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March 24, 2014Client Alert

2013-2014 Wisconsin Legislative Session Status Report on Key Agriculture Bills

The 2013-2014 Wisconsin Legislative Session is winding down. Following an all-night floor session on March 20, 2014, the Wisconsin State Assembly adjourned and concluded their work. The Wisconsin State Senate plans to adjourn following their final scheduled floor session day on April 1, 2014. Several key bills of interest to the agriculture industry have been signed into law by Governor Walker, are awaiting the Governor’s signature to become law, are waiting to be scheduled and passed by the full Senate or have stalled and died. Below is a recap of the status of several key bills of interest to the agriculture community.

 

Bills Signed Into Law

 

Governor’s Tax Cutting Package: On March 18, 2014, the Assembly approved Governor Walker’s tax cutting package (JSS SB 1) that was initially unveiled in January following the announcement of a large state budget surplus. The Assembly recommended passage of JSS SB 1 on a vote of 61-35. The Senate had previously passed the bill on March 4, 2014 on a vote of 17-15. As approved, the Governor’s tax plan included the following measures:

  • Reduces the bottom income tax bracket from 4.4% to 4.0% for tax year 2014 and beyond;
  • State assumes nearly half of the technical college levy which will reduce $406 million from December 2014 (January 2015) property tax bills; and
  • Provides offsets to the state alternative minimum tax for the Manufacturers Tax Credit, retroactive to tax year 2013, and for the R&D and historic rehabilitation tax credits for tax year 2014 and later.

Amendments that were approved by the Legislature which modified the Governor’s initial proposal included the following items:

  • Allows a 20-year carry-forward for net business loss of corporate income;
  • Adopts automatic federalization of depletion changes; and
  • Provides a clarification to the carry-back for individual income net operating losses passed in the 2013-15 state budget, retroactive to the 2012 tax year.

The Governor signed the bill into law on March 24, 2014.

 

Electrician Licensure: On March 19, 2014, Governor Walker signed the electrician licensure bill (AB 683) into law as Wisconsin Act 143. AB 683 was supported by the Midwest Food Processors Association Inc., the Wisconsin Manufacturers & Commerce and other real estate and business associations. AB 683 allows in-house electricians and building maintenance workers of manufacturing facilities to perform work without additional costly state licensure requirements which would have presented a burden on employers. Specifically, AB 683 revises the structure for licensing various levels of electricians. The bill also adds exemptions regarding work done by an employee in an existing manufacturing facility, work to replace residential switches and outlets, volunteer work for a qualified non-profit engaged in building homes, and it revises the current exemption for work on equipment that does not have a primarily electrical function. Additionally, the bill exempts from the licensing requirements a person who was born before January 1, 1956. A number of amendments were adopted which made additional changes to the bill as initially introduced.

 

Bill That Awaits Governor’s Signature

 

Phosphorus Reform: In mid-February, 2014, the Assembly and the Senate passed phosphorus reform legislation (SB 547) which offers businesses an alternative, more cost-effective means to reduce phosphorus discharge in public waters, and it aims to lower costs to water utility ratepayers. With the goal of slowing algae growth and preserving water-based tourism, the Wisconsin Department of Natural Resources (DNR) Board approved sweeping regulations in 2010 that set precise limits on concentrations of phosphorus in water bodies. Compliance with these regulations requires wastewater treatment plants, such as those operated by municipalities and industrial facilities processing pulp and paper, cheese and food processing, to install costly, advanced filtration technologies to remove phosphorus.

 

As the DNR began implementing the regulations in 2012, wastewater treatment facilities were increasingly concerned about the costs to install this equipment and raised questions about how much these additional reductions would help to improve water quality. Under existing law, a facility may apply for a variance if it makes a strong economic showing that compliance would be too expensive. SB 547 requires the state of Wisconsin to conduct a statewide economic analysis to support a finding of economic harm. Once established, the bill provides that qualified dischargers may opt into a variance program without making the individual facility showing. Under this program, dischargers would participate in a multi-discharger permit variance from the phosphorus limit for up to four permit cycles. While participating in this program, the permittees would also be required to meet discharge limits established by SB 547 and take steps to reduce phosphorus contributions from other sources in its watershed.

 

Business groups, municipalities, and environmental interests worked collaboratively to craft this bill which aims to enhance efforts to prevent phosphorous pollution in public waters. Before the program is available to permittees, the Governor will need to sign the bill into law. In addition, the Wisconsin Department of Administration (DOA) must complete an economic study that demonstrates compliance with the phosphorus standard will have an adverse and widespread social and economic impact. The DOA study must also identify the categories of dischargers that will be eligible for the multi-discharger variance. Finally, the federal Environmental Protection Agency must approve the variance before it may be implemented in Wisconsin.

 

Bills That Await Senate Passage

 

Implements of Husbandry: On March 20, 2014, the implements of husbandry legislation (SB509) passed the Assembly on an 82-11 vote. SB 509 provides new limits on the operation of agricultural equipment on public roads. The Assembly version of the bill included an additional amendment that aimed to improve SB 509. Since the Senate version that passed on March 11, 2014 did not include this amendment language, the Senate will now need to concur in the Assembly changes before the bill is sent to Governor Walker for his signature.

The agriculture industry utilizes a variety of equipment in its daily operations and although the equipment is designed for use in the field, it must sometimes travel on public roads. As this equipment has modernized, it has grown larger and heavier, sometimes straining the capacity of local roads to carry this additional weight. Until recently, there was widespread confusion about how weight limits applied to agricultural equipment. SB 509 clarified the definition of these pieces of agricultural equipment and established a higher weight limit, lighting and marking provisions, and more permissive length restrictions for these vehicles. However, agricultural representatives raised concerns that even under the increased weight limits allowed in SB 509, a large portion of the equipment currently utilized by agribusinesses would still be overweight. In an effort to address this issue, SB 509 establishes a program by which a local government can grant a permit to operate a vehicle that is oversized or overweight on the roads under that government’s jurisdiction.

 

Some agricultural representatives have expressed concern that the permit program offers little relief to farmers because it does not ensure the ability to take vehicles from farm to field, and it will create a patchwork of complicated weight limits that will make implementation difficult for agribusinesses that operate in multiple jurisdictions. The only compliance option with any certainty is to replace these overweight vehicles with smaller, less-efficient vehicles, which may put Wisconsin farmers at an economic disadvantage when compared to other states. Among the provisions included in the amendment is a moratorium on enforcement by State Police in 2014 while farmers and local governments adjust to the new requirements. Local police retain enforcement authority. Some agriculture industry representatives have indicated they will continue to work to develop additional improvements to SB 509 in the next legislative session.

 

Cheese Makers & European Union Food Fight: On March 20, 2014, a resolution (AJR 113) to protect Wisconsin’s cheese makers passed the Assembly with overwhelming bipartisan support. AJR 113 was introduced in response to the European Union’s (EU) trade negotiations and demands to ban American use of names on a variety of cheeses including Asiago, Feta, Fontina, Parmesan, Cheddar, Mozzarella, Gorgonzola, Muenster, and Brie that are currently made in the United States. AJR 113 defends the use of common brand names by American cheese makers and urges U.S. trade negotiators to “combat inappropriate restrictions on the use of common food names where any barriers to trade and commerce take the form of geographic indications or other similarly unjustified regulatory impediments.”

According to the Wisconsin Milk Marketing Board, Wisconsin is the top cheese producer in the United States with 90 percent of Wisconsin’s milk going toward cheese production. Wisconsin legislators expressed concern that the EU’s ban would threaten Wisconsin’s multi-billion dollar dairy industry and the state’s economy by creating new barriers to cheese sales. AJR 113 now moves to the Senate for scheduling and approval.

 

Bills That Are Dead

 

High Capacity Wells: Earlier this year, a large coalition of Wisconsin businesses sent a letter to the Senate asking them to support high-capacity well legislation (SB 302). Wisconsin businesses, including farmers and food processors, that rely on water from high capacity wells advocated in support of SB 302 and argued it provided needed certainty related to the regulation of the high capacity well program. Specifically, the bill author, Senator Neal Kedzie, explained that SB 302 would have reaffirmed the legislative intent of 2003 Wisconsin Act 310 and provided important clarification on the intended scope of authority the Wisconsin Department of Natural Resources has to approve, condition or deny high-capacity well applications.

 

On November 7, 2013, SB 302 was approved for passage by the Senate Natural Resources Committee on a vote of 3-2. However, earlier this month, Republican leaders of the Senate signaled they had come up short on votes needed to pass the bill. Because SB 302 has not yet passed the Senate and the Assembly adjourned on March 21st, the bill is dead for this legislative session.

 

Raw Milk: On November 13, 2013, the Senate Committee on Financial Institutions and Rural Issues recommended passage of a modified bill (SB 236) that would have legalized the sale of unpasteurized milk to the public on a vote of 3-2. However, because bill proposals need passage by both chambers, the Assembly has already adjourned and no Senate floor vote has been scheduled, SB 236 is dead for this session.

 

Raw milk advocates indicated changing the law could give individuals access to fresh, unprocessed milk that contains beneficial bacteria. However, several associations representing the agriculture, public health and medical communities opposed the bill. Opponents argued raw milk should never be sold legally to the public because of the safety concerns of consuming raw milk, and the subsequent damage that could be done to the $26 billion Wisconsin dairy industry if problems occur with raw milk. Opponents argued the amended bill that passed the Senate Committee simply did not solve safety concerns.

 

In terms of Governor Walker’s position on SB 236, during a speech at the Dairy Business Association late last year he stressed the importance of ensuring any dairy products that are sold to consumers must be safe for him to sign the bill into law. Governor Walker said, “I want to make it clear that I want to protect our status as America’s Dairyland. We should be able to guarantee that kids in this state and in this country will have access to fresh and safe milk and dairy products. I’m not going to do anything that puts at risk any child who consumes products that comes out of the state of Wisconsin.”

 

Genetically Modified Organism Package Labeling: On March 18, 2014, Representative Chris Taylor and Senator Fred Risser introduced a genetically modified organism (GMO) labeling bill (AB 874) which was then referred to the Assembly Committee on Consumer Protection. The bill generally prohibits a retailer, such as a grocer, from selling a packaged food produced through genetic engineering unless the package is labeled to indicate the food was produced through genetic engineering. The bill also generally prohibits a retailer from selling a food produced through genetic engineering that is labeled as “natural.”

 

According to the bill author, in the U.S. over 80% of all processed foods contain GMO’s and approximately one-half of the U.S. states have legislative bills requiring labeling pending in their legislature. This is the first time a GMO labeling bill has been introduced in Wisconsin.

 

Due to the late introduction of the bill, there is not sufficient time to move AB 874 through the Assembly and the Senate prior to adjournment so the bill is dead for this session. Food labeling will be an issue to watch during the next legislative session.

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