Washington Insider -- Friday

Fighting Virus Impacts

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

Five US Governors Seek Waivers on Biofuel Requirements

Governors of five U.S. states are asking the Trump administration to waive biofuel blending requirements on the basis that complying with the mandates post “severe economic harm” to the economy.

The governors submitted a series of letters to EPA, including Greg Abbott of Texas, Gary Herbert of Utah, Kevin Stitt of Oklahoma and Mark Gordon of Wyoming. Louisiana Governor John Bel Edwards made a similar request on April 7, according to Reuters.

EPA now has 90 days to decide on the matter.

The governors cite a spike in the cost of Renewable Identification Numbers (RINs) – credits refiners can buy to demonstrate compliance with the requirements. They also cited the COVID-19 pandemic as another factor, noting that it has already forced the closure of at least one oil refinery.

RIN prices have nearly doubled this year, a situation driven in part by a decision by the 10th Circuit Court that three small refinery exemptions (SREs) for the 2016 compliance year were invalid. EPA opted to not appeal that ruling, sending RIN prices rising. An appeal by the refiners impacted directly by the decision was also rejected by the court.

Senate Environment and Public Works Committee Chairman John Barrasso, R-Wyo., issued a statement backing the requests. “I fully endorse the governors' request to reduce costly biofuel mandates on America's refineries,” he said. “As the global coronavirus pandemic continues, fuel demand has dropped dramatically. At the same time, compliance costs under the Renewable Fuel Standard have quadrupled since the start of the year. American refineries are now fighting for their lives.”

EPA can waive the RFS requirements, in consultation with the Secretaries of Agriculture and Energy, under certain criteria. The waiver can be issued if the Administrator determines – after a notice and comment period – that implementation of the RFS requirements would severely harm the economy or environment of a state, a region, or the United States.

There have been requests for waivers previously, with the most recent ones taking place in late 2017 and early 2018. EPA has not approved any of the waiver requests previously sought based on information the agency has released on requests since 2008.

USDA, DHS Announce Shift on H-2A Workers

USDA and the Department of Homeland Security (DHS) will allow more flexibility for employing H-2A workers already authorized to work other jobs in the U.S. and allowing those workers to stay beyond the period allowed under current rules via a temporary final rule the agencies released Wednesday.

The decision means companies seeking H-2A workers can start employing certain foreign workers who are currently in H-2A status in the U.S. immediately after United States Citizenship and Immigration Services (USCIS) receives the H-2A petition.

But those workers cannot be employed “earlier than the start date of employment listed on the petition” and must already be in the U.S. with a valid H-2A status, the departments added.

Those already in the U.S. will be allowed to stay beyond the three-year maximum allowable period under the new rule.

The rule will become effective when published in the Federal Register.

Washington Insider: Fighting Virus Impacts

The Trump administration is proposing to make purchases of milk and meat products as part of a $16 billion to $18 billion initial aid package for farmers rattled by the coronavirus, according to USDA Secretary Sonny Perdue.

“We want to purchase as much of this milk, or other protein products, hams and pork products, and move them into where they can be utilized in our food banks, or possibly even into international humanitarian aid,” Perdue said on Fox Business News on Wednesday. He also said he wants to include direct financial assistance to farmers in the bailout.

The combination of direct payments to farmers and bulk government purchases of commodities parallels the approach the administration followed in its $28 billion agriculture trade bailout over the past two years. That aid included $1.2 billion in bulk purchases in the first year including pork, beef, dairy and fruits and vegetables and an additional $1.4 billion for such purchases the second year.

Many farm groups say they will need even more assistance to make it through the coronavirus pandemic, Bloomberg said. Hog farmers have asked USDA to purchase $1 billion in pork products, compared with $559 million in the first round of trade aid and $208 million in the second year. The National Pork Producers Council, which is also seeking direct payments to farmers, anticipates a $5 billion blow from the virus if hog prices stay at current depressed levels for the remainder of the year.

In addition to milk purchases, dairy farmers have urged the administration to impose a temporary supply management program in which farmers would be paid for reducing milk production. Perdue didn’t address that request in his recent interview.

The closure of restaurants, school cafeterias and other commercial food service operations has upended the market for agricultural products, particularly dairy, meat and produce. Food service is a disproportionate buyer of cheese, butter, meat and fresh fruits and vegetables. Dairy farmers are dumping as much as 8% of their milk, according to the Dairy Farmers of America cooperative.

A shutdown of several slaughterhouses because of virus outbreaks among employees of the facilities has further disrupted hog and cattle farmers’ ability to sell their livestock. “When you have a slowdown in processing, which we’re working on to sustain as much as possible, then you have a backup in that,” Perdue said.

However, the secretary said he didn’t expect the closures to cause any shortages of meat products on grocery shelves.

The coronavirus relief bill Congress passed last month includes $23.5 billion in aid for farmers. Speaking at a news conference last week, Trump said his administration will develop a program with at least $16 billion initially for farmers, ranchers and producers.

At about the same time it reported the anticipated request for ag producer assistance, Bloomberg reported that the effort to create a five-member oversight commission to police a major part of the massive coronavirus relief programs will be in place – but after two weeks, just one member has been appointed.

The reasons for delays in choosing the chairman and three additional members aren’t clear, Bloomberg said. The deadline is less than a month away for the commission’s first report as it monitors about $500 billion of aid, including loans, loan guarantees, and investments to affected industries, including airlines.

Senate Minority Leader Chuck Schumer, D-N.Y., is the only one of the four top House and Senate leaders to make his appointment, naming Bharat Ramamurti, on April 6. House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Mitch McConnell, R-Ky., and House Minority Leader Kevin McCarthy, R-Calif., also will name members to the commission, and Pelosi and McConnell will jointly choose a chair.

Ramamurti a former aide to Senator Elizabeth Warren, D-Mass., has forged ahead on his own, asking the U.S. Federal Reserve for information on the trillions in emergency loans that the central bank plans to extend to businesses. He wrote said to Fed Chairman Jerome Powell on Wednesday that “the public deserves to know which companies are receiving taxpayer-backed lending through the Fed and on what terms.”

Aides to Pelosi, McCarthy and McConnell declined to disclose when their appointments might be announced, or why they haven’t been already.

The commission, which is to designed operate for five years is modeled after a similar temporary oversight commission that reviewed the Troubled Asset Relief Program during the 2008 economic crisis.

Pelosi, speaking on Tuesday, promised that the commission’s members would be installed, but gave no timeline. Asked whether Congress can ensure the coronavirus spending isn’t misspent or subject to corruption, she said, “Well, we have to,” adding that the commission “will be in place.”

The commission doesn’t have staff even though it’s supposed to issue its first report within 30 days of Treasury’s first distribution of funds. The panel is required to make reports every 30 days after that.

So, we will see. Day by day, the impacts of the virus continue front page news and questions of how to reopen the closed sectors of the economy and what government interventions will be required in the future continue to be bitterly contested. These are policy issues that should be watched closely by producers as these debates continue, Washington Insider believes.

Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN’s Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the US Ag Policy, US Farm Bill and DTN Ag News sections on their News Homepage.

If you have questions for DTN Washington Insider, please email edit@dtn.com