Washington Insider-- Tuesday

By DTN's Washington Insider

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

EPA Calls on States to Develop Greenhouse Gas Plans for Power Plants

The Environmental Protection Agency has decided to let states develop their own plans for complying with carbon dioxide emissions standards for power plants, rather than writing a federal plan that all states would be required to adopt, according to Avi Garbow, the agency's general counsel.

The EPA Clean Power Plan, proposed in June 2014, sets a carbon dioxide emissions rate for each state. States will develop their own plans to comply with the rule, and only states that don't create their own plans would be subject to a federal plan. Garbow said the agency this summer would be issuing a draft federal implementation plan (FIP) intended to provide an outline of what EPA will be looking for in the state-developed greenhouse gas reduction programs.

Speaking at a recent American Bar Association event, Garbow said, "Make no mistake. The agency is doing everything it can to ensure there is no [federal implementation plan] in place for any state because all of the efforts we've been talking about [are] to ensure that every state remains in the driver's seat for submitting a plan."

The "states-lead" approach is seen by many as a response to frequent congressional criticism that EPA regularly "overreaches" when it writes regulations. Some in Congress, most notably Senate Majority Leader Mitch McConnell, R-Ky., have counselled states not to develop their own plans. In response, Craig Segall, a senior staff attorney for the California Air Resources Board, said, "The notion that states should remove themselves from the driver's seat [and be] tied up in the trunk is not only unwise, it's foolish." It should become clearer in coming months which position in the metaphorical automobile state regulators feel more comfortable.

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Congressional Budget Committee Chairmen Hope to Have Unified Plan in Hand by Tax Day

Both the House and Senate approved their own budget resolutions before the current congressional spring break, and all that remains to be done is to submit the plans to a conference committee to work out the differences. Before the recess, Senate Budget Chairman Mike Enzi, R-Wyo., and his House counterpart, Tom Price, R-Ga., said they believe that they can negotiate a final congressional budget by April 15, or just two days after lawmakers return from their two-week recess.

The two budget plans are fairly similar in scope, but some key details will need to be worked out before a final blueprint is put together. With Congress out of session for two weeks and formal conferees not even named, much of that work will be done informally in the interim.

Both plans aim to bring the budget into balance within their 10-year budget windows, and both do so by a combination of sharp spending cuts and the assumption of faster economic growth that would result in lower spending and increased revenues.

Beyond that, however, the two budget resolutions contain a number of differences, some of which involve the assumptions behind the numbers, others on policy approaches and still others on spending numbers. Even with both chambers now being led by majority Republicans, the coming conference is likely to prove challenging.

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Washington Insider: Parsing Farm Bill Costs

Earlier this month, the Environmental Working Group's farm program skeptics tried their hand at a familiar game -- deconstructing the many variables of the new programs, including some that are not yet implemented, and estimating their likely cost. The EWG came up with some big numbers, and were hooted at by Politico reporter David Rogers, who said they were unreasonably high.

Now EWG is back in print with their side and some new criticism. We probably will see more of this fight over time since it seems to be drawing a crowd, of sorts.

EWG says its earlier estimates were "based it on newly published projections by the University of Missouri's Food and Agricultural Policy Research Institute and the University of Illinois' Farmdoc Daily." And, it says history is on its side, that "estimates are estimates" but farm bills have a long history of costing more than projected. Then the group takes an interesting tack in revisiting the argument.

EWG group says it did not create the numbers, but merely used those already in wide use. So, it says it is standing aside and that Politico's fight is really with U of Illinois' Farmdoc Daily. That blog published a map -- an estimate -- that pegged the per-acre payments that corn growers could receive under the newly minted Agriculture Risk Coverage subsidy program at "shockingly high levels, ranging from $60 to $200 per acre on their base acres, EWG says. "We pointed out that those payments would be far, far larger than the so-called direct payments that ARC replaced,"

The Politico article chastised EWG for citing the $200-per-acre estimate, arguing that no farmer would ever get that much. For example, Farmdoc writer, Gary Schnitkey, said he thought $80 per acre would be closer to the truth. But that's what a range means, EWG responded. The most common payment rate would likely fall somewhere in between. "The author didn't mention what payment level he considered most probable within this range," EWG complained.

EWG says there are lots of complications involved in estimating farm program costs and that they expected the U of Illinois to have considered all of them -- and still highlighted the high level of per acre payments. The group also says that the argument that "payment limits" in the recent bill would effectively cap payments is not valid since the caps affect only farms with perhaps 1,200 acres and that many, many farms are much smaller than that.

Then, EWG uses this dispute to express their hopes that Politico "is right that ARC payments will not reach $200 per acre" and then it goes on to agonize, "Are we supposed to be happy with the $80-per-base acre payment? That's still more than three times the old $24-per-acre average direct payment for corn. So even at $80 per base acre, growers will get the equivalent of three years' of direct payments in the first year of the new farm bill alone -- with more to come."

EWG says it agrees that growers should have a safety net supported by taxpayers when farmers suffer potentially crippling losses -- but that the current programs are excessive.

Nobody can be much surprised that EWG is critical of the new programs, since the group made similar criticisms throughout the recent debate, and long before. They have attracted particular attention from budget hawks and others over the years, especially for their highly detailed reports of individual producer payments -- reports that are regarded as credible in spite of strong criticism from certain quarters.

Right now, it seems that the congressional leadership is not much interested in following EWG's advice since it seems likely to make only token cuts on farm programs -- at the same time it focuses on restructuring and reducing the nutrition programs.

Whether the ongoing budget wars significantly involve the farm programs as they intensify, the EWG criticisms should be noted carefully by producers since they almost certainly will play a role in the coming debates over the role of government in the sector, Washington Insider believes.

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(GH/CZ)

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