Washington Insider-- Wednesday

Iowa Pollution Case Proceeds

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

RFA Calls For Probe of RIN Prices

Possible manipulation of the market for renewable identification numbers (RINs) generated via production of biofuels should be looked at by U.S. derivative regulators and environmental officials, according to the Renewable Fuels Association (RFA).

RFA called for the investigation in an Aug. 1 letter to EPA and the Commodity Futures Trading Commission (CFTC), noting a recent unexplained rise in RIN prices, suggesting that those against the Renewable Fuel Standard (RFS) may be playing a role. "We are concerned that opponents of the RFS are similarly using the recent RIN price spike to bolster efforts to change or eliminate the program," RFA said.

Concern over "recent irregular activity and volatility" as RIN prices have climbed around 30% since mid-May was the key focus for RFA, calling on the officials to determine the "real reasons" for the rise.

"The recent spike in RIN prices appears contrived and driven by something other than basic supply-demand fundamentals," RFA said.

The two agencies earlier this year signed a memorandum of understanding (MOU) on RINs, an agreement under which CFTC said it would help EPA investigate possible fraud and abuse. Citing that MOU, RFA called for the agencies "to closely examine recent events in the RIN market to determine whether certain parties may be exerting undue influence on prices or otherwise engaging in manipulative practices."

In conclusion, RFA said, "we are respectfully requesting that CFTC and EPA explore the true causes of recent volatility in the RIN market and work together to identify methods for preventing future manipulation."

McDonald's to Remove HFCS From Buns and Curb Antibiotics in Chicken

McDonald's Corp will replace corn syrup in hamburger buns with sugar this month and has removed antibiotics that are important to human medicine from its chicken months ahead of schedule, it said on Monday, moves that are part of its drive to target increasingly health-conscious consumers.

The fast-food company also said it eliminated artificial preservatives from Chicken McNuggets and several breakfast items, including scrambled eggs.

McDonald's USA President Mike Andres at the company's headquarters said that the changes announced on Monday will affect about half its menu and more adjustments would follow.

The U.S. Food and Drug Administration has said it is unaware of any differences in the safety of foods containing equal amounts of corn syrup and sugar, or sucrose.

McDonald's said it is "following the customers" in switching to sucrose in buns used on Big Macs, Quarter Pounders, hamburgers and other sandwiches, said Marion Gross, senior vice president of McDonald's North America supply chain. "We know that they don't feel good about high-fructose corn syrup so we're giving them what they're looking for instead," she said.

Washington Insider: Iowa Pollution Case Proceeds

There is a bitter legal battle underway in Iowa, Huffington Post says and important ag groups are contributing heavily to press the fight including the Iowa Soybean Association, which represents some 11,000 growers of the state's second-most-lucrative crop. Three highly agricultural counties are involved in a controversial lawsuit brought by the Des Moines Water Works.

The lawsuit, which was filed in 2015, claims that nitrogen-rich water flowing off farms in Buena Vista, Calhoun and Sac counties pollutes the Raccoon River, which, along with the Des Moines River, provides drinking water for half a million people. The water authority wants the counties to pick up the higher treatment costs for the water.

The case has thus far been allowed to proceed, although it won't be brought to trial until next June. Meanwhile, both sides are digging in for a pivotal Iowa Supreme Court hearing on the matter set for September.

The case is widely discussed in Iowa, and is closely watched by ag interests, since if the water utility wins, it would mark the first time in the U.S. that agribusiness was required to pay for water pollution, potentially setting a precedent with nationwide ramifications.

The Iowa Soybean Association (ISA), which previously contributed $65,000 for the counties' legal expenses, considers the case a "must win." It also argues that the lawsuit is an "unfortunate distraction" from the voluntary approaches to solving the state's nutrient runoff issues that it advocates. For example, ISA's CEO Kirk Leeds says the suit is threatening progress the state has made over the past 15 years in implementing practices to mitigate runoff. The ISA pointed to the over 970,000 acres Iowa farmers have enrolled in the federal Conservation Reserve program as further signs the state's industry is on the right track toward addressing the problem.

Des Moines Water Works CEO Bill Stowe testified during an Iowa Department of Natural Resources water hearing, and is leading the utility's fight to cut pollution. He called ISA's efforts "nothing more than greenwash," and said they're claiming "some kind of environmental awareness when, in fact, they're undermining public health and environmental protections," Stowe told Huffington Post.

Stowe's utility has been spending a lot of money, too, he says -- seven figures' worth of extra treatment costs to ensure the drinking water delivered to customers is safe. He argues that the Des Moines system is home to what he calls the "world's largest" nitrate removal facility. The plant is in need of repairs and expansion, he said, thanks to the historically high amount of nitrates they've had to remove from drinking water. EPA sets a maximum contaminant level for nitrates of 10 milligrams per liter. Anything higher needs to be removed by water providers.

In 2013, when nitrate levels in the source water reached a record high, the utility's tab for additional treatment costs and lost revenue totaled $900,000, the Des Moines system said. Last year, it spent $1.5 million on denitrification efforts.

Stowe say his nitrate removal facilities must be expanded to keep up with increased nitrates in the water. He argues that tile drainage systems used by the upstream farms to reduce crop flooding should be identified as "point sources" of pollution under the federal Clean Water Act, from which they traditionally have been exempt.

John Rumpler, senior attorney at Environment America, a Boston-based nonprofit, called the case a "huge, precedent-setting" matter. His group published a report last month linking nutrient runoff from agriculture to the growth of algae blooms and dead zones that have devastated ecosystems and damaged local economies in places like Lake Erie, the Chesapeake Bay and the Gulf of Mexico. EPA has also linked nutrient runoff to acid rain and air pollution.

Some Iowa farmers have recognized the runoff problem, too, and are planting cover crops on some fields. However, Huffington Post points out that Iowa's 470,000 acres of cover crops in 2015 are still a small share of the 26 million acres of statewide cropland. The Iowa Farm Bureau argues that "this is a 35% increase over the previous year," but the Huffington Post points out that it is "still less than 2% of the total cropland."

Stowe also argues that regardless of its outcome, the suit challenges the state's political status quo, "which he says has favored agricultural interests for too long." If the Des Moines Water Works were to lose and continue to pass on costs to their consumers, "there will be a political impact," Stowe said. "Our customer base will more clearly understand why they are paying more, so we think we win anyway. We will be the long-term winners no matter what happens in our legal case."

Certainly, the Iowa case is one of several that indicate strong urban efforts to limit ag related pollution of important water sources. These are important, and have the potential to sharply increase ag regulations and should be watched closely as they proceed, Washington Insider believes.

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 US Ag Policy, US Farm Bill and DTN Ag News sections on their News Homepage.

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