Washington Insider-- Thursday

The Fed's Expanding Role

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

EPA Files Response To Court Challenge On Dicamba

EPA has defended its decision to allow continued use of dicamba on soybeans and cotton, telling the Ninth U.S. Circuit Court of Appeals that it is in compliance with the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) in allowing the use of the three dicamba products through July 31.

EPA issued an order rescinding registration of Bayer's Xtendimax, BASF's Engenia and Corteva's FeXapan, and said in its court filing that action “only makes it illegal to distribute or sell that pesticide. It does not outlaw use of products already legally purchased.”

In the filing on Tuesday, lawyers for the EPA argued that spraying a pesticide that is not registered is not illegal; instead, it is only illegal to buy or sell an unregistered pesticide. EPA also said it anticipated illegal applications of dicamba could be a problem if the herbicide is immediately banned.

“When a registration is vacated, misuse of that product is no longer a violation of FIFRA,” EPA said. “The Cancellation Order addresses this indirect and potentially disruptive environmental harm. The Order plugs a regulatory gap by ensuring that existing stocks of these newly-unregistered pesticides are used safely and appropriately, and only for a limited period of time.”

Further, the agency said the court does not have jurisdiction over the decision because it is a separate administrative order than the registration that was vacated. The parties filing the action to halt EPA’s order to allow the products to be applied through July 31 have until today to file their reply.


EPA’s Wheeler Says Waiting On DOE Regarding SREs

EPA's EPA Administrator Andrew Wheeler told Brownfield that retroactive requests for small refinery exemptions (SREs) under the Renewable Fuel Standard (RFS) must be treated like other requests for exemptions.

Wheeler told the news service he was not sure how many had been filed. “The statute does allow people to file their applications for waivers at any time, and at any time is in the statute,” Wheeler stated.

“So, we have received some. We’ve not process reviewed them yet,” he observed. “We’ve sent them over to the Department of Energy when we received them and Department of Energy is currently reviewing them.” As for requests for the 2019 compliance year, Wheeler said the agency still has those to consider.

EPA data shows 27 requests are pending for the 2019 compliance year.

“We also included in the RVO [Renewable Volume Obligations] for 2020 the almost, actually over 700-million gallons for small refiners. We’ve not processed the 2019 applications because of the court decision.” The court decision referenced is the 10th Circuit Court which invalidated three SREs granted for the 2016 compliance year.

Washington Insider: Fed’s Expanding Role

The Fed is continuing to boost its visibility in the growing coronavirus fight.

Bloomberg noted that Chairman Jerome Powell told the Senate Banking, Housing, and Urban Affairs Committee on Tuesday that the U.S. economy may be entering a period of significant improvements in employment but also could leave the labor market “well short” of the robust levels seen just before the coronavirus pandemic.

Powell was repeatedly asked by about economic inequality and the unemployment rates for low-income and black Americans in light of protests sweeping the nation over police brutality and racial disparities. He responded that “the disproportionate impact of job losses on low-income Americans and minorities” is significant, and that “the economic pain was hitting hardest on those who can least afford it.”

“If not contained and reversed, the downturn could further widen gaps in economic well-being that the long expansion had made some progress in closing,” he said.

Powell also was pressed by Democrats on whether Congress should provide additional fiscal support, focusing in particular on whether budget cutbacks by state and local governments could further damage the economy if they don’t receive more aid.

Powell tried to stay out of the most partisan battles but agreed that growing inequality is a risk, Bloomberg said. He also appeared to lend his support to continuing some level of extra aid to the unemployed. “I wouldn’t presume to tell you what the Fed thinks you should do, it’s really not our role,” Powell said. “We do think you’ll want to continue support for workers in some form. There are going to be an awful lot of unemployed people for some time.”

Bloomberg also noted that the U.S. has spent more than half of the $3 trillion in economic rescue funds passed by Congress—but provided “little of the oversight intended to ensure the money goes to the right places.”

In fact, the new oversight bodies that exist are “barely functional,” Bloomberg thinks. These include a special inspector general who was recently sworn in, a congressional panel that still lacks a chairman and staff and an official that the president “quickly removed” who was going to lead a separate accountability committee.

The sheer size of the pandemic response means there’s a wide swath of issues to investigate. But mistrust in Washington is so deep that the oversight groups’ investigations are already mired in politics. Leaders of both parties have failed to agree on a chairman to lead the congressional oversight panel. And Democrats are already voicing concerns on whether Trump’s hand-picked special inspector general for the stimulus can be independent from his former boss.

While the U.S. Chamber of Commerce frets that lawmakers’ oversight will be tainted by politics, Democrats such as Senator Elizabeth Warren, D-Mass., an advocate of the watchdogs’ role, say the cash is already flowing to undeserving recipients. “We’ve seen giant public companies scoop up relief meant for small businesses, an inspector general fired, promises made to muzzle independent oversight,” Warren said.

One of the key figures in the oversight debate is Brian Miller, the former White House lawyer chosen by President Trump and sworn in June 5 as special inspector general for pandemic recovery. Democrats are deeply skeptical about how he’ll perform.

Miller must convince Democrats and the Trump administration that he’s tough, fair, and someone they should pay attention to, said Neil Barofsky, the first special inspector general who oversaw the Troubled Asset Relief Program, or TARP, amid the 2008 financial crisis. He said Miller’s most important chance to prove his independence will be his first public report, due in August.

So, we will see, as we enter an entirely new period of massive federal interventions and oversight amid an unusually contentious political campaign. Some experts continue to assure the public that strong but careful federal programs can alleviate the worst impacts of the virus and avoid a prolonged recession, or worse. In the meantime, there are desperate efforts to find and mobilize vaccines to control the infestation and death the disease carries.

Most of the approaches proposed involve high stakes and are extremely controversial, and all should be watched closely as the political season progresses, Washington Insider believes.

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