Advocating for agriculture and co-ops on Capitol Hill
This story was updated on Dec. 9, 2020.
Getting a policymaker’s attention takes persistence and a strong message — and that’s in a normal year. Add an election year, weather disasters, a global pandemic and a contentious Supreme Court nomination, and the result is background chatter off the charts and minuscule attention spans.
Finding ways to work through that noise in Washington, D.C., and key state capitals, the CHS Government Affairs team continues to advocate for farmers, ranchers and cooperatives.
“We experienced unprecedented disruption to our work and strategies,” says John Engelen, who leads the CHS Government Affairs team. “In what was already a difficult legislative environment given heightened partisan acrimony, we found ourselves contending with new challenges in the workplace and the Congressional policy agenda as lawmakers shifted their focus to crafting the rules and regulations that determined how companies like CHS could continue to operate during the pandemic.”
Still, speaking up for agriculture has never been more important, Engelen adds. “Few Americans have connections to the farm or ranch now and the situations that affect agriculture are complex. As rural counties continue to lose population, we need to help policymakers understand the needs of the ag businesses that are critical to the U.S. economy and world food supply.”
CHS Government Affairs team members Dan Mauer and Will Stafford, based in Washington, D.C., provided the following updates on key issues facing agriculture:
Section 199A
On Capitol Hill, the Section 199A (DPAD, or Domestic Production Activities Deduction) debate is known as “the one that just won’t go away.” Long after most thought they’d never have to mention the “grain glitch” again, we’re still fighting to prevent a significant tax increase on U.S. farmer-owned cooperatives.
Leveraging the strength of CHS owners and working with the other cooperatives that make up the National Council of Farmer Cooperatives, we are continuing to engage with members of Congress, senior Capitol Hill staff and key Treasury Department officials on this topic.
The Treasury Department is very close to completing a final rule to implement the so-called grain glitch agreement from 2018. Initial drafts of the Treasury rule would have imposed significant restrictions on the ability of a farmer-owned cooperative to calculate and use Section 199A (DPAD) credits. The CHS Government Affairs team has met extensively with key Congressional tax policymakers and Trump administration officials to explain cooperative patronage, DPAD and the negative financial burden the proposed rule would have on co-ops and farm businesses.
It’s frustrating that there was confusion when Congress directed the Treasury Department to replicate the previous Section 199A as it was in effect before its repeal. We will continue educating those who need educating, providing facts to overcome distortions and showing how critical it is to our nation’s farmers for both patronage and nonpatronage income to be deductible.
Renewable Fuels
The U.S. Environmental Protection Agency (EPA) issued its final rule in May 2019 to allow E15 to be sold year-round, and the Trump administration has recently pushed policies that will help renewable fuels producers, including CHS. Within a month, the administration announced E15 could be sold in E10 pumps and infrastructure and gave a 90-day extension to the expired tariff rate quota that allowed 198 million gallons of U.S. ethanol to flow into Brazil duty-free. Unfortunately, it also denied 54 small refinery exemptions (SRE) to the Renewable Fuel Standard (RFS), which will have a detrimental effect on the CHS energy business as the company has previously received SREs for the Laurel, Mont., refinery.
Those steps represent significant federal assistance to the biofuels industry at the same time our economy is struggling to adapt to a COVID-19 world. Election season may also have had something to do with timing of the announcements, since President Trump wanted to consolidate support in rural America while bolstering vulnerable Republican senators, including Iowa’s Joni Ernst.
In August 2020, USDA completed a round of funding designed to help transportation fueling and biodiesel distribution facilities upgrade their fuel pumps and related equipment to allow for higher biofuels blends. With more than $100 million up for grabs via a competitive grant process, the Higher Blends Infrastructure Incentive Program (HBIIP) will help local fueling stations, convenience stores, fleet facilities and fuel terminal operations share the costs of infrastructure improvements so E15 and E85 can be offered at more locations.
President Trump also tweeted in late September that his administration plans to allow for higher-ethanol gasoline to be distributed using existing filling station pumps. The tweet, which read “Subject only to State approval, our important Ethanol Industry will be allowed to use the 10% Pumps for the 15% BLEND. Thank you!” comes with significant questions, since implementation won’t be as easy as “state approval.” EPA hopes to have regulatory hurdles cleared by December, so E15 distribution can increase as we enter 2021.
EPA still needs to announce 2021 renewable volume obligations under the RFS, so it will be interesting to see if the administration’s feelings toward biofuel producers change now that Americans are done going to the ballot box.
Trade
After completing the Phase One trade agreement with China, a free trade agreement with Japan and the U.S.-Mexico-Canada Agreement (USMCA), the U.S. Trade Representative (USTR) has continued to focus on bilateral trade agreements to expand export markets for U.S. producers.
USTR has been eagerly working with the United Kingdom (UK) to finalize a trade deal that includes significant access for agricultural goods. USTR has also urged the UK for a more transparent, science-based regulatory system that will allow U.S. farmers and ranchers to compete on a more level playing field. The CHS Government Affairs team engaged with members of the U.S. House Ways and Means Committee to encourage USTR to advocate for standards and rules based on sound science, including those related to products developed through ag biotechnology. It included a request for language in the agreement that would mirror USMCA in recognizing the safety of the U.S. food and agriculture system and guarding against trade-restricting measures implemented under the guise of food safety. While the UK has not historically been a large importer of corn, wheat or soybeans, this trade deal offers the potential to be a template for a future agreement with the European Union.
USTR is also negotiating a free trade agreement with Kenya, which would be the first bilateral free trade agreement between the U.S. and a sub-Saharan African country. The agreement could serve as a blueprint for negotiations with other countries in that region.
CHS Government Affairs continues to have regular updates with USTR to discuss the ongoing Phase One agreement with China. Officials from both countries met in September to discuss progress of the deal, with USTR officials noting record-breaking corn purchases made by Chinese importers over the summer and expressing optimism for continued growth in exports to China in the new marketing year, which began Sept. 1.
Grain Standards Act
CHS welcomes the passage of a comprehensive and improved reauthorization of the Grain Standards Act. The act, which is reauthorized by Congress every five years, allows the USDA Federal Grain Inspection Service (FGIS) to establish official marketing standards for grains and oilseeds.
The current authorization was set to expire Sept. 30, 2020, but was extended through the Continuing Resolution passed by Congress, which funds the federal government until Dec. 11, 2020.
Senate Bill S.4045, which would reauthorize the Grain Standards Act and make modest changes aimed at improving the official inspection and weighing system through more transparency and better data sharing, was introduced by Senate Agriculture Committee chair Pat Roberts (R-Kan.). The bill passed the U.S. Senate in November and the U.S. House of Representatives on Dec. 2, 2020, both unanimously by voice vote. The legislation has not yet officially been signed into law by President Trump, but is expected to be soon.
Check out the full C magazine with this article and more.