Washington Insider -- Thursday

New Infrastructure Funding Fight

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

Trump May Pull US from Paris Climate Accord

President Donald Trump will announce this afternoon whether to pull the United States from the global Paris climate change agreement. Early on Wednesday, a White House official said there could be "caveats in the language" announcing a withdrawal, leaving open the possibility the decision is not final.

Exiting the deal would fulfill one of Trump's signature campaign pledges, but would certainly anger allies that spent years negotiating the accord to reduce carbon emissions. While Trump currently favors an exit, he has been known to change his thinking on major decisions and seeks advice from inside and outside advisers, many with differing agendas, until the last minute.

If Trump follows through with withdrawal from the accord, it would clearly make the outlook worse, concurred Climate Interactive, a team of modelers backed by institutions including the MIT Sloan School of Management and the Rockefeller Brothers Fund. They estimate the world would warm by 3.6 degrees Celsius (6.4 degrees Fahrenheit) by 2100 when compared with pre-industrial levels if Trump quits the accord, more than the 3.3-degree baseline scenario (which assumes the U.S. remains in the agreement).

However, not all are convinced of the dire situation if the US exits the deal. While such an action would be "disappointing," European Commission Vice President Maros Sefcovic said, it would not be the end of the world. "For Europe there is no plan B, because we do not have a planet B,” Sefcovic told reporters. "If they decide to pull out this would be disappointing, but I really don’t think that this would change the course of mankind.”

Further, he argued the business case for investing in renewable energy will still be a focus for the U.S. that will see the country pursue cleaner energy sources.

Grocery Manufacturers Call for Nutrition Facts Deadline Pushback

The Grocery Manufacturers Association is using the Trump administration's effort to pare back regulations that burden manufacturers as an opportunity to push for coordination of the compliance deadlines for the Nutrition Facts label update and the GMO disclosure standard.

The Commerce Department could release as early as this week a report outlining recommendations for reducing regulations on U.S. manufacturers, pursuant to a memorandum from President Donald Trump. GMA, which says it is directly responsible for nearly 16% of U.S. manufacturing employment, submitted comments Wednesday, at the close of the public comment period for the Trump-ordered effort.

GMA called for the Nutrition Facts deadline to be delayed until May 2021, arguing that if the regulatory deadlines were better coordinated, it would save the industry nearly $2 billion.

Currently, food packaging must reflect the updated Nutrition Facts label as of July 26, 2018, though small manufacturers will have one more year to comply. And as a result of the GMO disclosure bill passed last year, USDA has until July 29, 2018, to finalize disclosure rules for products that feature GMO ingredients, a standard that will likely not take effect for several years thereafter.

Washington Insider: New Infrastructure Funding Fight

The Hill is reporting this week that the White House and Congress are headed for a fight over President Trump’s desire to build new tollways on U.S. highways. The group says that the administration is already drafting plans to lift current tolling restrictions as part of an effort to upgrade the nation’s infrastructure.

At the same time, the outcome of this fight is not certain, The Hill says, and the contentious idea will be a tough sell in Congress, where lawmakers have generally been reluctant to broach the “unpopular subject.”

“I’m not a big fan of tolling. I don’t like paying for a road twice,” Rep. Sam Graves, R-Mo., chairman of the Transportation and Infrastructure Committee's highways and transit subcommittee, said last week. At the same time, Graves said: “Everything’s on the table.”

The administration laid out Trump’s vision for a $1 trillion infrastructure package in his budget proposal recently, offering the first real glimpse of the highly anticipated plan. His idea for revitalizing U.S. roads, bridges, airports and other public works relies heavily on private companies instead of the federal government to back transportation projects, which he says would speed up project delivery and bring down costs.

A six-page fact sheet on the infrastructure plan says Trump will pursue a proposal to lift a federal ban that prevents tolling on existing lanes of interstate highways. The infrastructure outline also calls for allowing private companies to construct, operate and maintain interstate rest areas.

When Congress created the Interstate Highway System in 1956, states were prohibited from tolling most new roads, with the exception of states that already had tolls in place. However, lawmakers have slowly chipped away at the ban. Tolling is now allowed to add new capacity to an interstate highway or to reconstruct a bridge.

Congress also created a pilot program in a 1998 highway bill that allows three states to explore tolling on their interstates, though none of them has yet utilized the program. In addition, the administration’s tolling proposal would need to win approval from both the tax-writing panels and the transportation authorizing committees before being brought to the floor. “This is an issue that has been talked about for quite a while,” Transportation Secretary Elaine Chao told the press recently.

Cash-strapped cities and states have long struggled to raise revenue for transportation projects. Proponents of tolling say it gives states more flexibility to pay for local transportation projects and would encourage more private sector involvement — two core principles in Trump’s infrastructure initiative. Supporters also argue that it makes sense to charge motorists directly for the roads they use.

“We applaud President Trump’s support and call on Congress to immediately join with the President to reduce burdensome regulations that prevent state and local governments from utilizing all available funding mechanisms,” Patrick Jones, executive director and CEO of the International Bridge, Tunnel and Turnpike Association said.

There are currently over 5,900 miles of toll roads throughout the U.S., generating over $13 billion in annual revenues to help make infrastructure improvements, according to Jones’ association.

Still, there has been far less enthusiasm for erecting toll roads on existing interstate highways. Critics point to the fact that the three states with the authority to toll their interstates have not done so, and two of them, Virginia and North Carolina, even gave up their slots in the pilot program.

“It’s very difficult, because people don’t like it,” Rep. Peter DeFazio, D-Ore., ranking member on the Transportation and Infrastructure Committee, told The Hill. “If Republicans want to hand us the House, I urge them to adopt these policies.”

Other skeptics, including the trucking industry, argue that tolling could create a new slew of problems, such as more traffic on local roads.

“Tolls also hurt businesses, communities and economies where they are located,” said Stephanie Kane, spokesperson for the Alliance for Toll-Free Interstates. And, there is already growing concern among Democrats and rural Republicans that the private-sector model favored by Trump would neglect some critical infrastructure needs, The Hill notes. Public-private partnerships allow private firms to bid on transportation projects, build and maintain the project for a set amount of time, and recover costs. However, private firms would only be attracted to projects that can recoup their investment costs through some sort of revenue stream, such as tolls or user fees.

In addition, the tolling proposal could further add fuel to critics’ claim that the White House infrastructure initiative will amount to a “corporate giveaway” for wealthy private investors. The Congressional Progressive Caucus, in a warning about the impacts of Trump’s plan, “In reality, President Trump and Congressional Republicans are pushing a trillion-dollar corporate giveaway that would create tax incentives for Wall Street to privatize our roads, bridges, sanitation systems, and utilities, while raising tolls, fees, and bills — all through taxpayer subsidies,” the CPC outline says.

So, we will see. Attention to infrastructure was a key part of the Trump campaign, but tying that investment to user-tolls may be seen as dampening its appeal. Still, the need to upgrade the national infrastructure is real and widely appreciated, so the outcome of this battle is important to producers and should be watched closely as it develops, Washington Insider believes.

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