Washington Insider-- Friday

By DTN's Washington Insider

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

Clinton Campaign Met CARB Officials from California

Discussions on how to potentially alter the Renewable Fuel Standard (RFS) mandates and shift to a market-oriented approach have taken place between the Hillary Clinton's campaign and the California Air Resources Board (CARB), according to a report from Reuters.

The discussions between the Clinton campaign advisers and CARB were confirmed to Reuters by Mary Nichols, head of the California agency. The discussions centered on whether a policy like the California Low Carbon Fuel Standard (LCFS), a market-based system rather than a mandate, could replace or augment the RFS at the national level. Nichols told the news service she suggested they could avoid political backlash by focusing on other carbon-reduction strategies instead, such as expanding electric vehicle sales and cleaning up emissions from coal-fired electricity.

Further, Reuters said an unnamed Clinton campaign official also confirmed the CARB discussions, saying they have been seeking advice from "a diverse set of stakeholders."

This development could be seen as a potential departure by Clinton on ethanol policy as she said in a May op-ed item in the Iowa Gazette that there was a need to get the RFS "back on track in a way that provides investors with the certainty they need, protects consumers, improves access to E15, E85, (ethanol blends) and biodiesel blends, and effectively drives the development of cellulosic and other advanced biofuels."

But late-Wednesday, Reuters updated their story, quoting a campaign official who painted the discussions in a little different light. A campaign spokesman, Tyrone Gayle, said the campaign has been seeking advice from "a diverse set of stakeholders." He added that the Clinton campaign "does not support replacing the RFS with a national low-carbon fuel standard" but did not elaborate. Further, the campaign reached out to other news outlets with a similar message.

Republican presidential candidate Donald Trump said during the GOP primaries he supported the mandates in the RFS.

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Revised U.S.-Mexico Sugar Deal Being Discussed

U.S. and Mexican trade officials are working to broker a new deal on sugar trade to prevent U.S. duties of about 80%. The new agreement would be a renegotiation of a U.S.-Mexico suspension agreement that was put into place in December 2014, following findings that Mexican sugar had been sold below market prices in the U.S. market in 2013.

Reports note that the Department of Commerce is engaged in consultations with the Mexican government and the Mexican sugar industry to explore concerns that have been raised about the operation of the agreements. The new negotiations aim to ensure that U.S. beet and sugar cane farmers are better protected, according to Phillip Hayes, a spokesman for the American Sugar Alliance. It also could include additional requirements for refining sugar in the U.S., Hayes said, to make sure that cane sugar refiners have access to an adequate supply of raw sugar for processing.

"The suspension agreements are not market access agreements for Mexico," U.S. sugar industry lobbyists said during a meeting this week in Idaho. "They are the settlement of litigation under U.S. laws in which the government of Mexico and Mexican sugar producers were found to be guilty of injuring the U.S. sugar industry," a U.S. sugar industry spokesman said.

The 2014 suspension agreement established price limits and volume quotas for Mexican sugar exports. It was put into place following a sugar dumping investigation by the Commerce Department, which found that in 2013, Mexican sugar had been sold in the U.S. below market price between 40.48% and 42.14%. The suspension agreement also established periodic meetings two to three times a year between the relevant trade officials to discuss the progress of the suspension agreement. If the agreement is terminated, antidumping and countervailing duties of up to 80% could be applied to sugar imported from Mexico.

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Washington Insider: Following up on Huelskamp's Primary Loss

Tim Huelskamp is a third-term Republican congressman from Kansas' first district, and despite strong conservative support, lost Tuesday's primary to a political newcomer who was backed by much of the state's farming and business groups, the AP said.

The contest was unusual because GOP primary challengers usually accuse incumbents of being insufficiently conservative. However, Huelskamp may have been seen as too rigid. Marshall, an obstetrician from Great Bend, now is the heavy favorite to win in November since he'll only face an independent challenger, while the Democrats aren't fielding a candidate, the AP said.

The primary contest became a proxy battle between GOP conservatives and pragmatists. The anti-tax Club for Growth spent heavily in the largely rural district to help Huelskamp and members of the conservative House Freedom Caucus campaigned for him. The U.S. Chamber of Commerce and the Ending Spending Action Fund, which wants to curb federal expenditures, spent big dollars against him.

Even as Huelskamp's fellow conservatives pushed back hard on local establishment Republicans, Marshall was able to cast Huelskamp as "too unyielding and combative," and made the case that his clashes with the leadership hurt the district. Perhaps the key to his defeat was the House leadership's decision to push Huelskamp off the Agriculture Committee in 2012. Farm groups turned against him after that, and many voters saw it as a crucial issue, AP said.

"Getting kicked off the Agriculture Committee is a crime that can't be forgiven," Brian Scheideman, a 52-year-old driver's education instructor told the AP. "I don't mind the independent voice, but you've got to figure out how to work with people."

Marshall credited his win as "all about agriculture." He won with the endorsements of the Kansas Farm Bureau, Kansas Livestock Association, National Association of Wheat Growers, among other groups. He calls himself conservative but says he will work across the aisle, adding he is not sure the Freedom Caucus would have him.

Huelskamp blamed his loss on $3 million of super PAC money that went to support his opponent, and charged that "half-truths and smears were spread by billionaires that bought a seat in Kansas."

Huelskamp has a reputation for clashes with GOP leaders over farm and budget legislation, as well as other things. He was especially critical of Speaker John Boehner, R-Ohio. Huelskamp told the press he felt he gave his "conservative, safely GOP district an independent voice," AP said.

Both candidates raised more than $700,000 for their campaigns but Marshall also loaned his campaign more than $280,000. Interest groups also spent more than $2.7 million on the race, with Marshall benefiting significantly more, AP said.

With no Democrat running, Marshall will run in November against independent Alan LaPolice, a farmer and educator who ran for the GOP nomination in 2014 and lost a closer-than-expected race against Huelskamp.

One of the key advantages Huelskamp claimed in his frequent fights with House leadership was his "safe district" status and therefore his independence from the need for majority support. He was well known for his long list of battles and his unwillingness to compromise on controversies the leadership felt they needed to pass budgets to keep the government in operation.

Still, the leadership's decision to kick Huelskamp off the House Ag Committee seems to have hurt him, even in his "safe" district, suggesting that the leadership may have greater capacity to enforce at least some discipline than many expect. It will be important to watch the coming budget battles closely this fall to determine whether the "Huelskamp effect" is apparent in those fights and if it significantly increases the leadership's clout, Washington Insider believes.

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(GH/CZ)

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