After six hours of heated debate, the Senate narrowly rejected (47-53)a resolution sponsored by Sen. Murkowski (R-AK) which would have prevented EPA from moving forward to regulate greenhouse gases under the Clean Air Act. Six Democrats - Landrieu (LA), Lincoln (AR), Pryor (AR), Nelson (NE), Bayh (IN) and Rockefeller (WV) – joined all Republican Senators in support of the effort.
During the debate, Sen. Murkowski argued the EPA is overreaching its powers, saying it has control of the nation's energy and climate policy instead of Congress.
Although environmentalists are expressing relief with the vote, Sen. Murkowski may have still made an impact with her effort. With her resolution garnering 47 votes, it seems difficult that a strong comprehensive climate bill could get the necessary 60 votes. Also, Senate Majority Leader Reid (D-NV) had to cut a few deals to prevent even more conservative Democrats from voting for the resolution, including a future vote on a bill by Sen. Rockefeller (D-WV) that would delay all EPA regulations on greenhouse gases for at least two years.
Prior to the Senate consideration, NCC President/CEO Mark Lange sent a letter to Cotton Belt Senators urging adoption of the resolution. The letter stated that without relief from Congress, EPA’s regulation of greenhouse gases under the Clean Air Act would impose a severe economic impact on the US cotton industry including “increased costs of production, inability to generate offsets, increased processing costs for ginning and textile production, and market disadvantages with its international competitors in India, China, and Brazil who do not incur such regulatory burdens.”
“While the EPA set out to regulate only mobile sources (motor vehicles), the overlapping triggers within the Clean Air Act will immediately extend the agency’s regulatory reach to stationary sources as well as giving it authority to regulate all greenhouse gas emissions,” Lange said in the letter. “President Obama, (EPA) Administrator Jackson, and Members on both sides of the aisle have said throughout the climate debate that the Clean Air Act is not the appropriate vehicle for regulating greenhouse gas emissions and that this issue should be decided by Congress. S.J. Res. 26 offers the clearest and most sensible approach to assure this occurs.”
Gulf Oil Spill Revives Climate Bills
With the Gulf of Mexico oil spill reviving prospects for energy debate in the Senate this summer, lawmakers are refocusing on climate change proposals -- some of which could upstage the comprehensive bill recently unveiled by Sens. Kerry (D-MA) and Lieberman (I-CT).
A new GOP climate bill that offers an alternative to mandatory caps on greenhouse gas emissions picked up support from two leading Senate Republicans. Sen. Lugar (R-IN) unveiled legislation (S. 3464, the Practical Energy and Climate Plan) that he claims will reduce the nation’s dependence on foreign oil by 40% and cut energy use by 11% in 20 years while reducing greenhouse gas emissions more than 20% by ’30.
Lugar’s proposal rejects emissions caps in favor of incentives to encourage purchases of fuel efficient cars, stronger fuel economy standards, improvements in the energy efficiency of buildings, and more loan guarantees for nuclear power. The bill has been endorsed by Sens. Murkowski (R-AK) and Graham (R-SC). Sen. Graham had been working with Sens. Kerry and Lieberman to develop a climate bill but withdrew his support in April over a dispute about immigration legislation. He acknowledged that the Lugar bill does not go as far, but called it a good start.
Another bill, S. 2877 (Carbon Limits and Energy for America’s Renewal Act), sponsored by Sens. Cantwell (D-WA) and Collins (R-ME), also has been getting some attention. Their bill would cap emissions of greenhouse gases but rebate to consumers the money raised by selling emissions allowances to regulated entities.
Crop Insurance SRA Final Draft Issued
Agriculture Secretary Vilsack released the final draft of a new crop insurance Standard Reinsurance Agreement (SRA) and announced that $6 billion in savings has been created through this action. Two-thirds of this savings will go toward paying down the federal deficit, and the remaining third will support high priority risk management and conservation programs.
The final draft SRA details the new terms, roles and responsibilities for both the USDA and the insurance companies that participate in the federal crop insurance program.
The final draft agreement follows two draft proposals and months of discussions with insurance companies and other stakeholders. The draft agreement generally maintains the current Administrative and Operating (A&O) subsidy structure (which is used to reimburse the companies for operating the program and is used for agent commission), but removes the possibility of windfall government payments based on high commodity price spikes by limiting the level of A&O payments that the crop insurance industry can receive. However, an inflation factor and consideration for new business were included so that the maximum payment may reasonably increase over the length of the agreement. Other changes were made to risk sharing between the government and companies. Companies now will have 30 days to review the draft and decide whether or not to agree to abide by its’ terms.
The Administration is ensuring that $2 billion in savings from the new SRA will be used to strengthen targeted risk management and conservation programs. The $2 billion that will be invested in farm bill programs include releasing approved risk management products, such as the expansion of the Pasture, Rangeland, and Forage program; providing a “good producer” discount or refund, which will reduce the cost of crop insurance for certain producers; increasing Conservation Reserve Program (CRP) acreage to the maximum authorized level; investing in new and amended Conservation Reserve Enhancement Program initiatives; and investing in CRP monitoring.
The NCC sent a letter to Secretary Vilsack in April strongly urging USDA to carefully consider the baseline budget implications of any program changes. The letter noted that if such programmatic changes are necessary, USDA should structure those adjustments in a manner that does not reduce the overall baseline for commodity, insurance and conservation programs.
Funding Sought for WACIP
Seeking continued funding for the West Africa Cotton Improvement Project (WACIP), NCC President/CEO Mark Lange and Senior Vice President John Maguire met with officials from USDA, the US Agency for International Development and the US Trade Representative. These meetings followed earlier sessions with officials in the State Department.
Funding for WACIP will be exhausted at the end of August. The project, created in ’06, was based on earlier work done by NCC staff with university researchers and USDA’s Agricultural Research Service. Government officials expressed support for the project and are searching for funding sources.
Draft NPDES Pesticide General Permit Scrutinized
EPA’s proposal for a general permitting system for certain pesticide uses, released June 2, is being scrutinized by interested parties.
EPA's 10 regions proposed the draft permit, which was developed in response to a Jan. ’09 ruling by the 6th Circuit Court of Appeals invalidating a ’06 EPA rule. The rule exempted pesticide applications directly to, over, or near water bodies from having to obtain a permit, if they met other statutory requirements. The court subsequently stayed its ruling, giving EPA until April ’11 to establish a permitting system.
One major concern is the permit’s compliance with the Endangered Species Act (ESA) which has spawned numerous lawsuits by anti-pesticide groups. EPA currently is consulting with the National Marine Fisheries Service and US Fish and Wildlife Service to ensure the permit does not jeopardize endangered or threatened species or adversely modify their critical habitat.
As a result of these consultations, EPA may consider adding conditions to the permit to further protect listed species and critical habitat. These requirements may include additional effluent limitations, monitoring, planning, recordkeeping and/or reporting. Meanwhile, the draft permit requires any operator that must submit a notice of intent (NOI) to indicate in the NOI whether any threatened or endangered species and/or its critical habitat are present in the area to be covered by the permit. In addition, operators must notify the Services of any adverse incidents to threatened or endangered species that may be due to their use of pesticides.
The draft general permit describes the technology-based effluent limitations and water quality-based effluent limitations that must be met under the permit. For the technology-based limitations, all operators must minimize pesticide discharges into waters of the United States by "using the lowest effective amount of pesticide product per application and optimum frequency of application to control the target pest." Operators also must "perform regular maintenance activities to reduce leaks, spills, or unintended discharges of pesticides ... and maintain pesticide application equipment in proper operating condition."
For water quality limits, the discharge "must be controlled as necessary to meet applicable numeric and narrative state, territorial or tribal water quality standards." EPA expects that compliance with the technology-based effluent limitations and other conditions of the permit will allow the operator to meet the water-quality effluent limits.
The draft general permit also describes the threshold, based on the annual treatment area, above which operators must file a NOI to obtain coverage under the general permit and when such a notice must be submitted to EPA.
Operators who must file a NOI also must follow Integrated Pest Management (IPM) practices, including: identifying and assessing the pest problem; evaluating effective pest management; and following appropriate procedures for pesticide use. Operators must perform each of these steps before the first application covered by the permit and at least once each calendar year afterward.
While EPA expects the permit to create a minimal economic burden on entities, including small businesses, industry views it as an unnecessary and costly layer of additional regulation, and there is concern about the impacts on cash-strapped states.
Agricultural groups are concerned about certain language in the documents and its implication to crop protection applications. EPA repeatedly has stated that Congress exempted agricultural storm water and irrigation return flows from NPDES permitting requirements, and the 6th Circuit's ruling does not affect these exemptions. EPA also clarifies that the general permit "does not cover terrestrial applications for the purpose of controlling pests on agricultural crops or forest floors" with the caveat that any applications not covered by the permit would need to be covered under another permit "if they involve pesticide applications that result in point source discharges to waters of the United States."
The draft permit will be subject to a 45-day public comment period during which EPA plans to hold three public meetings -- on June 14 in Albuquerque, NM; on June 16 in Boise, ID; and on June 21 in Boston, MA -- as well as a public hearing on June 23 in Washington, DC. EPA also has scheduled a webcast for June 17.
EPA Cancels Endosulfan Uses
EPA announced it will terminate all uses of endosulfan, an organochlorine insecticide, after its determination that the risks posed to farm workers are greater than were previously determined in the agency's ’02 re-registration decision. Endosulfan is an important product for whitefly control on cotton in Arizona and California.
In addition to posing an unacceptable risk to farm workers, the agency also has determined that risks to wildlife are above EPA's level of concern. However, because endosulfan is used only on "a very small percentage of the U.S. food supply," dietary exposures don't present a risk.
EPA says it "is currently working out the details of the decision that will eliminate all endosulfan uses, while incorporating consideration of the needs for growers to timely move to lower-risk pest control practices."
The agency is considering a phase-out program based on this product’s importance to various crops.
’09-10 Export Estimate Raised
In its June report, USDA gauged US ’09-10 cotton production at 12.19 million bales, unchanged from the previous month. Exports were raised by 250,000 bales while mill use was unchanged at 3.40 million bales. The estimated total offtake now stands at 15.65 million bales, generating ending stocks of 2.90 million bales and a stocks-to-use ratio of 18.5%.
For the ’10-11 marketing year, USDA projects US production of 16.70 million bales. Mill use is seen at 3.30 million bales while exports are projected to rise to 13.50 million bales. The estimated total offtake stands at 16.80 million bales. With beginning stocks of 2.90 million bales, this would result in US ending stocks of 2.80 million bales on July 31, ’11, and a stocks-to-use ratio of 16.7%.
The USDA report estimated world production for the ’09-10 marketing year to be 102.89 million bales, down 20,000 bales from the May report. World mill use was raised 540,000 bales to 116.43 million bales based on adjustments for Pakistan and Turkey, where analysis suggests that ending stocks will be tighter than previously estimated. Consequently, world ending stocks are estimated to be 52.21 million bales with a stocks-to-use ratio of 44.8%.
For the ’10-11 marketing year, USDA projects world production to be 114.32 million bales. Mill use is set at 119.49 million bales. With beginning stocks at 52.21 million bales, this would result in world ending stocks of 49.59 million bales on July 31, ’11, and a stocks-to-use ratio of 41.5% which, if realized, would be the smallest stocks-to-use ratio since ’94-95.
Sales Reach Marketing Year High
Net export sales for the week ending June 3 were 643,200 bales (480-lb) – a marketing-year high. This brings total ’09-10 sales to approximately 13.1 million bales. Total sales at the same point in the ’08-09 marketing year were approximately 13.6 million bales. Total new crop (’10-11) sales are 1.7 million bales.
Shipments for the week were 234,400 bales, bringing total exports to date to 9.6 million bales, compared with the 10.9 million bales at the comparable point in the ’08-09 marketing year.
With a little less than two months remaining in the marketing year, weekly shipments must average roughly 330,000 bales to reach the USDA projection of 12.3 million bales.
Effective June 11-17, ’10
Adjusted World Price, SLM 11/16
73.36 cents
*
Fine Count Adjustment ('09 Crop)
0.00 cents
Fine Count Adjustment ('10 Crop)
0.00 cents
Coarse Count Adjustment
0.00 cents
Marketing Loan Gain Value
0.00 cents
Import Quotas Open
9
Special Import Quota (480-lb bales)
616,971
ELS Payment Rate
0.00 cents
*No Adjustment Made Under Step I
Five-Day Average
Current 5 Lowest 3135 CFR Far East
90.40 cents
Forward 5 Lowest 3135 CFR Far East
84.05 cents
Coarse Count CFR Far East
NA
Current US CFR Far East
89.25 cents
Forward US CFR Far East
85.55 cents
'09-10 Weighted Marketing-Year Average Farm Price
Year-to-Date (August-April)
61.75 cents
**
**August-July average price used in determination of counter-cyclical payment
