Washington Insider -- Monday

Pruitt Makes RFS Commitments

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

Ag Officials See High Stakes In NAFTA Negotiations

Agriculture officials from the U.S., Canada and Mexico are proposing more state and provincial involvement in negotiations for the North American Free Trade Agreement (NAFTA), representatives from all three countries said in a communique released during the National Association of State Departments of Agriculture' (NASDA).

"The Ministers, Secretaries, Commissioners, and Directors of the State and Provincial departments of agriculture from Canada, Mexico and the U.S. emphasize the vital importance of the North American Free Trade Agreement (NAFTA) to the agriculture and food processing industries across the continent," the communique read.

"Since NAFTA came into effect, these industries have become increasingly integrated, helping North America become a competitive force internationally. The ability to coordinate, collaborate, and create agriculture and food products together has made North America a successful economic region that is well positioned to continue providing the world with high-quality and safe food. Delegates discussed the importance of NAFTA and the usefulness of state and provincial attendance at negotiating rounds to directly engage federal negotiators on agri-food discussions."

The comments were given the NASDA representatives during their annual Tri-National Agricultural Accord meeting in Denver, Colorado.

States are working on ways to modernize the agreement, NASDA President Steven Reviczky said at the gathering. "We're encouraging federal officials to pursue greater market access for U.S. products, especially into Canada," Reviczky told Bloomberg. "We want to enhance the opportunities for state and provincial agriculture officials to provide input to our federal governments, and we want to enhance regulatory cooperation and coordination, said Reviczky, who also is Connecticut commissioner of agriculture.

Pacific Alliance Looks to Bolster Ties

The four countries that form the Pacific Alliance will sit down Oct. 23 to discuss options to fully incorporate the first associate members since the alliance was formalized in June 2012.

An expanded Pacific Alliance -- currently made up of Chile, Colombia, Mexico and Peru -- could become the cornerstone for trade in the region given the general uncertainty of trade. New alliance members would include Australia, Canada, New Zealand and Singapore.

"The alliance wants to become a platform with a global outlook, with an emphasis on the Asia-Pacific. Negotiations with these four countries is a clear step in that direction, making us the most important integration initiative in the region today," Peruvian Trade Minister Eduardo Ferreyros told Bloomberg.

Washington Insider: Pruitt Makes RFS Commitments

Several commitments on actions under the Renewable Fuel Standard (RFS) have been made by Environmental Protection Agency (EPA) Administrator Scott Pruitt to a group of U.S. Senators, including on the point of obligation under the program, mandate levels, E15 and making exported biofuels eligible to show compliance with RFS mandates.

As DTN reported Oct. 20, Pruitt, in a letter to seven senators, laid out several policy pledges on issues that have been raised by lawmakers backing biofuels. The letter came just a day after reports indicated the White House ordered EPA to back away from several policy changes that had raised concerns with lawmakers backing U.S. biofuels.

A petition to shift the RFS point of obligation to blenders from refiners and importers has been reviewed, Pruitt said, and "the record demonstrates that granting that petition would not be appropriate." He told lawmakers he has now directed staff to "finalize this decision within 30 days."

All indications have been that EPA had already made this decision but has yet to announce it publicly. This assurance from Pruitt would appear to set the stage for the decision to be announced before the Nov. 30 deadline for the final RFS mandate levels.

Meanwhile, EPA will meet the requirements of law to issue a final Renewable Volume Obligations (RVO) rule by Nov. 30, Pruitt stated. While the final process is ongoing in determining the final RVO rule, Pruitt said "preliminary analysis suggests that all of the final RVOs should be set at amounts that are equal to or greater than the proposed amounts, including at least 2.1 billion gallons for biomass-based diesel in 2018 and 2019." The comment period closed Oct. 19 on a proposal from EPA to lower the biomass-based diesel levels for 2018 and 2019 and thus the overall RVO levels. Pruitt's pledged numbers would indicate that lowering is now off the table.

Lawmakers have also been pushing EPA for a nationwide Reid Vapor Pressure (RVP) waiver that would allow year-round sales of E15. Pruitt noted he has directed the agency to "actively explore whether it possesses the legal authority to issue such a waiver." He called on lawmakers to work with the agency on the "important issue." EPA under prior administrations has maintained they do not have the authority to grant the RVP waiver for E15. This would appear to still be the case since Pruitt is requesting lawmakers' help in addressing the matter.

One possibility presented to EPA was to make exported ethanol count toward RFS compliance. Currently, the Renewable Identification Numbers (RINs) from exported ethanol do not count toward RFS compliance. "EPA has not taken any forma action to propose this idea, nor will EPA pursue regulations," Pruitt said of the effort that was touted as a way to stabilize compliance costs. Lawmakers appear to have headed off this potential change in U.S. biofuel policy before it made it too far down the regulatory pathway.

"I am appreciative of Administrator Pruitt's pledges to rural America, and I will continue to work collaboratively with the EPA going forward on this and other issues," Sen. Joni Ernst, R., Iowa, said in a statement after releasing the EPA letter. Ernst had previously indicated she was not yet willing to support EPA air nominee Bill Wehrum but all indications are this should shift her stance and allow the nomination to move ahead. The Senate Environment and Public Works Committee this week postponed a vote on the nomination of Wehrum and others for posts at EPA as Ernst had not signaled her support, putting the nomination in jeopardy since Republicans hold a one-seat advantage on the panel. This would appear to put to rest several issues that have built up on biofuel policy, at least for the time being, Washington Insider believes.

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