The federal government is currently on the precipice of finalizing a sweeping, $1.7 trillion omnibus funding package, just in time to prevent a looming government shutdown, which would have begun at midnight tonight. Funding the government through the end of the current fiscal year was the final item on the 117^th Congress’s agenda.

The omnibus includes a ten percent increase in Pentagon funding and nearly $40 billion in disaster aid, among many other appropriations contained in the four thousand-plus-page bill. The Senate took up the omnibus first yesterday morning after a harrowing night of last-minute negotiations. As a result of those negotiations, fifteen proposed amendments were also being considered, one by one, at a relatively breakneck pace. The upper chamber passed the omnibus, containing eight of the proposed amendments, with bipartisan support by a vote of 68-29 on Thursday afternoon.

The House followed suit this afternoon, passing the omnibus largely along party lines by a vote of 225-201-1 (one member voted “present”). President Biden is expected to sign the package into law before current appropriations lapse at midnight tonight.

A Look Inside the Omnibus

Despite the hefty price tag, for independent insurance agents, at least one of the policy items cut from the omnibus is as notable as the policy items that survived. Here, we will address the main PIA policy priorities considered for inclusion in the omnibus during the negotiations and how each fared in the final bill text.

IN: National Flood Insurance Program (NFIP) reauthorization through September 30, 2023

The National Flood Insurance Program’s funding has been tied to the federal government’s budget for the past several months, and, like the rest of the government’s funding, the NFIP would have expired on Friday, December 23 at midnight in the absence of action by Congress. Thankfully for all NFIP stakeholders, Congress kept the program’s reauthorization tied to federal government funding, allowing the NFIP to hitch a nine-month ride on the omnibus. The NFIP is now authorized until the end of the federal fiscal year on September 30, 2023.

While its reauthorization is an unadulterated win for NFIP policyholders, agents, and carriers, as a general matter, Congress’s insistence on continuing to keep the NFIP tied to the federal fiscal calendar has both pros and cons. It typically means the NFIP is less likely to lapse, because, when the two are paired, a lapse will coincide with a full-scale federal government shutdown, and, mercifully, most politicians prefer to avoid those. On the other hand, though, repeatedly giving the NFIP a ride on the omnibus allows Congress to keep postponing important decisions about the program’s future. Over the past several years, this practice has meant legislators only really contemplate the NFIP’s future under looming pressure to fund the entire federal government within nearly impossible time constraints.

Under the circumstances, it makes sense that members of Congress tend not to address the nuances of the program or seek to identify and implement needed improvements when the program is about to expire. But at some point, Congress needs to either deliberately decouple the NFIP from the federal budget by appropriating funds to each of them on separate timetables, or consider the NFIP as a standalone priority—before the fiscal time crunch makes reauthorization an emergency and reform an impossibility.

IN: Language supporting crop insurance inflation adjustment reinstatement and extra funding for specialty crops

In a victory for crop insurance agents, the PIA-supported crop insurance provisions have been included in the omnibus bill, thanks in part to the efforts of tireless PIA crop insurance agents from all over the country who traveled to Capitol Hill or sent messages to their representatives to advocate for their inclusion.

The provisions acknowledge the need for the federal government to correct a problem that has plagued crop insurance agents for the past several years. The 2011 Standard Reinsurance Agreement (SRA), which is the contract between the Federal Crop Insurance Corporation and crop insurers, set a cap on the administrative and operating (A&O) expense subsidy. From 2011 to 2015, the A&O subsidy cap was annually adjusted for inflation. However, in 2016, the U.S. Department of Agriculture’s Risk Management Agency (RMA) ended the A&O subsidy cap inflation adjustment. As a result, the cap has remained fixed in 2015 dollars ever since, effectively establishing an annual cut in agent commissions.

The omnibus provisions include an allocation of $25 million in equitable relief for specialty crops, which will provide immediate financial relief to that market, where the effect of ending inflation adjustments has had a profound impact.

The accompanying report language affirms the RMA’s power to reinstate the inflation adjustment for all crop reimbursements without renegotiating the SRA. This language, while helpful, does not require the RMA to reinstate the inflation adjustment. However, generally, federal agencies treat Congressional report language as guidance in making funding allocation decisions. In this case, it also demonstrates Congress’s view that reinstating the inflation adjustment is within RMA’s existing authority. This is a significant triumph in PIA’s efforts to ease the current economic strain on crop insurance agents.

More detail on the omnibus’s crop insurance provisions can be found in our crop insurance omnibus post from earlier this week.

OUT: SAFE Banking Act (cannabis safe harbor)

Twenty twenty-two was a successful but also disappointing year to have been seeking a safe harbor for independent agents who sell insurance to entities engaged in legal cannabis businesses at the state level. Over the course of the 117^th Congress, cannabis safe harbor provisions passed in the House, either alone or incorporated into other bills, about five times. Each time, the proposal died in the Senate.

Throughout the year, Senate Democrats spent months refusing either to bring a cannabis safe harbor bill to the floor for a vote or to include it as part of a broader package. Led by Senate Majority Leader Chuck Schumer (D-NY), Senate Democrats insisted it be passed only as part of a broader bill on criminal justice reform.

Not to be outdone, over the past several weeks, Senate Minority Leader Mitch McConnell (R-KY) made clear that he, too, would not support the inclusion of SAFE Banking in the National Defense Authorization Act (NDAA) … or the omnibus.

Over the past few months, though, a bipartisan group of senators had been working together on a package to give the cannabis industry greater access to financial services; the package was meant to be structured around SAFE Banking. It would have provided states with funding to issue cannabis-related expungements and protected legal cannabis users’ Second Amendment rights.

Among the four top congressional leaders, three of the four—House Speaker Nancy Pelosi (D-CA), House Minority Leader Kevin McCarthy (R-CA), and Majority Leader Schumer—supported SAFE Banking, at least conceptually (as noted above, Schumer’s support was conditional). In the end, arguably, McConnell was the only roadblock, but, with the lame-duck Congress’s time running out, his opposition was enough to derail SAFE Banking one last time.

Conclusion

Going forward, PIA will continue its efforts to encourage members of Congress to pass a cannabis insurance safe harbor law; ensure the full implementation of the omnibus’s crop provisions, and, if necessary, urge Congress to further address inflation issues in the upcoming Farm Bill negotiations; and reform the NFIP and pass a long-term reauthorization in the 118^th Congress, which begins on January 3, 2023.