Despite threatening a veto, President Trump signed into law a $1.3 trillion spending bill that addresses several agricultural priorities, including revisions to the Section 199A tax benefit and an exemption from farm-emissions reporting for the livestock industry.
The 2,232-page bill also creates a new $600 million grant and loan program for rural broadband, increases spending for agricultural research and for the first time in a decade doesn’t cut farm bill conservation programs, including the Environmental Quality Incentives Program, which appropriators routinely dip into to fund other priorities.
Trump tweeted Friday morning that he was “considering a VETO” of the bill because it didn’t fund a border wall or legalize the Dreamers. But he announced at the White House in the afternoon that he signed the bill because of the importance of its increase in defense spending. He complained that Democrats had forced Republicans to agree to unnecessary spending and that he would "never sign a bill like this again."
In addition to the exemption from emissions reporting under the Superfund law, the livestock industry will get a delay until at least Sept. 30 of a Transportation Department requirement that livestock haulers install electronic logging devices (ELDs) that are used to enforce limits on driver hours. The industry says the limits are unworkable.
Western rural counties got two big wins in the bill: It restores Secure Rural Schools payments and fully funds the Payment in Lieu of Taxes (PILT) program.
The 199A fix, which resulted from negotiations between the National Council of Farmer Cooperatives and the National Grain and Feed Association, is intended to equalize tax treatment of commodity sales to cooperatives and non-co-ops, while also providing a flow-through deduction from co-ops to their members similar to the old Section 199 deduction for domestic production activities (DPAD).
“Fixing Section 199A was a fundamental issue of fairness," said Agriculture Secretary Sonny Perdue. "We should not be picking winners and losers through the federal tax code by favoring one side over another."
The Tax Cuts and Jobs Act enacted in December established the 199A benefit but created a disparity by allowing the 20-percent deduction to be applied to a farmer’s gross sales to co-ops, but only on net income from sales to other buyers. Grain giants such as Cargill and Archer Daniels Midland were put at a disadvantage as well as supermarket chains and dairy processors that buy milk directly from farmers. At least one major ethanol producer also was preparing to restructure as a cooperative to take advantage of the tax law.
Dave Carlin, senior vice president of legislative affairs and economic policy at the International Dairy Foods Association, said the 199A fix "is good for all of agriculture and restores a competitive marketplace for all buyers and sellers."
The omnibus bill’s exemption to the emissions reporting requirements has long been a goal of livestock and poultry producers. The D.C. Circuit Court of Appeals ruled in April 2017 that EPA’s 2008 exemptions for animal operations from reporting under the Emergency Planning and Community Right-to-Know Act (EPCRA) and Comprehensive Environmental Compensation and Liability Act (CERCLA, also known as the Superfund law) were illegal.
Industry groups have been warning of dire consequences for up to 200,000 farms and ranches if the requirements went into effect, which they have not because the court repeatedly delayed issuing its mandate.
In a joint statement Friday, the National Turkey Federation, National Chicken Council, U.S. Poultry & Egg Association, and United Egg Producers said the exemption is "one of the most visible and essential demonstrations of support for U.S. farmers. Our deep appreciation for this action and bipartisan cooperation cannot be overstated.”
The omnibus also includes provisions that address a longstanding problem for the Forest Service, part of USDA, which has repeatedly been forced to divert funding from maintenance and prevention projects to supplement firefighting costs.
The agency has been required to budget for fire suppression based on the average costs of the prior 10 years, and that has often proven to be inadequate. Under the omnibus, the Forest Service can tap disaster relief funds once the firefighting account has been exhausted.
“Improving the way we fund wildfire suppression will help us better manage our forests," said Perdue. "If we ensure that we have adequate resources for forest management, we can mitigate the frequency of wildfires and severity of future fire seasons."
The bill also eliminates the requirement that landowners who participate in conservation programs obtain System for Award Management (SAM) and Data Universal Numbering System (DUNS) numbers. “Removing the burdensome task of SAM/DUNS reporting allows landowners and operators to prioritize conservation program participation without hindrance," said Jeremy Peters, CEO of the National Association of Conservation Districts.
The increased spending in the bill permitted by the budget agreement enacted in February allowed appropriators to boost spending on priorities at USDA without cutting conservation programs.
USDA’s research programs are increased $139 million to $3.03 billion for fiscal 2018.
The bill provides $2.1 billion for international food aid and for programs to promote U.S. agricultural exports, a $130 million increase from fiscal 2017. The FY18 total includes more than $1.7 billion for Food for Peace and $207 million for the McGovern-Dole International Food for Education and Child Nutrition program.
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