Washington Insider -- Wednesday

Administration to Rethink Transport Funding

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

EPA Unveils Plan For Year-Round E15 Sales, RIN Reforms

EPA has announced its plan to allow for year-round sales of E15 (15 percent ethanol, 85 percent gasoline) and proposed reforms to the biofuel credits known as Renewable Identification Numbers (RINs).

Under the proposed expansion, E15 would be allowed to be sold year-round without additional Reid Vapor Pressure (RVP) control, rather than just eight months of the year.

“Consistent with President Trump’s direction, EPA is working to propose and finalize these changes by the summer driving season,” EPA Administrator Andrew Wheeler said in a news release.

EPA will hold a public hearing March 29 on the plans and will take public comments on the proposed regulation with an aim of finalizing the effort before the summer driving season starts June 1 – the date that also serves as the start date that blocks sales of E15 fuels in some areas of the country.

For the RIN market, EPA's is proposing the following:

Requiring public disclosure when RIN holdings held by an individual actor exceed specified limits.

Requiring the retirement of RINs for the purpose of compliance be made in real time.

Prohibiting entities other than obligated parties from purchasing separated RINs.

Limiting the length of time a non-obligated party can hold RINs.

EPA appears to be setting the stage for a 45-day comment period as a pre-publication version of the proposed rule indicates that comments will be due by April 29.

But as expected, the American Petroleum Institute pledged they would use all means to block the EPA action.

USDA Still Pressing Forward On ERS, NIFA Relocations

The push to move the Economic Research Service and National Institute of Food and Agriculture (NIFA) outside of the Washington, DC, region continue at USDA, with a funding request made in the Fiscal Year (FY) 2020 budget plan released Monday.

Congressional appropriators raised objections to plans to move the two agencies, including language in an explanatory statement accompanying the FY 2019 spending plan. They also directed USDA to include detailed cost estimates and a "detailed analysis of any research benefits" in their FY 2020 budget justification. Besides the relocations, lawmakers also opposed USDA's plan to realign ERS within under the Office of the Chief Economist (OCE) from its current position in the departments Research, Education, and Economics (REE) mission area.

USDA requested funds for the relocations in their FY 2020 budget summary, and additional details in the budget justification will follow later. The department is seeking $15.5 million for relocating ERS and $9.5 million for relocating NIFA. USDA requested $45 million to fund ERS programs in FY 2020, down 48% from FY 2019 enacted levels.

Sharp pushback to the drastic ERS budget reductions and USDA's request for relocation funds for the two agencies came from the American Statistical Association (ASA). The group has vigorously opposed moving ERS and NIFA outside of Washington and previously released an extensive analysis questioning USDA's stated rationale for the action.

Earlier this month, USDA reportedly told staff that it planned to keep 76 of around 300 ERS employees in the Washington, DC region post-relocation. Meanwhile, the department just announced today (March 12) it has whittled down potential locations for ERS and NIFA from the initial 136 expressions of interest received to a "middle list" of 67 locations.

Washington Insider: Administration to Rethink Transport Funding

The Trump administration once again is plunging into new and old battles about spending—and says it wants to rethink how federal transportation funds are used and “whether existing programs are the best way to fund infrastructure.”

Bloomberg says that this year’s White House request is $21.4 billion in FY 2020 discretionary funding for the Transportation Department — almost 22% less than estimated 2019 spending but above the $15.6 billion the administration proposed for FY 2019.

“The administration has adopted a different approach to sensitive issues,” Transportation Secretary Elaine Chao said, pointing to spending proposals for Amtrak, subsidized airline services for rural airports, Washington’s Metrorail system, and Capital Investment Grants. “Instead of just budget cuts, the administration is adopting a new approach that focuses on transitional funding along with reform requirements.”

The approach reflects how she and her department plan to address potential infrastructure legislation or surface transportation reauthorization, she said. For example, the administration would fund busses to replace Amtrak on routes extending longer than 750 miles using state-funded “robust intercity bus service,” The administration plans to provide $550 million in transition grants to support the shift as part of its plan to restructure Amtrak and focus rail service on shorter-distance routes.

The “long distance routes continually under-perform, suffering from low ridership and large operating losses of roughly half a billion dollars annually,” the proposal states.

“While we’re very much aware that long distance Amtrak routes are used by rural communities and that they are popular with certain states, the average passenger subsidy cost tends to be heavy.

“We believe that a modernization of the national network, with the right level of dedicated and enhanced Federal funding, would allow Amtrak to serve more passengers efficiently while preserving our ability to maintain appropriate long distance routes,” Amtrak’s Kimberly Woods said.

Bloomberg notes that even before anyone could ask, the deputy U.S. transportation secretary made it very clear that the administration’s 2020 budget doesn’t earmark any money for the New York-area Gateway rail project.

“Those transit projects are local responsibilities and elected officials from New York and New Jersey are the ones accountable for them,” Deputy Secretary Jeffrey Rosen said Monday. “There is no reason for the federal government to have those projects jump the line and receive massive federal subsidies for projects that presently are ineligible and which lack realistic plans and commitments,” Rosen said.

The administration’s budget proposes $325.5 million for the Northeast Corridor in fiscal 2020. Senate Minority Leader Chuck Schumer, D-N.Y., has vowed to introduce legislation tied to the next federal budget that would require the U.S. government to reimburse New York and New Jersey for any money they spend on their own.

A popular federal air quality program that targets pollution from older diesel engines would get $10 million in EPA funding, a roughly $63 million cut from 2019 and 2018 funding levels. However, Bloomberg says Sen. Tom Carper of Delaware, the top Democrat on the Environment and Public Works Committee, plans to release a bill this week that would reauthorize grants under the Diesel Emissions Reduction Act that would reauthorize the program for five more years at $100 million annually, Bloomberg said.

The National Aeronautics and Space Administration would get about $283 million more than its fiscal 2019 budget of $21.5 billion, a 1.4% boost. That would include $363 million toward the commercial development of a large lunar lander that could initially carry cargo — and later, astronauts — to the Moon’s surface.

The request also seeks about $600 million for a mission to Europa, a moon of Jupiter hypothesized to have liquid water under its frozen surface, that would launch in 2023.

Bloomberg also said that the President’s FY 2020 budget request asks for a 9% cut to nondefense discretionary spending but includes $8.6 billion for border fencing, and “trillions of dollars of cuts in the next decade to mandatory spending,” among other requests that will get a chilly reception among lawmakers.

Bloomberg also notes that governors in at least 11 states, including Michigan, Ohio and Connecticut, are pushing for new taxes, bond sales and tolls to raise money for long-needed work on roads, bridges and transit systems following the administration’s “failure” to enact a major infrastructure plan.

For example, a 10-cent-per-gallon gasoline tax increase could get final passage in Alabama this week after a Senate committee advanced the measure Monday. The push to raise billions of dollars comes after a crop of new governors from both parties took office in January and reflects expectations that there won’t be money coming from a federal government dealing with a rising budget deficit and a politically divided Congress.

Raising the gas tax is one of the most prevalent options under consideration, according to the American Road & Transportation Builders Association, which says there are proposals in 22 states to increase different types of motor-fuel taxes.

Administration budget proposals tend to get short shrift from lawmakers who must actually agree on spending plans, so this proposal likely is merely indicative of administration preferences at this point. Over the next year, budget fights are expected to be long and bitter and should be watched closely by producers as they intensify, Washington Insider believes.

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