Washington Insider -- Wednesday

Lobbying Seems to Pay on E15

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

CPTPP To Be Activated After Australia Ratifies Trade Pact

Australia has become the sixth country to formally ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is the number required for the 11-nation trade deal to be activated.

The agreement will come into effect on December 30, 2018, at the end of a 60-day countdown triggered by Australia’s ratification, and will reduce tariffs for a number of agricultural commodities including dairy products, beef and pork among many others.

December 30 is a significant date for the agreement to be activated, as it makes 2018 ‘Year 1’ of the agreement and two days later January 1 will mark the start of ‘Year 2’.

Japan’s tariff reductions will be applied on April 1 each year, while for the rest it is January 1. Countries that have not yet ratified the deal will face a delayed schedule of tariff cuts.

Canada and New Zealand have both also ratified the Pacific Rim trade pact in the past week, joining Mexico, Japan and Singapore. The other members who have yet to ratify the agreement are: Brunei, Chile, Malaysia, Peru and Vietnam.

“I expect other signatories will come on board after the CPTPP enters into force, as many are working hard to progress their applicable domestic procedures,” New Zealand Trade Minister David Parker said in a statement. “As a result, we could well see other signatories in a position to ratify over the coming weeks and months.”

The U.S. pulled out of the Trans-Pacific Partnership agreement days into the presidency of Donald Trump and the US is now pursuing trade negotiations with Japan.

FDA Signals Move To Modernize Oversight of Plant and Animal Biotech

FDA says it is making progress on modernizing its approach to regulating plant and animal biotechnology and intends to increase stakeholder outreach and update guidance for developers.

The agency on Tuesday (Oct. 30) released its "Plant and Animal Biotechnology Innovation Plan," outlining priorities for how to clarify and revamp its review of biotech products in a manner that encourages developers but ensures safety.

The six-page action plan is short on specifics but generally suggests the agency is bullish on the potential benefits from both plant and animal biotechnology and is keen to promote development with a "science- and risk-based approach" to regulation.

Biotechnology offers "tremendous opportunities for advancing public health," FDA Commissioner Scott Gottlieb and Deputy Commissioner Anna Abram said in a joint statement. "Promising new technologies that can edit animal and plant genomes have the potential to improve human and animal health, animal well-being, food productivity and food security."

New food varieties and disease-resistant crops are some of the key biotech products that can help improve human health, the FDA officials said.

The plan lays out priorities across three areas: promotion of product innovation and the use of "modern, efficient and risk-based regulatory pathways"; strengthening public outreach and communication; and increasing engagement with domestic and international partners.

Key to the revamp of FDA's regulatory oversight will be the release of new industry guidance for developers of animal biotechnology – sometime next year – to clarify the agency's requirements for product developers.

Washington Insider: Lobbying Seems to Pay on E15

Roll Call is reporting this week that “biofuel groups upped their spending on lobbying this year,” and that to nobody’s surprise, pressure on lawmakers and the Trump administration on renewable fuels issues “appears to be paying off.”

EPA had argued previously that E15 contributes more to summer smog than the more commonly sold gasoline with 10 percent ethanol, Roll Call said. It linked the administration’s support to increased spending. For example, the report said that the Renewable Fuels Association spent $1.19 million in the most recent lobbying reporting period, up from $908,000 in 2017.

The report notes that EPA can temporarily exempt some small refineries from their renewable fuel obligations if they can demonstrate that having to blend biofuels into gasoline is causing them financial hardship. Under former EPA Administrator Scott Pruitt, several large refiners — including San Antonio, Texas-based Andeavor, which is owned by Marathon Oil — were granted such waivers, angering biofuel groups and their congressional backers.

The groups and their congressional supporters, led by Iowa Republican Sens. Charles Grassley and Joni Ernst, “have sustained pressure” on the administration for much of this year, meeting with President Donald Trump at the White House and reminding him of his campaign promise to support corn growers and ethanol producers.

The EPA now “intends” to propose a rule by February on E15 and finalize the rulemaking in May, according to the Unified Agenda, which outlines the administration’s regulatory priorities.

RFA President and CEO Geoff Cooper recently told the press that he was optimistic that the EPA will complete rulemaking in the ambitious timeline it has set.

Roll Call reported that the Advanced Biofuels Association spent $320,000 from Q1 to Q3, up from $270,000 in the same period last year, and is on pace to surpass the $360,000 it spent overall in 2017, Roll Call said.

Growth Energy, another biofuels trade group, spent $1.37 million between January and September, up from the $1.14 in the same period last year, the public records show. While spending during the third quarter alone was $5,000 less than the $405,000 in Q3 2017, this year’s overall spending has already exceeded the $1.35 million the group spent last year.

The groups focused on a number of targets, including several bills related to the Renewable Fuel Standard (RFS) that would ease limits on E15. They also pushed against other bills such as the one by Rep. Bob Goodlatte, R-Va., which would reduce the volume of biofuels mixed in transportation fuels and a second bill that would repeal the RFS program.

Even as the biofuels industry pushes for higher ethanol blends, Roll Call says support in Congress may be weakening. For example, some Democrats in Congress who once supported the RFS now worry about environmental harm as wildlands are converted to corn and soybean farms. They have been joined by oil patch lawmakers like Senate Environment and Public Works Chairman John Barrasso, R-Wyo., and Sen. James Inhofe, R-Okla., who have taken the side of the oil industry and who frequently call for a repeal or overhaul of the RFS.

These competing views in Congress could at least complicate any passage of RFS legislation, Roll Call says. In addition, the leading oil trade group, American Petroleum Institute, is threatening to sue the administration if it writes a rule to lift the summer ban on E15 sales.

Renewable fuel advocates say the White House has not yet decided on the “hardship waivers” for ethanol producers — although the EPA has taken steps to increase transparency on their use after complaints from opponents that it was shrouded in secrecy. Biofuel backers say the waivers hinder demand for their products and are sometimes given to refineries that cannot demonstrate that they are financially struggling.

The group argues that “there is really demand destruction from those waivers,” Paul Winters, a spokesman for the National Biodiesel Board, said of one the group’s top lobbying issues, which also includes a push for a now-expired biofuels tax credit.

Winters said demand for about 300 million gallons of biodiesel has been lost because of the waivers, which were intended for struggling refiners.

“We are going to continue to ask our congressional champions to echo our message,” Winters said.

American Fuel and Petrochemical Manufacturers (AFPM), a trade association that represents refiners and has spent less this year so far on lobbying, did not directly discuss the group’s strategy but said the decision to lift E15 restriction is “unlawful and would add to problems surrounding RFS”.

“AFPM has been very clear that we believe the President’s proposal to waive the rules for E15 is unlawful,” AFPM President and CEO Chet Thompson said in an emailed response. “We are certainly considering our options to counter this proposal and continue to push for reform of the RFS that works for all stakeholders.”

So, we will see. Renewable fuel advocates likely will retain strong access to the administration, especially if grain markets continue to be weak. However, the petroleum industry also appears to have strong access to the administration, so the fight over renewable fuels supports likely will intensify in the coming months, Washington Insider believes.

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