Congress resets clock on budget woes

Congress resets clock on budget woes

'Kentucky kickback' raising budget for Olmstead dam project makes it into final budget deal but may be overstated.

PRESIDENT Barack Obama signed a bill passed by both the House and Senate to reopen the government until Jan. 15 and raise the debt ceiling until Feb. 7.

The three-week, highly partisan battle to address both of these issues ultimately led to short-term relief and a resetting of the clock.

The bills, each of which passed its respective chamber with Democrat and Republican votes, ensured that federal services, including those provided by the U.S. Department of Agriculture, came back online.

With specific regard to USDA services, it is still unclear how and in what order the agency will reopen its regional and local offices and at what speed services provided through operating units like the Farm Service Agency (FSA) will return to normal working operation.

Local reports indicated that FSA offices were open for business last Thursday, but similar to other government positions with 13 days off the job, it will take time for staff to catch up on missed days in the office.

USDA announced that selected reports published through the National Agricultural Statistics Service and the World Agricultural Outlook Board would be postponed, including "Crop Production" and "World Agricultural Supply & Demand Estimates." The next scheduled release of these reports will occur Nov. 8.

 

'Kentucky kickback'

In an unexpected development, the measure passed by the House and Senate to reopen and fund the federal government also included an increase in funding for a waterway project.

The funding authorization for the Olmsted Locks & Dams project in Kentucky and Illinois was raised from $775 million to $2.9 billion — a move welcomed by the Waterways Council, which includes agricultural associations.

Olmsted is often called the poster child for government bureaucracy and the impact of rising costs and delayed project deadlines. Mike Steenhoek, executive director of the Soy Transportation Coalition, said the original cost estimate on the project was $775 million, and now it has increased to $3.1 billion.

Steenhoek noted that the Army Corps of Engineers is working to make progress, albeit slowly, on the Olmsted Lock & Dam. However, Section 902 of the Water Resources Development Act of 1986 imposes maximum costs on construction projects. When cost escalations occur, Congress frequently has to provide permission to raise the Section 902 limit.

The current spending limit on the Olmsted Lock & Dam is $1.56 billion. The deal raises the limit to $2.9 billion, which is more in line with the current cost estimate.

The rider has been called the "Kentucky kickback," and criticism was pointed at Senate minority leader Mitch McConnell (R., Ky.) for allowing the provision to make it in the final bill.

Steenhoek said it was Sen. Lamar Alexander (R., Tenn.) who requested that the Section 902 limit be included in the budget deal. "This is an issue that has broad bipartisan support, and it is not, in any way, an earmark," Steenhoek added.

The provision was included in both the Senate-approved and House committee's waterway bills. However, there was concern that the final bill would not become law before the Section 902 limit was reached, likely in November, which would result in closing the project.

"Bottom line: This provision basically allows work on this project to continue," Steenhoek said. "No new funds are being allocated to Olmsted. The same sources of funding (the Inland Waterways Trust Fund and matching funds from the U.S. Department of Treasury) are paying for the construction work."

The House is expected to begin floor debate for its Water Resources Reform & Development Act, which could be as early as this week.

 

Renewable fuels

During the shutdown, a leaked report on the Environmental Protection Agency's proposed 2014 renewable fuel obligation caused chaos in the marketplace, with information stating that levels would be significantly lower than many had expected.

EPA Administrator Gina McCarthy released a statement Oct. 11 that said the Obama Administration remains firmly committed to furthering the development of all biofuels.

"At this point, EPA is only developing a draft proposal. The agency has made no final decision on the proposed renewable fuel standards for 2014," McCarthy said.

In addition, the statement said "no decisions will be made on the final standards without a full opportunity for all stakeholders to comment on the EPA's proposed 2014 renewable fuel standards and be heard on how to best foster a growing biofuels industry that takes into account infrastructure- and market-related factors."

Tom Buis, chief executive officer of Growth Energy, said now that the government has reopened, he hopes that the U.S. Department of Justice as well as the Commodity Futures Trading Commission will be able to follow up and investigate the unverified leaked EPA document and "determine if this was an attempt to manipulate markets such as corn futures, ethanol futures and/or (renewable identification number) markets."

Volume:85 Issue:43

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