Washington Insider -- Friday

Still in Search of Infrastructure Deal

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

JBS Says Cyberattack Situation Resolved

JBS USA, the victim of a cyberattack that prompted the company to suspend activity at most of its U.S. slaughter facilities, said Thursday the situation has now been resolved.

JBS USA and Pilgrim's announced that all of its global facilities are fully operational after resolution of the criminal cyberattack on Sunday, May 30. As a result, JBS USA and Pilgrim's were able to limit the loss of food produced during the attack to less than one days' worth of production. Any lost production across the company's global business will be fully recovered by the end of next week, the company said, limiting any potential negative impact on producers, consumers and the company's workforce.

"Thanks to the dedication of our IT professionals, our operational teams, cybersecurity consultants and the investments we have made in our systems, JBS USA and Pilgrim's were able to quickly recover from this attack against our business, our team members and the food supply chain," said Andre Nogueira, JBS USA CEO. "The criminals were never able to access our core systems, which greatly reduced potential impact. Today, we are fortunate that all of our facilities around the globe are operating at normal capacity, and we are focused on fulfilling our responsibility to produce safe, high-quality food."

The company said it activated cybersecurity protocols, including voluntarily shutting down all of its systems to isolate the intrusion, limit potential infection and preserve core systems. In addition, the company's encrypted backup servers, which were not infected during the attack, allowed for a return to operations sooner than expected.

"We would like to thank the White House, the USDA and the FBI for their support in quickly resolving this situation," Nogueira stated.

ITA Delays Preliminary Determination on Imports of Organic Soymeal From India

The International Trade Administration (ITA) will delay the deadline for a preliminary determination in the countervailing duty (CVD) investigation on imports of organic soymeal from India.

The investigation was started April 20, and the preliminary determination was originally due June 25. Petitioners in the case made a request to delay that preliminary determination and ITA has now set that as August 30.

The request was made to "provide Commerce with sufficient time to analyze adequately all alleged subsidies received by the mandatory respondents during the period of investigation," according to a notice published in the Federal Register.

The final determination is still due 75 days after conclusion of the preliminary determination.

Washington Insider: Still in Search of Infrastructure Deal

President Joe Biden will meet again Friday with Sen. Shelly Moore Capito, R., W.Va., as the two try to hammer out a deal on an infrastructure package. But Bloomberg reports that the clock is ticking and at least one key lawmaker, Rep. Jim Clyburn, D., S.C., is thinking the effort needs to wrap up even if there is not a deal. Biden has insisted on meeting with Capito on the infrastructure plan, with Republicans having upped their offer to just over $900 billion from an initial offer of around $568 billion. Biden, for his part, has trimmed the hoped-for package to $1.7 trillion versus the initial $2.25 trillion he was seeking. The latest developments saw Biden offer another concession to Republicans on a key issue -- the corporate tax rate. Biden initially proposed raising the corporate tax rate to 28% from the current 21%. The lower level was a result of Republicans' 2017 tax package, and they are totally against digging into that package for savings or revenue to be able to pay for the infrastructure effort. Biden offered a minimum tax rate of 15%. But that concession may have been too much for some Democrats. "We are still negotiating," House Majority Whip Jim Clyburn, D., S.C., told Bloomberg TV. But, he added, "I don't think we should run the risk of not getting something done because the other side is not cooperating." The minimum 15% tax on U.S. corporations, along with strengthened IRS enforcement efforts, was offered by Biden as a way to pay for the infrastructure package without digging into the 2017 tax law. Even as he offered that to Capito and Republicans, White House press secretary Jen Psaki has insisted that Biden still hasn't given up on raising the corporate tax rate. Under that offer, Bloomberg said, is the concept that companies that have lots of tax credits and deductions would be required to pay at least 15%. The proposal would also increase tax revenues by conducting more audits of rich taxpayers. But a key Democrat is also against that rise in the corporate tax rate to 28% -- Sen. Joe Manchin, D., W.Va. He has emerged as a "king maker" of sorts, being a moderate Democratic lawmaker in the 50 Democrats in the U.S. Senate. Manchin made clear that he favored a corporate tax rate more like 25%. Biden indicated at that point that he was open the negotiations. Manchin's vote is key as without his support, any infrastructure package is unlikely to clear the Senate even if budget reconciliation is used. Meanwhile, Clyburn wasn't ready to say Biden should abandon the efforts with Republicans even as he said they seem to be "shall we say, reticent" to reach a deal. However, he told Bloomberg that he thinks the situation is one where Democrats are thinking they are "running out of time" relative to finding a bipartisan agreement. Meanwhile, Senate Minority Leader Mitch McConnell, R., Ky., said he has talked to Capito and indicated Republicans are "still hoping to reach a bipartisan agreement with the administration." His hope is that an agreement can be found on infrastructure -- and "fully paid for" -- noting it could be up to $1 trillion in size. But another issue has continued to be raised by farm-state lawmakers relative to other tax provisions suggested by Biden as ways to pay for the package. House Agriculture Committee Chairman David Scott, D., Ga., is the latest to express what he called "serious concerns" on how some of the proposed tax changes could affect farmers, ranchers and other small businesses. "While I appreciate that the proposal provides for some exemptions, the provisions could still result in significant tax burdens on many family farming operations," Scott said in a letter to Biden sent this week. The chairman noted that changes to how taxes are levied on inheritances could make it more difficult for farmers to take over family businesses. The loss of stepped-up basis is of particular concern, as he argued while provisions would not mean those inheriting farmland would have to pay immediately, they still could face a large delayed tax bill. Scott's concerns come despite assurances issued by USDA the evening the tax plan was unveiled that farmers would not be affected by the proposed changes. Already, even before the release, opposition from ag interests over proposals relative to increasing the estate tax helped jettison that from the final proposal. And there is also opposition to the proposed ending of using Section 1031 provisions of U.S. tax law for farmers to sell farm ground and buy other farm ground with the proceeds to defer taxes on the sale. But there is another wrinkle in the situation. The rising expectation had been for Democrats to eventually push President Biden to abandon talks with Republicans on infrastructure and use budget reconciliation to move the package through without GOP support. But Politico is reporting that "The Senate's chief procedural referee has effectively killed a workaround Majority Leader Chuck Schumer, D., N.Y., eyed as a bonus opportunity to pass President Joe Biden's agenda without Republican support." So we will see. Clearly the Biden administration appears to have underestimated the concerns that those in the ag community would have over the proposed tax provisions. And the possibility that the Senate may not be able to bypass Republicans in the Senate adds another layer to the situation. The bipartisan opposition to the tax proposals are creating a debate that needs to be watched closely, Washington Insider believes.

***Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN's Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the US Ag Policy, US Farm Bill and DTN Ag News sections on their News Homepage.

If you have questions for DTN Washington Insider, please email edit@dtn.com