Washington Insider-- Friday

Searching for Broader Support in Infrastructure

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

Reuters: Biden EPA Mulling Combining 2021, 2022 Biofuel Requirements

The Biden administration is mulling a plan to combine the 2021 biofuel (and 2022 biodiesel) proposed levels with those for 2022 biofuels (and 2023 biodiesel). This would not be without precedent, as there was a similar action in 2015 when the Obama administration issued the 2014, 2015 and 2016 biofuel requirements at the same time.

EPA did not comment on the possibility except to say the agency was looking at options.

The coming biofuel decisions are among several the Biden EPA has in front of them, including decisions on small refinery exemptions (SREs) which they say will not be made until after the U.S. Supreme Court rules in a case relative to the 10th Circuit Court decision which invalidated three SREs for the 2016 compliance year.

EPA has also come out and said they now back the 10th Circuit reading, signaling that the administration may make limited use of the SREs in the future.

Still Waiting On US-EU Tariff Suspensions In Aircraft Dispute

The Office of the U.S. Trade Representative published the formal notice of the suspension of additional tariffs on goods from the UK for four months, with the tariff suspension effective March 4 in the civilian aircraft dispute.

The UK had suspended its tariffs on U.S. goods as of January 1.

But there has not yet been the formal notice on a suspension of tariffs between the U.S. and European Union (EU) that was announced this week. In announcing the two sides would suspend tariffs for four months in a bid to work out a resolution to the dispute, the countries said the suspension would be “effective as soon as the internal procedures on both sides are completed.”

Presumably, that means for the U.S. side that the notice be published in the Federal Register, but so far there has been not action taken as of yet.

Washington Insider: Searching for Broader Support in Infrastructure

Bloomberg is reporting this week that a key discussion underway now concerns whether the next legislative goal be bipartisan or single-party only? The current view is that the administration will need GOP support for central parts of an expected infrastructure package which can't pass through expedited procedures.

After advancing the new COVID-19 relief package without Republican support, the Biden administration and congressional Democrats have signaled interest in greater bipartisan support for infrastructure and haven't ruled out using reconciliation to achieve that. One option would let them pass a bill without Republican support in the Senate, but would limit it to provisions that affect revenue or spending.

“We don't prefer going solo,” said Cedric Richmond, a senior adviser at the White House. “We may have to do that, but that's not our first choice.”

Tied to the infrastructure push, lawmakers face a Sept. 30 deadline to reauthorize highway, transit, and rail programs. Analysts think that much of what Congress would do in a surface transportation reauthorization bill, including moving funds from the general fund to the Highway Trust Fund, can't be done under the current rules for budget reconciliation. That could make it harder to reauthorize highway programs at the same time enacting an infrastructure package.

Reconciliation means problems for the administration's agenda because of things that “do not fit,” said Tori Gorman, policy director for the Concord Coalition, a nonpartisan group that focuses on the federal budget.

Rep. Peter DeFazio, D-Ore., Chair of the House Transportation and Infrastructure Committee, said he is “not ready to take any option off the table at this point.” Rep. David Price, D-N.C., chair of the House Appropriations panel that oversees transportation, said he is working with the administration to determine the best path forward — including how to structure a major infrastructure package alongside surface transportation reauthorization.

His preference is to “move forward on a robust infrastructure stimulus plan that is as bipartisan as possible,” he said. “The reconciliation process comes with a host of restrictions and limitations, but it is a potential option,” he added.

Neither lawmaker described how they would approach elements of the highway bill that can't be passed under reconciliation.

The Senate's Byrd Rule, adopted in the 1980s, allows reconciliation to be used only for provisions that affect the deficit and prohibits “extraneous” material if Senators enforce the rule. Analysts say the traditional way that surface transportation programs have been funded wouldn't comply with that rule.

The Highway Trust Fund, the main source of federal money for highways and transit, is nearing insolvency. Last year's House infrastructure bill, which some Democrats plan to use as the template for this year, included a $145.3 billion transfer from the general fund to the Highway Trust Fund.

That transfer likely wouldn't be possible in reconciliation because it wouldn't affect the deficit, said Jeff Davis, a senior fellow with the Eno Center for Transportation think tank. Outlays from the fund also wouldn't meet reconciliation requirements.

Davis said highway bills passed using regular order have been able to inject funding into the trust fund to keep it solvent. “But the downside is that everything in reconciliation has to be completely on the mandatory side of the scorecard, which means that you can't really do any spending from the trust fund the way it's currently set up, and you can't do any bailout of the trust fund because those bailouts don't score,” he said.

However, Congress could tweak the rate of the motor fuels tax — the main source of money for the Highway Trust Fund — under reconciliation since it would affect revenue, Davis said.

Senators may also have an opportunity to include specific scoring directions in the budget resolution that would lay the groundwork for the bill passed using reconciliation, the Concord Coalition's Gorman said.

The Biden administration campaigned on a $2 trillion infrastructure package to help with economic recovery and tackle climate goals. Mandatory spending on infrastructure could pass through reconciliation, but would need to follow stricter guidelines and might still face hurdles depending on decisions by the Senate Parliamentarian rules.

Legislation under the Byrd Rule can't increase the deficit beyond a designated time frame, such as 10 years, so spending on infrastructure would have to be temporary or have a corresponding offset, said Zach Moller, deputy director of the Economic Program at the think tank Third Way.

That restriction would make it difficult to fund larger projects like high-speed rail, which can take many years to develop and construct.

So, we will see. There appears to be solid political support for infrastructure investment just now, but whether that would attract minority support in the Senate remains to be seen. This is likely to be an important debate producers should watch as it emerges, Washington Insider believes.

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