Can you see it?
It’s right there.
Really, it’s on page 2033 of the 2232-page, $1.3 trillion omnibus appropriations bill passed by Congress and signed by President Donald Trump March 23.
It’s the fix of Section 199A of the federal code to equalize tax treatment of cooperatives and non-cooperatives. The bill passed the House 256-to-167 March 22, while the Senate approved it 65-to-32 in the early morning hours of March 23.
The Tax Cuts and Jobs Act passed in December 2017 was meant to spur economic growth across the American economy, including the agriculture sector and positive results can already be felt, supporters say.
However, the unintended consequences of Section 199A, originally designed to preserve benefits for cooperatives and their patrons, disadvantaged the independent operators in the same industry. Many members of the agriculture community began to raise questions about the potential market effects on cooperatives and independent grain-related businesses.
Hence, the solution passed by Congress was part of the omnibus bill.
“Fixing Section 199A was a fundamental issue of fairness. We should not be picking winners and losers through the federal tax code by favoring one side over another,” said Secretary of Agriculture Sonny Perdue in a statement following the bill’s signing into law. “During my travels across the country, I met with countless farmers and members of the agriculture community who were affected by this so-called ‘grain glitch.’ I applaud Congress for hearing their voice.”
Senate Appropriations Committee Chairman Thad Cochran, R-MS, who was set to retire from the Senate April 1, said in a statement this last legislation of his Senate career—an omnibus appropriations measure—will direct significant new resources toward strengthening national defense, improving border security, promoting education and economic development and rebuilding infrastructure.
“This important legislation reflects the realities now facing our nation. We must begin to reinvest in our defense. The country’s infrastructure needs rebuilding and we must protect our citizens from the problems associated with our vulnerable borders,” Cochran said. “All Americans will see benefits from this legislation and I’m pleased to finish my career with the enactment of an appropriations bill.”
Senate Agriculture Committee Chairman Pat Roberts, R-KS, voted in favor of the bill, saying in a statement, “I am pleased we were able to negotiate a fix to the unintended consequences of the tax reform bill in regard to section 199A and farmer co-ops, which was having harmful effects on the market.”
National Grain and Feed Association President Randy Gordon commended Congress for the vote on the bill that includes the Section 199A fix and expressed appreciation to the dedicated tax experts from NGFA-member companies—half derived from cooperatives and half from private/independent organized businesses—who provided “sound, factual, advice and analysis in a totally professional and above-board process throughout the two-plus months that it took to develop and analyze the real-world impacts of an equitable concept to correct Section 199A.”
He also praised what he called the “indispensable and critical involvement” of hundreds of NGFA-member companies that took the time to repeatedly contact their members of Congress to urge enactment of the solution.
NGFA noted that great care was taken by stakeholders to develop a concept that provides tax relief to farmers, as envisioned in the tax-reform law, while restoring to the maximum extent possible the competitive balance of the marketplace. NGFA verified that the final language to correct Section 199A included in the omnibus legislation accurately reflected the concepts developed by NGFA and NCFC.
ELD delay
The omnibus bill also prohibits funding to implement regulations requiring livestock haulers to install electronic logging devices—ELDs— on their trucks to monitor time spent driving. This temporary exemption will allow the livestock industry more time to work with the U.S. Department of Transportation to address the challenges facing livestock haulers. The livestock sector has been concerned for the welfare of their animals, exposure to potential disease threats and costs to the industry that will come about should they be required to abide by the ELD regulations.
Rural infrastructure
The bill allocates $600 million in rural broadband for the U.S. Department of Agriculture. According to the Federal Communications Commission, 80 percent of the 24 million American households that do not have reliable, affordable high-speed internet are in rural areas. The funding is for a new pilot grant and loan combination program, administered by the USDA, to provide broadband to underserved rural and tribal areas. This investment will leverage nearly $1 billion in total new rural broadband projects.
“It is unacceptable that millions of people in rural America currently lack access to reliable broadband,” Perdue said in a statement. “I have travelled extensively across the nation and everywhere I go I have heard how important increased broadband is to rural Americans. Reliable and affordable internet e-connectivity truly is the key to productivity in the 21st century and I’m pleased Congress recognized this need and has provided this critical funding. The inclusion of this money dovetails nicely with President Trump’s bold agenda to restore and expand the nation’s crumbling infrastructure, which will include massive investment in rural America.”
Other provisions
The bill includes other provisions related to agriculture and forestry:
- The Fair Agricultural Reporting Method Act exempts air emissions from animal waste from being subject to the Comprehensive Environmental Response, Compensation and Liability Act reporting requirements. Farmers and ranchers were never intended to be subject to this requirement and without congressional action livestock and poultry farms with roughly 200 head of cattle or a pig farm with two swine finishing barns would potentially be subject to the reporting requirement.
- A solution to address the U.S. Forest Service budget for wildfire suppression and ends the practice of “fire-borrowing,” which establishes a fund of more than $2 billion a year, which would increase modestly over a 10-year period. Access to the fund would become available when the cost of wildfires exceeds the 10-year average cost of wildfires, which would be set at the 2015 level. The funding fix will not take effect until FY2020 meaning current law would remain in effect through FY2019.
- An extension of current law of the Pesticide Registration Improvement Act through Sept. 30, 2018.
Reaction
In his statement following the bill’s passage, National Cattlemen’s Beef Association President Kevin Kester reflected the majority of agricultural groups’ thinking on the bill.
“Thanks to our dues-paying NCBA members and the hard work of our team in Washington, this omnibus spending bill includes several provisions that represent major victories for America’s cattle producers. First, we were able to kill the notion that our farms and ranches will be regulated like toxic Superfund sites under the CERCLA law,” Kester said.
“Second, we were able to secure another delay of the Electronic Logging Device mandate for livestock haulers. And finally, we were able to get Congress to address the 199A tax issue.”
National Farmers Union President Roger Johnson issued a statement responding to the omnibus language:
“Farmers Union is deeply disappointed that Congress included harmful modifications to Section 199A in this must-pass legislation. Reverting back to Section 199, in light of double-digit corporate tax relief, leaves farmers and their cooperatives worse off than prior to the passage of the Tax Reform and Jobs Act,” Johnson said.
“There were meaningful bipartisan compromises to remedy challenges associated with 199A that would have ensured farmers and cooperatives were not worse off and that small private elevators were not disadvantaged. Those compromises were disregarded in favor of corporate interests.
“Further, the Congressional Budget Office projects that these modifications in the omnibus would raise $100 million for the federal government, which will come out of the pockets of farmers and their cooperatives. Congress can and should do better for farm families and rural communities.”
Larry Dreiling can be reached at 785-628-1117 or [email protected].
