be able to keep this program. Larger dairies, who produce in excess of 50% of the milk, and those who find MILC to be insufficient, may find the insurance option, with more actuarially fair premiums, a better fit for their operation.

tab1.jpg

Issued by John Newton and Cam Thraen Department of Agricultural, Environmental and Development Economics The Ohio State University

Rural MN Radio: A Chance of a New Farm Bill?

Dave Ladd, President of RDL & Associates, was recently a guest on Rural MN Radio to discuss the sticking points regarding the Farm Bill debate and the chances of getting legislation passed in the new year.

The interview can be accessed by visiting http://ruralrealitymn.org/2013/12/13/a-chance-at-a-new-farm-bill/

 

Commentary: Farm Bill Serves as Poster Child for Congressional Dysfunction (via NationalJournal)

The news that there will be no farm bill this year, after three futile years of embarrassing setbacks and turmoil, made me reflect on the larger issues. Exhibit A is the farm bill, the poster child for the state of dysfunction in Congress and American politics.

In 1969-70, my first year in Washington, George McGovern memorably took to the Senate floor to reflect on his colleagues’ culpability in the Vietnam War. He said, “The walls of this chamber reek with blood,” drawing a collective gasp from those on the floor and in the galleries. You weren’t supposed to talk that way in the Senate. A week or so later, Bob Dole, then a freshman senator, took to the floor and ripped the bark off of McGovern for his apostasy.

But sometime later in the year, I saw McGovern and Dole walking arm in arm in the Old Senate Office Building. They forged a relationship that blossomed into a 40-year-plus friendship, based on their common interest in dealing with food issues. Dole, representing his Kansas farmers, embraced the food-stamp program on their behalf, a way to deal with farm surpluses. McGovern, with a deep passion to alleviate hunger in America, embraced a system of price supports that gave money to agribusinesses for not planting crops as a way to fund the food-stamp program.

Their alliance reflected a more than five-decade relationship between rural and urban lawmakers that made farm bills possible, a kind of model for how Congress, through compromises and trade-offs, can find majorities for legislation that primarily benefits minorities or narrower interests. To be sure, the alliance was at best imperfect; the farm price support system was not very smart public policy. But on balance, the coalition worked, given the larger politics that surrounded both agriculture and food stamps, providing stable and ample food supplies while adding to the safety net for the poorest among us.

In mid-2012, there were “green shoots” in the Senate over a renewal of the five-year authorization of the farm bill due to expire at the end of this year. Through adroit maneuvers, Agriculture Committee Chairwoman Debbie Stabenow, working with Pat Roberts and other Democrats and Republicans, put together a package that got overwhelming, broad support in the Senate. It looked like a model of bipartisan cooperation, providing a lower budget and a modest but real set of reforms in the antiquated price-support system that discomfited a lot of farm-state solons. It also contained some cuts in food stamps, a bow to conservatives who wanted to reduce spending but a loss for liberals. The deal managed to win 90 votes.

Politico’s David Rogers, who has covered the farm-bill dynamics meticulously, quoted Rep. Collin Peterson, D-Minn., the ranking member of the House Agriculture Committee, about the tea-party-dominated House, “If this gets through the Senate, the dynamics change and I don’t think they can stop it.”

Wrong. Despite facing the greatest drought since the Great Depression and broad and deep support for a bill in the Senate, the House managed to reach new depths of dysfunctional embarrassment when Majority Leader Eric Cantor singlehandedly blew up a delicate compromise forged by House Agriculture Committee Chairman Frank Lucas and ranking member Collin Peterson. Cantor decided to get behind a provision on the House floor aimed at cutting food stamps dramatically over 10 years; instituted punitive new work requirements; gave states financial incentive to drop eligible people from the food-stamp rolls; and took away states’ flexibility over waivers of job-training provisions in the program in the face of continuing high unemployment. As Rogers detailed, 62 House Republicans who voted for the amendment (which alienated a slew of moderates) then voted against the bill, killing it on the floor. Nine of the 62 were committee chairs who took on their fellow chairman Lucas, showing that the regular order of deliberation in committees, and a basic deference to the delicate, bipartisan compromises worked out there, had disappeared in the House.

Subsequently, Cantor took the nutrition component and, ignoring the committee process, jammed through a plan to double down on food-stamp cuts, slashing $40 billion over 10 years, on a 217-210 vote that involved no committee markup and no amendments allowed on the House floor.

To be sure, Cantor’s actions were not just based on his own views. A slew of House Republicans were—and still are—determined to blow up the food-stamp program, transforming it radically while cutting it deeply, undeterred by the high level of hunger in America and stubbornly high unemployment, and unfazed by the fact that this demand has itself blown up any ability to get a bill enacted.

After all the turmoil, we finally saw a House/Senate conference committee convene; it has worked diligently for weeks to try to beat the year-end deadline and finally get a new law. The conference has not been easy; besides differences over food stamps and other nutrition programs, the effort to cut farm assistance and reform the price-support system has led to infighting among and between different commodity groups, fraying traditional alliances with more tension as time has passed without a deal. Despite the problems, all the groups involved, including farm producers and nutrition advocates, want a bill to emerge.

Tuesday, it became clear that the conference had failed, putting off the day of reckoning until at least the end of January—presumably with an extension in the current law to prevent milk from ballooning to $7 a gallon as a New Year’s present for Americans.

But even if the conferees find the elusive compromise, it may well fail in the House—losing Democrats because it will cut food stamps too much and Republicans because anything short of the $40 billion cut will not be enough. The compromise may also lose the support of some rural lawmakers who believe that their commodities have been shafted compared with others.

The same day the farm conference came a cropper, we got a mini budget deal, creating a brief feel-good moment, a sense that maybe compromise is still possible. But with Ed Meese, FreedomWorks, and Heritage Acton leading an effort on the right to scuttle the budget deal, it has its own challenges. The farm bill may have been overshadowed by spending bills, Obamacare, and other higher-profile controversies, but it tells us way too much about the do-nothingest Congress in our lifetime.

This article appears in the December 12, 2013, edition of NJ Daily.

FDA to crack down on antibiotics in meat (via Politico)

The Food and Drug Administration will issue two major proposals Wednesday in an effort to cut back on antibiotics used on farms that can spur drug-resistant superbugs, making a final push to limit drugs fed to animals before they’re turned into steaks and pork chops.

The move — just the latest by the agency to tighten regulation of the American food supply — puts drug companies on notice and starts the clock on the Obama administration’s three-year strategy to rein in the use of antibiotics. It comes on the heels of a recent effort to ban trans fats and a handful of other sweeping new food safety regulations.

Antibiotics have become essential to meat producers as they help fatten chickens, pigs and cattle more quickly and keep diseases from spreading among thousands of animals in close quarters. Health advocates, however, have for decades sought stricter limits, arguing that science shows this practice contributes to the growing problem of antibiotic-resistant infections — which now kill 23,000 Americans and rack up millions in added health care costs each year.

Scientists also blame antibiotics’ overuse in human medicine, but — since agriculture consumes the vast majority of antibiotics sold in the U.S. — animal drug use is increasingly under fire. In 2011, nearly 30 million pounds of these drugs were sold for animals, compared to just under 8 million pounds for humans.

After years of deliberating, and revealing drafts in early 2012, the FDA will release two key finalized documents today aimed at tackling what the agency calls “injudicious” use of certain antibiotics on farms.

“We see this as a very big step forward in the effort to tackle the problem of antibiotic resistance,” Michael Taylor, deputy commissioner for foods and veterinary medicine at FDA, who oversees the food side of the agency, told POLITICO. “We all realize the time has come to take this step and move beyond these growth promotion uses.”

The first part of Wednesday’s announcement is the release of a long-awaited guidance, which essentially asks veterinary drug companies to remove growth-promotion claims from antibiotics that are important for human medicine. The agency is giving all drug companies 90 days to notify FDA if they will voluntarily agree to do so. After a lot of private sector engagement, FDA officials say they are optimistic most will and the companies that don’t could face regulatory action.

The second part of the plan is a proposed rule to require antibiotics currently sold over the counter in large quantities that can be added to feed and water to — for the first time — require prescriptions from veterinarians.

Farmers and ranchers will still be able to use medically important antibiotics for what FDA considers judicious uses — to prevent, treat or control diseases — but the goal is to curb the practice of administering the drugs at low dose levels to entire flocks or herds.

FDA’s announcement will start clocks ticking on both fronts. Drug companies will have three months to notify the agency if they intend to go along with their strategy. FDA, meanwhile, will have three years to implement its plan and evaluate if it’s working.

Taylor told POLITICO the agency intends to publicly release an update, after the 90-day period, on what percentage of companies have agreed to go forward with removing their growth-promotion claims from a wide variety of pharmaceutical feed additives.

“That will be an important benchmark of success,” said Taylor.

The veterinary drug and animal agriculture industries are largely supportive of FDA’s approach. Groups like the Animal Health Institute, which represents drug companies, and the American Veterinary Medical Association, which represents the veterinarians who work on livestock farms, have been complimentary of the agency’s cooperation with industry and say they support promoting more veterinary oversight of widely-used antibiotics.

Clinton Lewis, Jr., executive vice president and president of U.S operations for Zoetis, the country’s largest animal pharmaceutical company with $4.3 billion in revenue last year, told POLITICO the company is “very appreciative of [FDA’s] open and collaborative approach.” Zoetis is a spinoff of Pfizer’s animal health division.

According to FDA, Zoetis and Elanco, a division of Eli Lilly, are the sponsors of a “large percentage” of the drugs that will be targeted for label changes.

“We agree with [FDA] that this is the fastest way to address their questions and concerns,” said Lewis, who noted the new policy will only affect the small portion of the company’s overall animal feed medicine portfolio that carry growth-promotion claims.

“We strongly support responsible use of antibiotic medicines and the involvement of a veterinarian whenever antibiotics are administered to food producing animals,” the Animal Health Institute said today in a statement.

Livestock groups have also been broadly supportive of the effort, though some want FDA to adopt a longer timeline.

But the fact that the industry supports the plan has some health advocates concerned it is too riddled with loopholes to work. One of the primary concerns is that growth promotion will continue under the auspices of preventing or controlling diseases.

FDA’s strategy has drawn harsh criticism from Rep. Louise Slaughter (D-N.Y.), the only microbiologist serving in Congress. Slaughter has been incensed about what she feels is a lack of action from FDA on antibiotic-resistance issues. Over the past several years, Slaughter has fired off dozens of letters and press releases blasting the agency and garnered a long list of co-sponsors for legislation to ban certain farm uses of important antibiotics.

Each time there is a drug-resistant foodborne illness outbreak, Slaughter sharply questions FDA. In October, a Salmonella outbreak tied to Foster Farms chicken — caused by a strain resistant to multiple antibiotics — sickened nearly 400 people in 23 states. The congresswoman, along with Rep. Rosa DeLauro (D-Conn.), held a press conference to talk about antibiotic resistance.

Reps. Slaughter and Earl Blumenauer (D-Ore.) sent a letter to the White House Office of Management just this week urging the administration to “swiftly” release its new guidance and proposed rule, but they ask FDA to push for mandatory compliance, calling the guidance approach “anemic and deficient in authority.”

In a statement issued Wednesday, Slaughter further calls the FDA’s voluntary guidance “inadequate.”

“Sadly, this guidance is the biggest step the FDA has taken in a generation to combat the overuse of antibiotics in corporate agriculture, and it falls woefully short of what is needed to address a public health crisis,” she says.

Avinash Kar, a health attorney at the Natural Resources Defense Council, blasted the proposals Wednesday as an “early holiday gift to industry” and a “hollow gesture.”

Still, many public health advocates are glad the agency is trying something.

“We commend FDA for taking the first steps since 1977 to broadly reduce antibiotic overuse in livestock,” said Laura Rogers, director of the Human Health and Industrial Farming campaign at the Pew Charitable Trusts. “There is more work to do, but the agency’s approach is promising — especially after decades of inaction.”

Steven Roach, a senior analyst for the Keep Antibiotics Working Coalition, said the group is “happy that the FDA has finalized this document, so that we can see whether it actually works,” but added that the coalition fears there wont be a reduction in the use of antibiotics.

FDA’s Taylor acknowledged that the agency is at the beginning of a long road.

“There’s significant work to come,” he said. When responding to critics, Taylor often argues that FDA’s voluntary approach is the best shot it has at moving the ball forward. FDA officials say they lack the authority and resources to force changes on each of the 200 or so antibiotics approved for food animals.

Peterson: Farm bill talks close, bill heading for January vote (via The Fargo Forum)

After months of doubt, the top House Democrat in ongoing negotiations says lawmakers are a near a deal that would pave the way for passing a farm bill in the next month.

Minnesota Rep. Collin Peterson, one of four House and Senate negotiators working behind the scenes on a compromise between the two chambers, said the framework of a farm bill deal could be finished before the House adjourns for the year on Friday, pushing a full vote sometime into January.

Crucially, Peterson said the negotiators have agreed on how much to cut from food stamps – one of the largest sticking points between the House and Senate. Peterson declined to provide a number, but said the deal hews “substantially closer to the Senate’s” targeted cuts of $4 billion over the next decade rather than the House’s bill, which would slash $40 billion from the Supplemental Nutrition Assistance Program.

Peterson guessed that change will still be one of the major issues when the bill goes to House and Senate floors for a vote, which he said could be as early as the second week of January. The deal would have to be passed by the farm bill’s conference committee before heading for a full vote.

“I think it will pass the Senate, but I cannot guarantee you it will pass the House,” Peterson said in a meeting with the Forum’s Editorial Board Monday. “They are not going to be happy with the food stamp cuts.”

Peterson said he’s confident he can secure “yes” votes from at least half of the House Democrats – important if many Republicans, who control the House, balk at the smaller-than-expected food cuts to food stamps.

Just last week, things looked grim for the farm bill, a massive package of subsidies and for farmers, plus food stamps and other programs. Citing little progress, House Speaker John Boehner urged lawmakers to pass a one-month extension of the current farm bill.

But even as a deal emerges, a short-term extension may still be necessary to avoid skyrocketing milk prices that could come as dairy subsidies expire at the end of the year.

Sen. John Hoeven (R-N.D.), a member of the conference committee, said he’d prefer not to pass short-term extension and “keep the pressure on” passing the farm bill before budget talks consume Washington again in January. He said he thinks the U.S. Department of Agriculture could make some temporary fixes in early January to keep milk prices down.

Hoeven said he hopes the committee can approve its report by the end of the week and move it to the Senate, which could pass the bill before the Senate adjourns for the year late next week.

“I think we’re basically there, unless something goes up on us,” Hoeven said.

House eyeing short-term farm extension (via Politico)

To buy more time for farm bill talks, the House is expected to take up this week a short-term extension of current law through January.

Speaker John Boehner (R-Ohio) has already signaled he is open to this option and a vote could come as early as Wednesday on the suspension calendar.

This is the second such extension Congress has been forced to take up since the 2008 farm bill expired almost 15 months ago. But the circumstances now are very different.

Last year at this time, the House had yet to even act on a farm bill and a long-term extension was needed through this past September. The legislative process is much farther along now—albeit still tortured. And there is a genuine hope that a House-Senate conference can report a farm bill back for final action in January.

Veteran lawmakers, like Minnesota Rep. Collin Peterson, the ranking Democrat on the House Agriculture Committee and its chairman when the 2008 law passed, would argue that no extension is truly needed under these conditions.

But the leadership is sensitive to the fact that the dairy program runs out at New Year’s. Republicans don’t want to be hearing—as they did last year— about milk prices spiking.

With the House due to go home Friday for the holidays, the plan is to extend the expired law for the remaining three months of this calendar year and through January. The end date happens to be the opening of the annual holiday of Tet in Vietnam.

Read more: http://www.politico.com/story/2013/12/short-term-farm-extension-house-100921.html#ixzz2n5CHGfvG

Farm negotiators shift on subsidies (via Politico)

Bowing to pressure from corn and soybean interests, farm bill negotiators are testing new options for paying crop subsidies on some variation of a farm’s historic base acres— rather than what’s actually being planted each year.

The reversal dashes early hopes— shared by the House and Senate— to adopt a more transparent system of paying on planted acres. Indeed, a major criticism of the current direct cash payments to farmers is that the money goes out regardless of what is being planted, if anything at all.

The rough goal now is to pay on 85 percent of base acres for both the new revenue and price loss programs in the proposed commodity title. Following Wednesday’s break-out session, there continues to be optimism that a deal is possible, and a meeting of the full House-Senate conference could be called next week.

But much depends on what scores come back from the Congressional Budget Office Monday. And at this stage it seems almost certain that the House will not vote before it goes home next Friday, Dec. 13th.

From a political standpoint, the shift back to a base acre approach testifies to the immense power of corn and soybeans, which came to fear they would be exposed to trade complaints if subsidies were tied to current production.

Midwest Republicans in the Senate, allied with corn and beans, were most adamant that base acres be used for a new target price program advocated by the House. But as corn prices have fallen over the summer, the Senate’s own revenue protection option—paid on planted acres —became vulnerable to the same complaint.

Last week the National Corn Growers Association and America Soybean Association, which had supported planted acres themselves, warned they would oppose the bill unless all payments were decoupled from current production.

House Agriculture Committee Chairman Frank Lucas (R-Okla.) relented Wednesday in talks with the Senate. And his ranking Democrat, Minnesota Rep. Collin Peterson, confirmed Thursday that he is going along reluctantly in hopes of getting to a deal.

“Don’t ask me to defend it, that’s all I told them,” Peterson joked with reporters. And he cautioned that any agreement was preliminary subject to the scores. “We’ve never had the base acres scored,” Peterson said.

Special accommodations will have to be made for millions of “orphaned” cotton base acres, no longer qualifying for the commodity programs. At the same time, negotiators are testing what it will cost if farmers were to be allowed to reallocate plantings within their base.

Such a reallocation seems almost certain for farms with a cotton base—but which have been planting other crops in recent years. But if done on a national scale, the costs could be high given the expansion of corn.

For example, a farmer in Arkansas, who has 1,000 acres of rice base acres but has been planting 500 acres of corn and 500 acres of rice in recent years, would he be allowed to reallocate his base according to these plantings? On one hand that makes sense, but given how much could be paid out for corn in 2014 under the Senate’s revenue protection program, there is the risk that the costs will balloon in CBO’s scoring.

In aggregate numbers, the estimated 260 million base acres counted today in farm programs are not so different from the average of real “planted” acres. But within that universe, huge shifts have taken place as corn and soybeans have grown more dominant while rice, cotton and wheat plantings have declined

For example in the South, about 12 percent of the base acres went unplanted in a recent year compared with just 3 percent in the Midwest. Oklahoma and Texas alone accounted for more than 4 million unplanted base acres or 26 percent of the total for the nation that same year.

At the same time in Midwest states, plantings over base totaled almost 9.5 million acres in 2010 — more than double that of the South. And in Kansas and North Dakota, corn plantings have soared as land has been pulled out of the conservation reserve program.

Corn and soybeans’ victory in this case comes at the expense of those Midwest farmers who had been hoping that aid would be distributed according to average planted acres of recent years. In many cases that would be significantly higher than a farm’s base acres.

The other side of the coin is that the drop in corn prices means that corn growers will very likely qualify for generous assistance under the new Agriculture Risk Coverage program, which is the mainstay of the Senate’s commodity title.

So much so, that if corn were to reach $4 per bushel in 2014, a farmer could double what he now gets in direct cash payments—paid on base acres.

At POLITICO’s request, the NCGA recently provided such an analysis based on an Illinois farm with a harvested yield of 175 bushels per acre. At a $4 per bushel price in 2014, the NCGA’s own numbers show that the farmer would get $53 per acre under the new subsidy structure — twice the $25 per acre he receives in direct payments for the same county.