WASHINGTON, Dec. 16, 2015 - Congressional leaders have reached agreement on a fiscal 2016 omnibus spending bill that would repeal the country-of-origin labeling rules for beef and pork, but the deal would fail to block states from requiring the labeling of biotech foods. 

Food makers and biotech companies were unable to persuade lawmakers to include even a temporary preemption provision in the 2,009- page spending bill. >

The bill also won’t stop the Obama administration from enforcing its new “waters of the United States” (WOTUS) rule if a court stay is lifted. The WOTUS rider was a top priority for many farm groups and developers, who said the rider was needed as insurance should the courts allow the administration to start enforcing the rule, which re-defines the jurisdiction of the Clean Water Act. However, the White House strongly resisted including it, lawmakers said. 

Food manufacturers and biotech companies lobbied until the last day for a provision to block GMO labeling laws for at least two years while the industries worked on national labeling standards, but they couldn’t overcome the opposition of key Senate Democrats, including Jeff Merkley of Oregon, the top Democrat on the Senate Agriculture Appropriations Subcommittee. The first GMO labeling law takes effect in Vermont next July. 

“In the Senate there’s not the support that we had in the House” for a preemption measure, said Senate Agriculture Chairman Pat Roberts, R-Kan.

 The top Democrat on the committee, Debbie Stabenow, has said she’s committed to addressing the issue earlier this year, but industry lobbyists saw the must-pass spending bill as the best chance to enact at least a temporary preemption measure that would slow down state labeling efforts. 

Labeling proponents are gearing up to push next year for labeling laws in two bigger prizes than Vermont - New York state and Connecticut. Passing a preemption measure “has got to be” a priority in 2016, said House Agriculture Chairman Mike Conaway, R-Texas. “We’ve got to get that fixed.” 

Patty Lovera, assistant director of Food and Water Watch, which supports GMO labeling, said that stopping the federal preemption provision would “give state legislatures some confidence that they can keep working on addressing the need for mandatory labeling at the state level.” 

The bill’s COOL provision would gut a law that was first enacted as part of the 2002 farm bill. In a small victory for supporters of the COOL law, the spending bill would leave in place the labeling requirements for chicken, while eliminating the rules for beef and pork. Those were the two commodities at the center of the WTO case in which Canada and Mexico recently won approval to impose more than $1 billion in retaliatory tariffs against U.S. exports. 

A bill that passed the House this summer would have repealed the rules for chicken as well. 

"American farmers, ranchers and small businesses will finally get the certainty they deserve from unnecessary trade retaliation,” Roberts said. 

Section 179 made permanent in tax deal 

Congressional leaders also reached agreement on a broad tax package that would revive and make permanent the expanded Section 179 expensing allowance that is widely used in agriculture. 

The Section 179 provision will permanently allow a business to expense up to $500,000, up from a limit of $25,000. The $500,000 limit is reduced dollar for dollar after expenditures reach $2 million. The provision also would index both the $500,000 and $2 million limits for inflation beginning in 2016. 

The tax measure also would extend through next year the $1 a gallon blender’s credit that subsidizes biodiesel; the $1.01 tax credit for next-generation, cellulosic ethanol; and the 30 percent investment tax credit for ethanol blender pumps and other alternative fueling infrastructure. 

Also extended is the small agri-biodiesel producer credit of 10 cents per gallon. 

Cotton growers win relief from payment limit

Here are some key provisions for food and agriculture in the omnibus, which the House and Senate are expected to consider on Friday: 

Cotton assistance - The bill would reinstate the use of commodity certificates, which provide a way around the $125,000-per-person limit on marketing loan gains and other forms of subsidies. The provision would help producers “sell their cotton on a more orderly basis and it keeps us from having to take ownership of the cotton,” said Conaway. 

The use of certificates ended in 2009 when Congress eliminated a limit on marketing loan gains. The 2014 farm bill restored a limit on marketing loan gains by including them in the $125,000 limit and didn't restore certificates. But the cotton industry argues that the $125,000 limit ($250,000 per married couple) has created challenges for individual growers while threatening to disrupt cotton marketing.

Biotech salmon - Biotech salmon couldn’t be sold until the FDA releases guidelines for labeling it. 

School meals - The bill would extend existing provisions that delay a further reduction in sodium limits and allow states to provide schools waivers from USDA’s whole grains requirement. “Schools are going to get the flexibility from the whole grain standard and insure future sodium reductions will not take effect until supported by science,” said Rep. Robert Aderholt, chairman of the House Agriculture Appropriations Subcommittee.

Animal Research - More than $57 million would be withheld from the Agricultural Research Service until USDA certifies that ARS has updated animal care policies and improved practices at its animal research facilities. The provision is linked to concerns raised about the Meat Animal Research Center in Nebraska. 

“Despite having nearly a year to address this matter, the Department has provided a wholly inadequate public response to the allegations of animal mistreatment at MARC and it has been delinquent in providing necessary information and updates” to the appropriations committees, according to the report language that accompanies the Agriculture section of the bill.

Food Safety - The Food and Drug Administration would get a $104.5 million increase to implement the new rules required by the Food Safety Modernization Act (FSMA), fully funding the administration’s request. That amount is double what House and Senate appropriators had proposed. The report language requires FDA to provide quarterly reports on how the extra is used and to estimate its future needs. 

Dietary guidelines - The bill seeks to ensure the Obama administration doesn’t use environmental factors in writing the new dietary guidelines, which are due out any day. A provision says the guidelines must be “based on significant scientific agreement” and “limited in scope to nutritional and dietary.” 

The bill also would require a study by the National Academy of Medicine, formerly the Institute of Medicine, of the advisory committee process that USDA and the Department of Health and Human Services use to revise the guidelines every five years.

The study is supposed to examine the standards of evidence that are used to develop recommendations and how the advisory committee process can be improved to “provide more transparency, eliminate bias, and include committee members with a range of viewpoints.” 

Trans fats - The bill would ensure that partially hydrogenated oils would be considered safe to use until the end of a phase-out period in June 2018. Food companies sought the provision as liability protection while they waited for FDA to act on a petition to deem some continued use of the oils as “generally recognized as safe” (GRAS). FDA announced earlier this year that it was withdrawing GRAS status for the oils. 

Sage grouse - A ban on listing the sage-grouse as an endangered species is extended through fiscal 2016, although the Fish and Wildlife Service announced in September that the bird would not be listed.

What’s not in the bill? 

-A delay in conservation compliance penalties. Conaway thought it made it into the bill but it was left out. 

-Policy riders barring Endangered Species Act protections for other species such as the lesser prairie chicken. 

-Extension of licensing for Marshall ryegrass, which the American Seed Trade Association argued would set a poor precedent. 

-House and Senate appropriators had both proposed to block beef imports from Brazil and Argentina by requiring USDA to preform comprehensive risk assessments. 

-A block on use of Chinese-processed chicken in school meals. 

For the full text of the omnibus, click here.

For a summary of the agricultural provisions, click here.

(The newsletter version of this story incorrectly said that the omnibus delayed penalties for violating conservation compliance.)

 (Bill Tomson contributed to this report.)