Fed’s Powell Testifies Today Amid Trading Scandal, Questions Over Inflation Strategy
Biden and Vilsack talk trade policy, logistics and climate change/cover crops at Farm Bureau
In Today’s Digital Newspaper
• Fed Powell testifies today amid trading scandal at Fed
• Treasury warns taxpayers to prepare for turbulent (late) filing season
• End around SALT?
• IMF has a new chief economist
• Dairy prices spiking
• 2014 through 2021 warmest on record, and 2021 fifth-hottest single year
• USDA daily export sale: 100,000 MT soybeans to Mexico during 2021-2022 marketing year
• Ag demand update
• Quiet trade overnight
• Brazil cuts crop forecasts amid drought
• Consultant continues to cut South American crop estimates
• Thailand finds ASF at slaughterhouse
• Wholesale beef prices strengthen
• Premium in February hogs narrows
• CFAP payouts hold mostly steady
• Highlights of comments from Biden and Vilsack at Farm Bureau
• $308 million in new humanitarian assistance
• Vilsack: Potential nominee for Agriculture undersecretary for trade being vetted
• Action on nominee to lead Commerce’s National Telecommunications and Info Admin.
• USDA nominations before Senate Ag Committee
• China reviewing antidumping, anti-subsidy tariffs on DDGs; keep in place during process
• Import and export operations in Tianjin are slowing due to Covid cases
• Ray Dalio again defends Beijing
• USDA, USTR formally announce India opening market to U.S. pork
Energy & Climate Change:
• Supreme Court refuses to reinstate EPA rule re: year-round sales of E15
• Greenhouse gas emissions rise
• White House signals it will curtail oil development in National Petroleum Reserve-Alaska
• EPA proposed rule on canola oil pathways for renewable diesel, jet fuel sent for review
Livestock, Food & Beverage Industry Update:
• Lawmaker offers beef labeling legislation
• Man receives new heart from a genetically modified pig
• No decision yet by Supreme Court to hear Prop 12 petition
• President Biden requires insurers to pay for at-home tests
• U.S. issues ‘do not travel’ warning for Canada as Covid cases rise
• Japan extends near-total ban on foreigners entering country
Politics & Elections:
• McCarthy: Will strip three Dems of their committee assignments if GOP wins House
• Rep. Ed Perlmutter (D-Colo.) will not seek a ninth term in Congress
• Biden to use Atlanta speech today to push stalled elections bills
Other Items of Note:
• Russia and U.S. agree to continue talks; Russia says they didn’t plan to invade Ukraine
• Back to school in Chicago
Equities today: Global stock markets were mixed overnight. U.S. stock indexes are pointed toward higher openings. Asian equities ended mostly lower amid rising COVID concerns. The Nikkei declined 256.08 points, 0.90%, at 28,222.48. The Hang Seng Index fell 7.48 points, 0.;03%, at 23,739.06. European equities are higher in early action, posting solid gains. The Stoxx 600 was up 0.9% with other markets up 0.8% to 1.2%.
U.S. equities yesterday: The Dow fell 162.79 points, 0.45%, at 36,068.87, having failed to get into positive territory during the session. The Nasdaq, however, managed to finish slightly higher after a late rise, gaining 6.93 points, 0.05%, at 14,942.83. The S&P 500 declined 6.74 points, 0.14%, at 4,670.29.
On tap today:
• Kansas City Fed President Esther George discusses the economic and monetary policy outlook at a Central Exchange event at 9:30 a.m. ET.
• Federal Reserve Chairman Jerome Powell appears before the Senate Banking Committee as lawmakers weigh his nomination to a second term leading the central bank. (10 a.m. ET)
• China's producer price index for December is expected to increase 11.2% from one year earlier and the consumer-price index is forecast to rise 1.6%. (8:30 p.m. ET)
• WSJ hosts Cleveland Fed President Loretta Mester to discuss the economic and policy outlook for 2022 at 11:10 a.m. ET.
• EIA is scheduled to release the short-term energy outlook.
Federal Reserve Vice Chair Richard Clarida is stepping down over stock trading controversy. Clarida will exit on Friday, after new reports on his questionably timed stock trades made in the early days of the coronavirus pandemic. Clarida’s term was originally set to expire at the end of the month. He’s the third Fed official to resign in recent months amid an investigation into whether officials violated rules by trading stocks with insider knowledge. Clarida is set to return to teaching economics at Columbia University this week, where he is a professor.
"This revelation is just the latest evidence of a deep-rooted ethics failure at the Fed and the urgent need for a comprehensive information release about officials’ trading activity,” said Sen. Elizabeth Warren (D-Mass.).
Federal Reserve Chair Jerome Powell said the central bank will prevent higher inflation from becoming entrenched while also cautioning that the post-pandemic economy might look different than the previous expansion. “We will use our tools to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched,” Powell said in brief remarks prepared for delivery at a confirmation hearing before the Senate Banking Committee today. Fed’s Powell pledges to use all tools to combat inflation in nomination hearing testimony. Economic strength in the U.S. is coming even as the pandemic continues, a situation which is “giving rise to persistent supply and demand imbalances and bottlenecks, and thus to elevated inflation,” Powell said in remarks for his confirmation to serve another term atop the U.S. central bank. “We know that high inflation exacts a toll, particularly for those less able to meet the higher costs of essentials like food, housing, and transportation,” he noted. “We are strongly committed to achieving our statutory goals of maximum employment and price stability. We will use our tools to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched.”
Powell also acknowledged the Fed expects the post-pandemic economy “is likely to be different in some respects” and that Fed policy will have to “take these differences into account.”
Powell is expected to face questions about trading by Fed officials around the pandemic, especially with the announcement Monday that Fed Vice Chair Richard Clarida will exit Jan. 14, two weeks ahead of when his term expires. Clarida has become the third Fed official to leave amid revelations about trading activity in financial and equity markets surrounding the pandemic. Powell announced a series of changes in 2021 to address trading activities by Fed officials but some lawmakers are expected to keep pressing the issue during Powell’s confirmation hearing.
More backlogs expected at the IRS. The Internal Revenue Service (IRS) will begin accepting 2021 individual income-tax returns on Jan. 24, and administration officials are already warning of paperwork backlogs and difficulty reaching IRS employees on the telephone during this year’s filing season. The IRS enters the year with several million pieces of backlogged work from prior years instead of about one million in a typical year. That stems from office closures during the pandemic as well as the challenge of administering new tax benefits and programs created by Congress over the past two years.
Facts and figures. In the last two years, Treasury said 20% of its customer service employees at IRS have been unavailable due to Covid-19 related reasons. Part of the $80 billion President Biden is seeking over the next 10 years for IRS would go to customer service hiring, with the goal of answering 75% of calls that come in to the agency. During the pandemic, that figure dropped to just 7%. During the first half of 2021, IRS had one employee for every 16,000 calls that came in. IRS has also shed 17,000 enforcement workers over the last decade. The agency currently has the same number of employees as it did in 1970, Treasury officials said, despite the U.S. population growing by 60% since then. Overall, it has seen its budget decreased by 20% over the last decade.
Peppering the SALT. New York business owners are saving billions of dollars in taxes by using a state-approved system for sidestepping the $10,000 federal cap on state and local tax (SALT) deductions, the Wall Street Journal reports (link). The effort to help business owners dodge the cap marks the latest and most effective step by high-tax states to fight back against the $10,000 limit on deducting SALT, or state and local taxes, from federal income.
The International Monetary Fund (IMF) has a new chief economist. The University of California at Berkeley’s Pierre-Olivier Gourinchas will succeed Gita Gopinath, who is set to become the IMF's first deputy managing director later this month. Gourinchas, a French national, received a Ph.D. in economics from the Massachusetts Institute of Technology in 1996 and worked with the IMF as a visiting scholar and the editor-in-chief of the "IMF Economic Review" from 2009 to 2016.
• Outside markets: The U.S. dollar index was lower ahead of U.S. economic updates as the euro, yen and British pound were all firmer versus the greenback. The yield on the 10-year U.S. Treasury note was weaker to trade around 1.76%. Gold and silver futures were registering gains, with gold above $1,805 per troy ounce and silver above $22.64 per troy ounce.
• Crude oil futures are re seeing solid gains ahead of U.S. trading, with U.S. crude around $79.45 per barrel and Brent around $82 per barrel. Crude was higher in Asian action, with U.S. crude up 50 cents at $78.73 per barrel and Brent up 45 cents at $81.32 per barrel.
• Dairy prices are spiking as the cost of feeding cows soars and Omicron infections at processing plants idle part of the workforce, notes a Bloomberg article (link). There’s also a more long-term trend at work: milk production in the U.S. is dropping. It’s getting too expensive to feed cows with grain costs soaring, so farmers are shrinking their herds and sending animals to slaughter. For the cows that remain, they’re getting fed less, which means they’ll produce less milk. (BTW, today is National Milk Day.)
• Conab estimates soybean crop in Brazil at 140.5; corn crop at 112.9
• USDA daily export sale: 100,000 MT soybeans to Mexico during 2021-2022 MY.
• Ag demand: South Korea bought 259,000 MT of optional origin corn in two separate tenders but passed on a tender to buy 65,000 MT of feed wheat. Japan is seeking 107,555 MT of milling wheat from the U.S. and Canada in its weekly tender.
• The years 2014 through 2021 were the warmest on record, and 2021 the fifth-hottest single year, an EU climate report said, based on temperature data dating to 1950.
• NWS weather: Bitter cold in the Northeast through early Wednesday, while milder air begins to expand across the Central United States... ...Heavy rain may lead to instances of flooding throughout parts of western Washington over the next few days.
Items in Pro Farmer's First Thing Today include:
• Quiet trade overnight
• Brazil cuts crop forecasts amid drought
• Consultant continues to cut South American crop estimates
• Thailand finds ASF at slaughterhouse
• Wholesale beef prices strengthen
• Premium in February hogs narrows
— CFAP payouts hold mostly steady. Payments under the Coronavirus Food Assistance Program 2 (CFAP 2) held at $19.06 billion for total payments as of Jan. 9, with $14.23 billion in original CFAP 2 payments and $4.82 billion in top-up payments. A shift in rounding moved total CFAP 1 payments up to $11.75 billion ($11.74 billion prior) while original CFAP 1 payments were at $10.56 billion and top-up payments were at $1.19 billion were unchanged.
— Vilsack pushes China Phase 1 followthrough, actions on supply chains & climate in AFBF address. USDA Secretary Tom Vilsack told American Farm Bureau Federation (AFBF) annual convention in Atlanta that ensuring China’s total compliance with the Phase 1 agreement, rolling out remaining disaster and pandemic aid, and advancing the department’s Climate Smart Agriculture and Forestry (CSAF) initiative are among the Biden administration’s top ag policy priorities for 2022.
President Joe Biden, in a pre-recorded video played ahead of Vilsack’s speech, said he knows farmers are “the backbone of this nation,” and said his administration is committed to ensuring they have a “level playing field” to grow and market their products. “I want you to know that every day — I mean this — every day you have a partner in the White House,” he stressed. “You deserve: A. Affordable seed and other inputs; B. Markets that allow you get a fair price for your livestock and other products; C. Agricultural exports service, timely service, to get your goods around the world; D. The right to repair the equipment you own either yourself or at an independent shop,” Biden said. Biden added that he tells people who needs plumbers and other workers that they “need a farmer three times a day.” The president also said that farmers deserve affordable seeds and other inputs and the right to repair their equipment themselves, and that the administration is spending $1 billion to increase meat processing capacity. Biden also noted the port and road provisions in what he called “my infrastructure law” — which passed with some Republican votes — will help improve transportation capacity for ag products while the broadband provisions will improve the lives of people in rural America.
Vilsack, who owns farmland in Iowa, said, “I am a member” of the Farm Bureau. AFBF president Sonny Duvall said “the phone always rings when USDA is considering important policy…When I text the secretary, he texts me back. When I call the secretary, he calls me back.”
Highlights of Vilsack’s remarks:
- China Phase 1, existing trade policy enforcement. Trade was the first area addressed by Vilsack, stressing that the Biden administration’s top priority is enforcing existing trade deals — including the Phase 1 agreement with China. Since the deal took effect “we saw sales to China increase over what they were during the trade war,” he noted. However, he said so far China is “about $16 billion dollars light” versus the purchase commitments they agreed in the deal. “That's why [U.S. Trade Representative Katherine Tai] is going to China and continues to converse with China about the necessity of living up totally and completely to the Phase 1 trade agreement — making up that $16 billion deficit over the course of the next several years.”
(Comments: This is the first mention that Tai will be traveling to China to discuss the Phase 1 agreement and that the Biden administration views complete implementation of the Phase 1 deal as needing to happen before any discussion on extension. That rather open-ended statement of extension does not suggest that any Phase 2 agreement is in the cards any time soon with China.)
Vilsack said the administration will also press China to fully comply with other facets of the deal, including the removal of sanitary and phytosanitary (SPS) and other trade barriers that are still impacting U.S. exports like pork and ethanol. “All of these steps that China can take and needs to take to live up to this Phase 1 trade agreement are important, and we're going to continue to press China on the need for complete enforcement and complete implementation of this trade agreement before we begin the process of discussing the possibility of extensions,” he stressed.
Support for trade among Americans needs to be rebuilt, Vilsack said, adding “We are going to enforce the agreements that we have. That is the first step in rebuilding trust.”
Beyond China, Vilsack said the administration continues to “look for ways in which we can break down barriers and expand access to trade.” An agreement to reopen the Indian market to U.S. pork and Vietnam’s move to slash duties on corn, wheat and frozen pork are examples of those efforts, he said, noting that sends a message the U.S. is “going to diversify beyond our reliance on China in our Asian markets.”
Vilsack noted Mexico is set to reopen its market to imports of U.S. fresh potatoes, a goal that has been “almost 15 years in the making.” He also promised a continued focus on enforcement of the U.S.-Mexico-Canada Agreement (USMCA), pointing to the recent U.S. win in its challenge of Canadian operation of its tariff-rate quotas (TRQs) for U.S. dairy products as evidence.
- Climate and conservation initiatives remain high on USDA’s agenda, Vilsack said, announcing an expansion of new soil and water initiatives under the Environmental Quality Incentives Program (EQIP) and Conservation Stewardship Program (CSP). He also unveiled a new partnership in some states with several ag groups — including the National Corn Growers Association (NCGA) and United Soybean Board (USB) — that aims to double the number of cover crop acres to 30 million by 2030. “We're announcing in 11 states, roughly $38 million to begin that process of expanding incentives and encouraging additional cover crop activity,” he said. The 11 states include including Arkansas, California, Colorado, Georgia, Iowa, Michigan, Mississippi, Ohio, Pennsylvania, South Carolina and South Dakota. States were selected for this initial pilot based on their demonstrated demand for additional support for the cover crop practice. Sign-up dates will be determined at the state-level, and applications will be selected for funding by Feb. 11, 2022.
Vilsack touted the partnership between USDA and AFBF on the department’s climate-smart ag agenda. “We know that the markets in both the U.S. and around the world are continually going to demand more climate-smart commodities… and the exciting news is that we are on the cusp of providing significant help, listening to the Farm Bureau and listening to those in agriculture,” he said, referring to the coming rollout of CSAF pilot programs.
“This is really a bottom-up effort; we know that it's important for us to fund pilots and demonstration projects because we don't know everything we need to know,” Vilsack remarked. “Through pilots and demonstration projects we can encourage farmers to come together, establish climate-smart practices, establish those climate-smart commodities, and do it in a way that makes sense on the ground.” He reiterated that the guiding principles for the effort include making it voluntary and incentive-based, stressing that “it can't be regulated” and will ensure early adopters are supported and not penalized.
He also mentioned working with land-grant universities to be able to demonstrate and measure the climate-smart practices that the markets are going to demand.
Resources for CSAF pilots “are going to come from the Commodity Credit Corporation (CCC),” Vilsack said, adding he wanted to make it “absolutely clear” that it will not “come at the expense” of other farm programs that rely on CCC. He also stressed that in no “way, shape or form” is USDA looking to establish a carbon market. “We want the private sector to do that, the government shouldn't be in that business,” he stressed. Instead, he said USDA sees its role as supporting pilot and demonstration projects, providing farmers with resources to help them adopt climate-smart practices, and working with land-grant universities and others to “measure and quantify and verify the results.”
The bottom line is that CSAF is about “creating new revenue streams” for farmers and ranchers, he observed, by allowing them to harness consumer demand for climate-smart commodities.
- Supply chain moves, disaster aid. Vilsack listed USDA’s actions to sooth pandemic-related supply chain disruptions. “There are a lot of reasons why we're faced with the current dilemma,” he said, pointing to the uptick in demand following pandemic lockdowns, weather challenges and a labor shortage as contributing to supply chain bottlenecks. The Biden administration “went to work on the factors that we were able to control,” he said, including expanding the hours of operations at key ports.
Regarding the problem of empty shipping containers being dispatched from U.S. ports, Vilsack promised additional actions are in the works. “We have too many empty containers leaving our ports without having agricultural products in them,” he remarked. “We're working on an effort to try to incentivize those containers to be filled with agricultural products,” he said, and the department will be detailing efforts “in the next several weeks” to leverage $500 million in new resource investments to help move ag products to export markets.
He said the federal gov’t has been able to get ports to extend their hours of operation and set up "pop up ports" near main coastal ports to help relieve congestion. He also said there are now penalties for allowing shipping containers to sit empty at ports and clog up shipping.
One of the areas hit by supply chain issues is fertilizer, where prices have shot up and supplies for the spring are uncertain. Vilsack said USDA has put out a new risk management tool and crop insurance options farmers have to make fewer fertilizer applications this year. But he was also hopeful about those supplies in the long term. "I think over the course of the next year or so you're going to see that supply chain begin to catch up to demand and hopefully we'll begin to see greater stability in prices and hopefully be in a position to bring those input costs down and continue to maintain good income." (Corn grower groups will hold a presser tomorrow morning to discuss a report on surging fertilizer prices done for them by Texas A&M Univ.)
On disaster aid, Vilsack said USDA is working to roll out the additional $10 billion set aside by Congress four months ago for payments under the Wildfire and Hurricane Indemnity Program-Plus (WHIP+). He promised a simplified application process that utilizes existing USDA data “whether it's from crop insurance, or whether it's from our Livestock Indemnity programs and forage programs” to identify producers that have suffered losses. He said the aim is to rollout additional WHIP+ funds “in the first quarter of 2022.”
- Meat and poultry markets have been a major recent focus for the administration, and Vilsack ran through the list of actions USDA is taking. He highlighted moves to help small- and mid-sized processors expand operations and make upgrades needed to sell their products across state lines, along with support to help finance mid-supply chain needs like cold storage and mobile slaughter units. In the next 60 to 90 days, Vilsack said USDA is looking to announce the availability of $150 million to help finance new processing facilities and the expansion of existing ones. “We hope to be able to provide additional grant money in the summer for those projects and additional loan money as well,” he stated. (Vilsack will travel to Colorado Friday for an event highlighting USDA efforts to expand meat processing capacity.)
Labor is another key challenge facing the processing sector, and Vilsack said USDA has “put together a resource that can partner with community colleges, with unions and other organizations” to help train new workers.
Meanwhile, livestock market reform is another major focus for USDA, and Vilsack touted upcoming rulemakings under the Packers and Stockyards Act (P&SA) aimed at boosting enforcement and clarifying “when and under what circumstances there is a violation.” Legislatively, he promised to work with a bipartisan group of lawmakers on new bills to boost price discovery in cattle markets so that producers can be confident they are receiving a fair price.
- WOTUS. At a news conference, Vilsack also acknowledged that the state Farm Bureau presidents he met with before his speech had asked him about the Environmental Protection Agency’s and U.S. Army Corps of Engineers’ proposed rewrite of the Waters of the United States (WOTUS) rule. Farm Bureau had praised the Trump-era rule, but the Biden administration has withdrawn it. Vilsack said USDA’s role in the WOTUS process is to encourage EPA to “lean in and listen” to farmers, to weigh in on the decision that EPA will reach, and once the decision is made to make sure the regulations are easy for farmers to comply with as possible. Vilsack also told reporters that he has the relationship he needs with the U.S. Army Corps of Engineers as well as EPA to achieve those goals. “We all share the goal of clean water,” he told reporters.
- Upshot. Vilsack said USDA’s focus “boils down to more, new and better markets” for producers and “equipping farmers with the ability to be the great stewards of land and water that they are. The department is also ”very focused on making sure we get help and assistance to those who have been negatively impacted by weather and climate in a very serious way, and trying to provide those resources as quickly and simply as possible,” he concluded.
— U.S. has announced $308 million in new humanitarian assistance to help ease an urgent food and healthcare crisis in Taliban-led Afghanistan. USAID will direct the funds through independent aid organizations on the ground that work to provide emergency health, shelter and nutrition services in the country, Emily Horne, spokeswoman for the National Security Council said in a statement. The aid brings America’s total financial assistance in the country to nearly $782 million since October last year.
— USDA Secretary Tom Vilsack said that the Biden administration has a potential nominee for Agriculture undersecretary for trade who is being vetted, but that a candidate for undersecretary for nutrition and consumer services had dropped out before the vetting process had been completed. Vilsack said he hopes that the undersecretary for trade will be announced soon and said while the administration looks for a new candidate for undersecretary for nutrition and consumer services, Stacy Dean, the deputy undersecretary, is “terrific” in the position. At an earlier news conference after his speech to the American Farm Bureau Federation in Atlanta, Vilsack acknowledged that announcement of appointees for state-level positions to head the Farm Service and Rural Development agencies have been slow, but that the vetting process is thorough.
— Biden‘s nominee to lead the Commerce Department’s National Telecommunications and Information Administration is one step closer to confirmation after clearing a procedural hurdle in the Senate. The Senate voted 64-30 yesterday to limit debate on the nomination of Alan Davidson, with a motion to invoke cloture, allowing the chamber to proceed on a vote confirming him as the assistant Commerce secretary for communications and information.
— USDA nominations this week. Senate Agriculture Committee on Wednesday will consider the nominations of Chavonda Jacobs-Young to be USDA undersecretary for research, education, and economics, and Margo Schlanger to be assistant secretary for civil rights.
— China reviewing antidumping, anti-subsidy tariffs on DDGs, but keep them in place during process. China’s Ministry of Commerce has announced it will conduct a review of the antidumping and anti-subsidy duties that it currently has on imports of U.S. distillers-dried grains (DDGs), with the tariffs to remain in place during that review. The agency said they received a request in October for an expiry review of the antidumping duties currently at 42.2% to 53.7% and anti-subsidy duties that are at 11.2% to 12%. The review will start January 12 and should end before Jan. 12, 2023, the agency said, according to Reuters. This comes as USDA Secretary Tom Vilsack said the U.S. is continuing to press China to remove barriers to trade for U.S. goods and fully live up to terms of the Phase 1 agreement reached between China and the U.S. In remarks to the American Farm Bureau Federation (AFBF), Vilsack noted restrictions on U.S. pork and ethanol but did not specifically mention DDGs (see related item).
— Import and export operations in Tianjin are slowing after a small cluster of Covid cases was discovered over the weekend, according to third-party logistics providers in China. Meanwhile, in Shenzhen, authorities are blaming a contaminated import shipment infecting a cargo worker, who then spread the virus to three other people. The Port of Tianjin and the airport have suspended pickup operations for all import containers, freight management companies said. Beijing is about 70 miles northwest of Tianjin and easily reached by car or high-speed train. Meanwhile, in Zhengzhou, hundreds of thousands of workers at iPhone maker Foxconn’s facilities and Huawei’s research campus in Dongguan are being tested as more COVID cases appear. Zhengzhou is an air cargo hub and restrictions there could cause “massive” issues for shippers, Seko Logistics warned.
— Ray Dalio again defends Beijing. The Bridgewater founder said at a conference yesterday that he backed President Xi Jinping’s “common prosperity” economic policy — and that countries like the U.S. could benefit from adopting a similar approach. Dalio recently apologized for a “lack of nuance” in likening China’s human rights approach to that of a “strict parent.”
— USDA, USTR formally announce India opening market to U.S. pork. USDA Secretary Tom Vilsack and the Office of the U.S. Trade Representative (USTR) announced Monday that India will now allow imports of U.S. pork, with Vilsack noting the development in remarks to the American Farm Bureau Federation. Both USDA and USTR issued releases announcing the action. However, USDA’s Food Safety and Inspection Service noted last week that as of Dec. 30, U.S. pork and pork products were now eligible for export to India (link) and they also released the requirements for such shipments to take place (link).
ENERGY & CLIMATE CHANGE
— Supreme Court rejects appeal by trade group, refuses to reinstate EPA rule that would have permitted year-round sales of fuel containing as much as 15% ethanol. Growth Energy had asked the court to allow a Trump-era rule that would have expanded waivers from summertime volatility limits so that E15 gasoline blends can be sold all year. The defeat is another victory for oil industry trade groups that sued to challenge the 2019 rule and won a federal appeals court decision saying EPA had exceeded its authority under Clean Air Act. The Biden administration urged rejection of the appeal even while saying appeals court should have deferred to EPA’s approach. (Case is Growth Energy v. American Fuel & Petrochemical Manufacturers, 21-519.)
— Greenhouse gas emissions rise. After a pandemic plummet, American greenhouse gas emissions jumped back up in 2021, rising 6.2%, per a new estimate from the Rhodium Group. Emissions levels are still lower than in 2019, but the rebound highlights how difficult it will be for Biden to meet his reduction goals.
— The White House signaled it would curtail oil development in the National Petroleum Reserve-Alaska and restore restrictions on drilling that had been jettisoned under Trump. The Bureau of Land Management said that after reevaluating a 2020 environmental analysis, it was now formally adopting as the “preferred alternative” a plan to go back to an Obama-era program for the 23-million-acre petroleum reserve that imposes more stipulations on leaseholders and provides more safeguards for threatened and endangered species.
— EPA proposed rule on canola oil pathways for renewable diesel, jet fuel sent for review. EPA has forwarded to the Office of Management and Budget (OMB) for review a proposed rule regarding canola oil pathways for renewable diesel, het fuel, naptha and liquid propane gas under the Renewable Fuel Standard (RFS). Under the proposed rule, EPA said it was “providing an opportunity to comment on an analysis of the lifecycle greenhouse gas emissions associated with certain biofuels that are produced from canola/rapeseed oil, specifically diesel, jet fuel, heating oil, naphtha, and liquefied petroleum gas produced from canola/rapeseed oil via a hydrotreating process.” EPA targeted release of the proposed rule yet this month and a final rule in July, according to the unified regulatory agenda released in December 2021.
LIVESTOCK, FOOD & BEVERAGE INDUSTRY
— Lawmaker offers beef labeling legislation. With the Biden administration eyeing a rewrite of the “Product of the USA” label, Sen. Roger Marshall (R-Kan.) has introduced the Bona Fide Beef Branding Act of 2022 (S 3439), that would direct USDA to eliminate the current Product of USA meat label. Instead, the new bill would create three new voluntary labels to address consumer confusion in the marketplace and help beef producers. Marshall’s bill would allow labels stating, “Processed in USA,” applying to meat that would undergo substantial transformation in a U.S. facility.
The legislation would also create a label stating, “Raised and Processed in USA,” covering a live animal raised in the U.S. for not less than 100 days before processed in a U.S. facility.
The third label, “Born, Raised and Processed in USA,” means the live animal was born and raised and processed in the US. Critics of the “Product of the USA” label say a meat product that comes from other countries can qualify for the label if it is processed in the country.
Background. USDA announced in July that it was conducting a “top-to-bottom review” of the label and what it means to consumers and President Joe Biden last week reiterated White House support for coming up with a new Product of USA labeling effort.
Bottom line: Key to any revisions to the voluntary Product of USA label would be what kind of restrictions are imposed as it could impact imports of cattle from Canada and/or hogs, many of which are imported into the U.S. at a young age and fed in U.S. feedlots and processed at U.S. meat facilities.
— A man received a new heart from a genetically modified pig. Scientists have worked to develop pigs whose organs would not be rejected by the human body, research accelerated in the past decade by new gene editing and cloning technologies. This heart transplant comes just months after surgeons in New York successfully attached the kidney of a genetically engineered pig to a brain-dead person. The eight-hour procedure took place on Friday; doctors said the 57-year-old male patient, David Bennett, who has a life-threatening heart disease, was doing well on Monday. The hope is that such procedures will in future make up for the growing shortage of human organs for transplantation. Due to his condition, Bennett had also received a pig heart valve about a decade ago, which (along with pig skin grafts) are routinely used in humans. Link for details via the New York Times.
Bennett was ineligible for a human heart transplant or pump due to a heart failure condition and an irregular heartbeat. The FDA, which oversees such experiments, allowed the xenotransplantation surgery under "compassionate use" emergency authorization, which is available when a patient with a life-threatening condition has no other options.
A total of 106,657 people are currently on the U.S. transplant waiting list, and more than 6,200 patients die each year before getting one. In 2021, more than 40,000 organ transplants were conducted nationwide, including a record 3,800 heart transplants.
— No decision yet by the Supreme Court to hear Prop 12 petition from Farm Bureau and the NPPC. This is what sources predicted last week, despite others thinking a “decision” would be announced on Monday. Said one industry contact, “We didn’t show up on the order list and have been relisted for Friday again.”
Meanwhile, another case the Court might review regards a compliance order dispute between two Idaho landowners and the EPA over an area of their property the agency has designated as wetlands.
Comments: Link to an interesting piece from SCOTUSBLOG on what relisting means.
— Summary: Global cases of Covid-19 are at 310,583,761 with 5,497,113 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 61,558,507 with 839,500 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 520,166,098 doses administered, 207,796,335 have been fully vaccinated, or 63.30% of the U.S. population.
— New Biden administration plan will require private insurers to cover the cost for eight at-home coronavirus tests per person per month. Insurers that do not require people to pay the upfront cost for tests at certain retailers will be charged no more than $12 per test, if the test was purchased at an out-of-network site. Otherwise, insurers will be charged the full price of a test.
Problem: Many people are having a hard time finding the tests. The Biden administration promises progress on this front “soon.”
— U.S. issues ‘do not travel’ warning for Canada as Covid cases rise. The U.S. Centers for Disease Control and Prevention (CDC) and U.S. State Department have issued a Level 4 Travel Health Notice — do not travel — due to Covid-19, indicating a very high level of Covid-19 in Canada. CDC and the U.S. State Department said the risk of contracting Covid-19 and developing severe symptoms “may be lower if you are fully vaccinated with an FDA authorized vaccine.” There are around 80 destinations around the world that are designated as Level Four.
— Japan said it would extend its near-total ban on foreigners entering the country until at least the end of February, citing the risk of the Omicron variant. The ban took effect on Nov. 30 and has earned more than 80% support from Japanese surveyed in recent polls.
POLITICS & ELECTIONS
— McCarthy: Will strip Ilhan Omar, Adam Schiff and Eric Swalwell of their committee assignments if Republicans take back the House. House Minority Leader Kevin McCarthy (R-Calif.) said he plans to kick three Democrats off their committee assignments if Republicans win back the majority next year. In an interview with Breitbart, the GOP leader said his party would move to strip Reps. Adam Schiff (D-Calif.) and Eric Swalwell (D-Calif.) from their posts on the House Intelligence Committee, and remove Rep. Ilhan Omar (D-Minn.) from her spot on the House Foreign Affairs Committee. McCarthy has vowed to retaliate against Democrats after Speaker Nancy Pelosi (D-Calif.) took action against two of his party’s members last year. All three of the lawmakers McCarthy named are targeted figures for the GOP, most notably Schiff, the Intelligence Committee chair who led multiple House investigations focused on Donald Trump, including prior statements that turned out to be false. Said McCarthy: “The Democrats have created a new thing where they’re picking and choosing who can be on committees. Never in the history [of Congress] have you had the majority tell the minority who can be on committee.”
— Rep. Ed Perlmutter (D-Colo.) has announced he will not seek a ninth term in Congress and marks the 26th House Democrat to announce they will not seek another term or are running for another office. He cited “elevating the public safety risk of the cash-only cannabis industry here in our state and across the country” as one of his proud accomplishments.
— President Biden plans to use an Atlanta speech today to throw his weight behind long-stalled elections bills, even if passage requires changing Senate rules. Senate Republican Leader Mitch McConnell (R-Ky.) detailed a plan to force tough votes on the Democrats if they make even modest changes to the filibuster rule.
OTHER ITEMS OF NOTE
— First day of talks between Russia and the U.S. ended after almost eight hours with a plan to keep discussing and a Russian declaration that they didn’t plan to invade Ukraine. The U.S. rejected Russian security demands on NATO and Ukraine, but the two sides talked about the possible revival of the Intermediate-Range Nuclear Forces Treaty.
— Back to school in Chicago. The Chicago Teachers Union (CTU) voted last night to "suspend the Union's remote work action" and return to school buildings today. In-person classes for students will resume Wednesday after five days of class cancellations, though rank and file CTU members will still have to vote in favor of the deal. The Union House of Delegates voted 389-226 in favor.