Fact Sheet: President Obama Leading Administration-wide Drought Response

As communities across the country struggle with the impacts of one of the worst droughts in decades, President Obama is committed to ensuring that his Administration is doing everything it can help the farmers, ranchers, small businesses, and communities being impacted.

To respond to immediate needs, the U.S. Department of Agriculture (USDA) and other federal agencies are using their existing authorities wherever possible to address the hardships arising from the lack of water, feed, and forage.  Within the last month, USDA has opened the Conservation Reserve Program to emergency haying and grazing, has lowered the borrower interest rate for emergency loans, and has called on crop insurance companies to provide more flexibility to farmers.   The Department of the Interior has provided additional grazing flexibility on federal lands and the Small Business Administration is working to help with access to investment capital and credit in affected communities.

On Tuesday, August 7, 2012, President Obama convened his White House Rural Council for one of a continuing series of policy meetings to review Executive Branch response actions and to develop additional policy initiatives to assist drought-stricken Americans. Following the meeting, the White House announced several new measures the Administration is implementing to help those impacted by the drought, including providing additional assistance for livestock and crop producers, increasing the capacity for lending to small businesses, and waiving certain requirements on trucks helping to provide relief. President Obama also stressed the need for the entire Administration to continue to look at further steps it can take to ease the pain of this historic drought.

As the drought continues, the Administration will actively implement its longer-term strategy for assessing and managing the effects of the crisis.  In addition to impacts on farming and ranching operations, a long-term, widespread drought will also have implications for wildfires, water availability, navigation, and power generation across much of the country and across other sectors.  As we move forward, the Administration will work closely with state and local governments, farming and ranching communities and others to ensure an effective and efficient response and recovery. 

Finally, while the Administration is exploring every possible avenue to provide relief from the impacts of the drought, Congress still needs to act to ensure that the needed disaster assistance is available to these communities. The best way to do that is by passing a comprehensive, multi-year farm bill that not only provides much-needed disaster assistance but gives farmers and ranchers the certainty they deserve while enacting critical reforms.

New Actions by Federal Agencies to Help Respond to the Drought

UNITED STATES DEPARTMENT OF AGRICULTURE

• Additional Emergency Funding to Assist Livestock and Crop Producers: To assist producers facing extreme drought conditions, USDA announced Tuesday that it will utilize nearly $16 million in financial and technical assistance to immediately help crop and livestock producers in 19 states cope with the adverse impacts of the historic drought. In addition, USDA will initiate a transfer of $14 million in unobligated program funds into the Emergency Conservation Program. These funds can be used to assist in moving water to livestock in need, providing emergency forage for livestock, and rehabilitating lands severely impacted by the drought. Together these efforts should provide nearly $30 million to producers struggling with drought conditions.

THE NATIONAL CREDIT UNION ADMINISTRATION

• Allowing an additional 1,000 Credit Unions to increase their lending to small businesses: The National Credit Union Administration will announce that more than 1,000 credit unions are eligible for a low-income designation, which permits unlimited lending to small business owners including farmers; nearly half of those eligible credit unions are located in a severely drought-stricken state. Small business lending by credit unions is normally capped at the statutory 12.25 percent rate.  This designation exempts designated credit unions from this cap. Currently, approximately 1,100 CUs are designated low-income and can offer unlimited lending to small businesses.  The average credit union member business loan is $223,000. 

THE SMALL BUSINESS ADMINISTRATION WITH  USDA AND THE DEPARTMENT OF COMMERCE

• Community Outreach Events: SBA, USDA, and the Department of Commerce (DOC) through its Economic Development Administration (EDA), will host targeted events in communities severely impacted by the drought to provide detailed information on what federal resources are available to assist small businesses, farmers, and others in the community. These events will also be webcast to ensure audiences in other drought impacted communities can attend virtually.   At these events SBA disaster assistance staff, small business counselors from its network of resource partners, and field staff from SBA district offices along with interagency staff will provide information and offer technical assistance on applying for loans and where to find additional resources after the event.
• Leverage State and County Fairs in Regions: In addition to the standalone events, SBA, USDA, and EDA will conduct outreach at already scheduled State and Country Fairs.
• Online Outreach:  Since the drought's full impact may take months to be fully felt by small businesses and communities, SBA, USDA, and DOC will continue to reach out to affected regions through online webinars and conference calls that will further raise awareness and provide opportunity to gather real-time detail on the impact to communities.

THE DEPARTMENT OF TRANSPORTATION

• Existing Emergency Exemptions of Federal Operating Requirements: This authority can put more commercial drivers behind the wheel—driving large trucks needed to assist the farmers and ranchers in need. If a qualifying drought emergency has been declared in a state by the Governor or appropriate official, the state automatically gets Hours of Service and other regulatory relief for those providing emergency assistance; no application is needed.  If the situation does not qualify for emergency relief, the Federal rules regulating large truck and bus operations may be waived in certain circumstances. DOT can process a request to waive regulations in 7-14 days.
  • In addition, the transportation bill President Obama signed in July provides a new authority for States to issue special permits for overweight vehicles and loads that can easily be dismantled or divided in an emergency. The legislation makes the new special permits available beginning October 1, 2012.  DOT is expediting the process of developing guidance for States to support their permitting programs, and the way in which “relief supplies” are defined may provide states with a new tool to use for hauling heavy loads of grain, livestock, etc. for drought relief.

Today’s Actions Build on Steps Taken by Agencies across the Federal Government to Help Drought-Stricken Counties

UNITED STATES DEPARTMENT OF AGRICULTURE

• Use of Indemnity Payments for Crop Insurance Premiums.  To assist farmers in meeting cash flow challenges, USDA has taken steps to ensure that farmers will be able to apply this year’s crop indemnity payments toward their crop insurance premiums for the following crop year.  As of August 1, 2012, the sixteen major providers of U.S. crop insurance have all agreed to forego interest charges on unpaid premiums through November. 
• Disaster Designation Regulation. On July 12, USDA announced an expedited disaster designation process, allowing farmers and ranchers to obtain disaster assistance faster. USDA projects a 40 percent reduction in processing time for affected producers as a result of this change. 
• Reduction of USDA’s Emergency (EM) Loan Rate. Emergency Loans will help producers recover from production and physical losses associated with natural disasters.  The current rate was set in 1993 at 3.75 percent.  Effective July 15, the Administration lowered the interest rate on loans, effectively lowering the rate from 3.75 percent down to 2.25 percent.
• Conservation Reserve Program (CRP) Haying and Grazing. The Conservation Reserve Program (CRP) allows farmers and ranchers to receive annual rental payments and cost-share assistance to establish long-term, resource conserving covers (grasses) on eligible farmland.  Nationwide, 29 million acres are enrolled in the CRP.  Due to the drought, the federal government has opened up virtually all of the CRP grassland acres for emergency haying and grazing and reduced the payment penalty for haying and grazing from 25 percent to only 10 percent.  Further, the Administration took additional steps to ensure that appropriate wetland and riparian buffer areas will also be available for haying and grazing.

DEPARTMENT OF THE INTERIOR

• Grazing on Federal Lands: The Department of the Interior’s Bureau of Land Management and the USDA Forest Service are providing relief to ranchers who graze on public lands by employing flexibility to accommodate needs and conditions on the ground.  BLM will issue refunds to cattlemen that were displaced by early season fires and therefore not able to make use of their allotments and the Forest Service has liberally granted Permittee requested non-use.  Both agencies are making vacant land available for grazing and allowing for: changes in grazing use, including delayed or early turnout if conditions allow; increased salting to improve livestock distribution; water hauling and temporary portable water troughs; and other measures. 

THE SMALL BUSINESS ADMINISTRATION

• SBA Drought Disaster Declarations. To date, the Small Business Administration (SBA) has followed USDA’s disaster declarations and has issued 71 agency declarations in 32 states covering 1,636 counties, providing a pathway for small businesses, small agricultural cooperatives and non-farm small businesses that are economically affected by the drought in their community to apply for SBA’s Economic Injury Disaster Loan (EIDL).

THE ARMY CORPS OF ENGINEERS

• Army Corps of Engineers Preserving Navigation: The U.S. Army Corps of Engineers (USACE) has published guidance to coordinate a collective Common Operation Picture (COP) to monitor ongoing drought impacts on navigation.  At this time they have identified the 15 most critical river gages (of 2000+) as key monitors for navigation impacts and implemented Water Way Action Plans. USACE will continue coordinating with Coast Guard, National Oceanic and Atmospheric Administration (NOAA), and navigation industries on the mitigation of drought impacts by:
  • Working with contract dredges to identify areas of concern to divert resources based on priority.
  • Identifying available channel depths and widths to navigation industries, so barge tow drafts and widths can be modified accordingly.
  • Ensuring that storage reservoirs are releasing flow to augment natural flows downstream.
  • Continuing to do public and media outreach via, conference calls, webinars and emails with respect to the Mississippi, Missouri, and Ohio rivers and tributaries.
  • Monitoring the National Weather Service outlook on short and long term rainfall forecast to prepare for potential reservoir releases are other mitigation measures.

THE DEPARTMENT OF TRANSPORTATION

• DOT Outreach to the State DOTs: On Wednesday August 1, U.S. Department of Transportation Secretary Ray LaHood convened a call with states to listen and discuss the ways in which DOT can work with Governors and State Departments of Transportation to help communities impacted by the drought. Issues raised during the call included emergency waivers of hours of service requirements and emergency waivers for Federal truck weight regulations.