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Tuesday, September 25, 2012

Deregulating Genetically Engineered Alfalfa and Sugar Beets: Legal and Administrative Responses

Tadlock Cowan
Analyst in Natural Resources and Rural Development

Kristina Alexander
Legislative Attorney

Monsanto Corporation, the developer of herbicide-tolerant varieties of genetically engineered (GE) alfalfa and sugar beet (called Roundup Ready alfalfa and Roundup Ready sugar beet), petitioned USDA’s Animal and Plant Health Inspection Service (APHIS) for deregulation of the items. Deregulation of GE plants is the final step in the commercialization process. Monsanto filed a petition for deregulation of its GE alfalfa in 2004, and for GE sugar beets in 2005.

As part of the deregulation process, APHIS conducts an environmental review under the National Environmental Policy Act (NEPA) to determine whether any significant environmental impacts will result from deregulation. APHIS conducted a limited review, known as an environmental assessment (EA), of the GE plants to assess the impacts of growing them on a commercial scale. APHIS issued a “finding of no significant impact” (FONSI) for GE alfalfa and GE sugar beets.

Lawsuits subsequently challenged the adequacy of the EAs in separate actions. Both courts held that APHIS should have prepared a more analytically thorough environmental impact statement (EIS) for the deregulation decisions. Separately, the courts directed APHIS to complete an EIS on the effects of deregulating GE alfalfa and GE sugar beets.

The court in the GE alfalfa case halted planting of the genetically modified seed, and nullified the deregulation. The injunction was appealed to the U.S. Supreme Court, which held that the injunction was too broad and that the court should have considered partial deregulation. The Supreme Court did not discuss the appropriateness of the environmental review. In the meantime, APHIS completed the environmental review directed by the lower court, releasing a final EIS for GE alfalfa on December 16, 2010. On January 27, 2011, Secretary Vilsack announced that APHIS was granting GE alfalfa full deregulation. On January 5, 2012, a federal district court rejected claims that the deregulation violated the law.

The court in the GE sugar beet case did not formally prohibit planting sugar beets, but it voided APHIS’s deregulation decision in August 2010, undoing the five-year-old approval of GE sugar beets, from which nearly half of U.S. sugar is derived. APHIS issued four permits authorizing seedling production that would not allow flowering or transplanting without additional authorization. In November 2010, a judge ordered those seedlings pulled from the ground, holding that APHIS had violated NEPA in issuing the permits. The Ninth Circuit temporarily halted that decision in December 2010, ultimately holding in February 2011 that the seedlings did not have to be removed.

APHIS announced on February 4, 2011, that the agency would partially deregulate GE sugar beet root crop production, but would continue full regulation for sugar beet seed crop production while the EIS was prepared. The final EIS for GE sugar beets was published June 1, 2012. On July 20, 2012, APHIS issued its determination of non-regulated status for GE sugar beets. Provisions to amend APHIS’s regulatory procedures under the Plant Protection Act have been introduced in the House farm bill (H.R. 6083) and in the House Agriculture appropriations bill (H.R. 5973).

The cases of GE alfalfa and sugar beets highlight continuing policy questions about the adequacy of APHIS’s deregulation protocol, particularly regarding the environmental review process. In their suits against APHIS, plaintiffs cited the EAs’ failure to assess the impact on non-GE alfalfa growers (particularly those who export to Japan, Korea, and Taiwan) and on producers of commercial table beet and chard seeds (species that can cross-pollinate with GE sugar beets).

Date of Report: September 10, 2012
Number of Pages: 18
Order Number: R41395
Price: $29.95

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Monday, September 24, 2012

Dairy Policy Proposals in the 2012 Farm Bill

Randy Schnepf
Specialist in Agricultural Policy

Current U.S. federal dairy policy is based on five major programs—the Dairy Product Price Support Program (DPPSP), the Milk Income Loss Contract (MILC) Program, Federal Milk Marketing Orders, Dairy Import Tariff Rate Quotas, and the Dairy Export Incentive Program— which together are designed to provide price and income support and market stability for dairy producers. In addition, several smaller programs aid the U.S. dairy sector with market promotion, research, price reporting, risk management, and disaster assistance.

In recent years, dairy producers have argued that a simple price-based system fails to reflect the sharp increases in milk production costs, especially feed costs, that have occurred since the mid- 2000s. In response to producer concerns and to the volatile dairy price and margin developments of the past decade, both the House Agriculture Committee-reported (H.R. 6083) and the Senatepassed (S. 3240) 2012 farm bills propose replacing the current U.S. dairy programs that rely on a simple price trigger (DPPSP and MILC) with the Dairy Production Margin Protection Program (DPMPP), a new income support program based on the monthly difference (i.e., the margin) between the national average farm all-milk price and a formula-derived estimate of feed costs. According to the Congressional Budget Office (CBO), eliminating DPPSP and MILC generates enough savings to more than offset the cost of implementing the new margin-based dairy proposal.

DPMPP offers two margin protection plans: Basic Margin Protection (BMP) and Supplemental Margin Protection (SMP). BMP is a fully subsidized program, subject to an annual fee which insures at a single $4.00/hundredweight (cwt.) margin. In contrast, SMP is a partially subsidized program, subject to annual premiums, that provides higher margin protection coverage in $0.50/cwt. increments from $4.50/cwt. to $8.00/cwt. Each of the margin protection programs— BMP and SMP—has different costs, makes payments based on different milk production histories, and has different limits on how much of a producer’s milk production is covered by the margin protection program (80% for BMP, and 25% to 90% for SMP).

In general, all U.S. dairy producers are eligible to participate in the margin protection program. However, when producers elect to participate in DPMPP, their operations become subject to a milk supply stabilization program—referred to as the Dairy Market Stabilization Program (DMSP)—that reduces milk market returns when the margin falls below proposed statutory thresholds starting first at $6.00/cwt., then at $5.00/cwt., and finally at $4.00/cwt. The DMSP market stabilization proposal has generated considerable interest as a dairy supply management program and is being debated by dairy producer groups, which generally support it, and dairy processors, who oppose it.

Although the DMSP is referred to as a supply management program, it is perhaps more accurately described as a production disincentive program, since there are no production limits or quotas, and the dairy operator may continue to run his operation at any production level. Once triggered, DMSP payment reductions stay in place until one of a set of possible market conditions (referred to as suspension thresholds) is met—either the margins rise above $6.00/cwt., or U.S. prices for two basic dairy commodities (cheddar cheese or nonfat dry milk) exceed world prices by certain relative amounts, or a combination of higher margins and certain U.S.-to-international price relationships occur simultaneously.

Date of Report: September 18, 2012
Number of Pages: 30
Order Number: R42736
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Tuesday, September 18, 2012

Environmental Regulation and Agriculture

Megan Stubbs, Coordinator
Specialist in Agricultural Conservation and Natural Resources Policy

As the U.S. and global economies continue to struggle, some inside and outside of Congress have expressed concern about how environmental regulation may stifle growth and productivity. Much of the criticism has focused on environmental regulations promulgated by the Environmental Protection Agency (EPA). Some claim that EPA is overreaching its regulatory authority and imposing costly and burdensome requirements on society. In general, the agriculture community, among others, has been vocal in its concerns, contending that EPA appears to be focusing some of its recent regulatory efforts on agriculture. Many public health and environmental advocates, on the other hand, support many of EPA’s overall regulatory efforts and in some cases argue that EPA has not taken adequate action to control the impacts of certain agricultural activities. Where agriculture contributes to environmental impairment, these groups say, it is appropriate to consider ways to minimize or eliminate the adverse impacts. Growing interest in the impact of regulatory actions on many sectors of the economy is evident in Congress, which continues to examine the role of EPA and other federal agencies in regulating environmental protection. Congress has a number of policy options to address or respond to potential regulatory impacts.

Most environmental regulations, in terms of permitting, inspection and enforcement, are implemented by state and local governments, often based on federal EPA regulatory guidance. In some cases, agriculture is the direct or primary focus of the regulatory actions. In other cases, agriculture is one of many affected sectors. Traditionally, farm and ranch operations have been exempt or excluded from many environmental regulations. Given the agricultural sector’s size and its potential to affect its surrounding environment, there is interest in both managing potential impacts of agricultural actions on the environment and also maintaining an economically viable agricultural industry. Of particular interest to agriculture are a number of regulatory actions affecting air, water, energy, and chemicals. 


Agricultural production practices from both livestock and crop operations generate a variety of substances that enter the atmosphere, potentially creating health and environmental issues. Recent actions by EPA to regulate emissions and pollutants have drawn criticism, including greenhouse gas emission reporting and permitting requirements, and National Ambient Air Quality Standards (NAAQS) related to particulate matter (commonly referred to as dust). The agricultural community continues to show particular interest in NAAQS because some farming and livestock practices contribute to particulate matter emissions. 


Water quality issues also are of interest to the agricultural industry. Water is an input for production and can also be degraded as a result of production through the potential release of sediment, nutrients, pathogens, and pesticides. The extent and magnitude of water quality degradation from agriculture practices varies greatly, but agriculture is proven to be a significant source of impairment of several U.S. waters. Federal environmental laws largely do not regulate agricultural actors, in many cases giving the regulatory responsibilities to the states. One exception is large concentrated animal feeding operations (CAFOs), which are subject to permitting requirements. Constraints on agricultural production to reduce pollution discharges typically arise at the state level in response to local concerns, and how to manage agricultural sources has been a prominent issue in several large watershed restoration efforts, such as those in the Chesapeake Bay and Florida Everglades. 


Changes in energy policy, namely increased bioenergy production, have recently become important to many in the agricultural industry, based on the potential of corn-based biofuel production to contribute to the nation’s energy supply through both the renewable fuel standard (RFS) and the increased percentage of ethanol in gasoline (E15). 


Hundreds of chemical products are available to repel or kill “pests” that affect agricultural production. The federal regulation of these chemicals includes registering and restricting their use. The risks associated with agricultural chemical use and possible impacts on human health and the environment also have led to recent federal regulatory reviews of chemical fertilizer and pesticide use.

Date of Report: September 4, 2012
Number of Pages: 50
Order Number: R41622
Price: $29.95

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Monday, September 17, 2012

Trade Adjustment Assistance for Farmers

Remy Jurenas
Specialist in Agricultural Policy

The Trade Adjustment Assistance for Farmers (TAAF) program provides technical assistance and cash benefits to producers of agricultural commodities and fishermen who experience adverse economic impacts caused by increased imports. Congress first authorized this program in 2002, and made significant changes to it in the 2009 economic stimulus package (P.L. 111-5). The 2009 revisions were intended to make it easier for commodity producers and fishermen to qualify for program benefits. It also provided over $200 million in funding through December 2010. More recently, P.L. 112-40 (enacted in October 2011) authorized $90 million in each of FY2012 and FY2013, and $22.5 million for the first quarter of FY2014, subject to future appropriations.

The U.S. Department of Agriculture (USDA) is required to follow a two-step process in administering TAAF program benefits. First, a group of producers must be certified eligible to apply. Second, a producer in a certified group must meet specified requirements to be approved to receive technical assistance and cash payments.

To be certified, a group must show that imports were a significant cause for at least a 15% decline in one of the following factors: the price of the commodity, the quantity of the commodity produced, or the production value of the commodity. Once a producer group is certified, an individual producer within that group must meet three requirements to be approved for program benefits. These include technical assistance with a training component, and financial assistance. A producer must show that (1) the commodity was produced in the current year and also in one recent previous year; (2) the quantity of the commodity produced decreased compared to that in a previous year, or the price received for the commodity decreased compared to a preceding threeyear average price; and (3) no benefits were received under any other trade adjustment assistance program. The training component is intended to help the producer become more competitive in producing the same or another commodity. Financial assistance (capped at $12,000 over a threeyear period for an approved producer) is to be used to develop and implement a business adjustment plan designed to address the impact of import competition.

Since 2009, USDA has certified 10 of the 30 petitions filed by producers of five commodity groups—shrimp, catfish, asparagus, lobster, and wild blueberries. In FY2010, USDA approved about 4,500 agricultural producers who applied for training and cash assistance under three certifications. Under the seven FY2011 certified petitions, USDA approved about 5,700 producers. Program benefits in both years will mostly flow to shrimp producers.

USDA continues, in stages, to disburse financial assistance to producers approved to receive benefits under the FY2010 and FY2011 programs as they meet certain benchmarks. Any future program activity depends on whether Congress appropriates funds to support the authority enacted in P.L. 112-40. In its FY2013 budget request submitted February 13, 2012, the Obama Administration did not request any appropriations for the TAAF program.

The Government Accountability Office (GAO) has examined which commodities were certified under the revised TAAF criteria, presented data on the producers approved to receive program benefits, and analyzed the approach USDA followed to evaluate TAAF’s effectiveness. GAO recommends that USDA require spouses who apply for assistance to submit documentation on how they contribute to producing a commodity, take steps to ensure that the program’s financial assistance component is used for intended purposes, and adopt a longer-term approach to evaluate its effectiveness.

Date of Report: September 5, 2012
Number of Pages: 15
Order Number: R40206
Price: $29.95

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