Capital Update – For the Week Ending January 26, 2024

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In this week’s National Pork Producers Council (NPPC) Friday recap: NPPC takes stand as U.S. Supreme Court hears arguments in federal regulations case; EPA proposes new packing plants effluent limits; and lawmakers propose two-year freeze on mandated H-2A wages. Take a deeper dive below.

NPPC Takes Stand as U.S. Supreme Court Tackles Federal Regulations Case

What happened: The U.S. Supreme Court last week heard oral arguments that could dramatically reshape the landscape of how federal regulations are promulgated and interpreted. NPPC joined other agricultural organizations and business groups in submitting a friend-of-the-court brief in this pivotal case.

The case revolves around an interpretation by the National Marine Fisheries Service (NMFS) of a law affecting commercial fishing – specifically, whether herring fishermen are required to pay for the federal monitors on their boats. The U.S. Court of Appeals for the District of Columbia Circuit sided with NMFS, citing the 1984 Supreme Court case, that granted deference to agencies’ interpretation of statutes – the so-called Chevron deference.

NPPC’s take: In their brief, NPPC and the other organizations urged the high court to overrule the Chevron decision, as it “puts a heavy thumb on the scale on the side of agencies when a less constrained judicial inquiry would favor” those challenging a law’s interpretation. “Chevron incentivizes a finding of statutory ambiguity, rather than a deep inquiry into the meaning of statutory language.”

Why it matters: Chevron deference has been the foundation of the dramatic growth in federal regulations and the transfer of near unlimited power to unelected federal bureaucrats that has taken place over the last 40 years. In the brief, NPPC and its partners argue that the judicially created “Chevron deference” rule allows agencies and courts to avoid having to do their job and instead gives federal agencies carte blanche to take whatever action bureaucrats desire, rather than what Congress may have reasonably intended.

EPA Proposes New Effluent Limits for Packing Plants

What happened: The U.S. Environmental Protection Agency (EPA) proposed new, significantly more stringent permitting guidelines under the Clean Water Act for meatpacking plants. If adopted, the new rule would apply to many of the nation’s 5,000 meat and poultry plants, requiring them to upgrade facilities and install costly new wastewater treatment technologies, impacting the operation of meat and poultry packing and processing plants nationwide.

EPA offered two options to broaden the proposal and cover more facilities, including indirect dischargers, that would have a wide range of impacts, including potentially forcing the closure of at least 16 meat and poultry processing plants and imposing stringent new regulations, with direct costs in excess of $1 billion dollars on packers and processors. This will lead to even more costs downstream for pork producers who might once again face disruption in packing capacity.

The rulemaking stems from lawsuits filed by a coalition of environmental and animal rights activist groups in 2019 and 2022, including Earthjustice, Waterkeeper Alliance, the Humane Society of the United States, and the Animal Legal Defense Fund.

NPPC’s take: At a public hearing this week, Michael Formica, NPPC’s chief legal strategist, criticized EPA for review the hundreds of pages of proposed regulations prior to the public hearing.

Formica also voiced concerns over the EPA’s lack of engagement with farmers who will be affected by the regulation and for economic estimates that are deficient and “don’t adequately account for the harm that will be caused to farmers and the nation’s agricultural sector.”

A second public hearing is scheduled for Jan. 31 at EPA headquarters in Washington, DC. EPA has provided 60 days for interested parties to submit comments. NPPC is seeking an extension of time on the comment period, as well as additional public hearings outside of Washington, D.C.

Why it matters: While the agricultural industry and the meat and poultry processing sector support clean water efforts, regulations must not place costly undue burden on the regulated community. At a time when producers are facing an unprecedented economic crisis, EPA’s proposal will significantly disrupt packing capacity and inflict additional financial harm on producers, potentially leading to further industry concentration and the loss of independent producers.

Lawmakers Propose Two-Year Freeze on Mandated H-2A Wages

What happened: U.S. Congressman John Moolenaar (MI-02) introduced H.R. 7046, the “Supporting Farm Operations Act,” calling for a two-year freeze on the adverse effect wage rate (AEWR) for H-2A nonimmigrant workers, at 2023 levels. The H-2A visa program allows agricultural employers to bring a limited number of foreign nationals to the United States to fill temporary seasonal farm jobs.

The U.S. Department of Labor (DOL) requires H-2A workers and those in corresponding jobs be paid the highest of either the AEWR, the applicable prevailing wage, the collective bargaining rate, or the federal or state statutory minimum wage.

The AEWR is set annually by DOL to prevent adverse effects on employment opportunities for U.S. workers. The 2024 AEWR for Michigan, for example, is set at $18.50 an hour – among the highest in the country. In addition to a mandated wage, the H-2A visa program requires agricultural employers to pay the administrative costs of hiring H-2A laborers and their daily transportation and housing expenses.

A letter from 75 House members sent to the chairmen and ranking members of the Senate and House appropriations committees urged freezing the AEWR at 2023 levels.

Why it matters: With U.S. agriculture facing severe labor shortages, reliance on H-2A guest workers is increasing. For producers who are able to employ H-2A guest workers, AEWR wage mandates could increase production costs at a time when the industry has seen them increase more than 50% since the fall of 2022.

NPPC’s take: NPPC seeks effective reform of the H-2A program to enable the pork industry to build a strong workforce, including addressing year-round workforce needs and appropriate wage policies. Currently, the H-2A visa program does not allow for hiring of the year-round workers the industry needs, although some producers use H-2A in a limited capacity.