H.R. 1947, Agriculture Reform and Risk Management Act of 2013

Cost Estimate
May 23, 2013

As ordered reported by the House Committee on Agriculture on May 15, 2013

Estimated Budgetary Effects

CBO estimates that direct spending stemming from the program authorizations in H.R. 1947 would total $940 billion over the 2014-2023 period. That 10-year total reflects the bill’s authorization of expiring programs through 2018 and an extension of those authorizations through 2023, consistent with the rules governing baseline projections that are specified in the Balanced Budget and Emergency Deficit Control Act of 1985.

Relative to spending projected under CBO’s May 2013 baseline, CBO estimates that enacting the bill would reduce direct spending by $33.3 billion over the 2014-2023 period. The estimated budgetary effects of H.R. 1947 are summarized in Table 1. CBO estimates that sections 10008 and 10015 of the bill would increase revenues by $64 million over the 2014-2023 period. Further details of the changes in direct spending and revenues are displayed in Table 2.

Assuming appropriation of the specified and necessary amounts, CBO also estimates that implementing the bill would result in discretionary spending of $27.4 billion over the 2014-2018 period and $33.4 billion over the 2014-2023 period. Further details of that estimate for discretionary spending are displayed in Table 3.

Intergovernmental Mandates

The bill would impose an intergovernmental mandate, as defined in the Unfunded Mandates Reform Act (UMRA), by preempting state laws that regulate the production and manufacture of agricultural products offered for sale in interstate commerce if those laws impose standards or conditions that are in addition to the standards and conditions imposed by federal law or the laws of the producing or manufacturing state. Many states have laws regulating the production and manufacture of agricultural products that are different than the laws of other states.

By limiting a state’s ability to regulate agricultural products sold under its jurisdiction, the bill would preempt state authority. However, because the preemption would impose no duty on state governments that would result in additional spending, the threshold established by UMRA for costs of intergovernmental mandates ($75 million in 2013, adjusted annually for inflation) would not be exceeded.

Private-Sector Mandates

The bill also would impose private-sector mandates as defined in UMRA. The aggregate cost of those mandates could exceed the annual threshold established in UMRA for private-sector mandates ($150 million in 2013, adjusted annually for inflation), depending on the extent of regulations that might be implemented by the Department of Agriculture. Specifically:

  • The bill would impose mandates on dairy handlers that purchase milk from dairy producers participating in the Dairy Market Stabilization Program (DMSP). Under the DMSP, certain handlers would be required to report information to the Department of Agriculture under some circumstances. According to information from industry sources, the cost for handlers to collect and report information under the DMSP could amount to $100 million or more annually, depending on regulations to be issued by the department.
  • The bill would require imports of olive oil to meet the same standards as olive oil produced in the United States if a marketing order for olive oil is established. Imports would have to be inspected to ensure compliance with the standards of such a marketing order. Because 15,000 to 20,000 lots of olive oil are imported annually, the costs of those inspections could amount to tens of millions of dollars per year, if a marketing order is established.
  • The bill would expand the list of commodities eligible for federal research and promotion programs, which are funded through industry assessments. If approved by the Department of Agriculture and approved by industry referendum, members of the industry would be required to pay an assessment. Based on information from industries seeking to establish a federal research and promotion program, CBO estimates that the assessments would amount to tens of millions of dollars annually.

Previous CBO Cost Estimate

On May 13, 2013, CBO transmitted a cost estimate for draft legislation entitled the Agriculture Reform and Risk Management Act of 2013, as posted on the website of the House Committee on Agriculture on May 10, 2013. CBO’s estimate for the direct spending provisions of H.R. 1947 is similar to those in the earlier draft legislation. Enacting H.R. 1947 would lead to a small increase in revenues; the earlier version of the legislation would have had no impact on revenues.

On May 17, 2013, CBO transmitted a cost estimate for S. 954, the Agriculture Reform, Food, and Jobs Act of 2013, as reported by the Senate Committee on Agriculture, Nutrition, and Forestry on May 9, 2013. CBO estimates that enacting S. 954 would reduce direct spending by $17.8 billion and increase revenues by $54 million over the 2014-2023 period, relative to CBO’s May 2013 baseline.

Pay-As-You-Go Considerations

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. Enacting H.R. 1947 would affect direct spending and revenues; therefore, pay-as-you-go procedures apply. The net change in outlays and revenues that are subject to those pay-as-you-go procedures are shown in Table 4.