Dispatches from The Hill | May 2015

FY16 Budget and Appropriations Process

The House Appropriations Committee has started marking up bills in subcommittee for FY16 appropriations. On April 22, they released their sub-allocations of funding (called 302(b) allocations) for FY16. There is a $100 million increase in the House 302(b) allocation for Agricultural Appropriations between FY15 and FY16 for discretionary spending under that subcommittee’s jurisdiction – a change from $20.6 billion to $20.7 billion. As of May 8, the full House had considered two subcommittee bills (Milcon/VA and Energy and Water) with two more bills marked up in Committee, but the Ag Appropriations bill is still in the queue. The Senate Appropriations Committee is still holding subcommittee hearings on the President’s budget requests for key agencies and has not yet started their mark-up process.

On May 5, the Senate adopted the conference version of the FY16 budget resolution on a vote of 51-48, following House approval of the resolution on April 30. No Democratic members of either body voted for the budget resolution. This marks the first time that the House and Senate have agreed on a common budget resolution since the FY10 resolution was adopted in April 2009.

This document does not have the force of law since it does not go to the President, but it represents a proposed blueprint for federal spending over the next ten years. The resolution provides budget reconciliation instructions to committees with jurisdiction over health care policy with the intention of passing a repeal of the Affordable Care Act. Using this approach protects any such legislative effort against a Senate filibuster, but such a bill is certain to draw a Presidential veto if passed by both bodies of Congress. No other committees received reconciliation instructions for FY16.

The resolution envisions cutting non-defense discretionary spending by nearly $500 billion over that period while increasing defense spending by $245 billion by using budgetary sleight of hand. Using an array of assumptions about cutting mandatory social safety net spending (including Medicare, Medicaid, and the SNAP program) and requiring the Congressional Budget Office (CBO) to use dynamic scoring in evaluating the budgetary impact of proposed legislation, the resolution purports to achieve a balanced budget by FY24 while adopting comprehensive tax reform.

The President has promised to veto any FY16 appropriations bill that adheres to this framework in terms of funding levels, and it is not even clear that it would have sufficient votes to clear the Appropriations Committee process. It appears that this year’s appropriations process will be a rocky road indeed.

Policy Developments

Working Landscapes

Waters of the United States Rule (WOTUS)
A seminal piece of environmental legislation, the Clean Water Act (CWA) was originally enacted in 1972. The legislation established a national commitment to restore and maintain the chemical, physical, and biological integrity of the nation’s waters. The legislation gave oversight responsibilities to the Environmental Protection Agency (EPA) and the Army Corps of Engineers. Many of those responsibilities have been delegated to state-level agencies over the ensuing decades.

In 2003 and 2006, cases were litigated before the Supreme Court that challenged which types of water bodies were subject to CWA rules, specifically with regard to streams and wetlands. Unfortunately, the results of those two cases created more questions than they answered, and both agencies were encouraged by Chief Justice John Roberts in a concurring opinion on the 2006 case to undertake a formal rulemaking procedure to clarify the issues.

EPA and the Corps subsequently issued a proposed rule in April 2014 intended to define the scope of waters protected under the CWA. EPA was immediately charged with regulatory over-reach by many business sector entities who believed they would be adversely affected by the new rules if implemented, with the most fervent opposition coming from U.S. farm and commodity groups. EPA has been the public focus of the opposition, even though the proposed rule was issued by both EPA and the Corps. The agencies had sought to allay agricultural concerns by promulgating an interpretative rule that tried to provide some guidance as to what types of agricultural activities would be exempt from permit requirements under Section 404 of the CWA. Instead, that interpretative rule became the focus of agriculture's ire against EPA and the proposed rule, and agricultural interests convinced Congress to require EPA and the Corps to withdraw the interpretative rule under a provision of the FY15 appropriations bill. That interpretative rule was formally withdrawn in January 2015.

However, the Obama administration has stated its intention to continue the rulemaking process for the rest of the rule proposed in April 2014, and forces in Congress are intent on obstructing that process. There are parallel legislative efforts underway: one to enact a stand-alone legislation that would require EPA and the Corps to withdraw the rule within 30 days of enactment; and a separate effort to attach a rider to the FY16 Energy and Water (E&W) Appropriations bill.

Stand-alone bills were introduced both in the House (HR. 1732) and Senate (S.1140) in late April. No legislative action has yet been taken in either body. The House passed the FY16 E&W Appropriations bill containing the rider described above on May 3. As described above, the Senate has not yet started its appropriations process. This rider provision would bar EPA from spending any money on enacting the WOTUS rule. However, the provision would not take effect until the new fiscal year begins on September 30, and EPA could promulgate the rule before that date. In addition, President Obama has threatened to veto any bill that obstructs the CWA rule, and the House vote on the E&W fell short of a veto-proof majority.

Food & Nutrition

Reauthorization of the Child Nutrition Act (CNA)
On May 6, Secretary Vilsack released results of an analysis of USDA school lunch data which found that 95 percent of U.S. schools are meeting the nutritional guidelines for school meals established in 2013 as prescribed in the Healthy and Hunger-Free Kids Act of 2010. The Department is working to provide resources and training to help the remaining schools reach those standards as well. Despite anecdotal reports suggesting a massive increase in food waste as a result of the new standards, recent studies by the University of Connecticut and Harvard University found that students are consuming more fruits and vegetables and plate waste has not increased.

The current authority for child nutrition programs is due to expire on September 30, 2015. The House Education and Workforce Committee that holds responsibility for the covered programs (which include the school lunch and breakfast programs, WIC, and other supplemental feeding programs excluding SNAP) held a hearing on the legislation on April 15. While the Committee Chairman, Rep. John Kline (R-MN), focused on the need for more flexibility in school nutritional guidelines in his opening statement, the witnesses at the hearing focused on the need to bolster participation in school breakfast programs and provide more access to summer meal programs. The representative of the School Nutrition Association (known on Capitol Hill as the “school lunch ladies”) advocated for additional resources so they can serve healthy food in appealing meals that kids will eat, rather than program flexibility to diverge from the nutritional guidelines.

The Senate Agriculture Committee held its Child Nutrition Act reauthorization hearing on May 7. Members and witnesses covered much of the same policy ground as their House counterparts, although they placed more focus on verification of program eligibility. Chairman Pat Roberts noted issues related to the misuse of school food service funds, as found in recent reports by the USDA Office of Inspector General and the Government Accountability Office. A hearing to address waste, fraud, and abuse in the administration of federal child nutrition programs is scheduled for May 19, planned by the House Education and Workforce Committee’s Subcommittee on Early Childhood, Elementary, and Secondary Education.

International Development

Global Food Security Legislation
The House version of the global food security bill (HR.1567), introduced by Rep. Chris Smith (R-NJ) and Betty McCollum (D-MN), was reported out of the House Foreign Affairs Committee on April 23 on a voice vote. As of May 8, the bill had 19 additional co-sponsors, 10 R’s and 9 D's.

The language was quite similar to the version which passed the House on a voice vote in late 2014 but failed to move in the Senate. The new bill did explicitly incorporate the concept of sustainability, which had been excluded due to political sensitivities in the last Congress, and added a requirement that the Global Food Security Strategy include implementation plans from agencies and departments other than USAID which are part of the whole-of-government effort. Due to House rules imposed by the Republican majority when they took control of the body in 2011, the bill includes only one year of authorization of appropriations because additional years would have required offsetting reductions in mandatory spending.

The lead co-sponsors of the Senate companion bill, Senators Casey (D-PA) and Isakson (R-GA), introduced their companion bill on May 7. The bill would authorize global food security programs for five years, through fiscal year 2020 (FY20).

Food Aid Reform
The Senate Foreign Relations Committee (SFRC) held a hearing on April 15 on the topic of food aid reform. Eight members of the Committee appeared at the hearing, and a productive dialogue between members and witnesses about the merits of food aid reform ensued.

USAID is still hoping to have legislation introduced this year that would enact the deal they have struck with the U.S. maritime industry that would secure additional funding for U.S.-flagged vessels enrolled in the Maritime Security Program (MSP) in exchange for further reforms to U.S. food aid programs. Some of the details of the deal are still being ironed out within the Executive Branch.

On April 23, the chairs and ranking members of the House Transportation and Infrastructure (T&I) Committee and the T&I Subcommittee on Coast Guard and Maritime Transportation jointly introduced a Coast Guard Authorization Act that includes a provision on enforcement of cargo preference rules that is almost identical to a version stricken from a similar bill late last year at the insistence of Senator Bob Corker (R-TN). On April 30, the Committee reported the bill out on a unanimous vote. The NGO community is aware of this new effort and is engaged in discussions about how to stop this provision from becoming law in its current form.

Agricultural Trade with Cuba

On December 16, 2014 President Obama announced his intention to move toward normalizing U.S. relations with Cuba at the same time that Cuban President Raoul Castro made a similar announcement. About one month later, in January 2015, the Obama administration announced several concrete steps it was able to take to ease those restrictions under its administrative authority. However, unfettered trade and travel between the two countries will require further Congressional action. With respect to improving agricultural trade access, the Obama administration’s steps included: reversing the Bush administration determination on the timing of payments for exports to Cuba; easing the licensing process for permitted travel and trade under the Treasury Department; making it easier for Cuban-Americans to send funds to family members still in Cuba; allowing U.S. and Cuban banks to have direct relationships; and expanding the category of goods that can be shipped under the authority of the Trade Sanctions Reform and Export Enhancement Act (TSREEA) to include agricultural inputs, such as seeds and agricultural equipment.

In February, the Freedom to Export to Cuba Act (S. 491) was introduced in the Senate by Senator Amy Klobuchar (D-MN), and the bill now has 7 co-sponsors, 3 R's and 4 D's. The legislation would loosen many of the restrictions currently placed on U.S. firms doing business with Cuba, including limitations on direct shipping between the two countries, remittances, and the prohibition on direct financing of transactions with Cuba. A separate bill (S.1049) was introduced in April by Senators Heidi Heitkamp (D-ND) and John Boozman (R-AR) that would ease the restrictions on making export sales on a credit basis with Cuba. This bill gained many of the same co-sponsors as the Freedom to Export to Cuba Act.

Given the range of products that Cuba now imports and our geographic proximity to that market, there is no reason why the U.S. should not eventually recapture its position as the dominant exporter to Cuba. Although this will require legislative repeal of remaining trade and travel sanctions, such as would be achieved with the Klobuchar and Heitkamp/Boozman bills described above, for the full potential to be realized. Dr. Parr Rosson from Texas A&M University, who has studied these issues extensively, estimates that U.S. agricultural exports to Cuba could easily increase to $450 million annually under the new rules. With complete elimination of trade and travel sanctions, Dr. Rosson told a Senate hearing in April that U.S. agricultural exports to Cuba could reach $1.2 billion annually within five years.

Executive “Trade Promotion Authority”

The Senate is now considering granting President Obama “trade promotion authority” to complete negotiations on international trade initiatives, including the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (T-TIP), which aim to reduce barriers to trade with the European Union and 11 countries located around the Pacific, including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. “Trade promotion authority” permits President Obama to finalize the trade agreement with the understanding that it would pass through Congress without significant hang-ups. The TPP, and the offer to grant President Obama “trade promotion authority” to move a deal forward, has received criticism from environmental and labor interests and elicited controversy surrounding intellectual property protections, customs enforcements, and currency manipulation.

A TPP agreement could drive an increase in U.S. agricultural exports – including meats and animal products, grains, fruits, and vegetables – by reducing tariffs among Pacific Rim countries and making these products more competitive on the global market.

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