Capital Update — For the Week Ending October 18, 2024

NEWS 10/18/24

Supreme Court hears arguments in Clean Water Act case | Studies on rodenticide uses needed before finalizing new rule | NPPC comments on USTR's 2025 National Trade Estimate Report | NPPC's engages in U.N.'s World Food Forum | NPPC's veterinarians participated in USAHA conference | USDA issues advanced notice of proposed rulemaking on fed cattle | Pork Leadership Institute class travels to Mexico

Supreme Court Hears Arguments in Clean Water Act Case

What happened: NPPC argued before the U.S. Supreme Court as part of a broad coalition of mining companies, small businesses, manufacturers, and the U.S. Chamber of Commerce, defending the city of San Francisco in a Clean Water Act (CWA) case that could have major ramifications for livestock and other agricultural interests.

At issue is language in a wastewater discharge permit for San Francisco's combined sewer system that handles both sewage that they can control (human waste), as well as street waste that flows into the system during and after a rainfall. Traditionally, a permit (in this case, a National Pollutant Discharge Elimination System, or NPDES, permit) would provide clear direction on what can and can't be "discharged" into a Water of the United States (for example, the San Francisco Bay). While EPA's permit told San Francisco the specific types and levels of pollutants it could discharge when the system was overwhelmed, it also included impossible to meet language that prohibited the city from impacting "water quality" generally. Of course, any discharge would impact water quality, even within the general limits of the permit, placing San Francisco in a situation where compliance was impossible.

NPPC's take: NPPC's brief pointed out the multitude of problems in EPA's approach and the difficulty it could cause nationwide for farmers and other businesses, who would be unable to comply and be subject to both EPA enforcement as well as "citizen suits" filed by well-funded activist groups and trial lawyers.

NPPC, along with the city of San Francisco, is asking the Supreme Court to reverse the U.S. Court of Appeals for the Ninth Circuit ruling, which upheld EPA's preposterous and impossible to meet standards.

Why it matters: NPDES permits are the backbone of the CWA's operation. Hundreds of thousands of businesses obtain these permits and must comply with their onerous reporting requirements. Under the CWA, Congress long ago decided that agricultural stormwater - nutrients applied to a field to fertilize crops that might inadvertently run off after it rains - wouldn't be subject to permitting because of the importance of growing crops, the difficulty of controlling what runs off a field, and the minimal impact it posed to water quality overall. Nevertheless, activists continue to try to employ creative ways to force livestock producers to obtain a permit - not to protect water quality but to harass farmers though litigation and other attacks.

NPPC has successfully fought, including winning an important 9th Circuit victory earlier this month, to stop these efforts to impose requirements that livestock producers obtain NPDES permits that are otherwise unnecessary. However, if a producer does need to obtain a permit under the CWA or any other statute, the express terms of the permit should not conflict with itself and be impossible for the farmer to comply with. Under the CWA, this could result in legal obligations for producers that carry the risk of significant fines (over $60,000 per day, per violation) and potential criminal charges for their violation.

Before the Supreme Court, EPA shockingly argued that farmers like the current system and "trust" EPA to use its discretion in how it prosecutes these cases. But as Supreme Court Justice Brett Kavanaugh pointed out, farmers do not trust EPA, and in fact, filed a brief explaining their concerns to the court. Beyond the risk of EPA enforcement, if these standards were to be upheld and established, pork producers and anyone else holding these permits could see an immediate increase in activist and trial lawyer attacks seeking to collect large financial judgments against farmers who are otherwise fully obeying the law.

Studies on Rodenticide Uses Needed Before Finalizing New Rule

What happened: In follow-up comments to ones filed in February, NPPC and 10 other livestock and poultry organizations asked the EPA to gather more information before moving forward with its proposed regulation of rodenticides used on farms to control vermin.

EPA's rule would limit the purchase and application of rodenticides to certified applicators and, in some states, individuals supervised by certified applicators to reduce or eliminate rodenticides' effects on non-target species, including threatened and endangered species under the Endangered Species Act. The regulation also calls for additional, detailed recordkeeping for farm rodenticide use.

The groups reiterated their call for "serious studies" on specific uses of rodenticides that may cause harm to endangered species.

"Rodenticides are just too important to our country's farms and ranches, as well as the numerous critical societal objectives agriculture serves, for the [regulation's] policies and measures to move forward as proposed," the organization commented.

The groups noted that farmers and ranchers rely on their state departments of agriculture and the Land Grant University/Extension network for science-based best practice recommendations to ensure responsible use of rodenticides.

Why it matters: Rodenticides are an important part of the agriculture industry. Uncontrolled mice and rats have a detrimental effect on the environment as well as farms and ranches. Along with crop destruction, rodents transmit bacteria and viruses that can infect and cause animal diseases. They also consume and spoil feed, which increases the environmental footprint of farms and food consumers. Fewer rodents mean less fuel, fertilizer, and water are needed to raise animals and crops, reducing a farm's environmental footprint and lowering costs.

NPPC Comments on USTR's 2025 National Trade Estimate Report

What happened: NPPC submitted comments to the Office of the U.S. Trade Representative (USTR) on its 2025 National Trade Estimate (NTE) Report on Foreign Trade Barriers, which details significant barriers to U.S. exports of goods and services, U.S. foreign direct investment, and U.S. electronic commerce in important export markets.

The report highlights agricultural trade barriers such as burdensome facility registration requirements, SPS regulations, import licensing requirements that are not science-based, and a lack of adherence to international science- and risk-based standards.

NPPC's take: The NTE Report helps U.S. negotiators in their efforts to reduce or eliminate trade barriers and is a valuable tool for enforcing U.S. trade laws and agreements. In its comments for the most recent report, NPPC listed 20 countries and the European Union as having varying tariff and/or non-tariff barriers limiting U.S. pork exports. Among them:

• Australia - Sanitary and phytosanitary (SPS) barriers related to Porcine Reproductive Respiratory Syndrome (PRRS).
• China - Ban on the feed additive ractopamine rather than follow the international U.N. Codex commission's maximum residue limit (MRL).
• India - Export certificate requirements.
• Japan - Gate price mechanism that limits pork imports.
• South Africa - Prohibition on pork offal and trichinae-related freezing of pork.
• Taiwan - Country-of-origin labeling requirements and non-science-based MRLs for animal health products used in hogs.

Why it matters: Published annually since 1986, the NTE looks at market barriers to which 99% of U.S. goods and 66% of U.S. services are exported. Trade obstacles include tariffs, technical barriers to trade, SPS measures, government procurement policies, intellectual property protections - or lack thereof - and subsidies.

Trade barriers limit U.S. agricultural exports, vital to America's farmers, ranchers, and the overall U.S. economy, supporting about 1 million U.S. jobs. For pork producers, pork exports contribute significantly to their bottom line. Last year, producers shipped more than $8.2 billion of product to foreign destinations, and those exports equated to an average of $63.76 in value for each hog marketed.

NPPC's Dr. Carr Engages in U.N.'s World Food Forum

What happened: NPPC's Dr. Trachelle Carr, senior director of international technical affairs, attended the U.N.'s Food and Agriculture Organization (FAO) World Food Forum in Rome, Italy. In collaboration with World Food Day, this year's event was focused on providing "good food for all."

As part of the food forum, Dr. Carr participated in the third edition of the FAO Science and Innovation Forum (SIF), which serves as a platform for dialogue, knowledge exchange, and collaboration among scientists, innovators, policymakers, farm organizations, and stakeholders from diverse sectors.

The SIF technical sessions discussed the latest advancements and applications in biotechnology to enhance agricultural productivity, resilience, and sustainability; innovations and community-led initiatives that can drive the transformation of local and regional agrifood systems; and the role of digital technologies, such as precision farming and artificial intelligence, in revolutionizing agricultural practices and improving supply chain efficiencies.

NPPC's take: As a first-time participant, NPPC's engagement in these international forums/initiatives involves collaborating with and learning from international counterparts on behalf of the U.S. pork industry to advance science-based regulations and direct international guidelines to prevent the implementation of other agenda-driven policies that would restrict U.S. farming practices.

NPPC supports using technologies to increase pork production while reducing the industry's carbon footprint. It opposes arbitrary, non-science-based trade barriers that stifle innovation and could potentially impact the industry for future generations. NPPC will continue to engage in FAO-related meetings with a sustainability focus.

Why it matters: Launched in 2021 and facilitated by FAO, the World Food Forum is an independent, global network of partners collaborating to foster a movement that empowers young people around the world to shape agrifood systems to help achieve the U.N.'s Sustainable Development Goals. The forum wants to advance "bold and actionable solutions to catalyze the transformation of our agrifood systems." and to ensure that food is safe and affordable for everyone.

NPPC's Drs. Forseth, Johnson Participate in USAHA Conference

What happened: NPPC's Dr. Anna Forseth, director of animal health, and Dr. Ashley Johnson, director of food policy, participated in the United States Animal Health Association (USAHA) meeting in Nashville.

Dr. Forseth and Johnson led discussions to educate and learn from state and federal regulatory officials, as well as attendees from allied industries. Discussions topics included H5N1 Influenza, African Swine Fever (ASF), porcine epidemic diarrhea virus (PEDv), the U.S. Swine Health Improvement Plan, traceability, gene editing, antimicrobial use and resistance, one health, food safety, development and retention of veterinarians in regulatory medicine, and more.

The USAHA swine subcommittee, which includes Dr. Forseth and Johnson, developed draft permitting guidelines for licensed dealers (buying stations, markets) to allow continuity of business following an ASF detection. These guidelines address conditions that would be required by the dealer facilities, including biosecurity, surveillance, and reporting requirements. The guidelines were supported by the USAHA membership and will be submitted to USDA's Animal Plant Inspection Service for consideration.

NPPC's take: The development of such guidelines during a foreign animal disease response would take a considerable amount of time. It is imperative that producers, state regulatory officials, and federal regulatory officials continue to work together proactively to establish the core principles of testing, traceability, and permitting requirements.

Why it matters: USAHA is a forum for communicating and coordinating among state and federal governments, universities, the livestock industry, and other concerned groups on animal health, disease control, animal welfare, food safety, and public health. The organization serves as a clearinghouse for new information and methods, which may be incorporated into laws, regulations, policies, and programs. It develops solutions for animal health-related issues based on science, new information and methods, public policy, risk/benefit analysis, and the ability to develop consensus on issues.

USDA Issues Advanced Notice of Proposed Rulemaking on Fed Cattle

What happened: The U.S. Department of Agriculture's Agricultural Marketing Service (AMS) issued an advanced notice of proposed rulemaking (ANPR) and is seeking comment on several possible interventions involving Alternative Marketing Agreement (AMA) base prices and the development of new benchmarking alternatives. The public may submit comments until Dec. 10, 2024.

AMS issued the ANPR, it said, after some cattle producers raised concerns about meatpackers using regional cash or spot prices - negotiated trades - as the external benchmark for base prices under fed cattle AMAs. Now used in more than 70% of transactions, AMAs - contracts, formula sales, and grid sales - can help cattle producers manage risk and reduce costs. However, the vast majority of AMA price formulas are set using the value assigned to live cattle in negotiated trades, and the negotiated market has become increasingly thin.

AMS is concerned that certain regional negotiated cash-fed cattle prices may be unreliable benchmarks and that the design of certain AMS reports is not appropriate for use in formula pricing arrangements. The ANPR outlines several options for regulating AMAs, seeks comments on whether one or a combination of options would help remove barriers to price discovery or market transparency, and attempts to address producer concerns without undermining the benefits of AMAs for producers.

NPPC's take: NPPC recognizes the importance of timely, reliable market information made possible under the Livestock Mandatory Price Reporting program, which is the sole source of public market information on sales to packers of cattle, swine, lambs, and the subsequent sale of meat products. The reports, published by AMS through LMR, have become an integral part of daily business in the pork industry and are used in most marketing agreement price formulas.

It is critically important that the values referenced in hog pricing formulas are representative of current supply and demand conditions. NPPC supports the right of producers to enter into agreements of their choosing and is considering what, if any, implications potential rulemaking related fed cattle markets could have for pork producers.

Pork Leadership Institute Class Travels to Mexico

What Happened: The latest Pork Leadership Institute (PLI) class, the joint training program of NPPC and the National Pork Board designed to develop future pork industry leaders, traveled to Mexico. NPPC Vice President of Government Affairs Maria C. Zieba; Cole Spain, NPPC's manager of international affairs; and Lucy Russell, NPPC's manager of producer engagement, accompanied the 18 PLI participants on the trip and met with several of the country's officials and pork producers.

Participants received updates on global pork markets, trade policy updates, and the Mexican economy and political landscape. They went to the Chamber of Deputies, the lower house of Mexico's Congress of the Union, and visited a traditional market and several modern supermarket chains.

This international trip is the culmination of participants' year-long training process, where they demonstrate their leadership skills as they gain understanding with trading partners, learning about their culture, commerce, and citizens.

Why it matters: The PLI class went to Mexico to learn about the importance of trade to the U.S. pork industry, which last year shipped more than 25% of its total production to foreign destinations, including its No. 1 market - Mexico.

PLI participants at the Chamber of Deputies.

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Animal Well-being | Biosecurity | Capital Update | Capital Update | Commerce | Environment & Energy | Exports (general) | Mexico | News | Trade | Water quality