For the Week Ending January 6, 2017

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NPPC this week launched an effort to get its grass roots – pork producers and allied industries – to weigh in with their congressional lawmakers on the controversial U.S. Department of Agriculture GIPSA (Grain Inspection, Packers and Stockyards Administration) rule related to the buying and selling of livestock and poultry, urging them to work with the incoming Trump administration to rescind the “midnight” regulation. (Click here to send a message to your senators and representative, asking them to stop the GIPSA rule.) The Obama administration in mid-December issued the ironically titled Farmer Fair Practices Rules – an interim final rule and two proposed regulations – which NPPC says could restrict the buying and selling of livestock, lead to consolidation of the livestock industry and increase consumer prices for meat. The interim final rule broadens the scope of the Packers and Stockyards Act (PSA) of 1921 related to the use of “unfair, unjustly discriminatory or deceptive practices” and “undue or unreasonable preferences or advantages.” Specifically, the regulation would deem such actions per se violations of federal law even if they didn’t harm competition or cause competitive injury, prerequisites for winning PSA cases. (Such actions currently are state court matters.) USDA in 2010 proposed a number of PSA provisions – collectively known as the GIPSA Rule – which Congress mandated in the 2008 Farm Bill. But the agency was blocked by lawmakers through amendments to annual agricultural spending legislation from implementing a regulation that would eliminate the need to prove a competitive injury to win a PSA lawsuit. In fact, Congress considered and rejected such a “no competitive injury” provision during debate on the 2008 Farm Bill. Additionally, eight federal appeals courts have held that harm to competition must be proved for an action to be a violation of the PSA. When a rider wasn’t included in the fiscal 2016 agricultural funding bill, Agriculture Secretary Tom Vilsack vowed his agency would move forward with the blocked regulation. A recent update of a study conducted by Informa Economics of the proposed 2010 GIPSA Rule found that today it would cost the pork industry more than $420 million annually, with the majority of the costs related to PSA lawsuits brought under a “no competitive injury” provision. The PSA regulation and the two proposed rules are subject to a 60-day public comment period. (Click here to comment on the interim final rule by Feb. 21.)



New year, new regulations. As of Jan. 1, under directives from the U.S. Food and Drug Administration, food animal producers no longer are allowed to use medically important (to humans) antibiotics labeled only for growth promotion, and other uses of those same antibiotics will require a veterinary prescription. FDA’s Guidance for Industry 213 phased out the use of medically important growth promotion antibiotics, and the agency’s Veterinary Feed Directive (VFD) brings feed and water uses of medically important antibiotics under veterinary supervision. Veterinarians prescribing antibiotics need to have a veterinarian-client-patient relationship (VCPR), which includes knowledge of the animals, visits to the farm and follow-up evaluations or care. (For more information on Guidance 213 and the VFD, click here to read NPPC Chief Veterinarian Dr. Liz Wagstrom’s interview with Pork Network.)



The U.S. Department of Agriculture this week filed a motion to dismiss a lawsuit brought by the Humane Society of the United States (HSUS) against the agency over the sale by NPPC to the National Pork Board of the Pork. The Other White Meat® trademarks. NPPC sold the trademarks to the Pork Board in 2006 for about $35 million. It 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. In 2012, HSUS, a lone Iowa farmer and the Iowa Citizens for Community Improvement filed suit against USDA, claiming the trademarks were overvalued and seeking to have the sale rescinded. The U.S. District Court for the District of Columbia Circuit dismissed the suit for lack of standing, but a federal appeals court in August 2015 reinstated it, sending the case back to the District Court. But before any proceedings on the merits of the lawsuit, USDA inexplicably entered into settlement talks with HSUS. USDA conducted a valuation of the trademarks, finding their current worth is between $113 million and $132 million. Despite the nearly four-fold increase in value, HSUS decided to continue its lawsuit. In its a motion for summary judgment filed with U.S. District Court for the District of Columbia Circuit, USDA argues that the HSUS lawsuit lacks merit, is barred by the six-year statute of limitations, that the plaintiffs failed to establish standing to file the lawsuit or show that they were harmed by the sale of the Pork. The Other White Meat® trademarks and that the agency’s evaluation of the sale of the trademarks showed they provided significant value to the pork industry.



The House Thursday passed the “Regulations from the Executive in Need of Scrutiny (REINS) Act of 2017,” (H.R. 26), a measure that would require Congress to approve all new major regulations – ones with an economic impact of $100 million or more. Introduced by Rep. Doug Collins, R-Ga., the legislation would require federal agencies to submit their major regulations for congressional approval before they could go into effect, and both chambers of Congress would be required to accept or reject a rule within 70 legislative days. The president’s signature also would be required for any of Congress’ joint resolutions of approval on a major rule to take effect. NPPC strongly supports the legislation, which the House passed on a 237-187 vote. The bill now goes to the Senate for approval, and President-elect Donald Trump has indicated he will sign the REINS Act into law.



Legislation to permanently repeal the federal estate, gift and generation-skipping taxes was introduced this week in the House. NPPC strongly supports the measure, known as the “Death Tax Repeal Act,” (H.R. 198), and sponsored by Mac Thornberry, R-Texas. The estate tax is levied on the net value – less an exemption – of an owner’s assets transferred at death to an heir or heirs. For the 2016 tax year, the exemptions for the estate, gift and generation-skipping taxes are $5.45 million for an individual and $10.9 million for couples. Transferred estates valued at more than those figures are subject to a maximum tax rate of 40 percent on the amount of assets above those levels. Individuals and couples who give property during their lifetimes also are subject to the top tax rate of 40 percent for “gifts” that exceed the lifetime exemption amounts. But individuals and couples for 2017 may make gifts of up to $14,000 and $28,000, respectively, without reducing their lifetime exemption amounts, which for 2017 are $5.49 million and $10.98 million. (An individual who in 2017 gifts $25,000 to a relative, for example, would reduce his or her lifetime exemption by $11,000 – from $5.49 million to $5.38 million.) The generation-skipping tax applies to gifts and transfers in trust to, or for the benefit of, unrelated persons who are more than 37.5 years younger than the donor or to related persons more than one generation younger than the donor, such as grandchildren. The top tax rate of 40 percent is applied only if such gifts or transfers avoid the gift or estate taxes.



In a letter sent today to President-elect Donald Trump and Vice President-elect Mike Pence, 16 U.S. agricultural organizations, including NPPC, urged the incoming administration to maintain existing and to develop new export markets for U.S. agricultural products. Positive farm income would not be possible without access to foreign markets, trade promotion and trade agreements, the groups said. They pointed out that among the existing markets are Canada, China and Mexico – the three largest foreign customers of American agriculture. U.S. farm exports in fiscal 2016 were nearly $27 billion to China, more than $24 billion to Canada and almost $19 billion to Mexico. “Disrupting U.S. agricultural exports to these nations would have devastating consequences for our farmers and the many American processing and transportation industries and workers supported by these exports,” said the organizations. The groups also expressed a desire to work with the Trump administration on new fair trade agreements that will enable U.S. farmers to compete in some of the fastest-growing markets in the world, including, for example, Japan.



President-elect Donald Trump this week tapped Robert Lighthizer to be the U.S. Trade Representative for his administration. A private-practice attorney who mostly has represented the steel industry in trade cases, Lighthizer served as deputy trade representative during the Reagan administration. He would join a trade team – if confirmed by the Senate – that so far includes businessman Wilbur Ross, whom Trump has nominated as secretary of the Commerce Department, and Peter Navarro, who would lead the new National Trade Council.



The Federal Maritime Commission (FMC) is seeking public comments on a petition filed by a coalition of exporters, importers and transportation organizations, including NPPC, that request the FMC to promulgate a new rule prohibiting terminal operators and shipping lines from charging detention, demurrage and per diem fees when circumstances – such as labor disputes – don’t allow cargo to be picked up or dropped off within contracted times. Cargo owners and trucking companies normally are given a number of free days to pick up containers of imported goods from ports after they have been unloaded from ships. After that, they can be charged demurrage, a fee intended to ensure that containers are removed quickly and efficiently. In addition, detention and per diem fees can be charged if the cargo containers and the trailers used to haul them are not returned to the terminal within a specified time. The federal Shipping Act requires that the fees and related practices must be “just and reasonable.” The petition asks the FMC to adopt a policy that would require free days to be extended during times of port congestion, weather-related events, port disruptions or delays caused by government actions or requirements beyond the control of the parties picking up or returning containers. Demurrage and similar fees charged during such incidents would be declared “unreasonable.” In some cases, “compensatory” fees could be charged provided they do not exceed actual storage or equipment use costs. The fees became an issue in late 2014-early 2015 during work slowdowns at West Coast ports that caused severe disruptions in exports of pork and other goods. The proposed policy would apply to ocean carriers and marine terminal operators. (Click here for information on submitting comments in support of the petition.)



A wave of populist candidates are running for election in Europe this year, with elections in the Netherlands, France, Germany and Italy. Currently leading the polls in the Netherlands is Geert Wilders’ populist Party for Freedom, which advocates leaving the European Union (EU) and discontinuing use of the euro. In France, the National Front’s Marie Le Pen is an expected run-off candidate, where her party also wants out of the euro. German Prime Minister Angela Merkel is favored retain her post, however, the anti-EU Alternative for Germany Party is expected to enter the election for the first time. Italy’s new government may call for an election this year as soon as it amends its electoral law. If the populist Five Star Movement wins, it, too, promises to leave the euro.



Minnesota pork producer Terry Wolters, who serves on NPPC’s board of directors, recently was named Pork Promoter of the Year by the Minnesota Pork Board. Wolters is the western region manager for Big Stone Marketing at Pipestone System, where he has worked the past 19 years. “If you’re doing something you love, it really isn’t work. It is about priorities and the desire to support our community,” Wolters said. An active member of the Minnesota Pork Producers Association, he served as president of that organization in 2009. (Click here to read an interview with Wolters.)





Senate Republicans have scheduled six confirmation hearings for Cabinet nominees on Jan. 11, including: Sen. Jeff Sessions, R-Ala., for Attorney General; Betsy DeVos for secretary of Education; Elaine Chao for secretary of Transportation; Rep. Mike Pompeo, R-Kan., for CIA director; Rex Tillerson for secretary of State; and retired Gen. John Kelly, for secretary of Homeland Security. Check back with Capital Update next week for a recap of the hearings.



For questions, comments and suggestions or to subscribe, contact: Dave Warner, Director of Communications, NPPC, at (202) 347-3600, or via e-mail at