I had the chance to talk with Colin Woodall, the National Cattlemen’s Beef Association’s (NCBA) point man in Washington, D.C., a week ahead of the election. Woodall was confident at that time that the power structure in Washington would not change; in the end he was right. Obama won reelection, while the control of the two chambers of Congress continued as it had been the two previous years.
After the election, I asked Woodall how he knew. After all, many political pundits were claiming surging Republican momentum in the run-up to the election, and several were even talking a Mitt Romney landslide. In addition, there was hopeful talk of a GOP majority in both chambers of Congress.
Woodall chuckled. “You know I’ve had a few folks ask me that same question. I don’t have a crystal ball; I was just going off the experience I've had here in previous election cycles. I’ve seen this too many times where Republicans get really confident and really excited, only to be disappointed because they didn’t do enough true groundwork. And that's what I was seeing going into last Tuesday. While I figured it would be much, much closer on the electoral vote side (332-206), the one thing I kept looking at was that Democrats in this town were not worried at all. And now we know why.”
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So what will a second Obama term look like for U.S. beef producers? Woodall says most worrisome is the prospect of new Environmental Protection Agency (EPA) regulations.
“I think we really need to be worried about EPA regulations, as a lot of things we've been talking and hearing about the past four years will finally be implemented. The shackles are now off EPA and I think a second Obama administration means a really negative relationship with EPA.”
Before the end of 2012, Woodall expects to see both the dust rule and Clean Water Act (CWA) guidance move forward. “These are the two biggies we expect first. We're in a situation now where we're going to see just how far we can trust Lisa Jackson (EPA chief). She had committed that she was not going to add coarse particulate matter – ag dust – to her final dust rule. But since the rule didn't come out before the election, all bets are now off. That's something we are geared up for; making sure that we can keep the pressure on EPA to implement what she committed to us that she would, which is not to include ag dust.”
He calls the CWA guidance, which would change the federal definition of navigable waters “the biggie.” The rule would put all surface water under the jurisdiction of EPA and the Army Corps of Engineers.
“It would hit everybody out there with water on their property. What would happen basically is that farmers and ranchers would have to get CWA permits in order to utilize those bodies of water and the land around bodies of water. That would just really impact farming and ranching. We're talking about creeks, streams, brooks, dry streams, ephemeral streams, arroyos, playa lakes, in-ground stock tanks, and even potentially to the point that if you just have low spots that fill with water when it rains, then those could be considered waters of the U.S. It could be interpreted that broadly.”
Woodall says NCBA is preparing for this eventuality. “We're just trying to make sure we have our congressional friends ready with some options for us. We’re also making sure that we have our war chest built up so that we can potentially take them to court.”
While ag dust and CWA guidance are the two biggest threats looming on the environmental side, Woodall also expects more discussions regarding feedlots and confined animal feeding operations (CAFOs).
“Those will be under more scrutiny in the coming years. We also have the potential out there for regulators to move forward in classifying manure as a superfund element. And potentially really cause some problems for us in declaring feedlots superfund sites,” Woodall says
He says the 2012 election results have dashed any hopes for reform of the Endangered Species Act (ESA). “We may see some ideas out of the House on this topic, but any measures will be dead on arrival in the Senate.”
On the tax side, Woodall says the estate tax is top of mind. With the so-called “fiscal cliff” of automatic tax hikes and spending cuts looming in the new year, Woodall says he’s “pretty optimistic” that congressional leaders will enact a blanket extension of all the programs. The big question is the income threshold for continued tax cuts.
“There are hard camps on both sides of the fiscal cliff issue. I think at the end of the day, however, neither party wants to be responsible for what would be one of the largest tax increases in American history. That is why I think we’ll ultimately see some sort of bargain.”
The current estate tax calls for a $5-million individual exemption and a 35% tax rate, with a step up in basis adjusted for inflation. If steps aren’t taken to address the expiring rule, the individual exemption would fall to $1 million and a 55% tax rate on Jan. 1, 2013. “Our hope is to get as long of an extension as possible on the estate tax in order to provide taxpayers with a little certainty.
“But there's also the option, and Congress is good at this, of just kicking the can down the road into the new Congress and trying to do something about all these issues in 2013. And they have the mechanism; they could change all of the dates around sequestration; they could do a short-term extension of the tax rates; there are a lot of things they could do to just buy themselves some time. We should have a pretty good idea what will happen by the end of November,” Woodall says.
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Woodall says he’s struck by how little change the election brought to Washington, D.C.
“After all this effort and money, there really wasn't that much changed. The general dynamic, the general control, the general philosophies stayed pretty much like we've had the past two years – Obama in the White House, the GOP controlling the House and Democrats the Senate. That’s good and bad for us. It's bad because we're not going to have the opportunity to see some major reform like we'd hoped – major tax reform, major ESA reform. That's just completely off the table now.
“But at the same time, it's the same dynamic we've been working with the past two years so we know how to navigate these waters; we know what to expect. And I think that will help us take out some of the surprise in figuring out what the next two years will look like in Washington.”
Another positive is that the cattle industry's influence in Congress has actually grown a little bit with the latest election results. Woodall points to two new additions in the new Congress – Rep. Ted Yoho, a Florida DVM and rancher, and Sen. Deb Fischer, a Nebraska cattle producer.
“We're pretty excited that we have a couple more of our own that are actually here in the halls of Congress beginning in 2013,” Woodall says.
His advice to cattle producers is to “get engaged in the process. Whether that's through your county, state or national association, join them, make sure you know what's going on, and get engaged with the local offices of your members of Congress. Go in, introduce yourself, invite them out to your farm and ranch and built that relationship. What you'll find is that they will come to you for info, because at the end of the day, these people want to know who their constituents are,” Woodall says.