Bill Huffman
Director - Government Relations

The Friday Report

June 12, 2009

The climate change bill (H.R. 2454) is moving slowly through the House of Representatives and it continues to dominate much of the agriculture news out of Washington. Chairman Henry Waxman of the House Energy and Commerce Committee continues to work toward an agreement on his Committee’s bill. Sources tell us, however, that there continue to be major confrontations especially as it relates to agriculture and forestry, two groups who are loudly complaining that the bill is flawed and doesn’t treat those industries fairly nor takes into account the contribution that agriculture and forestry can make toward reducing greenhouse gases.

House Agriculture Committee Hearing

There was a hearing Thursday by the House Agriculture Committee on the climate change legislation. USDA Secretary Tom Vilsack was the key witness. The hearing allowed members of the Agriculture Committee to vent their frustrations and concerns about the bill. Chairman Collin Peterson and Ranking Republican Member Frank Lucas both have been very vocal against the bill uttering their frustrations mostly toward Secretary Vilsack. Vilsack sought to ease lawmaker concerns but did little to build much, if any, support for the bill among members of the Agriculture Committee.

Vilsack again provided very little evidence that agriculture would be a net winner under the climate change legislation. USDA has not even conducted a cost or impact estimate on the legislation as it relates to potential increased costs for farmers and ranchers and any revenue that could be generated through the sale of offsets.

Key Issues for Agriculture and Forestry

As we sort through all of the information on the bill it appears that agriculture interests and Midwest farm-state members are seeking protections for corn-based ethanol as an alternative fuel. Among other things, the bill leaves to the Environmental Protection Agency (EPA) to determine which kinds of agricultural activities, known as offsets, will qualify as benefiting the climate. As the Wall Street Journal said this week, “This might seem like a petty bureaucratic issue, but it also has enormous financial ramifications for farmers, because the bill could let businesses meet their emission reduction targets by paying farmers to cut emissions.” 

There have been estimates that the value of agricultural offsets could be as much as $24 billion. EPA analyses suggest a much lower figure. Many in agriculture are concerned that EPA would rein in what qualifies as an offset. That would mean less money for farmers.

Agriculture also wants USDA, rather than EPA, to oversee its contributions to reducing greenhouse gas emissions. Most observers believe that unless USDA plays an active role, agriculture may not get a shot at programs that pay farmers and ranchers to capture carbon.

Chairman Peterson has been an outspoken opponent of the House bill. He told the news media, “We (agriculture) are going to take the brunt of this, because the increased costs are going to be put on farmers and ranchers. This legislative program is going to significantly increase the cost of fuel.”

Congressman Lucas, the ranking Republican on the House Agriculture Committee has been equally outspoken on the bill. At Thursday’s hearing, he asked Agriculture Secretary Vilsack if the Secretary supports the bill as it stands with no role for agricultural offsets spelled out. Vilsack responded, “No, what I support is the notion that there is work left to be done on the bill.”

Currently, the bill does not allow businesses to buy agricultural offsets to help them meet caps on greenhouse-gas emissions. The lack of offsets for agriculture and forestry is perhaps the major criticism of members of the House Agriculture Committee in addition to the role that USDA should play in administering the program for farmers and ranchers.

Meetings, Meetings and More Meetings

As the controversy continues over agriculture and forestry’s role in the climate change legislation, key meetings have been held to try to resolve key issues with the bill. Chairman Peterson’s staff has met frequently with House Energy and Commerce Committee staff. Peterson met this week with Chairman Waxman to voice his position on the bill and Thursday there was a 90-minute meeting between House Speaker Nancy Pelosi, Chairman Waxman and Energy and Environment Subcommittee Chairman Edward Markey, D-Mass., and House Agriculture Chairman Peterson.  Sources tell us that Chairman Peterson made his point very succinctly and that the Democratic leadership in the House wants to work with him to try to resolve his differences and those of Congressman Frank Lucas and others on the Agriculture Committee.  Chairman Peterson said, “We made good progress in a number of areas but we still have a few things to work through.”

It is clear that negotiations on this bill are intense. Speaker Pelosi wants to have the bill to the House floor by the end of June. This next week could be critical as the negotiations between Chairman Peterson and the House leadership continue.

Other Washington News

The House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies has approved the U.S. Department of Agriculture’s fiscal year (2010) spending bill.  Importantly, the Market Access and Foreign Market Development export promotion programs were funded at the farm bill-mandated levels of $200 million and $34.5 million, respectively.  Rice is a major benefactor of these promotion funds.

Senator Blanche Lincoln, D-AR, was named Chairperson of the Senate Agriculture Subcommittee on Rural Revitalization, Conservation, Forestry and Credit this week. Lincoln is the fifth-highest ranking Democrat on the Senate Agriculture Committee.

USDA Deputy Secretary Merrigan Visit FRC

Farmers’ Rice Cooperative and the California Rice Commission hosted USDA Deputy Secretary Kathleen Merrigan this week for an industry briefing and mill tour at the FRC mill in West Sacramento. Ms. Merrigan was traveling in California learning more about the Golden State’s vast agricultural industry.  FRC President & CEO Mike Sandrock and Senior VP Kirk Messick participated in an industry presentation highlighting key issues and opportunities for the California rice industry.  She also toured the FRC mill and packaging facilities as well as the Port of Sacramento.

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