ARA: Playing the best hand with cards you’re dealt
This year has dealt a series of ups and downs and unanticipated challenges from a legislative and regulatory standpoint. Several major issues such as the farm bill, comprehensive tax reform and immigration all have the potential to move forward due to some conference unity and bipartisanship in Congress. We have seen a one-year delay by the administration on the employer mandate provision of Obamacare, and continued pauses of full Dodd-Frank implementation. There was also a big win for the agriculture industry this year when EPA decided to respect the 10th amendment and finally accept Florida’s Numeric Nutrient Criteria.
In April, new challenges emerged for the agricultural retail and distribution industry after the terrible tragedy of the West Fertilizer facility explosion in Texas. Even though the exact cause of this incident is yet to be determined, the industry’s strong reputation for safety and compliance suddenly came into question after this event.
Several Senate and House committees have focused their attention on the West fertilizer investigation and review of existing federal, state and local regulations for products such as ammonium nitrate and anhydrous ammonia fertilizers.
In an upcoming issue of AgProfessional, we will provide more detail on these developments and the fertilizer and agricultural retail industry’s proactive efforts to establish a new code of practice to help ensure the future safety and prosperity of agricultural retail facilities, their employees and communities.
There is no doubt that with everything that has happened so far in 2013, this year is turning out to be quite diff erent than 2012. With all of these cards on the table, it is imperative that we keep moving forward and work together with federal agencies and Congress to lay out the best hand for the agriculture industry. It also emphasizes the for those in the agriculture retail industry to stand with ARA and get politically involved to preserve the future of the industry.
The farm bill is off to a tumultuous yet more promising start in 2013. Bills from both the Senate and the House mark an attempt at true reform in the administration of our farm and nutrition programs, but the big question has been, how much reform is actually needed?
The Senate finished its work early in May by passing legislation very similar to the 2012 farm bill with the addition of the Adverse Market Program or “AMP;” which will be an effective tool for growers in southern regions of the country.
The road to passage in the House was far more interesting as we saw many amendments offered to fundamentally change programs, such as dairy, and make work requirements mandatory for the receipt of nutrition benefits. This ultimately led to an overwhelming defection from Democrats and many Republicans that caused the bill’s first attempt on the House floor to fail. When House leadership removed the nutrition title and made another attempt to move the same farm programs, it marked the first time in the 113th Session that House Republicans united as a conference to pass legislation as a majority. Although it was partisan, that vote was a useful tool to get the bill to the Senate in hopes of an eventual conference to reauthorize the farm bill.
ARA has significant interest in passage of the 2013 farm bill and has made many strides in seeing membership policy goals achieved. If passed, we are likely to see the preservation of a strong crop insurance program, a potential reduction in the regulatory burdens our industry faces and many needed reforms within the conservation title. These reforms include a reduction in the acreage cap in the Conservation Reserve Program (CRP), possible contract flexibility with an early opt-out option and changes to the Technical Service Provider (TSP) program that will allow all industry representatives to participate in conservation partnerships. Finally, ARA has pursued an amendment that would help to protect agricultural products from inaccurate assumptions and improper perspective from agencies when it comes to the issuance of security regulations.
Water quality issues will yet again be another major issue for the agricultural industry to contend with in 2013. A major priority carried over from 2012 is the ongoing battle against the implementation of a pesticide general permit (PGP) under the Clean Water Act (CWA) for aquatic pesticide applications. Over the past few years, our industry has been fighting for legislation that would eliminate the need for CWA NPDES (National Pollution Discharge Elimination System) permits that are FIFRA compliant (Federal Fungicide, Insecticide and Rodenticide Act). This is a very costly and unnecessary redundancy that adds stipulations to a regulation applicators are currently in compliance with, and it is imperative this is included in the farm bill.
Total Maximum Daily Load (TMDL) development continues as the EPA’s vehicle to regulate nutrients in bodies of water. Over the years, we have seen TMDL’s develop in places such as the Chesapeake Bay, the western Lake Erie basin, and other watersheds in order to regulate the amount of nitrogen, phosphorus and sediment a body of water may contain. More time has passed and ARA remains skeptical of the data and methodologies that are being used to determine thresholds and a national criteria for water quality standards. Because the agriculture sector’s impact on water quality is often overestimated, ARA supports industry initiatives with retailers to improve water quality and continues to work with other groups and associations, such as TFI and the Conservation Technology Information Center (CTIC) to promote the adoption of 4R and other best management practices with growers.
The industry earned a victory with EPA’s acceptance of the Florida’s Numeric Nutrient Criteria. (Environmentalists typically will approve of numeric criteria over narrative criteria because numeric criteria will set pollution limits before poor water quality effects show up.) But it is likely that environmentally-minded groups will continue to challenge this decision through the courts due to their perception that the state’s criteria does not go far enough. However, this recent development of EPA’s acceptance of Florida’s Numeric Nutrient Criteria resulted in a tremendous sigh of relief for many in agriculture.
The American Taxpayer Relief Act or “Fiscal Cliff ” legislation that was passed in the waning hours of 2012 provided certainty for some provisions of concern for our industry. The permanent rates, asset dollar exemptions and income limits set for the Estate and Capital Gains tax were positive for agriculture, but there is much more to be done to “fix” our code.
Comprehensive tax reform is currently taking up a lot of airspace in and around Capitol Hill. Major developments such as Ways and Means Chairman Dave Camp (R-Mich.) announcing bipartisan working groups in the House to review the tax code, and Senate Finance Committee Chairman Max Baucus (D-Mont.) announcing his desire to achieve reform before his retirement, have lent promise to the notion that the great tax compromise of 1986 can be relived in 2013.
We continue to work through the conduits provided by Congress to promote provisions that help agriculture and agricultural retailers. A few of these provisions include special land use valuation (IRC Section 2032A) to ensure estates are protected to the fullest extent, the five-year agricultural equipment depreciation schedule (accelerated depreciation and cash accounting to increase farmer asset acquisition in good years), and finally the inclusion of the Agricultural Chemical Security Tax Credit to help with facility security investments. ARA will keep you informed of developments to achieve tax reform throughout the process.
Another recent development that has the potential to affect agricultural retailers is the potential adoption of a tax on goods bought and sold through e-commerce. The Marketplace Fairness Act that passed the Senate and sits in the House Judiciary Committee has the potential to place heavy record-keeping burdens on members of our industry who sell products in states with “agricultural product-use exemptions” if enacted “as-is.” ARA is working with member companies, other associations, and members of Congress to ensure this does not affect or deter ag retailers currently engaged or considering adoption of an online model in the future.
For more information and the latest policy updates from ARA, visit www.aradc.org.