Washington Insider -- Wednesday

Renewed Talk of Resilient Infrastructure

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

Food Companies Urge Tariff Exemption of Steel to Make Food Cans

Steel imports used for canned foods should be exempt from any duties that the Trump administration may put on steel imports via a Section 232 investigation, several food companies told President Donald Trump in a letter.

"Since tinplate steel makes up approximately 60% of the cost of a can, a tariff as low as 5% would result in increased can costs of approximately $1 billion/year," a coalition of major food companies and can makers said in a letter. "Given the industry's thin margins, manufacturers cannot absorb this cost and will be forced to pass it on to consumers." The companies, including Conagra, Del Monte and other canned food manufacturers, warned that it will costs consumers more if the tariffs were imposed.

The Commerce Department has not yet given Trump two reports on the investigation — one on steel and one on aluminum — even though two weeks ago they indicated the reports were in the final stages of review at that point.

US Delays Ruling On Canada Lumber Duties

The U.S. Department of Commerce will postpone its final determination for antidumping and countervailing duties on Canadian softwood lumber until November 14, the department said. The decision was initially expected in the first week of September.

“I remain hopeful that we can reach a negotiated solution that satisfies the concerns of all parties,” Commerce Secretary Wilbur Ross said in a statement. “This extension could provide the time needed to address the complex issues at hand and to reach an equitable and durable suspension agreement.”

Tensions escalated in April when the Trump administration imposed preliminary countervailing duties of as much as 24% on Canadian imports. Additional duties of as much as 7.7% followed in June. Last week, Canada’s Ambassador to the U.S., David MacNaughton, said the country is prepared to sue the U.S. if trade negotiations fail.

Washington Insider: Renewed Talk of Resilient Infrastructure

There seems to be a growing expectation for yet another debate regarding recovery after Hurricane Harvey in spite of the already crowded agenda. Bloomberg says there is a renewed appreciation for impacts of global warming, stated or not, and for built in “resilience.”

As a result, advocates are urging Congress and government leaders to “require that federal recovery monies for Hurricane Harvey damage go to reconstruction projects that can withstand future extreme weather,” Bloomberg says.

Experts in the “intersection between climate change and infrastructure” want congressional leaders to invest wisely to prevent tax dollars from rebuilding a house only to see it flooded with the next major storm and rebuilt once more, Bloomberg says.

“Congress has to take this issue seriously if they want to ensure that we constantly do not rebuild the same properties over and over again because we failed to factor in future flooding and resilience to that flooding,” Natural Resources Defense Council Project Attorney Joel Scata, told Bloomberg.

While congressional leaders expect to face pressure to act quickly with dedicated funding, resilient infrastructure proponents hope the government will do its homework before doling out monies.

“Harvey should really serve as a wake-up call. Major flood disasters have been increasing over recent years and that trend does not look like it's about to abate,” Scata said.

Once the flood waters recede, the pressure will be “less about airlifting grandmothers from rooftops and more about getting money out to communities quickly” John Williams, chairman and CEO of Impact Infrastructure, told Bloomberg.

“Our federal government is going to get tons and tons of requests for enormous amounts of money and there will be lots of pressure to provide that money rapidly with minimal vetting or consideration as to whether or not dollars are spent on the most appropriate tactics or strategies,” Williams said.

Federal and state leaders need to pause long enough to make sure money being spent will help prevent future damage, Williams said. “The impression I get from the administration is that they are looking to expedite infrastructure projects as quickly as possible, and trying to do that does not bode well for making those same projects resilient,” Scata told Bloomberg.

President Barack Obama in 2015 ordered infrastructure projects using federal dollars to be resilient to climate change. However, President Trump recently rescinded that order, much to the frustration of industry groups like NRDC.

In the absence of any regulatory requirements, Congress can impose restrictions on how recovery dollars are spent, Scata said. The Disaster Relief Appropriations Act of 2013, which provided about $50 billion in recovery funds in the wake of Hurricane Sandy, set aside a portion of funds intended for disaster resilience and hazard mitigation. Congress should do that again, Scata thinks.

“If we were really serious about making sure that infrastructure lasts as long as intended and the American public is getting their dollar's worth out of federally-funded projects, then it really has to be done in a manner that is resilient to the future of more extreme flooding,” Scata said.

Rep. Matt Cartwright, D-Pa., wants the federal government to apply the same principle of safeguarding investments to federal assets. The Democrat says he will introduce legislation calling on the federal government to implement government-wide resilience and risk management priorities.

“It's a zero-cost bill that compels the federal government to prepare for the threats posed by extreme weather events. Preparedness reduces costs, safeguards our economy and, most importantly, saves lives,” Cartwright said in a statement to Bloomberg.

This fall Congress will have to tackle both a debt ceiling and the annual budget process in addition to several expiring authorizations. Now there will likely be a special appropriation to cover recovery from Hurricane Harvey.

“I would like to think that those dollars will be made available, but time will tell. I have no reason to believe that they won't, but we are living in unpredictable times,” said Williams.

The question of whether global warming was responsible for Hurricane Harvey, or where the fault lies for the storm and the damage it caused is only beginning to be discussed. And, the issue of returning to requirements for future investments that have recently been rejected would certainly be controversial.

Still, Harvey almost certainly will mean shocks to each of the many systems involved, and could mean some permanent changes. The coming debate over cleanup and repair spending will be intense, and should be watched carefully by producers as it proceeds, Washington Insider believes.

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