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. 

Air 

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 

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. 

Energy 

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). 

Chemicals 

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: February 22, 2013
Number of Pages: 51
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U.S. Farm Income

Randy Schnepf
Specialist in Agricultural Policy

According to USDA’s Economic Research Service (ERS), national net farm income—a key indicator of U.S. farm well-being—is forecast at a record $128 billion in 2013, up 14% from last year, and $10 billion above 2011’s previous record.

In addition to near-record farm income, farm wealth is also at record levels. Farm asset values— which reflect farm investors’ and lenders’ expectations about long-term profitability of farmsector investments—are expected to rise nearly 8% in 2013 to a record $2,732 billion for a fifth consecutive year of gains. Farm land cash markets have continued to see gains related to strong crop prices in 2012. Since 2008, farm asset values are up 35% while farm debt has risen by only 15%. As a result, the farm debt-to-asset ratio has declined steadily since 2008 and is expected to fall to 10.2%, its lowest level since 1960.

The 2013 outlook for a third year of strong farm income occurs in spite of slow growth in the domestic economy and the most severe and extensive drought in at least 25 years. A severe drought in 2012 destroyed or damaged a significant portion of the U.S. corn and soybean crops, with deleterious impacts on all U.S. livestock sectors—cattle, hogs, poultry, and dairy—as feed costs reached record levels. The drought’s eventual effect on food prices at the retail level will continue to be felt in 2013. Yet, drought-induced large increases in the value of 2012’s crops, plus substantial crop insurance indemnity payments, are expected to partially offset higher production expenditures for both crop and livestock activities.

In general, a return to trend yields in 2013 (assuming normal weather) is expected to generate record-large harvests of major crops which, in turn, would likely benefit livestock producers in the second half of the year as crop prices are expected to decline from record-high levels. However, high feed costs could persist through at least the first half of the year. Cash grain farmers in the Corn Belt and Northern Plains are expected to experience a third year of nearrecord revenues as a return to trend yields would offset a substantial portion of the anticipated crop price decline. However, the expected increase in crop and total output in 2013 is also projected to lead to unusually large increases in marketing, storage, and transportation expenses and miscellaneous expenses.

Government farm payments, at about $11 billion, are expected to remain relatively small in 2013 (third-lowest total since 1997) as high commodity prices continue to shut off payments under the price-contingent marketing loan and counter-cyclical payment programs.

These data suggest a strong financial position heading into 2013 for the agricultural sector as a whole relative to the rest of the U.S. economy, but with substantial regional variation. The lingering effects of the drought are expected to spill over into 2013, when record-high market prices will likely motivate large feed grain and oilseed plantings. Eventual 2013 agricultural economic well-being will hinge greatly on spring crop planting and summer growing weather, as well as both domestic and international macroeconomic factors including economic growth and consumer demand.


Date of Report: February 21, 2013
Number of Pages: 35
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USDA’s “GIPSA Rule” on Livestock and Poultry Marketing Practices

Joel L. Greene
Analyst in Agricultural Policy

On June 22, 2010, the U.S. Department of Agriculture’s (USDA’s) Grain Inspection, Packers and Stockyards Administration (GIPSA) published a proposed rule to implement regulations on livestock and poultry marketing practices as mandated by the 2008 farm bill (P.L. 110-246). The proposed rule, commonly referred to as the “GIPSA rule,” added new regulations to clarify conduct that violates the Packers and Stockyards Act of 1921 (P&S Act). The P&S Act regulations are used by USDA to ensure fair competition in livestock and poultry markets.

The 2008 farm bill included new provisions that amended the P&S Act to give poultry and swine growers the right to cancel contracts, to require the clear disclosure by poultry processors to growers of additional required capital investments, to set the choice of law and venue in contract disputes, and to give poultry and swine growers the right to decline an arbitration clause that requires arbitration to resolve contract disputes. The farm bill required USDA to propose rules to implement the farm bill provisions.

In what some saw as a major change from current practice, GIPSA proposed that a violation of the P&S Act does not require a finding of “harm or likely harm to competition.” The proposed rule set criteria for “unfair, discriminatory, and deceptive practices” and “undue or unreasonable preference or advantages” that violate the P&S Act. The proposed rule also included arbitration provisions to ensure that contract growers have a meaningful opportunity to participate in arbitration and the right to decline arbitration.

According to proponents of the proposed rule implementing the farm bill provisions, the rule brought fairness to contracts and reshaped interactions between producers and large meat packers and poultry processors. Opponents argued that the proposed rule went far beyond the intent of Congress in the 2008 farm bill, and that the rule altered business practices to the detriment of producers, consumers, and the industries.

USDA issued the final rule on December 9, 2011, and it went into effect on February 7, 2012. The final rule, a significant modification of the proposed rule, included four provisions that address, respectively, suspension of the delivery of birds, additional capital investments, remedy of breach of contract, and arbitration.

Before USDA finalized the GIPSA rule in December, Congress enacted in November 2011 Section 721 of the FY2012 appropriations bill (P.L. 112-55), which prohibited USDA from finalizing the most contentious parts of the rule. The language from the FY2012 appropriations bill was continued into FY2013 as part of the continuing resolution (P.L. 112-175), which provided funding through March 27, 2013.

The FY2013 House appropriations bill, H.R. 5973, included Section 719, which contained the prohibitions on the GIPSA rule from FY2012 appropriations. In addition, Section 719 also included a provision for USDA to repeal the four provisions that USDA finalized in 2011. The Senate appropriations bill, S. 2375, did not contain similar provisions.

Depending on the outcome of appropriations legislation, the repeal of the GIPSA rule may also become part of the omnibus farm bill debate in the 113th Congress. In the 112th Congress, the House-reported farm bill, H.R. 6083, included a provision—Section 12105—that repealed the final GIPSA rule and prohibited USDA from implementing a similar rule.


Date of Report: January 11, 2013
Number of Pages: 39
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International Food Aid Programs: Background and Issues

Charles E. Hanrahan
Senior Specialist in Agricultural Policy

For almost six decades, the United States has played a leading role in global efforts to alleviate hunger and malnutrition and to enhance world food security through the sale on concessional terms or donation of U.S. agricultural commodities. The objectives for foreign food aid include providing emergency and humanitarian assistance in response to natural or manmade disasters, and promoting agricultural development and food security.

The 2008 farm bill, the Food, Conservation, and Energy Act of 2008 (P.L. 110-246), authorized through FY2012 and amended international food aid programs. These programs are administered either by USDA’s Foreign Agricultural Service (FAS) or by the U.S. Agency for International Development (USAID). U.S. international food aid has been distributed mainly through five program authorities: the Food for Peace Act (P.L. 480); Section 416(b) of the Agricultural Act of 1949; the Food for Progress Act of 1985; the McGovern-Dole International Food for Education and Child Nutrition Program; and the Local and Regional Procurement Pilot Project, a newly created pilot in the 2008 farm bill which ended in FY2012. In addition, the 2008 farm bill also reauthorized the Bill Emerson Humanitarian Trust (BEHT), a reserve of commodities and cash for use in the Food for Peace programs to meet unanticipated food aid needs.

The 112th Congress extended the 2008 farm bill, including its international food aid provisions and food aid funding levels in effect during FY2012, through September 30, 2013, as part of the “fiscal cliff” legislation (P.L. 112-240).

Average annual spending on international food aid programs over the decade FY2002-FY2011 was approximately $2.2 billion, with Food for Peace Title II activities comprising the largest portion of the total budget (about 50%-90% of total annual food aid budgets). In recent years, the volume of Title II emergency food aid has exceeded the amount of non-emergency or development food aid. The 2008 farm bill provides for a “safe box” for funding of nonemergency development assistance projects under Title II, which ranged from $375 million in FY2009 to $450 million in FY2012, though this requirement can be waived by the President if certain criteria are met. The 2008 farm bill also maintained funding for the McGovern-Dole International Food for Education and Child Nutrition program on a discretionary basis, and authorized $60 million for the four-year local and regional procurement pilot project to be implemented in developing countries in order to expedite the provision of food aid to vulnerable populations affected by food crises and disasters. Separately authorized and funded is USAID’s Emergency Food Security Assistance Program, which uses International Disaster Assistance funds to provide cash-based food security assistance (local/regional procurement, cash vouchers, or cash transfers) for emergency relief.

Several food aid issues emerged as the 112th Congress debated a new farm bill, including ensuring the nutritional quality and safety of food aid provided; assessing the role of monetization (selling food aid commodities in recipient countries to finance development projects); determining the effectiveness and appropriateness of local and regional procurement of food aid; and determining the cost-effectiveness of U.S. cargo preference for delivering U.S. food aid.


Date of Report: January 9, 2013
Number of Pages: 22
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Table Egg Production and Hen Welfare: Agreement and Legislative Proposals

Joel L. Greene
Analyst in Agricultural Policy

Tadlock Cowan
Analyst in Natural Resources and Rural Development

The United Egg Producers (UEP), the largest group representing egg producers, and the Humane Society of the United States (HSUS), the largest animal protection group, have been adversaries for many years over the use of conventional cages in table egg production. In July 2011, the animal agriculture community was stunned when the UEP and HSUS announced that they had agreed to work together to push for federal legislation to regulate how U.S. table eggs are produced. The agreement between UEP and HSUS called for federal legislation that would set cage sizes, establish labeling requirements, and regulate other production practices. As part of the agreement, HSUS agreed to immediately suspend state-level ballot initiative efforts in Oregon and Washington.

During the 112th Congress, the Egg Products Inspection Act Amendments of 2012 (H.R. 3798) was introduced in the House in January 2012. In May 2012, a companion bill, S. 3239, was introduced in the Senate. The provisions in the bills were the same, and reflected the agreement between UEP and HSUS to establish uniform, national cage size requirements for table egglaying hens. The bills would have codified national standards for laying-hen housing over an 18- year phase-in period, included labeling requirements to disclose how eggs were produced, and set air quality, molting, and euthanasia standards for laying hens.

The agreement and legislation were a marked shift in direction for both UEP and HSUS. UEP viewed H.R. 3798 as being in the long-term interest and survival of American egg farmers. Egg producers would benefit from national egg standards that halted costly state-by-state battles over caged eggs that result in a variety of laws across the country. For HSUS, which has actively campaigned for cage-free egg production, accepting enriched cages was a compromise, but one that could result in significant federal farm animal welfare legislation. H.R. 3798 and S. 3239 were endorsed by a wide range of agricultural, veterinary, consumer, and animal protection groups.

Farm group opponents criticized H.R. 3798 and S. 3239 for several reasons. First, they were concerned that the bills federally mandated management practices for farm animals, something that had not been done in the past. These groups argued that the bills could set a precedent, paving the way for future legislation on animal welfare for the livestock and poultry industries. Opponents held the view that the cage requirements were not science-based, and undermined long-standing views that animal husbandry practices should be based on the best available science. They also argued that codifying cage standards today ignores innovations that could appear in the future. Additionally, opponents were concerned that the capital cost of transitioning to enriched cages would be high, and could be prohibitive for small producers.

S. 3239 was initially offered as an amendment to the Senate’s proposed 2012 farm bill (S. 3240), but was withdrawn. The Senate Agriculture Committee held a hearing on S. 3239 on July 26, 2012. H.R. 3798 was not offered as an amendment during the House Agriculture Committee’s markup of the 2012 farm bill (H.R. 6083). However, an amendment to H.R. 6083 was adopted that would have prohibited states from enforcing their production or manufacturing standards for agricultural products on agricultural products from other states.

The provisions that were in H.R. 3798 and S. 3239 are expected to be reintroduced in the 113th Congress, and both UEP and HSUS will advocate for passage. Egg legislation could again become part of the omnibus farm bill debate during the year.


Date of Report: January 11, 2013
Number of Pages: 28
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