Washington Insider - Thursday

Appropriations Bill Movement

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

Grassley Wants USDA Part of US Government Review of ChemChina’s Buy of Syngenta

Some U.S. lawmakers want USDA to weigh in on the national security review of China National Chemical Corp.’s planned takeover of pesticide and seed company Syngenta AG, another development in the sensitive $43 billion deal.

Sen. Chuck Grassley, R- Iowa, said he and a bipartisan group of Farm Belt senators in the coming days plan to seek a formal role for USDA, which has aired concerns over the Syngenta deal in recent weeks.

The ChemChina move, unveiled in February, is the largest-ever foreign acquisition by a Chinese company. Syngenta, based in Switzerland, generates about one-quarter of its sales in North America where it is a top pesticide seller and supplies an estimated 10% of soybean seeds and 6% for corn.

The national security review of the ChemChina-Syngenta deal is being conducted by the Committee on Foreign Investment in the US (CFIUS). The committee includes representatives from 16 US departments and agencies, including the Treasury, Homeland Security and Defense departments, but not including USDA. CFIUS has a track record of stopping foreign companies’ purchases of US assets they think raise national-security risks.

“I’m not saying foreign direct investment is inherently bad,” Grassley said in an interview with the Wall Street Journal. “But we ought to ensure through [CFIUS] that we’re not permitting the sale of too much of our food industry, especially when government-controlled entities like ChemChina are the buyers.”

Grassley said that he and other senators want permanent roles on CFIUS for USDA and the Food and Drug Administration, which are sometimes tapped to provide their views on mergers, to evaluate food security and safety aspects of foreign-driven deals. “We need to consider the long-term implications of letting foreign entities control significant market share in U.S. agriculture, especially in consolidated markets like the seed market has become,” he said.

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NPPC to USDA: Defend ‘Other White Meat’ Sale

In a meeting on March 23 with USDA’s Office of General Counsel, representatives of the National Pork Producers Council (NPPC) demanded that the agency defend the sale by the NPPC of ‘Pork. The Other White Meat’ trademarked assets to the National Pork Board.

NPPC sold to the Pork Board in 2006 The Other White Meat slogan and pork chop logo for about $35 million. NPPC financed the purchase over 20 years, making the Pork Board’s annual payment $3 million. The sale was an arms-length transaction with a lengthy negotiation in which both parties were represented by legal counsel, and USDA, which oversees the federal Pork Checkoff program administered by the Pork Board, approved the purchase.

The Humane Society of the United States (HSUS), a lone Iowa farmer and the Iowa Citizens for Community Improvement in 2012 filed a lawsuit against USDA, seeking to have the sale rescinded. Initially, USDA defended the lawsuit, and a US District Court dismissed it for lack of standing, but a federal appeals court in August 2015 reinstated the suit. But before any court proceedings on the merits of the suit, USDA inexplicably changed course and entered into settlement talks with HSUS.

According to NPPC President John Weber and CEO Neil Dierks, who met with USDA’s general counsel and reiterated the pork industry’s objection to any settlement, there was no indication where the agency stands on the case.

Weber and Dierks pointed out that: the Pork. The Other White Meat trademarks, particularly the pork chop logo, still are being used by the National Pork Board; regardless of how each of the trademarks is being used, the phenomenal recognition and awareness of them continue to make the trademarks some of the most valuable intellectual property in existence today; and the purchase agreement was for fair market value and continues to make sense for the Pork Board to perform under the contract, which provides a valuable service to the entire pork industry.

NPPC also urged USDA to follow the 1985 Pork Act, which created the Pork Checkoff program and gave authority to the Pork Board, through its board of directors, delegates and committees – collectively representing all pork producers – to make decisions about Checkoff funds and programs.

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Washington Insider: Appropriations Bill Movement

Bloomberg reported recently that members of the House Freedom Caucus and their allies this week outlined potential compromises to solve the months-long dispute over a budget resolution that threatens to weaken Speaker Paul Ryan’s hold over his conference.

At this time, the focus of the discussions is ways to tweak the draft budget resolution’s call for $30 billion in reductions in mandatory spending. Their goal is to craft language that would make it palatable for the most hardline foes of government spending to vote in favor of $1.07 trillion in fiscal 2017 discretionary spending -- a level that they would rather cut.

The House Budget Committee-approved resolution would instruct five committees to come up with a package of mandatory savings. That package would be presented as a stand-alone bill that would ride beside the resolution, the “the budget sidecar” they tend to mistrust. Freedom Caucus members have said they didn’t think the Senate would take up a sidecar bill, so that strategy wouldn’t be sufficient to win their votes.

“It has to be something real that addresses the fiscal environment,” caucus co-chairman Jim Jordan told reporters. “Just to vote on something, or a promise to fix a rule down the road, the American people are fed up with those things.”

Freedom Caucus members claim to have floated dozens of suggestions to Ryan and they keep returning to mandatory spending as the fiscal area that’s ripe for compromise.

However, Republican appropriators have argued that attaching large mandatory cuts to the 12 annual spending bills would stop the appropriations process in its tracks, risking the ability to get incremental changes or policy riders signed into law.

Kansas Republican Tim Huelskamp said that could be avoided by a choosing a different legislative vehicle, perhaps the next Federal Aviation Administration authorization, because an FAA bill will be needed before July 15.

The social programs that are funded through the Labor-HHS spending bill have tended in recent years to get rolled up into an omnibus appropriation, which frustrates lawmakers eager to use the appropriations process to force changes.

“We never get to vote on a Labor-H bill,” said Huelskamp, explaining that he’d like the opportunity to vote on a Labor-HHS amendment that would target Planned Parenthood’s eligibility to provide services through federal grants.

Concentrating mandatory cuts on the Labor-HHS bill could allow appropriators to move the other 11 bills while provoking just one showdown with the Senate.

Dave Brat, a Virginia Republican who voted against the leaders’ draft budget resolution in committee, praised Freedom Caucus member Scott Garrett of New Jersey for winning an amendment that would require the House to attach the $30 billion sidecar to legislation with “fiscal impact” should the Senate ignore the proposed stand-alone bill.

“That’s getting warm,” Brat said. “Our group is willing to go to the $1.070 [trillion] number.”

The key, he said, would be to be able to tell constituents “We made up for a barn cleaning.” That’s a reference to former Speaker John Boehner, who said he made sure there would be no government shutdown over of the fiscal 2016 appropriations because “I don’t want to leave my successor a dirty barn.”

The Freedom Caucus comments come after House Republicans met once again to discuss their budget dispute. Ryan told reporters the budget resolution will come to the House floor when it has the 218 Republican votes it needs in the face of united Democratic opposition.

Under the 1974 Budget Act, both houses of Congress are supposed to agree on a budget by April 15. That deadline is now looking harder to meet. Still, that dispute hasn’t stopped appropriators from moving forward with individual spending bills. The House Appropriations Military Construction-VA Subcommittee plans to mark up its measure later this week.

Jordan said that he and others in the HFC plan to evaluate the bill on its individual merits rather than voting against it in protest of the overall federal budget proposal.

Under the Budget Act, leaders could bring appropriations bills to the floor after May 15 even without a top-line, although leaders prefer to have an agreement on the top-line first.

The kinds of discussions now underway tend to make observers nervous, aimed as they seem to be, at mechanisms that are sold on the basis that they can do something in an indirect way—usually some sort of smoke and mirrors that are often hard to detect and often impossible to evaluate. Still, a budget stalemate is not desirable, either. Producers need to watch these proposals very closely as they emerge. If they seem too good to be true, they probably are, Washington Insider believes.


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