June 22, 2018

S. 3042, Agriculture Improvement Act of 2018

NOTEWORTHY

Background: The Agriculture Improvement Act of 2018 was favorably reported by a 20-1 vote of the Committee on Agriculture, Nutrition, and Forestry on June 13. Without reauthorization, the major Agriculture Department programs authorized by the 2014 farm bill will cease to exist on October 1.

Floor Situation: The Senate will likely consider S. 3042 during the week of June 25.

Executive Summary: The Agriculture Improvement Act renews the federal government’s major agricultural programs, including crop insurance, farm credit, and conservation. It also renews the Supplemental Nutrition Assistance Program, with some modifications to improve efficiency. The bill provides predictability on regulatory and trade issues while making investments in rural communities.

NOTABLE BILL PROVISIONS

Title I - Commodity Programs

Subtitle A: Commodity Policy

For the 2019 through 2023 crop years, provides eligible producers a choice between: (1) the Price Loss Coverage or Agriculture Risk Coverage County programs on a covered-commodity by covered-commodity basis; or (2) Agriculture Risk Coverage Individual program. If all producers on a farm do not make a unanimous election, payments are prohibited for the 2019 crop year and Agriculture Risk Coverage County is deemed the selection for 2020 through 2023.

Reauthorizes the Price Loss Coverage, Agriculture Risk Coverage County and Individual programs for the 2019 through 2023 crop years.

Repeals the transition assistance for producers of upland cotton program.

Subtitle B: Marketing Loans

Extends current law on nonrecourse marketing loans through 2023 and provisions for extra-long staple cotton through 2024.

Subtitle C: Sugar

Extends current law for loans and flexible marketing allotments through 2023.

Subtitle D: Dairy

Replaces the Margin Protection Program with Dairy Risk Coverage through 2023. Dairy Risk Coverage will, starting in the 2019 calendar year, provide payments to dairy operations when actual dairy production margins are less than established monthly threshold amounts. Allows producers to cover between 5 and 90 percent of their production. Producers elect to enter the program and pay fees and premiums. Small and medium farms will receive coverage discounts on insurance premiums.

Establishes a milk donation program to reimburse eligible dairy organizations for costs incurred for donating milk.

Subtitle E: Supplemental Agricultural Disaster Assistance

Allows the secretary to consider unique circumstances, including vaccination status, impacting unweaned livestock for eligibility under the Livestock Indemnity Program. Requires a reimbursement of 75 percent of the losses for beginning farmers, ranchers, and veterans under the Tree Assistance Program.

Subtitle F: Noninsured Crop Assistance Program

Establishes a milk donation program to reimburse eligible dairy organizations for costs incurred for donating milk.

Subtitle G: Administration

Limits eligibility for commodity and conservation program benefits to individuals with an adjusted gross income below $700,000 (down from $900,000).

Title II - Conservation

Subtitle A: Conservation Reserve Program

Authorizes the Conservation Reserve Program for five years and increases the maximum acreage to 25 million acres from 24 million acres. Targets the enrollment of marginal and environmentally sensitive land in the program. Aligns the program with market expectations by capping the rental rate for both general and continuous enrollments at 88.5 percent of the NASS county rental rate. Allows for incentive payments based upon commodity market prices.

Expands the use of haying and grazing during a state of emergency caused by wildfire or drought. Allows the secretary to permit harvesting and grazing on all land but restricts the secretary from authorizing harvesting and grazing if it would cause long-term damage to vegetative cover.

Subtitle B: Conservation Stewardship Program

Limits the Conservation Stewardship Program to 8.797 million acres and extends the program through September 30, 2027.

Subtitle C: Environmental Quality Incentives Program

Maintains the program’s role of helping agricultural producers to meet federal, state, and local regulatory requirements. Continues the function and flexibility of EQIP to address multiple natural resource concerns and agriculture production types. Sets the program’s livestock allocation at 50 percent, expands it to include grazing practices, and increases the wildlife allocation to 10 percent. Provides budget certainty for the program taking into account recent appropriations cycles. Provides funding for fiscal years 2019-2023 as follows: $l.473 billion; $1.478 billion; $1.541 billion; $1.571 billion; and $1.595 billion.

Subtitle D: Other Conservation Programs

Agricultural Conservation Easement Program: Provides modifications to increase the flexibility and execution of both the Agriculture Land Easement and Wetland Reserve Easement portions of the program. Provides an increase of funding to a total of $1.6 billion in mandatory funding over 10 years.

Regional Conservation Partnership Program: Extends the program through 2023. Encourages partnerships to leverage federal resources to implement conservation projects at the watershed level. Provides $200 million in mandatory funding for each fiscal year from 2018 through 2023. Adds authority to engage in multistate projects.

Working Lands for Wildlife: Provides producers certainty with regard to working lands and wildlife conservation practices by continuing the Working Lands for Wildlife model of conservation. Ensures that a landowner who voluntarily maintains certain wildlife practices for species habitat receives protections under the Endangered Species Act. The bill repeals a number of unused and unfunded conservation programs, including the National Natural Resources Foundation, Cranberry Acreage Reserve Program, Flood Risk Reduction Program, Integrated Farm Management Program, and Conservation Corridor Demonstration Program.

Title III – Trade

Provides a total of $259.5 million annually in mandatory funding for export programs.

Subtitle A: Food for Peace Act

Reauthorizes funding for food aid activities under the Food for Peace Act, which provides food assistance to countries around the world. Eliminates the 15 percent floor on sales of commodities by private voluntary organizations and cooperatives under the Food for Peace program. Allows the administrator of USAID to permit organizations to sell commodities distributed under nonemergency programs to generate proceeds to be used for program purposes.

Subtitle B: Agricultural Trade Act of 1978

Provides funding for the Priority Trade Promotion, Development, and Assistance program, which combines Market Access Program, Foreign Market Development Program, Emerging Markets Program, and Technical Assistance for Specialty Crops. Creates the Priority Trade Fund to allocate additional funds to any of the four major export programs to address immediate needs.

Subtitle C: Other Agricultural Trade Laws

Reauthorizes the Food for Progress program, which helps developing foreign economies gain a stronger agricultural sector. Permits some assistance for agricultural development activities to be disbursed as direct program support rather than the monetization of commodities. Reauthorizes the McGovern-Dole Program and allows up to 10 percent of funds to be spent on local and regional procurement.

Title IV – Nutrition

Subtitle A: Supplemental Nutrition Assistance Program

Authorizes appropriations for SNAP allotments through fiscal year 2023 and makes program improvements. Allows a state agency to certify households are SNAP eligible for up to three years, if the household adults all are elderly or disabled and have no earned income.

Improves the Food Distribution Program on Indian Reservations, which eligible individuals on Indian reservations may choose as an alternative to SNAP. Allows pilot projects for tribal organizations to purchase agricultural commodities for FDPIR, instead of USDA procuring them. The pilots will give the tribal organizations more control over meeting the food needs of participants in the program. Requires the secretary to pay at least 80 percent of the administrative and distribution costs for the food distribution program on Indian reservations, which reduces the tribes’ share of these costs. Current law does not have a percentage threshold. Permits administrative funds for FDPIR to be obligated for up to two fiscal years. Reauthorizes the traditional and locally grown food fund through fiscal year 2023.

Provides for more employer input into developing and evaluating states’ SNAP employment and training programs. Permits the Secretary to certify workforce partnerships, which are not subsidized; these partnerships are a way for groups of employers and non-profits to offer additional employment training, with minimal government burdens. Authorizes states’ completion, and USDA adoption, of successful pilot programs that place SNAP participants on paths to employment. Authorizes and provides funding for additional pilot projects that seek to help certain populations with barriers to employment, such as older workers and those who are disabled, homeless, recovering from substance abuse, or formerly incarcerated.

Prohibits state benefit issuers from assessing unauthorized fees on switching or routing electronic benefit transfer transactions. Permits farmers’ markets to use an EBT point of sale device at multiple locations using the same SNAP retailer authorization if they furnish compliance information to the secretary. Requires GAO to study EBT outages and the entities that provide EBT-related services to retail food stores and state-contracted EBT processors. Requires a comprehensive USDA review of state contract service agreements for EBT systems, including compatibility with USDA fraud prevention systems.

Requires USDA to issue guidance to help retail food stores choose EBT equipment and service providers that mitigate fraud. Permits USDA to require retailers to provide certain EBT-related information when they apply to be authorized retailers.

Includes reforms to the federal, state, local, and non-governmental roles in administering SNAP. Creates an interstate data-matching system that will guard against a person receiving benefits from more than one state at the same time. Requires state agencies to contact participating households to confirm information about their household in certain situations. One example would be if a data match shows information that conflicts with the information the agency received at the time it certified the household as eligible for benefits. Permits the agriculture secretary, through a pilot project in up to eight states, to test ways of verifying earned income at certification and recertification for households participating in SNAP. The pilot project ends by the end of fiscal year 2022.

Permits retail food stores to give SNAP-participating households incentives to buy fruit, vegetables, low-fat dairy, or whole grain foods.

Authorizes $20 million, available until expended, for pilot project grants to agencies or nonprofit groups that devise ways to help SNAP participants purchase and consume more fluid milk.

Eliminates $42 million in performance bonuses to state agencies for low and most improved quality control error rates. Replaces that arrangement with regulations to be promulgated by the secretary that would ensure the quality control system collects accurate data and produces statistically accurate results. Requires state agencies to give the secretary access to their systems and program records for audits and inspections. It authorizes the secretary to debar anyone who provides false information as they carry out the quality control system. Requires state agencies to test their systems for automatic data processing and information retrieval in a live production environment before they implement them.

Requires state agencies to use electronic reporting systems to evaluate nutrition programs and report program outcomes to the secretary annually. Increases coordination between the SNAP nutrition education program and the nutrition education program administered through the USDA’s National Institute of Food and Agriculture.

Gives food banks an opportunity to inform state agencies of their commodity needs and preferences. Allows state agencies to partner with food banks to establish projects to harvest, process, or package commodities donated by agricultural producers, processors, or distributors. The federal share is limited to 50 percent of the costs to harvest, process, or package the donated commodities. The bill provides mandatory funding of $4 million in each of fiscal years 2019 through 2023 for this purpose. Additionally, it requires the secretary to write guidance on minimizing waste of donated food.

Extends the authorization of appropriation for emergency food program infrastructure grants through fiscal year 2023. These grants, authorized at $15 million annually, go to emergency food providers to pay for costs related to collecting, storing, and distributing perishable food projects, giving recovered food to food banks, and similar activities.

Subtitle B: Commodity Distribution Programs

Extends the authorization of appropriations for both the commodity distribution program and the commodity supplemental food program through fiscal year 2023. It requires states to certify commodity supplemental food program participants for one to three years if they are 60 years or older. Authorizes surplus commodities to be distributed to special nutrition projects through fiscal year 2023.

Subtitle C: Miscellaneous

Extends the authorization of appropriations for the secretary of agriculture to purchase fruits and vegetables through fiscal year 2023. Extends through fiscal year 2023 the authorization of appropriations to expand the senior farmers’ market nutrition program. The program, authorized at $20.6 million annually, provides low-income seniors with fresh and local fruits, vegetables, and other items from farmers’ market and similar sources. Expands the Food Insecurity and Nutrition Incentive program to encourage SNAP participants to purchase fruits and vegetables. Creates a pilot project in which health care providers, through partnerships with nonprofit groups or state and local agencies, can offer fruits and vegetables to low-income people who have or are at risk for diet-related health problems.

Title V – Credit

Subtitle A: Farm Ownership Loans

Extends the authorization of appropriations for both the commodity distribution program and the commodity supplemental food program through fiscal year 2023. It requires states to certify commodity supplemental food program participants for one to three years if they are 60 years or older. Authorizes surplus commodities to be distributed to special nutrition projects through fiscal year 2023.

Subtitle B: Operating Loans

Reauthorizes farm operating loans and cooperative lending pilot projects.

Subtitle C: Administrative Provisions

Reauthorizes beginning farmer and rancher individual development accounts pilot program through 2023. Allows the secretary to make or guarantee up to $12 billion of farm ownership and operating loans for years 2019 through 2023.

Subtitle D: Miscellaneous

Requires Farm Credit System associations to adopt programs to provide credit and related services to young, beginning, small, and socially disadvantaged farmers and ranchers.

Title VI – Rural Development

Subtitle A – Consolidated Farm and Rural Development Act

Reauthorizes the Revolving Funds for Financing Water and Wastewater Projects Program through 2023. Increases to $200,000 the maximum amount of financing an eligible entity can receive to fund water and wastewater projects.

Prioritizes loan and grant funding for development of facilities to prevent and treat substance abuse.

Reauthorizes the Emergency and Imminent Community Water Assistant Grant Program at $50 million annually for 2019 through 2023.

Reauthorizes the Rural Business Development Grants program through 2023 at $65 million annually.

Allows no more than 10 percent of any rural development grant, loan, or loan guarantee to be used to fund broadband facilities and service.

Reauthorizes the Rural Microentrepreneur Assistance Program at $20 million annually from 2019 through 2023.

Subtitle B – Rural Electrification Act of 1936

Allows matching grants as eligible funding mechanisms for broadband deployment in rural areas. Codifies USDA’s definition of minimum acceptable broadband service of 25 Mbps download and 3 Mbps upload speed. Prioritizes funding to areas that have no existing residential broadband service. Allows the secretary to make or guarantee loans for cybersecurity and grid security improvements under title I of the Rural Electrification Act of 1936.

Subtitle C – Miscellaneous

Sets aside 20 percent of Distance Learning and Telemedicine grant funding for substance use disorder treatment services. Reauthorizes the program through 2023. Amends section 6407 of the Farm Security and Rural Investment Act of 2002 to allow for financing of renewable energy and storage systems.

Title VII – Research

Authorizes a total of $490 million in discretionary spending and $845 million in mandatory funding over five years on various education and research initiatives.

Subtitle A – National Agricultural Research, Extension, and Teaching Policy Act of 977

Reauthorizes several agricultural research and education programs, including grants and fellowships for education, veterinary services grants, and the National Agricultural Research, Extension, Education, and Economics Advisory Board.

Subtitle B – Food, Agriculture, Conservation, and Trade Act of 1990

Reauthorizes agriculture and research programs including the high-priority research and extension initiatives.

Subtitle C – Agricultural Research, Education, and Extension Reform Act of 1998

Reauthorizes a variety of research and grant programs, including the Specialty Crops Research Initiative, and grants for Youth Organizations like 4-H, Boy Scouts of America, and the National FFA Organization. Continues authorities for agricultural research at land-grant universities and through extension.

Subtitle D – Other Laws

Provides $200 million in mandatory funds for the Foundation for Food and Agriculture Research. Requires the secretary to study and report on the economic viability of domestic production and sale of industrial hemp.

Subtitle E – Food, Conservation, and Energy Act of 2008

Reauthorizes agriculture biosecurity programs.

Title VIII – Forestry

State and Private Forest Landscape-Scale Restoration Program: Creates a competitive grant program for financial and technical assistance for restoration of priority forest landscapes.

Good Neighbor Authority: Expands eligibility for the use of Good Neighbor agreements to tribes and counties to allow for forest and rangeland restoration activities to occur on respective land.

Cross-Boundary Wildfire Mitigation: Establishes a $20 million annual grant program for state foresters to carry out hazardous fuel reduction projects on federal and non-federal land.

Categorical Exclusion for Greater Sage-Grouse and Mule Deer Habitat: Authorizes development and use of a categorical exclusion from National Environmental Policy Act requirements for activities protecting, restoring, or improving greater sage-grouse or mule deer habitats in a sagebrush steppe ecosystem. Projects carried out under that categorical exclusion are capped at 3,000 acres.

Timber Innovation: Establishes a wood innovation grant program to promote research and development of wood products. Grant funds must be matched by an equal amount of non-federal funds.

Collaborative Forest Landscape Restoration Program: Extends the program and allows appropriations at $80 million annually through 2023.

Title IX – Energy

Reauthorizes the Biobased Markets Program at $3 million annually for 2019 through 2023. Reauthorizes several bioenergy and biofuels programs, including the Bioenergy Program for Advanced Biofuels ($15 million annually for 2019 through 2023); the Biodiesel Fuel Education Program; and the Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance program.

Repeals the Repowering Assistance Program and the Rural Energy Self-Sufficiency Initiative.

Title X – Horticulture

Establishes a mandatory National Organic Program import certificate and tracking system. Increases authorization for the National Organic Program to $100.5 million total between 2019 and 2023. Requires a 2/3 vote of the National Organic Standards Board for a decisive vote on what to include on the organic “National List.”

Requires the secretary to modernize international trade tracking and data collection systems for organic products to aid in inspection, trade data collection, or enforcement of trade requirements of organic products.

Reauthorizes the Specialty Crop Block Grants program through fiscal year 2023.

Allows states to regulate hemp growth and production. Requires states and tribes without USDA approved plans regarding hemp growth and production to follow applicable federal laws and regulations.

Title XI – Crop Insurance

Clarifies conditions for voluntary conservation practices, including cover crops, to be considered good farming practices for purposes of federal crop insurance. Defines underserved producers as beginning farmers or ranchers, veteran farmers or ranchers, or a socially disadvantaged farmer or rancher.

Allows the Federal Crop Insurance Corporation to carry out research and development to improve data and policies.

Title XII – Miscellaneous

Subtitle A: Livestock

Reauthorizes the National Animal Health Laboratory Network at $30 million annually from 2019 through 2023. Establishes various programs to address animal disease preparedness, including the National Animal Vaccine and Veterinary Countermeasures Bank.

Requires a USDA study on the feasibility of establishing a Livestock Dealer Statutory Trust, including analysis of the potential impacts a trust would have on livestock producers, dealers, markets, financiers, and other parties in the livestock sector.

Subtitle B: Agriculture and Food Defense

Requires a process be developed for identification and responses to diseases of concern in plants or animals. Codifies the National Plant Diagnostic Network, which is used to detect plant disease and pest outbreaks.

Requires consideration of the negative impact on research that may occur when biological agents or toxins are placed on a watch list, as well as the risk of not placing them on the list.

Subtitle C: Historically Underserved Producers and Limited Resource Producers

Merges several outreach programs for beginning and socially disadvantaged farmers and provides $50 million in mandatory funding and $50 million in appropriations annually.

Establishes a USDA Tribal Advisory Committee to advise on tribal agricultural topics.

Directs the secretary to establish an Office and Advisory Committee on Urban Agriculture and Innovative Production and provides competitive grant authority to encourage development of urban agriculture.

Subtitle E: Other Miscellaneous Provisions

Provides $3 million per year in appropriations for 2019 through 2023 for a grant program to provide emergency and transitional housing assistance for victims of domestic violence and their pets. Amends stalking and protection order rules to include crimes targeting pets and allows restitution to cover veterinary care needed for victims’ pets.

Adds South Carolina to the Virginia/Carolina peanut producing region for the purpose of appointing members of the Peanut Standards Board.

Creates a secure data collection system to allow for analysis of the effectiveness of conservation practices.

Subtitle F: General Provisions

Expedited Exportation of Certain Species: Instructs the director of the Fish and Wildlife Service to issue a proposed rule to amend FWS regulations pertaining to export permission requirements for certain harvested sea life intended for human and animal food.? Export-licensing requirements currently in place can result in delayed delivery to foreign markets of highly perishable sea life.

Baiting of Migratory Game Birds: Requires the secretary of the interior, in consultation with the secretary of agriculture, to revise regulations clarifying that certain practices for rice producers, when carried out as part of a normal agricultural operation, do not constitute baiting.?

Trust Funds: Continues funding for calendar years 2019 through 2023 for the Pima Agriculture Cotton Trust Fund and the Agriculture Wool Apparel Manufacturers Trust Fund, as well as Wool Research and Promotion, and makes technical updates and clarifications. The trust funds are used to offset duties applied to cotton and wool products. Also establishes an Emergency Citrus Disease Research and Development Trust Fund, with funding for fiscal years 2019 through 2023, to support research and development activities to combat citrus diseases and pests.

Hemp: Amends the Controlled Substances Act regarding industrial hemp.

ADMINISTRATION POSITION

A Statement of Administration policy is not available at this time.

COST

CBO estimates that S. 3042 would, relative to baseline spending, increase net direct spending by $1.4 billion from 2019 through 2023 and decrease net spending by $0.1 billion from 2019 through 2028. The existing programs that the bill continues are a part of the CBO baseline, and CBO projects those programs will cost $387 billion over the five-year period of fiscal years 2019 to 2023.