Biden ‘Goes Big’ on First Part of Aid Package, But Equities Drop Amid Tax Increase Concerns

Posted on 01/15/2021 8:12 AM

RFS waiver news | Section 199A co-op tax deduction | Biden’s climate change team

 


In Today’s Updates


 

Market Focus:
• Wheat futures surge on Russia protectionist measure
* Daily export sales: 110,000 MT corn to Mexico 2020-2021 marketing year
• Daily export sales: 318,000 MT soybeans to unknown destinations 2021-2022
• Fed’s Powell: ‘We are a long way from maximum employment’
• U.S. retail sales for Dec. fell 0.7% ; Nov. revised to fall of 1.4% from prior decline of 1.1%
WSJ survey: The U.S. economy will grow 4.3% this year

• Several big U.S. banks report huge profits
• Buy commodities and sell bonds: JPMorgan strategists
• Demand appears to be outstripping supply in the freight industry
• 2020 tied for the hottest year on record
• Hot last year but another polar vortex may be on way
Current Argentine rains key ahead of another dry stretch
• Blast of cold air expected for Black Sea region, but snow should prevent winterkill
• Ukraine’s grain shipments remain well behind year-ago
• India hopes to reach E20 gasoline blends by 2025
• Big hog weights remain a limiting factor
• Beef prices rise as cash prices slip

Policy Focus:
• Biden unveils $1.9 trillion plan as part one of two-part proposal
• IRS won’t alter stance on Section 199A co-op tax deduction

 

China Update:
• U.S. bans exports to China’s state-owned oil company
WSJ reviews Phase 1 trade deal with China

 

Trade Policy:
• Another U.S./Mexico clash, this time on energy
• USTR: Austria, Spain and U.K. digital sales taxes discriminate against U.S. firms

 

Energy & Climate Change:

• Biden’s EPA will decide on RFS waivers


Coronavirus Update:
• Vaccine tourism
• Britain banned arrivals from most of Latin America as well as Portugal
• Coronavirus immunity passports

 

Politics & Elections:
• Pelosi introduces bill to provide statehood for the District of Columbia
• Ag support for Homeland Security secretary
• Senate postpones nomination hearing on national security official
• More Biden nominees
• Biden announces planned hiring of new climate staffers to join his West Wing
• Macaulay Culkin joined calls to have Trump’s cameo edited out of 1992 movie
• Fortress Washington


Other Items of Note:
• Bill Gates is top private farmland owner in America
• Move to privatize Fannie Mae and Freddie Mac falters
• New infrastructure coalition
• Major gene edits for hogs ‘on the horizon’: NPPC
• Cotton AWP rises again
• Joe the pigeon may get a reprieve

 


MARKET FOCUS


 

Equities today: Global stock markets were mixed overnight. U.S. stock indexes are pointed toward weaker openings. Hong Kong’s Hang Seng climbed 0.3% after falling as much as 0.7% during the session and China’s benchmark Shanghai Composite was broadly flat. Japan’s Nikkei 225 index was 0.6% lower. Banks are set to formally kick off the Q4 earnings season this morning, including results from JPMorgan Chase (already released), Citigroup and Wells Fargo. It'll be the first set of earnings since the Fed gave lenders the green light to resume share buybacks, which were halted in March 2020 and banned by the central bank in June on fears of a steep recession from the coronavirus pandemic. JPMorgan kicked off big bank earnings with results that beat, with a record $12.1 billion profit in its latest quarter, up more than 40% from the year before. Nearly all of the firm’s business lines beat expectations, especially its investment banking and trading operations. Revenues from investment banking and equities topped estimates, while fixed-income was just a touch above consensus. Meanwhile, Wells Fargo & Co.’s profit rose 4% in the final three months of the year. The San Francisco-based lender said that it made $2.99 billion in the fourth quarter, up from $2.87 billion a year earlier. Per-share profit totaled 64 cents, compared with analyst forecasts of 59 cents.

 

     U.S. equities yesterday: The Dow fell 68.96 points, 0.22%, at 30,991.52. The Nasdaq fell 16.31 points, 0.12%, at 13,112.64. The S&P 500 was down 14.30 points, 0.38%, at 3,795.54.

 

On tap today:

 

     • U.S. retail sales for December are expected to fall 0.1% from a month earlier. Follow our coverage here. (8:30 a.m. ET) Update: U.S. retail sales fell 0.7% in December. November was revised to a fall of 1.4% from a prior decline of 1.1%. But for all of 2020, retail sales were up 0.6% from 2019. Activity to open the year and the recovery from pandemic declines helped to push the year into positive territory.
     • U.S. producer price index for December is expected to rise 0.4% from a month earlier. (8:30 a.m. ET). Update: PPI rose 0.3% from November while the core rate rose 0.1%, both below expectations.
     • New York Fed's Empire State Survey is expected to tick up to 6.0 in January from 4.9 a month earlier. (8:30 a.m. ET)
     • U.S. industrial production for December is expected to rise 0.5% from a month earlier. (8:30 a.m. ET)
     • University of Michigan's preliminary consumer sentiment index for January is expected to fall to 79.4 from 80.7 at the end of December. (10 a.m. ET)
     • Minneapolis Fed President Neel Kashkari speaks at a virtual town hall at 11:30 a.m. ET.
     • Baker Hughes rig count is out at 1 p.m. ET.
     • CFTC Commitments of Traders report is out at 3:30 p.m. ET.

 

Fed Chair Jerome Powell doubled down on the monetary side as weekly jobless benefit claims rose to their highest level since last August. "Now is not the time to be talking about exit" from easy money policies, he said in a webcast Thursday with Princeton University, pledging to give plenty of notice before scaling back the central bank's bond buying program. Powell said he expects a strong U.S. economic recovery beginning later in 2021 and added that inflation levels could rise. The “inflation trade” has been in the spotlight early this year, as evidenced by rallying commodity markets like the grains, crude oil, copper and others. Besides high unemployment, inflation isn't on a path to reaching 2% on a sustained basis, even though it might shoot higher this year.

 

     Powell made clear it is premature to talk about the Fed tapering its bond purchases, that lifting the Fed funds rate is not happening “soon” and that he doubted inflation is coiling like a spring. Some Fed officials have talked about the possibility of trimming the bond buys if the U.S. economy posts a strong recovery this year, but Powell said, “Now is not the time to be talking about it.” The Federal Open Market Committee will not even talk about trimming the bond buying effort of $120 billion per month until there is “clear evidence” of progress toward the Fed’s employment and inflation goals. “When that happens, and we can see that clearly, we’ll let the world know, we will communicate very clearly to the public and we’ll do so well in advance of active consideration of beginning a gradual taper of asset purchases,” Powell stated.

 

     Powell said that there will eventually be a time for raising rates but “that time, by the way, is no time soon.” Slack in the labor market and a lack of demand from foreign countries are factors Powell said argue against inflation being poised to suddenly surge higher. Powell acknowledged that inflation readings are likely to start moving higher once the pandemic-impacted readings from March and April are out of the calculations. And should inflation rise, Powell said the Fed has tools to address any such action.

 

     Bottom line: While some on the Fed are expressing concern over inflation, Powell is pushing the Fed to keep its policies in place and will use communication to make sure there is not a surprise when the time comes for the Fed to act. “We’ll let the world know,” he stated. 

 

WSJ survey: The U.S. economy will grow 4.3% this year, as the country exits the grip of the coronavirus pandemic, economists forecast in a Wall Street Journal survey (link). Economists raised their growth prediction for 2021 U.S. gross domestic product in the January survey, saying vaccinations and the prospect of additional financial relief from Washington for individuals and businesses brightened economic prospects. The latest 2021 growth forecast, measured from the fourth quarter of the prior year, was a sharp increase from the 3.7% growth expected for 2021 in last month’s survey.

 

     WSJ survey

 

Market perspectives:

 

     • Outside markets: The U.S. dollar index higher. Nymex crude oil futures prices are lower and are trading around $52.75 a barrel. Gold and oil declined. Bitcoin fluctuated around $38,000. The yield on the benchmark 10-year U.S. Treasury note stands at 1.107%.


     • Crude oil futures have lost ground ahead of the U.S. trading start, with both U.S. and Brent crude in negative territory. U.S. crude is trading under $52.95 per barrel and Brent below $55.60 per barrel. Crude oil prices were mixed overnight, with U.S. crude up four cents at $53.61 per barrel while Brent crude was down 14 cents at $56.28 per barrel.

 

     • Buy commodities and sell bonds, JPMorgan strategists recommended, touting energy as a cyclical asset and an inflation hedge. They raised the commodities weighting of a model portfolio to 6% from 4% and cut exposure to bonds. Equity holdings were held steady. Commodities will benefit from strong economic growth and fading risks from issues like the trade war, pandemic and Brexit.

 

     • Wheat futures surged to a six-year high in Chicago after Russia said its new wheat-export tax will rise even more than expected as the country accelerates efforts to cool domestic food prices. Russia, the biggest wheat exporter, is adding to measures announced late last year after President Vladimir Putin told the government to temper food-price inflation because of sharp increases for staples. A grain-export quota and wheat-export tax that will both kick in Feb. 15 have combined with tightening supply elsewhere and surging Chinese demand to drive global grains prices to multiyear highs. Details: Russia’s wheat duty will rise to 50 euros a ton ($61) from 25 euros on March 1, the Economy and Trade Ministry said in a statement. The government is also planning to continue taxing shipments into the next season. The agriculture ministry earlier this week proposed an increase to 45 euros from March 15.

 

     • USDA daily export sales: 110,000 MT corn to Mexico 2020-2021 marketing year; 318,000 MT soybeans to unknown destinations 2021-2022.

 

     • Ag demand: Jordan’s state grains buyer tendered to buy 120,000 MT of milling wheat from optional origins.
 

     • Demand appears to be outstripping supply in the freight industry. "North American freight volumes continue to make a healthy recovery, although it's rising freight rates that have caused our expenditures index to reach an all-time high," Tim Denoyer of ACT Research said of the latest Cass Freight Index.

 

        Freight index

 

     • 2020 tied for the hottest year on record. In a new study (link), NASA found that 2020 ranked right alongside 2016 as the warmest year since record-keeping began in 1880. Scientists said rising levels of carbon dioxide and methane, which trap heat in the atmosphere, contributed to the rise. At times last year, parts of the Arctic hit temperatures of 100 degrees Fahrenheit. Carbon dioxide emissions from fossil fuels dropped 7% in 2020, according to the Global Carbon project, a research consortium, largely because pandemic lockdowns reduced car and air travel. Still, the U.K.’s Met Office, which tracks climate change, has found the level of CO2 in the atmosphere is now higher than at any time in the past 800,000 years. These maps (link via NYT) show the biggest changes.

 

       Hottest year

 

Hot last year but another polar vortex may be on the way. A relatively rare weather phenomenon (until the past few years) with the potential to disrupt the polar vortex is threatening to send an Arctic blast across North America, Europe and Asia from late January.

Even if temperatures ease, the impact of tighter LNG supplies is likely to be felt into the summer and to feed into other markets, say some observers.

 

Items in Pro Farmer's First Thing Today include (Link to subscribe to FTT):

     • Current Argentine rains key ahead of another dry stretch
     • Blast of cold air expected for Black Sea region, but snow should prevent winterkill
     • Ukraine’s grain shipments remain well behind year-ago
     • India hopes to reach E20 gasoline blends by 2025
     • Big hog weights remain a limiting factor
     • Beef prices rise as cash prices slip

 


POLICY FOCUS


 

—  Biden officially proposes a $1.9 trillion American Rescue Plan as first of two parts. In an address last evening in Wilmington, Delaware, President-elect Joe Biden urged the new Congress to quickly approve a $1.9 trillion Covid-aid plan to improve vaccine distribution, provide direct payments to Americans and bolster state and local government coffers. Biden described it as a package of emergency measures to meet the nation’s immediate economic and health-care needs, to be followed in February by a broader relief plan he will unveil in his first appearance before a joint meeting of Congress. The second package will focus on economic recovery that would also use jobs and infrastructure as a tool to combat climate change. Link to details of proposal.

 

     Summary: Biden’s proposal is divided into three major areas: $400 billion for provisions to fight the coronavirus with more vaccines and testing, while reopening schools; more than $1 trillion in direct relief to families, including through stimulus payments and increased unemployment insurance benefits; and $440 billion for aid to communities and businesses, including $350 billion in emergency funding to state, local and tribal governments.

 

     What Biden first package calls for:

  • Direct payments of $1,400 to most Americans, bringing the total relief to $2,000, including December’s $600 payments (cost estimated at around $1 trillion). The funding expands eligibility to include adult dependents such as college students who were excluded from previous versions. The plan would also expand eligibility for the stimulus payments to families where one parent is an immigrant. About 13.5 million adult dependents were excluded from the prior checkst, including millions of disabled people.
  • Increasing the federal, per-week unemployment benefit to $400 and extending it through the end of September. Biden will also seek to link the level of unemployment benefits to general economic factors, so that benefits increase automatically when the unemployment rate spikes.
  • Increasing the federal minimum wage to $15 per hour and eliminating lower minimum wages for tipped workers and people with disabilities.
  • Extending the eviction and foreclosure moratoriums, which currently goes until the end of this month, until the end of September.
  • $350 billion in state and local government aid.
  • Extending the 15% boost in increased Supplemental Nutrition Assistance Program (SNAP/food stamp) benefits through September — current SNAP benefit increase will otherwise end in June; Biden said he is committed to providing this boost for as long as the Covid-19 crisis continues, and will work with Congress on ways to automatically adjust the length and amount of relief depending on health and economic conditions so future legislative delay doesn’t undermine the recovery and families’ access to benefits they need.” Biden lamented a “growing hunger crisis,” particularly among minority communities, saying: “More than one in five Black and Latino households in America report that they do not have enough food to eat. It’s wrong. It’s tragic. It’s unacceptable.”
  • Temporarily cut the state match for the SNAP program. “The president-elect is calling for a one-time emergency infusion of administrative support for state anti-hunger and nutrition programs to ensure that benefits get to the kids and families that need it most,” a fact sheet said.
  • Making a $3 billion “multi-year investment” for the Women, Infants and Children (WIC) program “to account for increased enrollment due to growing hunger and to increase outreach to ensure that low-income families have access to high-quality nutritious food and nutrition education.”
  • Providing $1 billion in nutritional assistance to U.S. territories Puerto Rico, American Samoa, and the Commonwealth of the Northern Mariana Islands.
  • Urging Congress to authorize the Occupational Safety and Health Administration (OSHA) to issue a Covid-19 Protection Standard that covers a broad set of workers, so that workers not typically covered by OSHA, like many public workers on the frontlines, also receive protection from unsafe working conditions and retaliation.”
  • Urging employers “to meet their obligations to frontline essential workers and provide back hazard pay.”
  • $440 billion in funding for communities and small businesses.
  • $170 billion for K-12 schools and institutions of higher education. The $130 billion in K-12 funding is aimed at paying expenses associated with mitigating the spread of virus inside schools, such as improving ventilation systems.
  • $400 billion for direct pandemic relief such as vaccine distribution, testing and providing schools the resources they need to return to in-person learning ($50 billion toward Covid-19 testing; $20 billion toward a national vaccine program in partnership with states, localities and tribes). The plan calls for providing free vaccines to people regardless of their immigration status. The proposal would fund 100,000 public health workers to engage in vaccine outreach and contact tracing. Biden will lay out details for his vaccine plan today, and he said the rollout so far has been a “dismal failure.”
  • Making the Child Tax Credit fully refundable for the year and increasing the credit to $3,000 per child ($3,600 for a child under age 6). The credit currently maxes out at $2,000, but lower-income workers don't receive the full value of the credit because it's only refundable up to $1,400. It extends eligibility for the credit to millions of very poor families and boosts the Earned Income Tax Credit, a benefit for workers, from $530 to $1,500.

     The Biden administration isn’t proposing any offsets with its supplemental spending request, consistent with the way Congress approved prior pandemic aid packages during the Trump administration.

 

     Some Republican senators warned Biden was seeking to do too much too fast. “Reminder that a bipartisan $900 billion #COVID19 relief bill became law just 18 days ago,” tweeted Sen. John Cornyn (R-Texas). Sen. Marco Rubio (R-Fla.) said Biden’s plan was too sweeping to pass quickly. Rubio urged Biden to focus on passing his proposed $1,400 tax rebate checks. “Let’s get the extra money to people first,” Rubio tweeted. House Ways and Means Committee ranking member Kevin Brady (R-Texas), said, “Here we go again. True to form and his signature failed ‘stimulus,’ President-elect Biden launches yet another economic blind buffalo that does nothing to save Main Street businesses, get people back to work, or strengthen our economy… Special interests and liberals are cheering. The jobless and Main Street are left shaking their heads.”

 

     Democrats have the option of punting to a budget reconciliation package if bipartisanship falters — Biden said he will need 10 Republican votes in the Senate to overcome a filibuster. Tapping the budget reconciliation option would require only a simple majority in the Senate to pass, but the process is time-consuming and can have major limitations as any policy language that doesn't have a direct budgetary impact could have to be removed. It is also unclear whether discretionary funds would be allowed. The restrictions include a limited number of times Democrats can use it this year and rules that confine reconciliation bills to tax and fiscal matters rather than broader policies. The budget reconciliation process is how Republicans passed their big tax-cut bill after Trump took office, and how President Barack Obama passed the Affordable Care Act.

 

     Senior Biden officials confirmed that the president-elect still supports $10,000 in student debt forgiveness. While the current proposal doesn’t include it, an official said. the current focus will be on extending student loan forbearance, which allows people to temporarily pause loan payments.

 

     Biden also supports legislation called the FEED Act (link) to partner with restaurants in feeding the needy. The bill “aims to provide nutritious meals to people in need in response to the coronavirus crisis,” supporters said in a statement. It waves current provisions in a law called the Stafford Act to allow the Federal Emergency Management Agency (FEMA) to cover 100% of the cost of emergency and disaster-related expenses, instead of 75%. “This would eliminate any state costs during the Covid-19 crisis and allow more states to take a proactive approach to distributing meals and providing more financial relief to restaurants,” supporters noted. The bipartisan legislation, backed by prominent chef and humanitarian José Andrés, was introduced last year by Sens. Kamala Harris (D-Calif.) and Tim Scott (R-S.C.) and Reps. Mike Thompson (D-Calif.), Jim McGovern (D-Mass.) and Rodney Davis (R-Ill.).

 

     Will restaurants and bars be part of USDA Commodity Credit Corporation (CCC) funding?  In a section of the Biden plan that’s focused on small business relief, the Biden team says the president-elect “wants to work with Congress to make sure that restaurants, bars, and other businesses that have suffered disproportionately have sufficient support to bridge to the recovery, including through the [Commodity] Credit Corporation at the U.S. Department of Agriculture.”

 

     The second package is expected to be centered on job creation and infrastructure, including hundreds of billions of dollars of spending on clean-energy projects like electric vehicle charging stations, along with health care and education spending.

 

     Bottom line on Biden’s first package: Republicans may recoil from a more than doubling of the minimum wage, aid for states and higher unemployment benefits. Some items may please moderates, such as $400 billion to tackle the virus to speed up re-opening and $1,400 in further direct payments. For perspective, the spending would come on top of the $2 trillion relief bill from March and the $900 billion relief program in December. By contrast, the centerpiece of the Obama administration’s response to the financial crisis came in at around $800 billion.

 

— IRS won’t alter stance on Section 199A co-op tax deduction. Some issues never go away, even in areas beyond biofuels. One is tax policy, in particular a return to the “Grain Glitch” issue. The regulation has been the subject of dispute since Congress passed the 2017 Tax and Jobs Act. It concerns how farm income from co-operatives should be handled for tax purposes.

 

     The Internal Revenue Service (IRS) in a final rule said it will not change its restrictions on the Section 199A tax deduction provided by the 2017 tax overhaul. The final regulations for the deduction limit the deduction to patronage income. Non-member income won’t qualify. The IRS is a division of the Treasury Department.

 

     Lobbyists who were defeated blasted the final IRS ruling. “Treasury is siding with large, multinational grain companies and their friends on Wall Street at the expense of the hardworking farmers and the rural communities where they live,” said Chuck Conner, president and CEO of the National Council of Farmer Cooperatives (NCFC). He said the group would “pursue every avenue available to overturn this example of bureaucratic overreach." Around 20% of co-op business is non-patronage. According to NCFC, limiting the deduction only to member income will fall especially hard on members of co-ops that rely more heavily on buying commodities from non-members to ensure stability in operations.

 

     Tax details: According to the IRS, Section 199A(a) of the law provides taxpayers a deduction of up to 20% of income from a domestic business operated as a sole proprietorship or through a partnership, S corporation, trust, or estate, and up to 20% of qualified real estate investment trust (REIT) dividends and publicly traded partnership (PTP) income (section 199A(a) deduction). The IRS maintains that “Section 199A(b)(7) requires patrons of Specified Cooperatives to reduce their section 199A(a) deduction if those patrons receive certain payments from Specified Cooperatives.”

 

     The naysayers say the IRS interpretation does not follow congressional intent and called it the “grain glitch” in the law. The rule (link) is scheduled to be published in the Federal Register on Tuesday, the day before President Donald Trump leaves office.
 


CHINA UPDATE


 

— U.S. bans exports to China’s state-owned oil company. The Commerce Department added the China National Overseas Oil Corporation, known as CNOOC, to its blacklist of foreign entities that threaten national security, Politico reports. The department cited the oil company’s role in building artificial islands in the South China Sea in order to bolster China’s territorial claims there. It is the latest in a series of actions by the Trump administration that have escalated tensions with China ahead of Biden’s inauguration. “CNOOC acts a bully for the People’s Liberation Army to intimidate China’s neighbors, and the Chinese military continues to benefit from government civil-military fusion policies for malign purposes,” Commerce Secretary Wilbur Ross said in a statement. The move could have implications for U.S. oil projects. “A U.S. CNOOC subsidiary operates about 400,000 acres of oil and gas fields in Wyoming, Colorado and Texas. It also owns stakes in oil development projects in the U.S. Gulf of Mexico,” Politico writes.

 

— WSJ: Phase 1 trade deal with China has improved business conditions even as purchase targets fall short. Structural changes made by China as part of the Phase 1 agreement between the U.S. and China are “being credited for improving business conditions for some American companies, even if a cornerstone of the deal — China’s commitment to greatly increase purchases of U.S. goods — has fallen short,” is the open of an item (link) in the Wall Street Journal (WSJ) marking the one-year anniversary of the signing of the Phase 1 agreement. They note data through November show China’s purchases of goods have reached $82 billion, or about 52% of the $159 billion goal in the agreement, according to analysis from the Peterson Institute for International Economics. China met 67% of the target for ag purchases through November, but only 52% on manufactured goods and 31% on energy. But the item notes that China committed to improve market access for U.S. companies, “and on that front, Beijing has made strides, especially with respect to American financial companies.”

 

     Craig Allen, president of the U.S.-China Business Council, said the Chinese have “lived up to all their commitments on the structural side. They have not been able to on the quantitative side.” The group also released a report that noted up to 245,000 Americans have lost their jobs in part from higher costs due to U.S. tariffs.

 

     The item notes a spokesman for China’s customs agency pointed to U.S. soybeans and pork as items where the country has increased its buys of U.S. goods. The item also points to U.S. officials noting that it also removed longstanding barriers for U.S. exports to China, including on beef, where shipments had more than doubled from year ago by the end of August.

 

     China Phase 1

 

U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link

 


TRADE POLICY


 

— Another U.S./Mexico clash, this time on energy. The outgoing Trump administration is upset over Mexico’s preferential treatment of its state-owned energy companies, triggering concerns that could threaten U.S. agricultural exports. In a letter (link), Secretary of State Mike Pompeo, Energy Secretary Dan Brouillette and Commerce Secretary Wilbur Ross wrote to their counterparts in Mexico that "recent regulatory actions by the Mexican government have created significant uncertainty about Mexico's regulatory processes, especially regarding the energy sector, and have damaged Mexico's overall investment climate," pointing to reports of a memo and meeting last year where regulators were "allegedly instructed to block permits for private sector energy projects and to exercise their regulatory authority to favor state-owned energy companies." If true, the secretaries warned, it would be "deeply troubling and raise concerns regarding Mexico's commitments" under the U.S.-Mexico-Canada Agreement. (USMCA).

 

     Potential impact: Reuters reported (link) that Economy Minister Tatiana Clouthier said the country could "raise concerns over potential barriers to its agriculture exports to the United States" in future negotiations over the Mexican government's energy policy.

 

— USTR says Austria, Spain and U.K. digital sales taxes discriminate against U.S. companies. Digital sales taxes (DSTs) put in place by Austria, Spain and the U.K. discriminate against U.S. firms, according to findings of DST investigations released Thursday by the Office of the US Trade Representative (USTR). The Section 301 investigations also found that the countries’ policies are “inconsistent with prevailing principles of international taxation” and restrict U.S. commerce. But it is not clear the investigations will result in any action as USTR previously said they would await the outcome of all of its DST investigations before deciding on any actions.

 


ENERGY & CLIMATE CHANGE


 

— Remember when Reuters reported the ‘majority’ of RFS waiver requests would be approved by EPA? Never mind. Bloomberg, citing two unnamed contacts, reports that EPA officials have told stakeholders that small refinery exemptions for 2019 and 2020 biofuel-blending requirements are not likely to be issued amid ongoing litigation. EPA is also set to request comment on petitions by governors and refiners that Renewable Fuel Standard (RFS) blending requirements be pared amid the pandemic.

 

     Background. Biofuel proponents, including some members of the House and Senate, had implored EPA Administrator Andrew Wheeler against issuing new refinery exemptions, with the Supreme Court set to hear arguments in a case testing the EPA’s ability to grant them. “Due to the ongoing litigation, we take no position on the availability of SREs for the 2019 compliance year,” EPA says in proposal to delay compliance deadlines. That indicates EPA won’t take further action on SREs, said Emily Skor, head of Growth Energy. “We certainly hope that’s the case, and that Mr. Wheeler doesn’t suddenly reverse course in the last few days of this administration.”

 

     Oil refiners would get more time to comply with 2019 biofuel-blending requirements under an EPA proposal published today (link). Under the proposed rule, small refineries would have until Nov. 30, 2021 to comply with 2019 Renewable Fuel Standard requirements. Deadline for satisfying 2020 quotas would also shift to Jan. 31, 2022 for all fuel importers and refiners obligated to comply with the RFS. The public can comment on plan through March 11, 2021. The deadline for submission of attest engagement reports and the associated deadline associated deadline for submission of attest engagement reports for the 2020 compliance year for obligated parties and Renewable Identification Number (RIN)-generating renewable fuel producers and importers, and other parties holding RINs to June 1, 2022. “For small refineries, we are proposing to extend the 2019 compliance deadline in light of ongoing uncertainty surrounding small refinery exemptions (SREs) under the RFS program,” EPA said. Previously, those deadlines would have been March 31, 2020 for the compliance deadline and June 1, 2020, for the attest engagement reporting deadline.

 

     Additional EPA comments: While EPA said that the 10th Circuit Court of Appeals decision was not finalized until after the compliance deadline for 2019 had already passed on March 31, 2020, the matter of the Renewable Fuels Association (RFA) vs EPA is now before the Supreme Court. “This case is pending on the Supreme Court’s docket at this time,” EPA stated. “The resolution of the appeals process for the RFA case has the potential to impact the availability of SREs going forward. Because of the uncertainty both leading up to the March 31, 2020, deadline and of SREs going forward, we do not believe it would be appropriate to require small refineries to demonstrate compliance with their 2019 obligations pending ongoing appeals of the RFA decision.” EPA will also hold a virtual public hearing Feb. 9 on the action but said it would not respond to any of the presentations at that meeting.

 


CORONAVIRUS UPDATE


 

 Summary: Global cases of Covid-19 are at 93,218,605 with 1,996,505 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 23,314,238 with 388,705 deaths.
 

       Link to Covid Case Tracker
       Link to Our World in Data

 

— Vaccine tourism. Visitors from Toronto to New York to Buenos Aires have long flocked to Florida for sun, surf and shopping. Now they are coming for the Covid-19 vaccine, reports the Wall Street Journal (link). Some of the arrivals are Americans or foreigners who own second homes in the state and reside here part-time. Others are making short-term visits, seizing the opportunity provided by Florida’s decision to make the vaccine available to people age 65 and older, including nonresidents. The practice, which some are calling vaccine tourism, has drawn fire from some officials and residents.

 

     Vaccine tourism

 

— Britain banned arrivals from most of Latin America as well as Portugal over fears of a Brazilian virus variant. In England, hospitals are stretched to the brink.

 

— Coronavirus immunity passports. A tech and healthcare coalition that includes members like Microsoft, Oracle, Salesforce and U.S. nonprofit Mayo Clinic are working together to create a Covid-19 vaccination passport. The Vaccination Credential Initiative (VCI) would allow businesses, airlines and countries to check if people have received a coronavirus vaccine to "demonstrate their health status to safely return to travel, work, school and life while protecting their data privacy."

 


POLITICS & ELECTIONS


 

— Pelosi introduces bill to provide statehood for the District of Columbia. House Democrats recently re-introduced as HR 1 a voting and campaign-finance bill that would deal with the voting process and provide statehood for the District of Columbia that would guarantee Democrats two new Senate seats. The bill requires every state to register voters based on names in state and federal databases — such as anyone receiving food stamps or who interacts with a state DMV. It mandates same-day and online voter registration, expands mail and early voting, and limits states’ ability to remove voters from rolls. The bill also strips state legislatures of their role in drawing congressional districts, replacing them with commissions — opponents note that in practice, commissions have turned out mostly to favor Democrats. The bill requires some nonprofits to disclose publicly the names of donors who give more than $10,000, even if those groups aren’t taking part in candidate elections. The bill also raises disclosure requirements for political ads on radio and TV, requiring the head of an organization to approve messages and list the group’s top donors by name.

 

— Ag support for Homeland Security secretary. More than 85 agriculture groups signed on to a letter stating they want to see Alejandro Mayorkas quickly confirmed by the Senate as secretary of Homeland Security, given the department’s involvement in processing H-2A visas and oversight of border checkpoints.

 

— Senate postpones nomination hearing on national security official. The Senate Select Committee on Intelligence has postponed the nomination hearing set for today (Jan. 15) on Avril Haines to be director of national intelligence for the Biden administration. The timeline is not expected to change dramatically for Haines’ nomination, but it was not clear if it would take place before or after President-elect Joe Biden’s inauguration Wednesday. The panel said in a statement it was working “as fast as possible” on the nomination and said they looked forward to holding a hearing on Haines’ nomination next week. Reports indicated that the delay was linked to one of the panel members wanting the session to be in person as opposed to virtual.

 

— More Biden nominees. President-elect Joe Biden picked Jaime Harrison, a veteran of South Carolina politics, to lead the Democratic National Committee, and Dr. David Kessler, a former head of the FDA, to help lead the government’s efforts to accelerate the development of virus vaccines.

 

— Biden announced the planned hiring of more than a half-dozen new climate staffers to join his West Wing. Outside the White House, Biden plans to add one of the architects of former President Barack Obama's plan for cutting emissions from the power sector to the Environmental Protection Agency, a sign of more environmental regulation to come.

 

     The hires include David J. Hayes, who served as Interior deputy secretary under both Presidents Bill Clinton and Barack Obama and will now be a special assistant to the president for climate policy. "The role of farms, forests and public lands in clean energy production and climate protection has generally been underappreciated," Paul Bledsoe, a former Clinton White House climate advisor, now at the Progressive Policy Institute, told the Washington Post. "The appointment of David Hayes signals that the Biden administration intends to make those issues more central."

 

     Another hire is Cecilia Martinez, a prominent environmental justice advocate. Martinez, who advised the transition team, will play a major role in tackling pollution disparities as senior director for environmental justice at the White House Council on Environmental Quality (CEQ).

 

     Janet McCabe, currently a law professor at Indiana University, will join the administration as the second-ranking official at the EPA, the transition team announced this morning. Under Obama, she led the agency's Office of Air and Radiation and helped develop the Clean Power Plan.

 

     Stef Feldman, a longtime Biden aide who started as his policy intern when he was vice president and rose to become his 2020 campaign’s policy director, will serve as deputy assistant to Biden. During the presidential race, she helped get the buy-in of young climate activists, union leaders, environmental justice advocates and former Democratic rivals when writing Biden’s proposal to eliminate carbon pollution from the electric sector by 2035 and to spend $2 trillion over four years to boost clean energy.

 

     Maggie Thomas, a former climate adviser to two of Biden’s former rivals for the presidency, Sen. Elizabeth Warren (D-Mass.) and Washington Gov. Jay Inslee (D), will serve as chief of staff in the Office of Domestic Climate Policy.

 

     Jeff Marootian, who directs the D.C. Department of Transportation, is being hired to help oversee future hires as special assistant to the president for climate and science agency personnel.

 

     Recall that heading up the White House climate change team are former secretary of state John Kerry and former EPA chief Gina McCarthy — who are set to be his international climate envoy and domestic climate czar, respectively. Their hirings were announced shortly after Biden's victory. They will work with several incoming Cabinet officials new to Biden’s orbit, including North Carolina environmental regulator Michael S. Regan, picked to run the EPA, and Rep. Deb Haaland (D-N.M.), set to serve as interior secretary. Incoming USDA Secretary Tom Vilsack will also play a big role in climate change policy implementation.

 

— Macaulay Culkin, the star of Home Alone, joined calls to have President Trump’s cameo edited out of the 1992 movie.

 

— Fortress Washington. The Secret Service will establish a “green zone” in downtown Washington this weekend, shutting down traffic and train lines as troops flood into the city for Biden’s inauguration.

 

    Fortress
 


OTHER ITEMS OF NOTE     


 

— Bill Gates is the top private farmland owner in America. The billionaire and philanthropist has been purchasing 242,000 acres of farmland across 18 states, Forbes reports (link). His largest holdings are in Louisiana (69,071 acres), Arkansas (47,927 acres) and Nebraska (20,588 acres).

 

— Move to privatize Fannie Mae and Freddie Mac falters. The Treasury Department has decided not to restructure the taxpayers’ stake in the two mortgage giants, effectively ending the Trump administration’s push to ensure that they are eventually returned to private hands.

 

— New infrastructure coalition. The U.S. Chamber of Commerce and the Bipartisan Policy Center have joined forces to launch a new coalition aimed at passing an infrastructure package by the Fourth of July. As part of the effort, the coalition is calling for comprehensive legislation that will update and repair U.S. infrastructure, address climate change and promote "fiscally and environmentally responsible" policies. The coalition is comprised of nearly 200 business, policy and labor organizations, including the North America's Building Trades Unions, the National Wildlife Federation, and the National Association of Clean Water Agencies.

 

— Major gene edits for hogs ‘on the horizon’: NPPC. At least five other nations are moving toward gene editing of hogs, which could put them way ahead of the United States in producing disease-resistant and faster-growing hogs that cost less to grow, said a group speaking for American hog farmers. The National Pork Producers Council (NPPC) said USDA, rather than the FDA, should regulate GE livestock. The FDA “continues to engage in delay tactics that are holding back U.S. agriculture,” said NPPC president Howard Roth. USDA Secretary Sonny Perdue proposed last month that USDA assume regulatory jurisdiction of GE food animals. The comment period on the proposal runs into late February, so the Biden administration would decide whether to proceed. Reports surfaced earlier this week, however, that the Trump administration may try to carry out the transfer of authority before leaving office. “Major competitors such as Argentina, Australia, Brazil, Canada, and China are moving forward while the United States lags behind,” said the NPPC in comments submitted to the USDA (link). “This disadvantage will be more acute if these countries approve the significant gene edits that we know are on the horizon long before the United States is able to do so. We simply cannot allow U.S. farmers and ranchers to lack the same animal health and food safety advantages as producers in other countries.”

 

— Cotton AWP rises again. The Adjusted World Price (AWP) for cotton rose to 66.23 cents per pound, effective today (Jan. 15), marking the fifth straight week above 60 cents and the highest since it was at 68.27 cents per pound the week of May 3, 2019. The AWP level means there is no opportunity for an LDP on 2020 cotton production at this point. USDA announced that Special Import Quota #13 would be established for 43,469 bales of upland cotton on January 21, applying to cotton purchased not later than April 20 and entered into the U.S. not later than July 19.

 

— Joe the pigeon may get a reprieve. Australian officials had planned to kill the bird, thought to have traveled from the U.S., as a biosecurity risk. But the American Racing Pigeon Union claims Joe's identifying leg band is a fake, and he may be an Aussie after all, the Associated Press reported. His fate is uncertain as authorities get to the bottom of his identity. Some lawmakers have called for a pigeon pardon.

 


 

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