Washington Insider-- Friday

By DTN's Washington Insider

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

Congress in Race With EPA Regarding Study of Algal Toxins

Legislation moving through Congress that would require the Environmental Protection Agency to create a plan to combat algal toxins in public water systems now appears unlikely to pass before EPA begins doing that on its own.

Legislation that already has passed the House and is under consideration by the Senate would require EPA to publish a list of harmful toxins, summarize their known adverse health effects, evaluate the risk they pose to drinking water supplies, recommend feasible techniques for treating the toxins, provide technical assistance to states and utilities and publish health advisories for the toxins.

However, says EPA official Peter Grevatt of the agency's Office of Ground Water and Drinking Water, EPA already is developing the health advisories that would be mandated by Congress. In fact, he said, EPA plans to complete and issue advisories for two toxins -- microcystin-LR and cylindrospermopsin -- by the end of this spring.

The health advisories would be nonbinding and would recommend safe exposure levels, treatment technologies and analysis techniques for sampling. Congressional Republicans want to assure EPA is given only the task of identifying how to combat algae toxins, and not provided any authority to prevent toxins from occurring. Those steps would be left to states to undertake, something the Ohio Legislature recently began developing as a way to stem algae blooms in Lake Erie.

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Rail Freight Bills Moving Through Congress

The Senate Commerce Committee has approved a bipartisan measure to reauthorize the Surface Transportation Board, expand the scope of its authority and increase the number of STB members from three to five. The bill was sponsored by committee Chairman John Thune, R-S.D., and ranking Democrat Bill Nelson, Fla., and was supported by a number of agricultural shippers including the National Grain and Feed Association which represents country and export elevators, feed mills and grain merchandisers, among others.

Thune, in a statement after the vote, said the legislation is intended to ease problems of rail congestion caused by the increased amount of crude oil moving by rail that had caused delays and higher fares to move other goods.

Separately, the committee also approved a measure to postpone a mandate that railroad companies install a new safety technology that would allow a train to brake automatically to prevent a collision. The bill, sponsored by Sen. Roy Blunt, R-Mo., would delay the full implementation of Positive Train Control (PTC) from the end of this year to 2020. Some railroads had complained they did not have enough time to put in place the costly new systems.

Once the legislation moves to the Senate floor, it is expected to be opposed by some Democrats led by California's Dianne Feinstein and Barbara Boxer who argue that pushing the PTC deadline five years into the future would penalize those railroads that already have made significant investments in the new technology. They are unlikely to win their argument.

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Washington Insider: Trade Pacts and Legal Vulnerability

Amid the current negotiations for the Trans-Pacific Partnership, a provision has been leaked to the press that is causing waves in urban dailies, including the New York Times. The clause is not unusual -- in fact, it is typically included in trade deals, experts say. Its purpose is to make it more difficult for countries to expropriate or hamstring investments overseas and it allows investors to challenge government actions and court rulings in tribunals organized under the World Bank or the United Nations.

The Times says it got the proposed language from WikiLeaks, but the provision certainly is no surprise. Investor-State Dispute Settlement (ISDS) accords are found now in more than 3,000 trade agreements worldwide, and the United States has signed on to 51 of those. Administration officials say they level the playing field for American companies doing business abroad, protect property from government seizure and ensure access to international justice. The United States Trade Representative's (USTR) Office dismisses concerns as overblown and accuses opponents of using extreme hypothetical cases to stoke irrational fear when an actual record exists that should soothe worries.

Similar "dispute settlement" chapters exist in the North American Free Trade Agreement and the Central American Free Trade Agreement, both of which include the United States. Still, these provisions have been used infrequently against the United States. Over the past 25 years the United States has faced only 17 investor-state cases, 13 of which went before tribunals. The United States lost none of these.

In general, companies use U.S. civil courts if they have a problem with government regulations. Since 1993, while the federal government was defending itself against the 17 cases brought through extrajudicial trade tribunals, it was sued 700,000 times in domestic courts. Interestingly, neither trade opponents nor the NYT seem concerned about access to domestic courts.

Still, trade opponents worry the new trade tribunals would give investors in countries as wealthy as Japan and Australia, with sophisticated companies deeply invested in the United States, a new opportunity to litigate. "USTR will say the U.S. has never lost a case, but you're going to see a lot more challenges in the future," said Sen. Sherrod Brown, Democrat of Ohio. "There's a huge pot of gold at the end of the rainbow for these companies." He doesn't say why he thinks so.

One group, Public Citizen's Global Trade Watch, has even developed estimates of potential litigants -- arguing that about 9,000 foreign-owned firms operating in the United States would be empowered to bring cases against state and federal governments here. Those are as diverse as timber and mining companies in Australia and investment conglomerates from China whose subsidiaries in Trans-Pacific Partnership countries like Vietnam and New Zealand also have ventures in the United States.

The proposed language suggests those disputes would be adjudicated under rules set by either the International Centre for Settlement of Investment Disputes or the United Nations Commission on International Trade Law -- not exactly kangaroo courts.

The Obama administration pressed for -- and won -- clear transparency rules in the proposed draft mandating that tribunals be open to the public and arbitration documents be available online. Outside parties would also be allowed to file briefs.

The Times article downplays this approach, and emphasizes what it calls "catches." For instance, one article in the draft states that "nothing in this chapter" should prevent a member country from regulating investment activity for "environmental, health or other regulatory objectives," but limits that with a requirement that such regulation must be "consistent" with the other strictures of the chapter.

More than a few observers likely will find the negative tone of the Times article surprising -- especially its tone of surprise and concern, since there is nothing new about this dispute except the intensity of the current anti-trade campaign. The stakes are high, especially over the longer run. The trade opponents are increasingly active and producers need to watch this important fight carefully as it proceeds, Washington Insider believes.

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(GH/CZ)

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