WRDA bill to White House | Russia to inspect grain loading points in all regions | Year-round E15 court challenge threat
— WRDA easily clears Senate, on way to White House. Water policy legislation ended its path through Congress as the Senate overwhelmingly passed the legislation yesterday on a 99-1 vote. The bill authorizes $6.1 billion for construction of 12 new Army Corps of Engineers projects, as well as authorizing other water and hydropower programs. The bill also authorizes feasibility studies for 65 new projects and $4.4 billion for the state drinking water revolving loan fund program, which provides federal financing for states and utilities to provide drinking water infrastructure.
The vote sends the bill (S 3021) to President Trump's desk and marks the third time in six years Congress has passed a water resources development measure. The House passed the same bill by voice vote last month.
Senate Environment and Public Works Chairman John Barrasso (R-Wyo.) highlighted language that would allow greater local control over water infrastructure decision-making. The bill would make it easier for local entities to win permitting approval and allows the corps to help them meet environmental standards. Barrasso also said the bill was part of the administration’s emphasis on rebuilding infrastructure, though Congress also passed two similar bills during the last term of Barack Obama’s presidency. “Water infrastructure is a major part of the president’s call,” Barrasso said.
A central part of the measure is a new Water Resources Development Act title, which authorizes $3.7 billion in federal funds for twelve Corps dredging, flood protection and other projects. When non-federal funding shares are added, those projects’ combined is about $5.6 billion. This includes $2.2 billion for flood protection and ecosystem restoration along the Texas Gulf Coast.
The WRDA title includes enhanced funding for the deepening of Savannah Harbor in Georgia and replacement for the Chickamauga Lock on the Tennessee River; increases the number of pilot programs for the beneficial use of dredged material from 10 to 20; and creates a new framework to allow for more Corps projects to be budgeted with increased local stakeholder input and expanded transparency.
“The passage of WRDA 2018 is a win for the Nation’s towboat operators, freight shippers, ports and labor and conservation groups that rely on an efficient inland waterways system,” said Mike Toohey, President and CEO of the Waterways Council, Inc. (WCI). “This bill strengthens our Nation’s vital inland waterways transportation system, will create and sustain American jobs, increase exports, and keep the United States competitive in world markets.”
Dredging contractors applaud measure. William P. Doyle, CEO and Executive Director of the Dredging Contractors of America said, “America needs this comprehensive water infrastructure legislation.” Doyle continued, “This legislation cuts bureaucratic red tape, it creates jobs and keeps our coastal communities, ports, harbors and inland waterway system safe. It will grow the nation’s economy and speed up important projects. We look forward to President Trump signing the legislation into law.”
More than 60% of U.S. grain exports rely on the waterway system, according to the American Farm Bureau Federation, which has backed the bill.
Key points of America’s Water Infrastructure Act of 2018/Water Resources Development Act:
- Ensure that America maintains the competitiveness of our coastal and inland ports, and maintain the navigability of our inland waterways;
- Create a new framework to allow for more Army Corps projects to be budgeted with increased local stakeholder input and expanded transparency;
- Beneficial use of dredged material - increases the number of authorized pilot projects from 10 to 20;
- Authorize or reauthorize important water infrastructure programs and projects;
- Include billions of dollars in deauthorizations – making the legislation fiscally responsible;
- Authorize federal funding for water infrastructure projects, which leverages billions in water infrastructure spending;
- Reduce flooding risks for rural, western, and coastal communities.
— Russia watchdog will inspect grain loading points in all regions. Russia's ag safety agency Rosselkhoznadzor will conduct inspections on grain loading at ports in the wake of complaints from major buyer, according to agency chief Sergei Dankvert. "We will check everybody, and everybody, everywhere, will be subject to the same conditions," he said, according to a report from the RIA news agency.
Inspections will include all regions, including Kaliningrad on the Baltic Sea and Primorsky in Russia's Far East.
The agency has been signaling it is focused more on grain quality issues after major importers of Russian grain have complained about grain standards.
This continues to fuel speculation that Russia will impose limits on its grain exports as in the past, the country has deployed similar measures as are being undertaken now prior to announcing overall export limits. But Russian government officials have continued to insist that no export limits are on tap.
— As widely expected, Trump administration move to year-round sales of E15 will be challenged in court. "It’s flat out unlawful what the administration is doing," said Chet Thompson, CEO of the American Fuels and Petrochemicals Manufacturers, a refiners’ trade association. "For EPA to allow year-round E15 clearly contradicts the statutory language.”
White House ready. A senior White House official told reporters on Monday the administration is ready for the inevitable legal challenge. "The current administration knows that legal risk is something that happens, our lawyers and lead lawyers in the agency think we have a good case going forward," the official said.
Ethanol lobbyists ready. "In my conversations with the agency, I think they’re acutely aware that there’s a lot of scrutiny of the rulemaking process," Emily Skor, CEO of Growth Energy, an ethanol trade association, told reporters. "We think there’s a variety of avenues EPA can go down in terms of this rulemaking." Meanwhile, Geoff Cooper, the new CEO of the Renewable Fuels Association, said it is “pretty clear that EPA does have the authority to do this. I think a lot of it hinges on the fact that current statute says the waiver applies to blends containing 10%. Well, E15 contains 10% ethanol.“
Year-round E15 opponents note they have newly sworn-in Supreme Court Justice Brett Kavanaugh on their side because he offered his views in a 2012 case over a partial waiver. The case was dismissed on procedural grounds, but Kavanaugh wrote a dissenting opinion arguing that EPA was misinterpreting the Clean Air Act. "On the merits, I conclude that the E15 waiver violates the statute," he wrote in Grocery Manufacturers Association v. EPA. "The waiver might be good policy; if so, Congress has the power to enact a new law permitting E15. But under the statute as currently written, EPA lacks authority for the waiver."
— Green Plains to sell three ethanol plants to Valero. Ethanol producer Green Plains will sell three of its ethanol production facilities to Valero Renewable Fuels in a deal for $300 million in cash for around 280 million gallons of annual production capacity. The plants are located in Lakota, Iowa; Bluffton, Indiana; and Riga, Michigan.
Reports indicate the sales would account for about 20% of Green Plains' reported ethanol production capacity. The firm said they would use proceeds from the sale to pay down debt.
Green Plains also entered into an asset purchase agreement with Green Plains Partners to acquire storage and transportation assets and the assignment of railcar leases associated with the ethanol plants it is selling to Valero.
Green Plains officials said they expected to make additional announcements in the future.
— Other items of note:
Demand for Brazilian soy has grown so much that the country is now running out of soybeans. The U.S./China trade war has pushed Beijing to rely more heavily on Brazilian soybean exports, and the South American country might now have to import soybean oil to meet the heightened demand, Bloomberg reports. Link.
USPS raises prices. The U.S. Postal Service (USPS) is set to raise the price of a first-class mail forever stamp from 50 cents to 55 cents in addition to a host of other price increases, according to a statement. The changes take effect on Jan. 27, 2019.
USDA Sec. Sonny Perdue will swear in Vicki Christiansen as the U.S. Forest Service chief today. Christiansen is the second woman to lead the agency. She became interim chief after Tony Tooke resigned in March amid a department investigation into allegations of past sexual misconduct.
Lawmaker warns about FTA with Philippines. Senate Finance ranking member Ron Wyden expressed concerns after the Lighthizer briefing about potential Trump administration trade talks with the government of Philippines President Rodrigo Duterte. Wyden said such talks would reward a government accused of killing more than 12,000 people as part of a crackdown on illegal drugs. Lighthizer met for more than an hour with Senate Finance Committee members of both parties on potential talks with the Philippines, Japan and the EU. Chairman Orrin Hatch (R-Utah) said Lighthizer didn't give a timetable for notifying Congress on the start of formal negotiations.
G20 finance ministers and central bankers meet in Bali. They will discuss international trade frictions, especially the U.S./China trade war, as well as other challenges for the world economy at the International Monetary Fund and World Bank’s annual meetings.
Bayer shares rise at prospect of new trial in glyphosate case. San Francisco Superior Court of California Judge Suzanne Bolanos gave a tentative ruling Wednesday to grant Bayer's motion for a new trial, a development expected to be finalized after a second hearing. Typically, second hearings affirm the initial decision with few changes. Bolanos ordered those in the case to present their submissions on her ruling by Friday. Bolanos said that Deewayne Johnson, a groundskeeper that brought the original suit, failed to meet the burden of producing clear and convincing evidence of malice or oppression by Monsanto — a key in allowing a jury to award punitive damages. The decision is expected to pave the way for a new trial relative to the verdict that awarded $250 million in damages. Shares in Bayer, which bought Monsanto earlier this year, rose in the wake of the judge's decision.
— Markets. U.S. stocks suffered their steepest drop in eight months (since Feb. 8) on Wednesday, as rising interest rates gnaw at investors and technology shares tumble in the face of growing trade tensions with Beijing. The Dow plummeted 831.83 points, 3.15%, at 25,598.74. The Nasdaq dropped 315.97 points, 4.08%, at 7,422.05. The S&P 500 declined 94.66 points, 3.29%, at 2,785.68.
European shares plunged to their lowest level in 20 months today, and markets in South Korea, China, and Japan suffered a similar fall after yesterday’s rout on Wall Street. Overnight, the MSCI Asia Pacific Index dropped 3.4%, while China’s benchmark Shanghai Composite Index crashed 5.2% with more than 1,000 stocks falling by their daily limit. All but one stock on Japan’s Nikkei 225 Stock Average ended lower, while the Topix index closed down 3.5%.
Trump signals Fed has 'gone crazy' as equity markets crumble. President Donald Trump has stepped up his criticism of the Federal Reserve, commenting again in the wake of the steep decline on Wall Street Wednesday that he disagrees with the central bank's plans to increase interest rates. "The Fed is making a mistake," Trump said in Erie, Pennsylvania. "I think the Fed has gone crazy." Trump also commented that the market downturn "is a correction that we have been waiting for, for a long time." But again reiterated, "I really disagree with what the Fed is doing, okay?" Trump's criticism of the Fed goes back to the campaign trail and early in his presidency as he opted to nominate then-Fed-governor Jerome Powell to head the U.S. central bank.
Data from the Labor Department this morning will probably show that the Consumer Price Index increased 0.2% in September after edging up with similar percentage gains in August. The inflation figure will be closely watched by investors as it could signal where Treasury yields will go from here.
The Trump administration is unlikely to designate China a currency manipulator but instead keep it listed as a country of concern in a forthcoming Treasury Department report, an administration official said Wednesday. Treasury’s semiannual report on foreign exchange rate practices will be released Monday. No U.S. administration has labeled a country a currency manipulator since the early 1990s. China was given the designation from 1992 to 1994. Treasury Secretary Steven Mnuchin, in an interview published by the Financial Times, declined to comment on the upcoming report and also steered clear of personally calling China a currency manipulator. “The renminbi has depreciated significantly during the year. There are various factors for that, which we look forward to discussing with them,” Mnuchin said. “One of those factors has to do with their own economic issues and what has gone on in the Chinese economy." The Treasury chief said currency issues will be part of any broader trade talks with China, which has been accused of lowering the value of the renminbi to increase the competitiveness of its exports. “As we look at trade issues, there is no question that we want to make sure China is not doing competitive devaluations,” he said.