Federal News Friday

Federal News Friday

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State Association Weekly Washington Report 12.5.19

Eyeing Senate Trial, Trump Wants Fast House Impeachment Process, Pelosi Looks to Accommodate

President Trump, fresh off a fractious two days in London at the NATO 70th anniversary summit, demanded the House move speedily to finish its impeachment “sham,” so he can get a fair shake during the trial portion of the process over in the Senate. House Speaker Nancy Pelosi (D, CA), less concerned with Trump’s schedule than her own, seems ready to accommodate the president.

It’s known Pelosi wants the impeachment process and floor vote impeaching Trump over before the House recesses for the Christmas/Hanukah holiday. While the House is formally set to leave town December 13, it’s likely it will hang around until December 20 to finish spending and other must-pass legislation.

This means the Senate trial will begin in the new year. The Senate event may prove as dramatic as the House two-month’s-plus process given Trump wants the Senate to subpoena Pelosi and House Intelligence Committee Chair Adam Schiff (D, CA) to testify, along with Biden and his son, Hunter, who served on the board of directors of a Ukrainian natural gas company during the Obama administration and beyond.

Within 24 hours of the House Judiciary Committee gaveling to a close its hearing – featuring three Democrat constitutional law experts and one GOP counterpart – on whether House proceedings to date have established grounds for moving forward with articles of impeachment, i.e. the “charges” to be potentially brought against Trump, Pelosi took the ball and announced this week she has instructed panel Chair Jerry Nadler (D, NY) to draft those charges posthaste. Nadler is expected to produce those impeachment charges next week for a full committee vote and formal transfer to Pelosi for floor action.

Pelosi said the president has left her “no choice” but to call for the articles, which will likely focus on abuse of power, bribery, obstruction of Congress and obstruction of justice relating to his phone call with Ukraine President Volodymyr Zelensky. Trump is alleged to have pressured Zelensky into investigating potential 2020 presidential opponents, notably former Vice President Joe Biden, in return for congressionally approved U.S. military financial aid. Some speculate the committee may bring forward portions of Special Counsel Robert Mueller’s report on Russian interference in the 2016 elections.

“The president’s actions have seriously violated the Constitution. Our democracy is at stake. The president leaves us no choice but to act,” Pelosi said during a television speech this week. When a reporter yelled a question at Pelosi as she left the podium about whether she hated Trump, she wheeled on him, obviously angry, and told him “don’t mess with me with words like that,” contending she was raised to be loving and that she prays for the president daily.

Trump counters the entire impeachment process is a sham, failing to produce evidence of “bribery, treason, high crimes and misdemeanors.” Trump and his allies contend Pelosi conducted a thinly veiled and purely politically motivated assault to weaken him in the 2020 national elections. He said aloud this week what most in Washington, DC, have assumed since the impeachment process began, namely the Democrat-controlled House will impeach him. He wants the process to move quickly so he can concentrate on getting a “fair trial” in the GOP-controlled Senate.

After Pelosi’s speech, Trump tweeted: “The Do Nothing Democrats had a historically bad day yesterday in the House. They have no impeachment case and are demeaning our Country. But nothing matters to them, they have gone crazy.”

December 20 Deadline to Get FY2020 Spending Package to Trump, Avoiding Holiday Scramble

Ever the optimists, at least in public, House and Senate appropriators this week said they plan to have a consensus FY2020 spending package ready for floor action next week. The spending maven say they want agreement on all 12 spending measures before any package moves to President Trump. They have until December 20 when the current continuing resolution (CR) expires to avoid a possible holiday government shutdown.

Neither party wants to play the blame game if the government – in whole or part – shuts down going into the 2020 election year.

Earlier this week, Senate Appropriations Committee Chair Richard Shelby (D, AL) said getting deals on all 12 bills would be a “monumental achievement, and it would be hard.” Currently, all negotiations are being handled at the respective subcommittee level, with unresolved issues to be decided by House and Senate spending committee leadership.

Sen. Patrick Leahy (D, VT), ranking Senate spending committee member, said late this week he was feeling better about the progress House and Senate negotiators are making. “We want final negotiations to be done this weekend,” he said.

Looming over the spending chatter is Trump’s request for another $8.6 billion to build his southern border wall. Also controversial are moves by Democrats to include gun violence research spending, as well as Title X family planning grant funding.

The complexity of getting all 12 bills written, agreed to, voted and to the president may make the December 20 deadline impossible given the president vows not to sign another omnibus spending bill unvetted by the full Congress and the White House.

The other option is another CR. While some are pushing for a full fiscal year CR – expiring September 30, 2020 – most contend a short-term CR, one running to mid-February/early March, is more likely. However, contentious legislative schedules, including a likely and possibly lengthy Trump impeachment trial in the Senate, and increasing politics surrounding the November election complicate the CR scenario.

U.S.-China Tariff Talks Stuck; Trump Says 2020 is OK, China Exempts Some Soybeans, Pork from Tariffs

Depending on who’s speaking and the day of the week, U.S.-China trade talks are going well or they’re dragging, are close to completion or could take months. President Trump further confused the issue this week, and riled U.S. agriculture, telling reporters in London a U.S.-China tariff détente may not be in hand until after the 2020 U.S. elections. Stock and futures markets reacted accordingly.

“They want to make a deal, but I like the deal we have,” Trump said on the sidelines of the London NATO 70th anniversary summit this week. “The deal that we have could get even better, and I could do it all by myself.”

With the next round of new U.S. tariffs on $156 million in Chinese exports looming December 15. Trump said, “In some ways I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we’ll see whether or not the deal’s going to be right.”

The White House confirmed U.S.-China talks are ongoing. “We’re talking to China, as you know. Those discussions are going very well, and we’ll see what happens. But we are talking to China,” Trump told reporters. Analysts contend that despite the media rhetoric, both sides are working “feverishly” to get a final deal done.

A “right” deal is one that’s “enforceable” and “reliable,” says Agriculture Secretary Sonny Perdue. Secretary of Commerce Wilbur Ross said Trump will greenlight the December 15 round of tariffs “unless there’s some real reason to postpone them,” explaining if a deal is imminent, “he probably would postpone it. If enough substantive progress had been made, he might.”

Trump contends the U.S.-China talks are going well, but Perdue told CNBC this week, “Trump wants to conclude a deal that can be enforceable, that can be reliable and be consistent with what the deal says…We in agriculture are optimistically hopeful we can conclude this.”

But Trump said a U.S.-China agreement is predicated on his perception of success. “The China deal is dependent on one thing – do I want to make to it. Because we’re doing very well in China now…I have no deadline, no.”

In a related development and amidst U.S. agriculture’s growing frustration over the yo-yo nature of the bilateral tariff talks, China announced December 6, it will exempt some pork and soybeans from retaliatory tariffs, seen as a way of spurring the talks. China whacked U.S. soybeans and pork in July, 2018, with 25% import tariffs after the U.S. levied Chinese imports

However, China sticks by its demand that both the U.S. and China lift all existing tariffs simultaneously as part of any so-called “phase one” tariff deal. From the U.S. perspective, that phase one deal also includes major increases in U.S. sales of agriculture products to China, and Trump wants a solid Chinese commitment to increase ag purchases with no conditions. China says it will buy commodities based on market conditions, price and domestic need.

The December 6 South China Morning Post reported that Liu Weidong, a U.S.-China specialist at the Chinese Academy of Social Justice, explained the tariff exemption “aims to boost the confidence of the American farming and agriculture industry.”

Trade Developments

Japan Fully Ratifies U.S. Trade “Mini” Deal, U.S. Proclamation Expected Next Week – There was good news this week for about $7.2 billion in U.S. ag commodities when the upper chamber of Japan’s parliament ratified the U.S.-Japan “mini” trade deal on agriculture and automobiles, following lower chamber action two weeks ago. The deal grants most U.S. agriculture exports the same tariff removal/reduction and market access as Japan’s cosigners of the Trans-Pacific Partnership (TPP) and the European Union (EU) in the Japan-EU bilateral trade treaty. President Trump is expected to sign an implementing proclamation next week since the deal modifies existing law and does need congressional approval. The treaty is expected to go into force January 1, 2020. The new treaty is expected to be a boon to wheat, corn, sorghum, ethanol, cheeses, wine, beef and pork exports, with the U.S. Meat Export Federation (USMEF) calling the deal, “one of the biggest developments in the history of red meat trade” given the Japanese tariff on beef drops from 38.5% to 9%. As the U.S. and Japan continue talks on a broader, more comprehensive overall trade pact, more agriculture commodities are expected to be included in the new tariff/market access agreement.

USMCA Now Seen as 2020 Candidate for House Action – With less than 10 working days left before the scheduled adjournment of the House for 2019, and all things now focused on House impeachment of President Trump, the prospects of getting the U.S.-Mexico-Canada Agreement (USMCA) completed before Christmas are dwindling rapidly. While nearly all of the contentious issues are resolved between House Democrats and the White House, all that’s left is administration drafting of the proposed deal, submission to House Speaker Nancy Pelosi (D, CA), vetting and a quick turnaround by Canadian and Mexican officials. Mexico says such speed is indeed possible once the U.S. signals it’s ready to go. After Mexican senior trade negotiator Jesus Seade met with U.S. Special Trade Representative (USTR) Robert Lighthizer this week, Seade said, “Every single issue that has made me lose my sleep is off the table. We are on our way to resolution.” While such optimism is welcome, House Democrat concerns over Mexico’s willingness to enforce labor reforms linger, particularly given Mexico has said publicly only enforcement requirements in line with World Trade Organization (WTO) rules are acceptable. House lawmakers wanted to see in-person inspections in Mexican factories and Mexican President Andres Manuel Lopez Obrador said this week, “We do not accept inspectors,” a sentiment echoed by the leader of the Mexican Senate. Political pressure from Congress and industry, particularly agriculture, continues, and while Sen. Charles Grassley (R, IA), chair of the Finance Committee, says “a deal is close,” a deal needs to be cut this week or there won’t be enough time to ratify the treaty this year.

U.S. Restores Brazil, Argentina Steel/Aluminum Tariff; Hits France with New Levy – Complicating President Trump’s desire to get a bilateral free trade deal with Brazil, the White House this week announced it is restoring tariffs on imported steel and aluminum from Brazil and Argentina. The two nations had been exempted from the original U.S. tariff in May, 2018, based on an agreement by the two to cap their metals exports to the U.S. Shortly after he whacked South America, the administration announced a new French digital service tax on “technology” is so bad, it is considering imposing up to 100% tariffs on popular French exports to the U.S., including wines, cheeses and leather goods, including handbags. If imposed, the tariff price tag for France would be about $2.4 billion. This week’s metals tariff action comes as the two South American nations are trying to devalue their currencies, Trump says, and he alleges such action negatively impacts U.S. farmers and ranchers by making competing exports cheaper. Brazil is a major steel exporter, but also recently announced it would institute for the first time in years a tariff rate quote (TRQ) on duty-free wheat imports from outside its Mercosur trade partners, action which may now be in jeopardy and would be a blow to U.S. wheat exporters. The tariff action could also complicate U.S.-Brazil negotiations to liberalize access for U.S. ethanol makers. Said Senate Agriculture Committee Chair Pat Roberts (R, KS) of the Brazil/Argentina action and the lack of progress on a China agreement, “There’s no certainty, there’s no predictability. It’s that lack of certainty and predictability that worries me, not only in 2020, but five years from now.”

USDA Announces Seven Trade Missions for 2020 – USDA announced this week it will sponsor seven international trade missions in 2020. Those missions, as announced by Undersecretary for Trade & Foreign Agriculture Ted McKinney, are North Africa (Algeria, Libya, Morocco and Tunisia), March 16-19; Philippines, April 20-23; Spain and Portugal, June 8011; United Kingdom, September 14-17; Australia and New Zealand, October 19-23; Peru, November 2-5, and United Arab Emirates (UAE), November 15-18.  Dates may change, McKinney said. For more information, please contact trademissions@fas.usda.gov.

RFS Blending Rule Coming Later this Winter

While EPA has in the past issued its final rule implementing its Renewable Fuel Standard (RFS) fuel blending mandates around Thanksgiving, this year the administration likely won’t put out its 2020 final rule until later this winter, missing its November 30 deadline. Reports indicate EPA is set to send its proposed final rule to the Office of Management & Budget (OMB) this week.

The agency complicated matters by publishing a supplemental blending rule this year, and set a November 29 deadline for taking public comments. It was that supplemental which tried to put in concrete the White House solution to the biofuels industry’s frustration over small refinery exemptions (SRE) and the lost gallons of biofuels demand represented by SRE, but the industry said what was published did not jive with what industry was told at White House meetings. Further, the alternative fuels camp contends an agency move to use Department of Energy (DOE) data – based on a three-year average – when calculating SREs rather than agency data is wrong.

The big SRE issue is reallocation by EPA of lost gallons of biofuel demand and the agency has proposed that larger oil/gas companies would increase their blending to offset SREs. This week Sen. John Barrasso (R, WY), chair of the Senate Environment & Public Works Committee, sent a letter to Andrew Wheeler, EPA administrator, letting him know the agency doesn’t have the legal authority to reallocate the SRE gallons.

“The Act mandates that EPA ensure the blending obligations met by small refineries, which receive hardship relief, are not borne by other refineries. EPA’s proposal fails to adhere to this statutory requirement and for these reasons, must be abandoned,” Barrasso wrote.

Wheeler said the agency is trying to mitigate biofuels’ industry concerns.

USDA Announces First CRP General Signup in Four Years

The first general signup under the Conservation Reserve Program (CRP) in four years was announced this week by USDA, and while rates are capped, the department expects a big enrollment. General signup begins Monday, December 9, ending February 28, while signup for continuous CRP continues.

The signup is the first since the 2018 Farm Bill brought with CRP rules changes and acreage increases. CRP has 22 million acres enrolled, but the new cap is 27 million, allowing some farmers to enroll for the first time or continue for another term, USDA said.

The number of acres expiring or under recently expired contracts leads USDA to foresee big interest, especially during tough economic times. Enrollment is more than 2 million acres lower than the FY2020 CRP cap and about 5.2 million acres expire fall, 2020, with 800,000 acres under contract expired this year.

Richard Fordyce, Farm Service Administration (FSA) administrator, told reporters this week, “We know we’ve got room and there’s going to be a lot of opportunities for landowners.”

A disincentive for some producers could be reduced payment rates for this round of CRP enrollments. Payments for general signup can’t be more than 85% of local cropland rental rates, with a 90% limit on continuous signup. FSA said this change could lead to “a uniform participation rate…(we) don’t see regional dislocation because of rental rates.”

Senate Committee Confirms Hahn to be FDA Commissioner

The Senate Committee on Health, Education, Labor & Pensions (HELP) this week voted 18-5 to confirm Dr. Stephen Hahn to be the next FDA commissioner, sending the nomination to the Senate floor. The committee’s action was expected given a relatively noncontroversial confirmation hearing held November 20.

HELP Committee Chair Lamar Alexander (R, TN) said he hopes the full Senate will take up Hahn’s nomination before the end of the year. No date for action has been announced by Senate Majority Leader Mitch McConnell (R, KY).

Hahn succeeds Dr. Scott Gottlieb who retired last year, but who supported acting commissioner Dr. Ned Sharpless to succeed him. However, organizations representing industries regulated by the agency rallied behind Hahn when it became clear he was President Trump’s choice and as committee favor became evident.

Hahn is the chief medical officer for MD Anderson Cancer Center at the University of Texas, and is a clinician, and is board certified in radiation oncology, medical oncology and internal medicine.

Brouillette Confirmed by Full Senate to Lead DOE

The full Senate this week confirmed the nomination of Dan Brouillette to be secretary of energy on a 70-15 vote. He’s President Trump’s second secretary of the Department of Energy (DOE)

A former lobbyist for Ford Motor Co., Brouilette was a member of Louisiana’s Mineral & Energy Board from 2013-2016. Prior to that position, he was assistant secretary for congressional and intergovernmental affairs at DOE under President George W. Bush.

He replaces former Texas governor Rick Perry who stepped down as DOE secretary amid links to President Trump’s ongoing impeachment troubles over a phone call with the prime minister of the Ukraine.