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Farm Bill; Biofuels; Climate Issues; Trade; and Water

Farm Bill- Chairman Peterson

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “House Agriculture Chairman Collin Peterson said Monday he believes the next Congress may have to take up a reconciliation bill that could include a rewrite of the farm program.

“Speaking by telephone to the American Association of Crop Insurers convention here [San Diego], Peterson said he is not an advocate of a reconciliation bill but believes that international concerns about U.S. finances and difficulties in selling U.S. bonds overseas may force the next Congress to consider a reconciliation bill.”

Mr. Hagstrom explained that, “A reconciliation bill updates existing laws to pull them in line with changes made in a budget resolution. As its passage only requires a simple majority in the Senate, a reconciliation bill can be used to push through legislation for which there aren’t 60 votes to break a filibuster.

“‘This budget is completely out of control,’ Peterson said. ‘I’m not advocating reconciliation. We have a very good possibility after this election, no matter who wins, to force the mother of all reconciliation.’”

Yesterday’s DTN article pointed out that, “Peterson said one reason he wants to hold farm bill hearings this year is to be ready if he needs to put a farm bill in a reconciliation bill. Peterson plans to hold three hearings in Washington in late March and early April and field hearings in July. He said he wants to avoid holding hearings between August and the November elections because he wants the hearings to be bipartisan. ‘Being bipartisan takes a lot of time. Bipartisanship is hard to come by,’ Peterson said.

If a reconciliation bill does not affect the process, Peterson said he plans to proceed with writing the farm bill early in 2011, mark it up in the fall of 2011 and finish it before the current bill expires.

Peterson said he is opposed to the Obama administration’s plans to cut $8 billion from crop insurance expenditures over the next 10 years, in part because he wants to preserve as high a baseline for agriculture as possible for the next farm bill or reconciliation negotiations.”

Todd Kurtz reported earlier this week at WDAY Online (Fargo, ND) that, “Congressman Collin Peterson told a crowd of more than 40 farmers that he’ll start working on the next farm bill earlier than usual.”

Peterson says there is two main reasons to start early. First because he wants another bi-partisan bill and says its long task to get everyone on the same page. Second he thinks the mother of all reconciliations is inevitable, putting the farm bill on the table for cuts.” (Note that this link includes a video replay highlighting Chairman Peterson’s comments).

Meanwhile, Tom Cherveny reported in today’s West Central Tribune (Willmar, Minn.) that, “[Sec. of Agriculture Tom Vilsack] spoke Tuesday at Southwest Minnesota State University in Marshall at the third annual Home Grown Economy conference hosted by U.S. Collin Peterson, D-Minn.

“The local foods movement has the attention and the support of the federal government today, according to Peterson, chairman of the House Agriculture Committee.

“It’s simple, according to Peterson: There is a market for local foods, and agriculture stands to gain jobs and income by serving it.

“At the same time, he emphasized that there ‘is room for everybody in agriculture.’ The expansion of a local foods economy can occur alongside of — and not at the expense of — commodity-based agriculture.”

Anthony Kiekow reported earlier this week at KSAX Online (Minn.) that, “U.S. Rep. Collin Peterson and U.S. Agriculture Secretary Tom Vilsack attended a ‘Homegrown Economy’ event at Southwest Minnesota Sate University in Marshall Monday.

At the event the powerful political pair conversed with local farmers about selling locally grown food to Minnesotans.

“‘Whenever something is grown in the same area it’s bought it’s always fresher. That’s just common sense,’ Peterson said.” (Note that this link includes a video replay highlighting Chairman Peterson and Sec. Vilsack in Marshall).

And Deb Gau reported yesterday at The Marshall Independent Online (Minn.) that, “They may need some initial help to develop a connection with consumers, but small farms can make a difference in the rural economy, U.S. Secretary of Agriculture Tom Vilsack said Monday.

“‘The reality is we need all kinds of farms in this country,’ Vilsack said, from small organic farms to large commercial farms.

“The main challenge will be helping small farmers open connections for local customers, Vilsack and U.S. Rep. Collin Peterson said. Vilsack and Peterson arrived in Marshall Monday for the Home Grown Economy conference held at Southwest Minnesota State University.”

Biofuels

Cindy Zimmerman reported yesterday at the DomesticFuel Blog that, “Compared to last year, Renewable Fuels Association president and CEO Bob Dinneen faced a much happier crowd for the opening session of the 15th Annual National Ethanol Conference.

“‘A year ago, at this event, we met amidst the worst economic climate since the Depression. Commodity markets were in upheaval, investment dollars had evaporated, gasoline demand was falling, production costs were rising, plants were closing and the very foundation of our industry and our economy was shaking,’ said Dinneen.”

Yesterday’s update added that, “Among the accomplishments for the industry, Dinneen noted 15% growth, reopening 14 plants that had been previously idled, starting up 8 new plants, and adding1.5 billion gallons of capacity. The ethanol industry contributed $53.3 billion to the economy, along with 400,000 jobs and reducing oil imports by 364 million barrels.”

The DomesticFuel link also included an audio replay of Mr. Dinneen’s remarks yesterday, while a text of his remarks can be viewed here.

RFA also released its 2010 ethanol industry outlook report yesterday, titled, “Climate of Opportunity,” which can be downloaded here.

In other news, Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “Sen. Charles Grassley is offering no timetable for reviving the biodiesel tax credit now that Senate Democratic leadership has nixed the plan to include it in a jobs bill.

“The Iowa Republican says an extension of the biodeisel subsidy could be added to an energy bill that the Senate may consider later this year or dealt with when the Senate debates the future of the estate tax. ‘Who knows when they are going to get passed,’ Grassley said of those bills on a conference call with reporters today.

The next target for dealing with the biodiesel credit could be the Easter congressional recess, he said.”

Bloomberg writer Mario Parker reported yesterday that, “The U.S. ethanol industry faces a challenge in extending its tax credit to avoid a repeat of the meltdown that’s ravaged biodiesel, a lobbyist said today.

“Refiners receive a 45-cent tax credit for each gallon of ethanol blended into gasoline and Brazilian imports of the fuel are smacked with a 54-cent tariff. They both expire Dec. 31.”

The article noted that, “The extensions ‘will happen but it will be a very, very tough’ battle, said Jon Doggett, vice president of public policy for the National Corn Growers Association. He was speaking at the National Ethanol Conference in Orlando, Florida.

The tax credit that supports the U.S. biodiesel industry expired at the end of 2009 as Congress focused on health care legislation, driving production of the fuel to a near halt, according to the National Biodiesel Board, the industry’s primary trade group.”

In other news regarding biofuels, a news release issued yesterday by Growth Energy indicated that, “Growth Energy today welcomed the words of a top General Motors executive who said that the United States must substantially build out the infrastructure to deliver ethanol to consumers. Growth Energy’s position is that increasing the number of blender pumps would give drivers a choice of mid- and high-level ethanol blends in more locations across the country.”

And with respect to next generation biofuel production, Jessica Leber of ClimateWire reported yesterday at The New York Times Online that, “Many cellulosic fuel producers are working with enzymes to break down tough, inedible plant parts, such as corncobs or switch grass, into simpler sugars that can be fermented to ethanol. Now enzyme companies say they are near to breaking down another tough obstacle: the cost of enzymes that will make the next generation of low-carbon fuels.

The progress may help put cellulosic ethanol on course to compete commercially when the first large plants open next year.”

Ms. Leber added that, “Novozymes, the world’s largest industrial enzyme producer, today launched a new line it says will yield ethanol from plant wastes at an enzyme price of about 50 cents a gallon. The latest product of a decade of research, this marks an 80 percent price drop from two years ago, according to Global Marketing Director Poul Ruben Andersen.

The advances, Andersen said, will help bring cellulosic ethanol production prices to under $2 a gallon by 2011, a cost on par with both corn-based ethanol and gasoline at current U.S. market prices.”

Climate Issues- Judicial Perspective

Robin Bravender of Greenwire reported yesterday at The New York Times Online that, “Critics of U.S. EPA’s climate regulations are lining up to launch legal battles against the agency’s ‘endangerment’ finding amid a looming deadline for court challenges.

“The U.S. Chamber of Commerce on Friday petitioned (pdf) a federal appeals court to reconsider EPA’s determination that greenhouse gases threaten public health and welfare, a finding that paves the way for broad regulations of the heat-trapping emissions.

“The challenge from the industry trade group is the latest of a series of legal attacks against the finding, and observers say more could appear before tomorrow’s deadline for critics to file petitions in the U.S. Circuit Court of Appeals for the District of Columbia.”

The AP reported yesterday that, “Texas became the first state to challenge the federal government’s finding that greenhouse gases are dangerous to people, claiming Tuesday that the ruling is based on flawed science and would wreck the state’s economy.”

And David A. Fahrenthold reported in today’s Washington Post that, “Virginia Attorney General Ken Cuccinelli II (R) on Tuesday filed paperwork attacking the legal underpinnings of an Obama administration effort to regulate greenhouse gas emissions, joining a crowd of political conservatives and business groups with similar objections.”

Climate Issues- Legislative Perspective

In legislative developments on the climate issue, Darren Samuelsohn of Greenwire reported yesterday at The New York Times Online that, “Senate promoters of a comprehensive climate and energy bill are reaching out to moderate Republicans and Democrats, but they have little to show for it.

“The nation’s economic troubles and election-year politics are making a signature item on President Obama’s domestic agenda a tough sell, despite the optimism expressed by the legislation’s leading advocates, Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.).

“‘I’m trying to avoid talking to people like … Senator Kerry and all of the people that are the stalwarts on the [climate bill], because I think we’ve got other things we’ve got to finish up before we embark upon that,’ Sen. Claire McCaskill (D-Mo.) said earlier this month.”

In related news, Washington Post writer Juliet Eilperin reported yesterday at the Post Carbon Blog that, “Sen. Blanche Lincoln (D-Ark.) is undeterred by the recent Sierra Club radio attack ad that criticizes her efforts to halt the Environmental Protection Agency from regulating greenhouse gases.

“‘Senator Lincoln acted on behalf of Arkansas workers, employers and consumers to protect them from burdensome regulation,’ said her spokeswoman Katie Laning Niebaum. ‘That’s why more than two dozen businesses and agricultural groups either based in Arkansas or with ties to the state supported Senator Lincoln’s efforts to prevent EPA’s overreach of regulatory powers.’”

Christa Marshall of ClimateWire reported yesterday at The New York Times Online that, “Companies and groups with deep coffers are lining up to change climate legislation emerging as an alternative proposal to cap and trade in Congress.

“The growth in lobbying from well-funded players signals that the bill from Sens. Maria Cantwell (D-Wash) and Susan Collins (R-Maine) has potential to gain momentum on Capitol Hill, analysts say.

“‘Companies are lobbying because they think the bill has legs or they want to ensure against the possibility that it does,’ said Kenneth Green, an analyst at the American Enterprise Institute, a conservative think tank.

“Since the two senators introduced their bill in December, more than 40 businesses and organizations announced plans to lobby on the measure via official disclosure forms filed with Congress.”

Climate Issues- Executive Branch Perspective

Stephen Power reported in today’s Wall Street Journal that, “President Barack Obama’s 2011 budget calls for an array of regulations, subsidies and taxes aimed at cutting emissions of greenhouse gases, even as a sweeping climate bill sits on ice in the Senate.

“Mr. Obama’s budget calls for $39 billion in tax increases on fossil-fuel producers over 10 years. It also includes an estimated $1.4 billion to help developing countries address the impacts of climate change, reduce deforestation and shift to low-carbon energy sources. And it proposes tripling federal support for nuclear energy, by adding $36 billion in new loan authority for an Energy Department program aimed at speeding the construction of new reactors.”

The Journal article noted that, “Mr. Obama has called on Congress to pass legislation that would require industries to pay for their emissions of heat-trapping gases linked to climate change. But Senate leaders have repeatedly pushed back their timetable for action, amid objections from many Republicans and some Democrats that such legislation would drive up energy costs and lead to job losses in fossil-fuel and manufacturing industries.”

Climate Issues- External Variables

Stephen Power and Ben Callelman reported in today’s Wall Street Journal that, “Three big companies quit an influential lobbying group that had focused on shaping climate-change legislation, in the latest sign that support for an ambitious bill is melting away.

“Oil giants BP PLC and ConocoPhillips and heavy-equipment maker Caterpillar Inc. said Tuesday they won’t renew their membership in the three-year-old U.S. Climate Action Partnership, a broad business-environmental coalition that had been instrumental in building support in Washington for capping emissions of greenhouse gases.

“The move comes as debate over climate change intensifies and concerns mount about the cost of capping greenhouse-gas emissions.”

And the editorial board at The New York Times indicated today that, “Disclosures of isolated errors and exaggerations in the 2007 report from the United Nations panel on climate change do not undermine its main finding: that the planet has been warming gradually for more than a century and that human activity is largely responsible. But the misstatements have handed climate skeptics a public relations boost.”

In a briefing with reporters yesterday, Special Envoy on Climate Change Todd Stern was asked about recent analytical errors and climate change. During the exchange, which is available here (MP3-2:15), Mr. Stern expressed that the “fundamental science of climate change” is “quite overwhelming,” and that climate change is a “serious and growing problem.”

Trade

The “Washington Insider” section of DTN indicated yesterday (link requires subscription) that, “One of the longest trade disputes between the United States and Mexico concerns truck access to interior markets on both sides of the border. The 1994 North American Free Trade Agreement deal called for a cross-border access initiative to phase-in beginning in 1995. Congress halted that effort citing safety concerns, among others.”

Yesterday’s item stated that, “Now, Mexico has once again raised the issue in a meeting between U.S. Trade Representative Ron Kirk and the Mexican Minister of Economy, Gerardo Ruiz. The Mexican official told the press the dispute will surely be resolved this year. Kirk said he expects to undertake consultations with Congress to come up with a ‘sensible program.’

“Kirk also said with the ‘offending’ appropriations language now removed, his office, along with U.S. Transportation and Commerce officials will begin a dialogue with Congress to come up with a ‘sensible program’ for Mexican trucks. This suggests the administration thinks it has a deal with congressional appropriations committees not to continue the pilot-program prohibition in the current appropriations bill.

“‘We have a green light to go forward and start consultations with Congress and stakeholders in the United States, and I have committed to [Ruiz] that we will keep him appraised [sic] of progress every step of the way,’ Kirk said. ‘We will be very willing to work together on a common solution to a common problem,’ Ruiz responded.”

The DTN analysis piece added that, “The U.S. position on Mexican truck access has been a matter of concern to a number of agricultural interests for several years, and has become a much broader irritant since Mexico won the right to retaliate on a broad range of products and services. Advocates of stronger trade ties with Mexico argue that while safety and environmental concerns are important, they can be handled adequately by tough regulations and increased monitoring, and that the way to define these is to proceed with pilot trials.

Because Mexico is a huge agricultural market for U.S. agricultural products, disputes such as this one deserve priority attention from both sides — especially so, given the administration’s new export initiative. Thus USTR Kirk can expect to find himself under the microscope in terms of his promised efforts to find a credible solution to both the current truck access impasse and to improved overall U.S. trade relationships with Mexico, Washington Insider believes.”

California Water

The Los Angeles Times editorial board indicated today that, “[Sen. Dianne Feinstein (D-CA)] announced that she would attach a rider to an upcoming federal jobs bill that would boost water deliveries from the Sacramento-San Joaquin River Delta to a vocal agribusiness community in the west San Joaquin Valley. Because these farmers were late to the game of acquiring water rights, they’re the first to get shorted when deliveries are cut, as they were last year because of drought conditions and court- ordered pumping restrictions aimed at restoring fish populations. West valley farmers only got about 10% of their allocations of federally subsidized water in 2009, and Feinstein’s rider would ensure they get closer to 40% this year and next.

“Feinstein says she’s proposing the amendment because ‘people in California’s breadbasket face complete economic ruin without help.’ Indeed, unemployment is running alarmingly high in some Central Valley communities. But then, they’ve long been beset by chronic unemployment. Moreover, a report by the University of the Pacific suggests that the vast majority of the region’s job losses have been in the construction industry, not agriculture. And it’s perverse to insert language in a jobs bill aimed at benefiting farmworkers without considering the impact on fishermen, whose industry has been devastated by heavy pumping of delta water. The delta is home to hundreds of species, including the increasingly threatened chinook salmon.”

The LA Times added that, “That’s only the beginning of what’s wrong with Feinstein’s amendment. If approved, it would create a legal morass around conflicts between federal and state endangered species protections. Worse yet, it would blow apart the trust built up among competing stakeholders during years of negotiations preceding last year’s water package. Her attempt to make an end run around this bipartisan process, at the behest of a powerful interest group, could destroy what limited progress has been made and end in years of litigation and acrimony.

Though the west valley’s farms are important to the state’s economy, they are located in a naturally arid landscape that’s unsuited to agriculture; moreover, runoff from the area contains heavy selenium deposits, which turned a local reservoir into a toxic waste dump. If cuts in water deliveries make it expensive to farm in such unsustainable places — well, maybe that’s as it should be. The region should only get its water allotment if managers deem there is enough surplus to allow it.”

Keith Good