Washington Insider--Wednesday

By DTN's Washington Insider

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer. Editor's Note: Contains corrections on USDA Secretary Vilsack's comments regarding COOL.

Congress Losing Patience With EPA's Performance on Renewable Fuels

The Environmental Protection Agency has failed to meet the statutory deadline for announcing the nation's annual Renewable Fuels Standard since 2013. The announcement, which is required by Nov. 30 for the following calendar year, has not yet been made for 2014 or 2015.

There are indications that some in Congress will seek to amend the section of federal law covering the RFS, but it is unclear how successful those efforts might be. Renewable fuels, especially ethanol, remain a politically charged issue that enjoys strong support from members of Congress from Midwestern states.

Among lawmakers likely to be active on the RFS front is House Energy and Commerce Committee Chairman Fred Upton, R-Mich. Upton led a similar effort in the last Congress. His committee is likely to hold hearings this year on the renewable fuels section of the Energy Independence and Security Act (EISA), but industry observers predict action to reform or repeal the RFS will not take place until 2016, if at all. For one thing, while the Senate Environment and Public Works Committee is also likely to hold hearings on the law, committee Chairman Jim Inhofe, R-Okla., says that reforming the RFS is "not high on my to-do list."

***

Railroads Opt for Safer Oil Tankers Over Slow Speeds

With increasing amounts of oil being moved around the country by rail, public officials at all levels, along with citizen groups, are increasingly concerned about the safety issues raised by the increased traffic. Their concern appeared to peak following the derailment of an oil tanker train in Quebec in July 2013 that killed 47 people, but haven't subsided much in the interim.

The railroad industry acknowledges these concerns and plans to make oil shipments less dangerous by building or retrofitting a fleet of tanker cars with thicker walls for added safety. Matt Rose, chairman of BNSF Railroad, said at a conference in Washington this week that railroads have supported thicker walls for rail cars, though they have opposed further speed restrictions, which safety advocates say are necessary to reduce risks.

A "stronger tank car is warranted" and is preferable to other proposed safety measures such as new speed limits, which would slow the delivery of a variety of goods, said Rose. In a set of proposed new rules, federal regulators estimate that slowing trains to a maximum of 40 miles per hour from 50 mph can reduce the severity of an accident by 36 percent. Railroads already have agreed to slow to 40 mph from 50 mph when carrying crude through cities known as High Urban Threat Areas.

With more rail oil tanker cars being moved to refining cities, slower train speeds are certain to cause bottlenecks around the country, as witnessed when farmers sought to clear their 2013 crops out of storage in advance of the 2014 harvest. Whether regulators will allow trains to travel at higher speeds as long as their cars are safer appears to be an iffy proposition.

***

Washington Insider: The Secretary Calls for Trade Advice

Of all the tough issues that seem to stump Agriculture Secretary Tom Vilsack on a pretty regular basis, the matter of country of origin labeling seems among the most baffling. For example, when the World Trade Organization said the original rules were not giving consumers useful information, but were costing producers -- especially those from Mexico and Canada -- plenty, Vilsack bought into recommendations to make the rules even tougher.

With the WTO unimpressed by that change Vilsack is turning to constituents and asking what should be done. This plea for ideas comes in spite of the fact that he has at hand perhaps the most impressive aggregation of economists and trade policy experts available anywhere.

One stumbling point is the insistence by one part of the industry to highlight the use of young livestock imports — feeders — from Canada and Mexico. Under the present rules, meat from imported feeders cannot receive the top U.S. label no matter how many bushels of Iowa corn they consume.

Instead, meat from those animals is required to be segregated, and the Canadians, Mexicans and WTO are crying foul. There are other aspects of the COOL law the WTO doesn't like, but the requirement for "100 percent domestic content" for the top meat labels likely is a major problem.

Mostly, the press has gone easy on the secretary, accepting his complaint that no easy fix is likely to be found. For example, Vilsack recently told the American Farm Bureau that it is difficult to come up with an effective labeling program for country-of-origin "without segregating livestock," a costly process. He takes the position that what he sees as a segregation requirement is the "area of the USDA rule" that hit a stumbling block with the WTO. He didn't elaborate.

Vilsack is reported to have said, "I'm now between a rock and a hard spot where Congress told me to do one thing and the WTO tells me I can't do what Congress told me."

Observers suggest that few U.S. labeling programs require that high of a domestic share, that perhaps using imported feeders should not be enough to prevent the whole product from being labeled as a U.S. product. Or, maybe that's not the problem at all, but, if so, someone needs to make this clear. What, exactly, does Congress need to change?

Secretary Vilsack is now charged by law to tell the Congress by May first what should be done. What he keeps saying sounds rather like he is willing to risk heavy WTO sanctions (assuming these first are approved by the WTO) rather than spell out a labeling policy that will pass muster with the WTO. This

is generating a considerable level of criticism from observers who see Vilsack as the manager of policies intended to improve U.S. access to growing markets worldwide, but who for now seems unable to see beyond the protectionist efforts put forward by activists, Washington Insider suggests.

---

Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN's Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the U.S. Ag Policy, U.S. Farm Bill and DTN Ag News sections on their News Homepage.

If you have questions for DTN Washington Insider, please email edit@telventdtn.com

(GH/CZ)

Copyright 2015 DTN/The Progressive Farmer. All rights reserved.