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.

USDA Secretary Candidates Meet with Trump

President-elect Donald Trump met with several people under consideration for USDA Secretary, one of his few remaining unfilled Cabinet positions. Trump met with former Texas Rep. Henry Bonilla and former Texas commissioner of agriculture Susan Combs at his Mar-a-Lago resort in Palm Beach, Florida, where he has been spending time over the holidays. Texas agricultural commissioner Sid Miller also met with some of Trump's senior aides. Speaking afterwards, Bonilla said his meeting with Trump "went very well... There were general questions about the agency, general discussion about regulations that farmers want fixed," Bonilla said. Asked why he felt he was suited for the role, Bonilla said: "I chaired the agriculture appropriations sub-committee for my last six years in Congress, and it was a huge responsibility to be in charge of the budget for all of the USDA," he said.

Miller said he had a "very good" meeting with Trump aides Steve Bannon and Reince Priebus, saying they discussed the weather, grandkids and agriculture. Trump met earlier in the week with Elsa Murano, the former president of Texas A&M, about heading USDA, and with and former California Lt. Gov. Abel Maldonado.

Other potential candidates or people "floated" for the position include former Georgia Governor Sonny Perdue, Kansas Governor Sam Brownback, Kansas Sen. Jerry Moran, former Nebraska Governor Dave Heineman and Trump campaign agriculture advisory committee chairman Charles Herbster.

Perdue may be Trump's selection for USDA post, according to some sources. Perdue was born in Perry, Georgia. A graduate of the University of Georgia, he served as a state senator. In 2003, he became the first Republican governor of the state in 130 years. He stepped down in 2011, and the same year he founded Perdue Partners LLC, which is an Atlanta-based trading company.

Perdue is not related to the family of the same name that owns chicken producer Perdue Farms Inc.

---

USDA Noting Options for Those with Maturing CRP Contracts

Those with Conservation Reserve Program (CRP) contracts maturing next September 30 have been alerted of several options available to them to consider, including re-enrolling acres and potentially pulling those acres out of the program prior to maturing with the 24-million-acre cap on CRP enrollments potentially impacting the options available.

Contracts on 2.55 million acres of CRP ground are scheduled to mature September 30, 2017, with 1.98 million acres enrolled via the general signup process and 540,000 acres under continuous signup efforts.

Seven states will have 100,000 acres or more of CRP contracts maturing September 30, 2017.

As for options, USDA has alerted those with contracts that mature September 30, 2017, of the following:

Continuous enrollment or CRP Grasslands: All or a portion of maturing CRP contracts may be eligible to be enrolled in either effort. The most-recent CRP Grasslands ranking period already closed December 16 and it is not clear when the next ranking period will be. As for the continuous effort, USDA said those can be made on a first-come, first-serve basis and must be submitted by August 31, 2017. "If demand is as high as anticipated, some offers may not be accepted because of the 24-million-acre cap." Any enrollments under the continuous signup would have a contract start of October 1, 2017.

Transition Incentives Program (TIP): If the current contract holder is not planning to farm the land upon contract maturity, they can get two additional annual CRP rental payments if they rent or sell the land to a beginning farmer or rancher or a member of an underserved group. Those new renters or landowners have to use "sustainable grazing or farming methods" to bring land back into production. Those seeking to use this option have to alert USDA by August 31, 2017. Land under this option could be eligible for an early termination of the contract up to one year before a contract is set to expire. However, the retired or retiring owner or operator may only receive the additional annual rental payments (of up to two years) when the beginning or socially disadvantaged farmer or rancher is not a family member.

Conservation Easements or Working Lands Programs: Options here include the Agricultural Conservation Easement Program (ACEP) or state and private easement programs. Those planning to bring CRP ground back into production could also use the CRP Grasslands, Conservation Stewardship Program (CSP) or the Environmental Quality Incentives Program (EQIP). "In many cases, a combination of approaches may be taken on the same land," according to USDA, including that a portion of the ground could be put in continuous CRP contract and other areas put in CSP and potentially receive additional ranking points.

Let contract expire: If contract holders opt to let the contract expire, they can plant, graze or hay the ground after September 30, 2017. "Since CRP land typically does not have a recent history of pesticide or herbicide application, the land may be valuable for organic production," USDA said. However, USDA cautioned that these maturing CRP acres could be subject to conservation and wetland compliance provisions.

---

Washington Insider" Coming Pension Fund Headaches

Well, after the toxic political debate last fall, few expected that the next few years would suddenly become calm and reasonable. But, at the same time, there seems to have been only modest awareness of a "ticking time bomb" that lies ahead for "more than a million current and future blue-collar retirees," Bloomberg is reporting this week. Many in Appalachia and the industrial Midwest are in danger of losing their benefits, or seeing them sharply reduced because a government backstop program is running out of money," Bloomberg says.

In just a few years the Pension Benefit Guarantee Corporation (PBGC) -- the program that takes over when there are shortfalls in pension funds -- could be insolvent. President-elect Trump has pledged to help Americans in areas where the local economy tanked because of trade deals, federal regulations and other forces. So, this expected pension-fund crunch could pose a special challenge, particularly if the congressional wing of his party balks at the $34 billion price tag.

In fact, the pension-fund pressure has been building for years. Legislation to prevent the coming meltdown is likely to be considered in the coming months as coal-state lawmakers press their fight to shore up the government-backed United Mine Workers of America pension fund as well as a retiree medical plan due to run out of money at the end of April. Senate leaders are determined to fix the miners' retirement fund as part of a larger solution for other union-negotiated pension plans.

Multiple employers paying into a single pension plan under terms negotiated in labor-management agreements worked well while the unionized industries were robust, but now has become unsustainable, especially as bankruptcies and layoffs continue. Currently just one miner is working for every 10 retired or inactive miners.

Potentially, more than 60 retirement plans set up under labor-management agreements could need government insurance, threatening to drain the PBGC's multi-employer plan fairly quickly. Even if the program survives, retirees could still face benefit reductions.

The issue was brought home earlier this month by coal-state senators, who voiced frustration that the most recent temporary government spending bill didn't address shortfalls in retired coal miners' pension plans and extended the health benefits for 16,000 retirees only through the end of April.

Republican Senator Rob Portman, who won re-election in Ohio with the mine workers union's endorsement, told reporters it would be "crazy" not to extend the health-care benefits for at least a year, though "we want more than that, we want this pension issue resolved as well."

In May, the Treasury Department rejected an application to cut benefits to 270,000 retirees and their dependents who are enrolled in the International Brotherhood of Teamsters' Central States and Southwest Areas Pension Plan. That plan also is projected to become insolvent in 2025. "It is clearly urgent that Congress takes action," said Thomas Nyhan, the Teamsters fund's executive director.

If the Central States fund fails, its liabilities would wipe out the PBGC's multi-employer insurance program, according to the agency. "Only government funding, either directly to our fund or through the PBGC, will prevent Central States participants from losing their benefits entirely," Nyhan said.

Recapitalizing the PBGC's multi-employer insurance fund to cover cash claims filed by financially distressed pension funds over the next 20 years would cost $34 billion, according to a Congressional Budget Office study. Actual fair-value measurement of the liability, according to the Congressional Budget (CBO) could cost much more -- $101 billion -- to pay "all future claims", CBO says.

Even now, in cases where the PBGC steps in, covered workers get no more than about 60% of the maximum benefit promised by their insolvent multi-employer pension funds.

UMWA President Cecil Roberts said the 2008 financial crisis "blew a gaping hole" in the fund's finances. As bankruptcy courts continue to allow companies to stop contributing to the plan "insolvency looms ever larger and closer," Roberts said in testimony submitted in March to the Senate Finance Committee.

Back in 2014, Congress took a partial step toward dealing with the multi-employer pension problem and passed a provision that lets the struggling funds seek Treasury Department permission to cut benefits.

Bloomberg says the Finance Committee staff is studying options for addressing these pension funds and the nationwide crisis of underfunded public pensions, which aren't government insured, according to a Republican aide. Portman said he's willing to have a larger discussion about the financial plight of other troubled multi-employer pension funds if that's what it takes to get the coal retirees taken care of. "But we want it resolved," he said.

Certainly, there will be huge recriminations over the process that left these—and, other—pension funds short of support, but it also is highly unlikely that these retirees will be left without some public support. What is likely is that the fight for limited government funding—always bitter—will become much more contentious in the early days of the next administration as campaign debts are presented for payment. This will be especially true as demands for new government functions compete increasingly with demands for smaller government overall, 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

(CC)

Copyright 2017 DTN/The Progressive Farmer. All rights reserved.