NWAS 2020 Sandau

Jonathan Sandau, public policy specialist with the Oregon Farm Bureau, provided a legislative update Wednesday at the 2020 Northwest Ag Show in Salem.

SALEM — While cap-and-trade legislation is once again expected to dominate the 2020 Oregon Legislature, it is hardly the only proposal with serious implications for the state's farmers and ranchers.

Jonathan Sandau, public policy specialist for the Oregon Farm Bureau, provided a legislative update Wednesday morning at the 50th annual Northwest Ag Show, including efforts to exempt agricultural products from the new "corporate activity tax" that passed last year.

The short legislative session begins Feb. 3 and runs through March 8. Democrats continue to hold a supermajority in both chambers of the statehouse.

If 2019 was any indication, the return of cap-and-trade legislation should stir up plenty of controversy in the weeks ahead. The policy calls for setting a cap on carbon emissions to combat climate change. Companies would then buy allowances on the open market to exceed the limit, and money raised would go into a funding pool for climate-friendly initiatives.

Introduced as House Bill 2020, cap-and-trade passed the Oregon House along a party-line vote last year but was defeated in the Senate after 11 Republican senators staged a walkout and several Democrats indicated they would vote against the bill.

Lawmakers recently announced a revised concept for cap-and-trade, which Sandau said is similar structure to HB 2020. The agriculture and timber industries would be exempt from purchasing allowances under the program, though he said producers would still face increased costs in fuel, natural gas, propane and electricity.

What's more, Oregon's carbon footprint makes up just 0.7% of total U.S. emissions, and 0.1% of global emissions, Sandau said.

"There are lot of questions about how much economic impact this would have, versus how much benefit in terms of collective impact on the global scale," he said.

Angelita Sanchez, a board member of the group Timber Unity, which rallied against HB 2020, went into greater detail on the newest cap-and-trade proposal during her seminar Wednesday at the Northwest Ag Show.

Corporate activity tax

The Farm Bureau is spearheading another legislative concept to exempt agricultural products from the corporate activity tax, which Sandau said will address uncertainty and inequity among growers who export their crops.

Oregon's corporate activity tax requires businesses that make more than $1 million annually to pay an additional 0.57% tax on that "excess" revenue. It is expected to raise $2.8 billion over the 2021-2023 biennium for schools.

But Sandau said the tax structure presents unique challenges in farm country.

The tax is not supposed to apply to out-of-state sales, though Sandau said agricultural exports are often commingled — such as grain or berries that are sold to the same processor or wholesaler. That makes it difficult to certify what is actually exempt from the tax at the farm level.

"There's just a lot of confusion on how this actually works on the ground for a lot of these guys," Sandau said.

Sandau said the best solution is to create a single, clear-cut exemption for agriculture. The exemption would also create an even playing field between producers who often don't have a say on where their products are sold, Sandau added.

"We very much think that this is a technical problem with the bill, and how it's applied," he said.

State, federal legislation

Though bills will not be publicly released until Jan. 27, Sandau did mention a few other legislative concepts the Farm Bureau is following.

Lawmakers are likely to revive a bill to create a commodity commission for industrial hemp, which Sandau said could assist Oregon State University's Global Hemp Innovation Center with funding research and developing markets for the crop.

The Legislature may also try again on a statewide ban for chlorpyrifos, a commonly used pesticide in the Willamette Valley where Sandau said nurseries and specialty crop growers have no other viable alternatives. A proposed ban failed during the 2019 session.

Wildfire is sure to be another hot topic, Sandau said, with the governor's 120-page omnibus wildfire response bill.

"This is a beast of a (legislative concept)," he said. "It is wide-reaching."

The bill is based on recommendations made to Gov. Kate Brown by a 19-member wildfire response advisory council, appointed last year. It touches on everything from building codes to private forestland, and even creating defensible space around utility poles to avoid rolling blackouts like those in California to mitigate fire risk.

"We're not sure how that's going to impact agricultural activity," Sandau said.

Finally, Sandau said the Farm Bureau is keeping an eye on several ongoing federal issues, including immigration and trade.

The U.S. House recently passed the Farm Workforce Modernization Act, which in part expands the H-2A worker visa program. The House also passed the U.S.-Mexico-Canada Agreement, or USMCA, in December, which is intended to replace the North American Free Trade Agreement.

"There are changes on the horizon," Sandau said.

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