Washington Report for 5-27-14

By Steve Kopperud

House blocks immigration reform proposals

Using procedural tools, House Republicans have blocked two immigration bills from getting floor votes, further complicating the possibility of getting a comprehensive immigration bill to the president’s desk before the November elections. On the Senate side, Majority Leader Harry Reid (D-Nev.) said if Congress doesn’t act on immigration reform by the end of July, the window for action will close for this session of Congress. He even offered to make any immigration bill passed by Congress effective in 2017, after President Obama is out of office, so Republicans can’t use distrust of the president’s commitment to administer the law as passed as an excuse for inaction.

The procedural maneuvering took place in the House Rules Committee, which approves legislation for floor action and sanctions amendments that can be offered. Last week the committee, considering floor rules for the National Defense Reauthorization Act – which overwhelmingly passed the House – refused to approve a bill by Rep. Jeff Denham (R-Calif.) that would have given green cards to immigrants who came to the United States as children if they serve in the military. Another bill blocked by the committee was authored by Rep. Joaquin Castro (D-Texas) and would have allowed immigrants under a certain age who have received an Obama administration reprieve from deportation to enroll in U.S. military academies.

It’s all about the timing, Reid said, explaining he sees a window of opportunity for progress on immigration reform during the marathon mid-June/end of July work period. He said if Congress doesn’t act by the end of July, it’s likely the administration will begin to propose rules and issue executive orders on immigration enforcement. “We all know things can be done administratively, but it’s better to change the law,” Reid said. The 2017 effective date – “the day the new president takes office” – is an endorsement of an option floated earlier by Sen. Charles Schumer (D-N.Y.). 

The use by President Obama of executive orders and administrative regulations to reform immigration law is seen as exacerbating GOP distrust of the president’s willingness to give House leadership a “demonstration of trust” he will implement the law as enacted. House Speaker John Boehner (R-Ohio) was grilled by Hispanic media during a press conference, asked repeatedly why he was “blocking immigration reform.”

He cited distrust of the president for House inaction and defended his bill-by-bill approach to immigration law changes as “the common sense way to do it.” During a floor colloquy between House Majority Leader Eric Cantor (R, Va.), reform supporters’ big target to blame for delay, and Rep. Steny Hoyer (D-Md.), House minority whip, Cantor said the House will move forward on individual bills if the president will back off calling for only a single comprehensive immigration package. 

However, Schumer, one of the lead immigration reform senators in his party, is no fan of “patches” on immigration law, such as those offered in the House. While it was 330-plus days ago the Senate passed its comprehensive immigration reform bill, Schumer said, “We are not going to go along with minor fixes that fail to address the huge systemic problems in our immigration system today.” 

Politico, a Capitol Hill newspaper, reported that despite the political sniping, immigration reform enjoys broad political support among Democrats and Republicans, as well as those who identify themselves as independents. Over 70 percent of the individuals surveyed this month said they want to see “sweeping” changes in federal immigration law, while just 28 percent said no change is needed.  Among political affiliations, almost 80 percent of Democrats, 64 percent of Republicans and 71 percent of independents support immigration reform. Not surprising, 85 percent of Hispanic voters surveyed said immigration reform would be an important factor in their voting decision, while 53 percent said the issue is very important. At the same time, 74 percent of white voters and 58 percent of African-American voters called immigration reform an important issue in their voting decision.

EPA expected to unveil climate change reg proposal with presidential participation

With the U.S. Environmental Protection Agency expected to publish its proposed rulemaking on regulating emissions from existing power plants in early June, Administrator Gina McCarthy and Energy Secretary Ernest Moniz told an online audience they fully expect participation by President Obama when the rule is unveiled. The power plant rule is seen as the precursor to other similar regulations to control carbon emissions, which would affect any facility using coal as a power source. 

At the same time, a bipartisan group of 47 senators wrote to McCarthy telling her the proposed rulemaking must carry at least a 120-day comment period since “there should be plenty of time for public comment on such a major rule that could potentially result in huge costs,” said Sen. Charles Grassley (R, Iowa).  

Climate change and how to minimize human contributions have become a major priority for the White House – McCarthy called it the president’s “moral obligation” – and carbon capture/greenhouse gas regulations are a significant part of this administration’s legacy initiatives. The rule coming in June will set emissions standards and is central to the White House Climate Change Action Plan to try and control carbon pollution and greenhouse gas emissions.

The rule is controversial because critics contend it is naïve and impractical saying it demonizes the coal industry by targeting coal-fired power plants. Also controversial is the degree to which EPA will allow states to handle their own carbon capture/greenhouse gas emissions programs.  The Department of Energy told a House committee the coal industry should welcome the rulemaking as it brings “clarity” to administration plans, “allowing people to think about the market risks and investment risks more directly.”

The Senate letter stressed the impact of the rule on the nation’s electricity providers and consumers, on “jobs in our communities that have existing coal-based power plants and on the economy as a whole.” The lawmakers pointed out the rule for existing power plants is far more complex than that contemplated for new facilities, “and the analysis of impact on individual power plants, reliability and consumer cost…will be no small undertaking as this will be the first-ever regulation of greenhouse gases from existing power plants.” The letter also pointed out EPA extended the original 60-day comment period on the new facility rule to 120 days “so it only makes sense to provide at least the same timeline from the outset of the existing plant rule.” 

The EPA rule, plagued by controversy, court cases, proposals and agency withdrawals and re-proposals, is expected to require existing coal-fired utilities to embrace best available technology in controlling carbon emissions. DOE says it’s working to find ways to cut the cost of carbon recapture technologies for power plants by 30 percent.

Sen. Heidi Heitkamp (D-N.D.), a fan of carbon capturing coal-fired utilities, joined with Sen. Jay Rockefeller (D-W.Va.) in introducing a bill that would increase funding for technology and protect the coal and utilities industries from liability for stored carbon.

Bioenergy groups, senators ramp up pressure as RFS final ruling expected

Companies and alternative energy associations seriously ramped up U.S. Environmental Protection Agency and White House political pressure as word spread of the deadline for the final White House approval and EPA’s release of its final 2014-15 mandate on alternative fuel/gasoline blending under the Renewable Fuel Standard (RFS) is anticipated. As proposed last February, the RFS blending levels for corn ethanol, advanced biofuels (biodiesel, renewable diesel, and non-corn ethanol) and biomass-based fuels would be decreased well below levels set in the authorizing law, mainly because gasoline demand has dropped.

The petroleum industry told EPA earlier this year that with reduced gasoline demand the only way it can hit the RFS mandate is by blending biofuels at a higher percentage than the 10 percent allowed by law. EPA concurred and rolled the proposed RFS levels back. However, recently EPA said gasoline demand has increased and it will base its final rule on current numbers, not those reflecting gasoline demand last fall.

The National Biodiesel Board, in a letter to President Obama, said only domestically produced biofuel has consistently met or exceeded its RFS mandate. However, the lower proposed levels frustrate the production of biodiesel, said NBB President Joe Jobe. A similar letter to EPA was sent by the National Renderers Association, whose members either refine biodiesel from animal fats and oils or provide the feedstock to companies making biodiesel and renewable diesel. 

“It appears the 2014 RFS Final Rule may be sent to OMB later, and we have received indications that the EPA and the Obama administration are considering leaving the biomass-based diesel fuel program at 1.28 billion gallons, while adopting a small increase in the initial proposal for the overall advanced biofuels standard. You need to know this decision would have lasting, damaging consequences for the jobs and economic activity supported by the U.S. biodiesel industry,” Jobe said.

The NBB letter was fairly typical of other communications pushing for an increase in the RFS levels. It warned not only of damaged domestic industry but how this means significant increases in imported biofuels. Jobe told the White House that if the advanced biofuels segment of the RFS isn’t increased, production will drop, opening the doors for foreign biofuels, including Brazilian sugar cane ethanol, an “advanced” biofuel by EPA definition. This would translate into the closing of 50 biodiesel plants nationally. The negative impact would also be felt by farmers supplying oilseeds for biodiesel refining and by the rendering industry, which also produces biodiesel and renewable diesel from rendered fats and greases. 

Six Democrat senators from the Upper Midwest have called on President Obama to increase the RFS for biodiesel and to support the extension of federal biodiesel tax breaks. The announcement was made at a National Biodiesel Board press event where NBB released a study showing the industry has slowed down, and in some areas, gone away. Supporting the senators’ action is the American Soybean Association, which said in a statement:  “We appreciate and echo the sentiments of these six senators today and call to attention the positive impacts the RFS and the biodiesel tax credit have on the production of biodiesel.” 

Signing the letter to Obama were Majority Whip Sen. Richard Durbin (D-Ill.), Sen. Amy Klobuchar (D-Minn.), Sen. Heidi Heitkamp (D-N.D.), Sen. Maria Cantwell (D-Wash.), Sen. Al Franken (D-Minn.) and Sen. Joe Donnelly (D-Ind.).

House, Senate clear waterways reauthorization conference report with new projects

On a 412-4 vote, the House overwhelmingly approved the conference report on the $12-billion Water Resources Reform & Development Act. The Senate then approved the package on an equally lopsided vote of 91-7, clearing the bill for the president who said he’ll sign it. In true Washington fashion, the final Senate approval came on National Maritime Day.

Part of the package is an amendment added in the Senate that would provide assistance to producers affected by the U.S. Environmental Protection Agency's Spill Prevention Control and Countermeasure rule on farm storage tanks. Currently the rule says if an operation has a tank holding 1,320 gallons or more above ground and is situated near a “reasonable pathway” to any surface water, there must be a spill prevention plan along with secondary containment equal to 110 percent of the largest tank on the property. Under the WRRDA language, all tanks of 1,000 gallons or less would be exempt, and operations with collective storage capacity of 2,500 gallons or less don’t have to comply with the rules. Pending the outcome of a USDA-EPA study, a temporary exemption would be granted to farms with 2,500-6,000 gallons in storage capacity.  Feed storage tanks are not included in the calculations for total capacity, said the National Cattlemen’s Beef Association.

Several ag and business groups praised the conference report prior to the chamber votes, with letters of support and press releases coming from the National Association of Manufacturers, the American Soybean Association, the National Grain & Feed Association and the National Corn Growers Association.

Conferees, who had been tied up in deciding how Army Corps of Engineer waterways projects would be selected and by whom, added 11 new projects to the bill to ease the political pathway, bringing the total to 34 projects designated for funding. The new projects will be paid for by taking about $6 billion from currently “stalled” projects and allocating it to the new list. The final conference report dumps a Senate plan to let the Corps decide which projects get funding, replacing it with a House plan that requires the Corps to submit for approval a yearly list of projects on which it plans to spend money. The total cost is now $5.7 billion, compared with $3.1 billion in the House-passed version. 

Among the projects designated for funding and completion is the critical Olmsted lock & dam.  The federal government will pay 85 percent of the project’s cost, with the Inland Waterways Trust Fund picking up the rest. Other agreements in the conference report include one designating the percentage of user fees actually spent through the Harbor Maintenance Trust Fund on harbor improvements to increase until it reaches 100 percent by 2025. Currently, only about half of the $1.8 billion collected goes for dredging and port maintenance. 

A flood diversion project with an $800-million price tag that would protect the Red River Valley region between North Dakota and Minnesota is included in the package, and several state levee rejuvenation projects are also part of the new federal spending. A new low-cost loan pilot program for water projects is created, but its authorized spending was cut to $350 million over five years, or about $150 million less than pushed by the Senate. 

A controversial section of the Senate bill that would have created a so-called federal “oceans endowment” was dropped from the final bill.  The section, authored by Sen. Sheldon Whitehouse (D-R.I.), would have shifted how the administration deals with ocean recovery, preservation and Great Lakes protection programs. The GOP surrendered on a long-time effort to stop a 2010 White House executive order to try and implement coastline protections.

GAO says fertilizer plant federal oversight flawed

Saying federal regulators don’t have a good handle on how many fertilizer plants nationally handle ammonium nitrate and have done a poor job ensuring those plants that do handle the fertilizer ingredient are following existing federal safety regulations, the Government Accountability Office released its report on federal fertilizer plant oversight following a Texas fertilizer plant explosion that killed 14 people in 2013.

The report was requested by Sen. Barbara Boxer (D-Calif.) and other senators after the Committee on Environment & Public Works – chaired by Boxer – held hearings last year on the causes of multiple plant explosions and fires and the degree to which OSHA and other federal regulators were aggressively regulating the facilities. Ammonium nitrate facilities are not among those OSHA currently inspects, and the agency told GAO it lacks the data to decide which plants on which to focus. 

The exact number of plants across the country with ammonium nitrate on the premises isn’t known, but at least 1,300 plants in 47 states reported to the Department of Homeland Security they have “reportable quantities” of the fertilizer ingredient on premises, GAO said.  About half of the reporting facilities are in just six states: Alabama, Georgia, Kentucky, Missouri, Tennessee and Texas. 

Vitter unhappy with CFTC nominee Bowen’s silence

Sen. David Vitter (R-La.) told a Capitol Hill newspaper he’s not happy with the lack of response to his questions from Commodity Futures Trading Commission nominee Sharon Bowen, a New York City attorney. Vitter sent a letter demanding to know why the nominee hasn’t provided information Vitter asked for back in March when her staff said responses would be forthcoming “as soon as practicable.” “Is two months not practicable?” Vitter asked in his letter. The Senate plans to vote on Bowen’s nomination, along with those of Chris Giancarlo, a New York investment attorney, and Timothy Massad, a former Treasury official set to be the new commission chair.

On the end-user protection front, calling it a “significant victory for the end-user community,” acting CFTC Chair Mark Wetjen announced three commission actions to “benefit utility special entities, further consider hedging practices for commercial participants and promote end-user trading on swap executive facilities and designated contract markets.

Wetjen said, “End-users win today with the proposal fixing the Special Entity rule and further relief from rule 1.35, which applied unworkable and costly recording requirements. The relief will remain effective until the commission revisits the rule to appropriately tailor the rule’s requirements to the relevant entities and more carefully consider the costs and technological feasibility of compliance with the rule.”

The commission also announced it’s reopening the comment periods on issues related to hedging of physical commodities prior to a CFTC public roundtable scheduled for June 19.  Specifically, the comment periods to be reopened apply to hedges of a physical commodity by a commercial enterprise, including gross hedging, cross-commodity hedging, anticipatory hedging and the process for obtaining a “non-enumerated exemption. Also being reconsidered are the setting of spot monthly limits in physical-delivery and cash-settled contracts and a conditional spot-month limit exemption; the setting of non-spot limits for wheat contracts; the aggregation exemption for certain ownership interests of more than 50 percent in an owned entity, and aggregation based on substantially identical trading strategies.

To increase trading on SEFs and DCSs, the commission issued a no-action letter to members of designated contract markets or swap execution facilities not registered or required to be register with the CFTC, providing relief with respect to compliance with certain recordkeeping provisions.  Full details of the CFTC actions can be found at www.cftc.gov.

Senate passes drought relief bill

The Senate has approved a bill giving states and the federal government additional flexibility in allocating water supplies and disaster help to drought-plagued regions. The bill requires the U.S. Environmental Protection Agency, U.S. Department of Agriculture and the Departments of Commerce and Interior to provide as much water as possible once a federal drought emergency is declared.

Sen. Dianne Feinstein (D-Calif.), chief author of the bill, said the California drought situation is critical. “Snowpack is at 6 percent of its normal level, and the state’s largest reservoirs are at or below half capacity,” she said in a statement. “Congress must take immediate action to help alleviate the suffering of farmers, workers, businesses and communities throughout the state.”

Federal agencies can issue grants or other funding for pilot programs designed to increase water in reservoirs in river basins that have a direct impact on the state’s water supply, according to the bill. Environmental review requirements would be negotiated with the Council on Environmental Quality. EPA would prioritize state water projects under state pollution control programs that receive federal dollars to ensure monies are directed at areas where the risk of inadequate supplies is greatest. No direct emergency spending is authorized under the bill, a provision dropped at the request of Republican critics. 

The House passed a drought bill in February that would alter federal laws on how water deliveries are allocated to specific California communities. However, it’s assumed champions will take the Senate bill and try to expand it. Eight House members called the Feinstein bill “a starting point” but said it fails to address long-term needs, and that the House-passed bill is only a temporary fix.

Senate finance panel approves Darci Vetter as USTR ag negotiator

The Senate Finance Committee has approved U.S. Department of Agriculture's Deputy Undersecretary for Farm & Foreign Agricultural Services Darci Vetter’s nomination to become President Obama’s chief agriculture negotiator at the Office of the U.S. Trade Representative. Her confirmation hearing was unusually friendly with clear bipartisan support. Vetter, who once worked at USTR and is well respected by agriculture, saw more than 100 organizations sign on to a letter in support of her nomination. The Senate schedule for voting to confirm the committee’s recommendation is unknown.

Cornell study shows GMO labeling laws costly to consumers

Cornell University released a study showing mandatory GM labeling in Vermont will cost families an average $500 per year in additional grocery costs. The university said studies in California and Washington State, where labeling referenda failed in 2012, would have resulted in similar food cost increases. If forced to buy organic foods rather than conventional foods due to labeling, Cornell said, the increase could be as much as $1,556 per family per year. In addition to the consumer costs are higher costs for state enforcement programs and loss of income to conventional farmers and ranchers.