Washington Insider -- Tuesday

By DTN's Washington Insider

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

Senate Agriculture Committee Received Perdue’s Ethics Forms

The Senate received USDA nominee Sonny Perdue's ethics paperwork late Friday, including a plan for how he intends to untangle himself from his web of business interests if he is confirmed by the Senate.

In a letter to USDA's designated ethics official, Perdue said he would put most of his assets into a blind trust — something he refused to do during his tenure as Georgia governor. He will sever ties with his farming business while keeping his real estate investments, according to disclosures released Sunday by the Office of Government Ethics (OGE).

Perdue also said he would recuse himself from decisions that could affect his grain company, AGrowStar LLC, until a promissory note from the firm is repaid, and would resign from positions with several groups, including the National Grain and Feed Association and the Georgia Agribusiness Council. Link to ethics papers. Link to Perdue ethics letter.

Perdue, 70, will still own real estate in Georgia and Florida worth between $1.1 million and $2.3 million, and he will continue to receive payments totaling as much as $6 million that he is owed from his holdings, according to the ethics agreement and his financial disclosure. That raises a concern about whether Perdue will recuse himself from situations in which there could be a conflict of interest, said John Wonderlich, executive director of the Sunlight Foundation, a government transparency advocate. “But at least it’s being mediated through the channels of the Office of Government Ethics and the agency lawyers,” Wonderlich said. “That’s more than the president has done.”

Perdue disclosed assets between $11.3 million and $47 million, the bulk of which were held by a pair of family trusts. Values are reported in wide ranges. The largest holding was in AGrowStar LLC, a Georgia-based grain broker, worth as much as $25 million. Perdue holds a promissory note with the firm worth as much $1 million, disclosures show.

He also disclosed between $942,000 and $1 million in income, more than half of which came from Perdue Inc., a trucking company. According to his disclosures, a pair of trusts owns Perdue’s holding company, Perdue Business Holdings Inc., and its subsidiaries, which include trucking, real estate and fertilizer distribution firms. Perdue and his wife, Mary, are the trustees and beneficiaries of one, while his wife is the trustee and one of the beneficiaries of the other.

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US Dairy Officials to Journey To Mexico

Tom Vilsack, of the US Dairy Export Council; Jim Mulhern, of the National Milk Producers Federation; and Michael Dykes, of the International Dairy Foods Association, will travel to Mexico City on Tuesday with two other officials as part of a mission to discuss the industry's top export market.

The trip, which will involve attending the annual Mexican Milk Producers Federation conference and meeting the country's secretary of agriculture, comes as Mexico talks to the European Union about updating an existing trade agreement and considers starting talks with New Zealand, a dairy export powerhouse.

Mexico accounts for nearly a third of U.S. dairy exports, or $1.2 billion in annual sales.

Vilsack told Politico that, “We want to reemphasize the fact that Mexico is a valued customer for dairy," the former U.S Agriculture Secretary said of the mission. "Obviously any agreement that's been around for a while has areas where there can be improvements, but we want to make sure they understand, from our perspective, that preserving NAFTA is important."

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Washington Insider: Gloves Off in Environmental Fight in Iowa

The Associated Press is reporting this week that for years a water utility that supplies drinking water to Iowa's capital has spent millions of dollars rid its water supply of pollutants from farms and fields upstream. Finally, exasperated officials filed a lawsuit to force the agricultural counties to clamp down on the runoff.

Now, however, the dispute has intensified as the state Legislature, which is controlled by Republicans. Now, the Legislature is preparing to dissolve the utility, effectively killing the lawsuit.

The AP says the GOP lawmakers argue that the change is meant to allow the cities in the area more direct control of their own water. But supporters of the Des Moines Water Works, an independent utility that has served the region for a century, say the move is a bold show of power by farm interests in a legislature where conservatives now hold sway.

"This is just a smoke screen," said Bill Stowe, the utility's CEO. "It's based on protecting industrial agriculture.”

The legislation to end the utility was proposed by a hog farmer who lives nearly 100 miles from Des Moines whose farm has been fined for mishandling hog waste. The legislation is moving through an agriculture committee, rather than a government-focused panel.

AP notes that it is hard to overstate the importance of farming in Iowa, the nation's leader in the production of corn, eggs and pork. The state of just over 3 million people has 22 million hogs and 55 million chickens on about 9,000 large-scale animal farms.

Much of the 20 billion gallons of liquid manure produced annually is spread as fertilizer on farmland, and runoff is blamed for causing more than 750 Iowa waterways to be reported to the Environmental Protection Agency as impaired, AP says.

Two years ago, the Des Moines Water Works sued three counties over rising nitrate levels in the Des Moines and Raccoon rivers, from which it draws water. The utility complained that cleaning the water has cost Des Moines area residents millions of dollars to operate a filtration system that when installed was intended to be used rarely. Federal regulations require nitrate levels below 10 milligrams per liter, but river levels have been measured at up to four times that amount.

Republican lawmakers and GOP Gov. Terry Branstad have been critical of the lawsuit and have said officials should rely on voluntary methods to reduce pollution from farms.

The new legislation would transfer the assets and control of the independent water utilities in Des Moines and the suburbs of Urbandale and West Des Moines to their respective cities. Iowa law currently allows water boards to be dissolved only by a public vote. In a 2003 election in the suburb of West Des Moines, 90% of voters chose to keep the independent water board rather than transfer power to the city council.

Republican Rep. Jarad Klein, who introduced the legislation, said the Water Works board should have been more willing to listen to ratepayers and elected officials from surrounding areas. "If they were more willing to listen we might not be here today," Klein said.

Farm groups have said the lawsuit soured relationships and has done nothing to improve water quality. Farmers are voluntarily using measures such as grass filters and buffer strips to contain runoff, according to Iowa Farm Bureau President Craig Hill. "That work will and must continue," he said.

But Stowe said those efforts aren't working, as shown by continued high nitrate levels in rivers.

If the bill passes, as expected, the presiding judge could dismiss the lawsuit if it's clear the board that filed the case no longer exists. Stowe said the bill is a way to scare off others who might think of taking on Iowa's agriculture industry. "This has a chilling effect on people who are advocating for environmental protection," he said.

The Iowa Farm Bureau has denied pushing for the change, though it has repeatedly criticized Des Moines Water Works and Stowe for filing the lawsuit.

The legislation has outraged environment groups and some Des Moines area legislators, AP says, but Democrats have little way of stopping it since losing control of the Senate in the November election.

Some city leaders said earlier they were open to the change, saying they feared even more restrictive legislation. Councilwoman Christine Hensley, a Republican, said the new system could allow better coordination among cities. But some Des Moines residents at a public hearing complained about bearing the financial cost of continued pollution.

Almost no one expects the issue to go away, or for an easy resolution to appear in the near future. Instead, the issue of water quality likely will continue to be a high profile political concern for the foreseeable future; one that producers should watch closely as it proceeds, Washington Insider believes.

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