Washington Insider -- Thursday

USDA and Ethanol

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

USDA's APHIS to Publish Proposed Rule on Biotech Reg Revisions

Proposed revisions to biotechnology regulations will be contained in a proposed rule to be published in the Federal Register January 19, according to USDA's Animal and Plant Health Inspection Service (APHIS).

"The proposed rule updates the regulations in a number of areas, all within the Agency's current statutory authority under the Plant Protection Act passed into law in 2000," APHIS said in announcing the coming proposed rule which is "based on the best available science, will better enable APHIS to focus its resources on regulating genetically engineered (GE) organisms that may pose plant pest or noxious weed risks, and will enhance regulatory flexibilities that stimulate innovation and competitiveness."

Comments received during public scoping and comment periods related to withdrawal of a 2008 proposed rule, comments relative to a March 2016 notice of intent to conduct a programmatic environmental impact statement, recommendations made in two Office of the Inspector General audits, recent advances in biotechnology, provisions in the 2008 Farm Bill, and the APHIS' accumulated experience in implementing the current regulations all contributed to the proposed rule. This would be the first comprehensive revision of the regulations since they were established in 1987.

The initial steps in the process would have APHIS first assess GE organisms to determine if they pose plant pest or noxious weed risks. If APHIS no plant pest or noxious weed risk is found, APHIS would not require a permit for the importation, interstate movement, and environmental release (outdoor use) of the GE organism. Should the risk analysis reveal controls on movement are needed, APHIS will work with the requestor to establish appropriate permit conditions to manage identified risks to allow safe movement. APHIS is defining "movement" as the import, interstate movement, or environmental release (regulated controlled outdoor use such as in field trials).

GE plants that are not engineered with plant pest sequences do not fall under current APHIS regulations even though they may pose noxious weed risks. Given that, APHIS is proposing to implement the noxious weed authority to close this gap.

Ensuring a high level of plant health protection based on the best available science; improving regulatory processes so that they are more transparent, efficient, and predictable for stakeholders and the public; and providing regulatory relief that will stimulate innovation and competitiveness are the goals of the APHIS proposal, the agency said.

APHIS' proposed rule will be available for public review and comments will be accepted for 120 days beginning today through May 19, 2017. After the public comment period closes, the agency said it would "decide how or whether to finalize the regulations based on our evaluation of public comments to the proposed revisions." Further, APHIS will make available a draft programmatic Environmental Impact Statement (EIS) intended to be published for public comment soon and the agency will hold public meetings on the proposed rule during the comment period.


Ross Says He Wants More Information on Cuba and is 'Pro Trade'

Saying he does not have a "firm view" on the U.S. embargo on Cuba, Commerce Secretary-designate Wilbur Ross told Senate Commerce Committee members he would like to become more educated on the issue, which he said was complex.

Ross was asked whether he would support ending the U.S. Cuba embargo or would recommend rolling back steps the Obama administration has taken toward normalization. In response to a question from Sen. Amy Klobuchar, D-Minn., Ross said he has no opinion on whether the U.S. should roll back the Obama administration's easing of U.S. embargo travel and business restrictions against Cuba. Ross said his Cuban-American friends are divided on the issue, adding that he has never been to Cuba. Klobuchar supports lifting the embargo.

Ross reaffirmed that the North American Free Trade Agreement (NAFTA) between the U.S., Mexico and Canada will be a "very, very early topic" for the incoming Trump administration. Sen. Tammy Baldwin, D-Wis., pressed Ross on ending "Buy America" provisions in NAFTA that allow Canadian and Mexican companies to be treated like American companies in bidding on U.S. government projects. Ross said "all aspects of NAFTA would be put on the table" in a Trump administration.

Ross also said it was easier and quicker to negotiate bilateral trade deals as opposed to multilateral trade deals such as the Trans-Pacific Partnership (TPP). He said that after delving into thousands of pages on the TPP text, he found that parts "were not as advertised." In particular, he said he was unhappy with rules of origin on cars that could have TPP countries make car parts with materials from non-TPP countries that would be subject to low tariffs.

Ross said that he will work with President-elect Donald Trump to negotiate trade deals that are "sensible" and take advantage of the U.S. trading partners' desire to sell to Americans to ensure "fair trade."

"I am pro trade. But I am pro sensible trade, not trade that is detrimental to the American worker and to the domestic manufacturing base," Ross said before the Senate's Commerce, Science & Transportation Committee, which will consider his nomination.

Washington Insider: USDA and Ethanol

Amid intense producer concerns about who the new USDA officials will be and numerous other issues, USDA released a new research report on ethanol recently. It is especially timely because of the widespread talk now about pressures to cap the renewable fuels standards in the next Congress as well as growing economic pressures from increasingly competitive natural gas.

Informa Economics is reporting this week that USDA now has determined that US corn-based ethanol "reduces greenhouse gas (GHG)emissions by 43% vs gasoline" and that additional benefits are expected through 2022.

In one of his last acts as Secretary, USDA Secretary Tom Vilsack commented that unlike other studies of GHG benefits, which relied on forecasts of future ethanol production systems and expected impacts on the farm sector, this study reviewed how the industry and farm sectors performed over the past decade to assess the current GHG profile of corn-based ethanol.

"This report provides evidence that corn ethanol can be a GHG-friendly alternative to fossil fuels, while boosting farm economies," Vilsack said.

This report's finding that lifecycle GHG benefits from corn ethanol are greater than estimated by a number of earlier studies is the result of a variety of improvements in ethanol production, from the corn field to the ethanol refinery. Farmers are producing corn more efficiently and using conservation practices that reduce GHG emissions, including reduced tillage, cover crops and improved nitrogen management. Corn yields also are improving—between 2005 and 2015, US corn yields increased by more than 10%.

Between 2005 and 2015, ethanol production in the U.S. also increased dramatically—from 3.9 to 14.8 billion gallons per year. At the same time, advances in ethanol production technologies, such as the use of combined heat and power, using landfill gas for energy, and co-producing biodiesel helped reduce GHG emissions at ethanol refinery plants.

By 2022, the GHG profile of corn-based ethanol is expected to be almost 50% lower than gasoline primarily due to improvements in corn yields, process fuel switching, and transportation efficiency, the study estimates.

The report also examines a range of factors that could enhance the GHG benefits of corn ethanol production. For example, it examined the benefits of improving the efficiency of ethanol refineries and adoption of additional conservation practices on corn-producing farms. In a scenario where these improvements and practices are universally adopted, the GHG benefits of corn ethanol are even more pronounced over gasoline, about a 76% reduction.

USDA says there are several reasons this report found greater lifecycle GHG benefits from corn ethanol than a number of earlier studies did. One of the most controversial aspects of earlier estimates was the assumption that using US corn to produce ethanol would result in "indirect land use changes" as land is shifted from grass and forests to commodity production as corn demand grows. Now, new information provides compelling evidence that indirect acreage impacts have been much lower than previously projected.

For example, the primary land use response from 2004 to 2012 has been to use available land resources more efficiently rather than to expand area. Instead of converting new land to production, farmers in Brazil, India and China have increased double cropping, expanded irrigation, reduced unharvested planted area, reduced fallow land and reduced temporary pasture.

Much of the international attention on supply of corn for ethanol has focused on Brazil, where earlier estimates anticipated conversion of rainforests to commodity production. But between 2004 and 2012, even as U.S. corn ethanol production increased more than 200%, deforestation in Brazil's Amazon decreased from 10,200 to 2,400 square miles per year.

The report also demonstrates the added GHG benefits of on-farm conservation practices like reduced tillage, nitrogen stewardship, and cover crops, the practices outlined in USDA's Building Blocks for Climate Smart Agriculture and Forestry strategy, which aims to reduce GHG emissions by over 120 million metric tons of carbon dioxide equivalent per year by 2025.

Certainly, this report will provide new ammunition for ethanol advocates, including opposition to conservationists who have used earlier studies to criticize ethanol's environmental impacts. And, while the new study won't end the competition of ethanol with animal feeds and food, it likely will provide new information for a better informed debate than in the past, Washington Insider believes.

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