Reuters writer Richard Cowan reported yesterday that, “A long-awaited compromise bill to reduce U.S. emissions of carbon dioxide and other gases blamed for global warming will be unveiled by a group of senators on April 26, sources said on Thursday.

“The legislative language to be sketched out in 11 days, according to government and environmental sources, is being drafted by Democratic Senator John Kerry, Republican Senator Lindsey Graham and independent Senator Joseph Lieberman.”

“Once the senators formally sketch out their bill, Senate Democratic Leader Harry Reid will decide the next steps in a year crowded with competing legislative priorities and congressional elections in November.”

Mr. Cowan explained that, “Point Carbon, an energy markets consulting service, estimated the anticipated Senate bill would result in U.S. gasoline prices rising an average of 27 cents a gallon from 2013 to 2020. The bill is expected to contain a fee on motor fuels.

“On Wednesday, a Senate source told Reuters the legislation would prohibit the Environmental Protection Agency from regulating carbon dioxide emissions. It would also end state and regional carbon-trading programs, such as the one several Northeastern states participate in, to be replaced by a national carbon reduction policy.”

National Journal writer Darren Goode reported yesterday that, “Nine Senate Democrats — including key fence-sitters, mainly from the Midwest — today gave the three senators putting together a climate and energy deal a blueprint for their possible support.

“The Democrats — led by Ohio’s Sherrod Brown — avoid getting very specific in how they want the bill to keep U.S. manufacturing jobs from shifting to nations like China that may not impose the same level of greenhouse gas emissions reduction standards as those called for under the evolving Senate bill.

“But they do ask for a ‘significant’ phase-in for manufacturers to be covered under a cap-and-trade program ‘if the funding for rebates to energy-intensive and trade-exposed industries is inadequate.’ During this period, these industries need to receive rebates that can be used to purchase greenhouse gas emissions credits. ‘It is critical that a sufficient number of allowances are set aside for EITE industries in order to provide the kind of certainty that will lead to investment in U.S. facilities,’ they wrote.”

In a related news article, Bloomberg writer Simon Lomax reported yesterday that, “Legislation to cut greenhouse-gas emissions from U.S. industry must include tariffs on some imports to maintain ‘a level playing field for domestic manufacturers,’ a group of Senate Democrats said today.

“The fees should apply to imports from countries ‘that do not have in place comparable greenhouse gas emissions reduction requirements to those adopted by the United States,’ Ohio Senator Sherrod Brown and eight other Senate Democrats said in a letter to lawmakers who are trying to revamp stalled climate- change legislation.”

Meanwhile, Steven Pearlstein noted in today’s Washington Post that, “Six weeks ago, it looked as if there was no chance that Congress would approve climate change legislation this year.

“The bill that had passed the House was so long, so complicated, so punitive to the coal-dependent Midwest economy, involved so many political compromises and so much money to be redistributed by the federal government, that it became the whipping boy of choice for conservative politicians and commentators.”

“Now, thanks to the heroic efforts of two dogged senators — Democrat John Kerry and Republican Lindsey Graham — and the quiet support of the White House, there looks to be a 50-50 chance the Senate will pass a simpler and more moderate version of a bill this year that would begin to substantially reduce carbon emissions in the United States.”

On the other hand, Wall Street Journal Columnist Kim Strassel noted today in an opinion item regarding the Congressional race of Richard Pombo—a California Republican who narrowly lost his House seat in 2006, and who is again running in the Central Valley, that, “Regulatory wins aside, it’s been a bleak 15 months for the environmental left. President Obama’s election was supposed to bring a climate-control regime that would finally give greens the tools to dismantle our industrial society. Instead, scandal has left climate science in tatters. The recession has sent the majority scurrying away from a comprehensive cap-and-tax bill. Some Democrats [including Senate Ag Committee Chairman Blanche Lincoln (D-Ark.), and House Ag Committee Chairman Collin Peterson (D-Minn.)] are embracing legislation to curtail the EPA’s planned carbon regulations.”

Meanwhile, Darren Samuelsohn of Greenwire reported yesterday at The New York Times Online that, “President Obama’s chief of staff summoned environmental leaders and other key administration allies to the White House today to discuss energy and climate legislation expected to be released in the Senate on April 26.

“Rahm Emanuel met for about 30 minutes with a group that included League of Conservation Voters President Gene Karpinski, Sierra Club Chairman Carl Pope, Center for American Progress President John Podesta, Environmental Defense Fund President Fred Krupp, Natural Resources Defense Council President Frances Beinecke, National Wildlife Federation President Larry Schweiger and Sheila O’Connell of Unity ‘09, a Democratic umbrella group.

“The environmental groups are hopeful Obama will keep pushing Congress during this election year to pass comprehensive energy and climate legislation amid several of his other top domestic agenda items, including Wall Street regulatory reform and a nominee to replace retiring Supreme Court Justice John Paul Stevens.”

The article added that, “Details on today’s West Wing meeting remain unclear. A White House spokesman referred calls to Emanuel’s office, which did not return requests for comment. Several of the environmental officials declined to comment as they left the White House.”

From an international perspective, Shai Oster reported yesterday at The Wall Street Journal Online that, “In the face of rising energy needs from a wave of unprecedented urbanization, China will have to spend up to $86 billion a year to reach ambitious greenhouse-gas reduction targets, a United Nations report says in one of the first estimates of how much China’s global warming targets will cost.”

Trade

The “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “The United States and Mexico may have moved closer to resolving the issue of cross-border trucking this week when Transportation Secretary Ray LaHood and Mexican Transportation Secretary Juan Francisco Molinar announced the establishment of a joint working group to look into the matter.

“Under provisions of the North American Free Trade Agreement, there was to be a cross border truck initiative that was to be phased in beginning in 1995. However, Congress balked at allowing the provision to go forward, citing safety concerns about Mexican trucks on U.S. roads. Others say congressional objections have more to do with protecting the jobs of union truck drivers in the United States than with the safety of Mexican trucks.”

The DTN item indicated that, “The U.S. refusal to meet its NAFTA obligations resulted in Mexico retaliating in March 2009 by imposing tariffs on $2.4 billion worth of U.S. goods. LaHood has been leading efforts within the Obama administration to develop a new program to comply with NAFTA provisions, and now says the administration is close to finalizing a plan to resolve the dispute.

“The negotiations that need to take place are between the White House and Congress rather than between the United States and Mexico. Most observers believe there will be progress on the issue this year, but that it will be slow and incremental.”

Food Safety

Jerry Hagstrom and Chris Clayton reported yesterday at DTN (link requires subscription) that, “Sen. Tom Harkin is anxious to get a floor debate next week on his bill to modernize food safety inspections at the Food and Drug Administration, but the bill could get pushed back depending on the status of the financial-reform package.

“The food-safety bill is expected to be popular, but aides and lobbyists have been scrambling in recent days to resolve a number of contentious issues. The bill is also the first FDA bill to come out of the Senate Health, Education, Labor and Pensions Committee since Harkin, D-Iowa, took over the chairmanship after the death of Sen. Edward Kennedy last year.

“‘It looked as though we were going to go next week on the food-safety bill, but now it looks like the regulatory-reform bill may go next week,’ Harkin told Iowa reporters in a phone call Thursday morning. ‘That’s still up in the air. There are a couple of things to be worked out on both bills. I’m still hopeful we’ll be up next week but we may not be up until after the reg-reform bill.’”

 

Financial Regulation

Reuters writers Elinor Comlay and Charles Abbott reported yesterday that, “A proposal to rein in derivatives trading could translate to billions of dollars of lost annual revenue for banks including JPMorgan Chase & Co and Goldman Sachs Group.

“Senate Agriculture Chairman Blanche Lincoln is expected to unveil a financial reform bill on Friday that would prevent banks with deposit insurance from also trading derivatives known as swaps.

“Banks would have to find a way to separate their swaps trading operations from the rest of their business, although the mechanism for doing so is not spelled out. Under Lincoln’s plan, over-the-counter derivatives — those with common terms and wide sales — would move onto regulated exchanges in many cases.”

Reuters writer Roberta Rampton indicated yesterday that, “Senator Blanche Lincoln’s proposal to curb involvement of banks in the $450 trillion over-the-counter derivatives market is aggressive but consistent with her pragmatic philosophy, a top aide to the Agriculture Committee chairman said on Thursday.

“Details of the measures, described as the toughest proposal to date to crack down on swaps, came as a surprise to financial industry players expecting Lincoln’s bill to be more friendly, particularly after a speech she made to the Chamber of Commerce in late March where she seemed to take a more centrist tack.

“‘Everyone is under a misconception at this point in time of what they thought Blanche Lincoln was going to do. That is not her fault,’ said Robert Holifield, the Agriculture Committee’s staff director.

“‘They were hearing what they wanted to hear,’ Holifield told Reuters.”

Kevin Drawbaugh of Reuters reported this morning that, “Democrats pressed ahead with financial regulation reform in the Congress on Thursday, rejecting Republican complaints and preparing the way for a final vote on legislation in the Senate.

“The last unfinished piece of a massive Democratic bill — new rules for the $450 trillion over-the-counter derivatives market — was expected to take clearer shape on Friday with the release of proposals from the Senate Agriculture Committee.

“The OTC derivatives component is crucially important to Goldman Sachs, JPMorgan Chase, Morgan Stanley, Citigroup and Bank of America, which dominate the unpoliced market.

“Lobbyists for the firms were on the defensive after it emerged that Agriculture Committee Chairman Blanche Lincoln planned to propose stricter rules than those approved by the Senate Banking Committee and the House of Representatives.”

Today’s article indicated that, “The top Agriculture Committee Republican criticized the proposals about to emerge from the panel on derivatives, including credit default swaps, which will seek to push more of those instruments through clearinghouses and exchanges.

“Senator Saxby Chambliss said there was some bipartisan agreement on the basic need for writing rules for swaps, but he said disputes remained unresolved on which businesses must clear swaps, and how they would be reported and transacted.

“‘Unfortunately our bipartisan negotiations have now been halted,’ Chambliss said, accusing the administration of intervening to stop the committee’ work.”

In related news, Nebraska GOP Senator and former Secretary of Agriculture Mike Johanns, a member of the Banking, Housing & Urban Affairs Committee, appeared yesterday on C-SPAN’s Washington Journal program. The issue of financial regulation was a key topic of discussion on yesterday’s show.

To listen to a brief overview and assessment regarding recent developments on some aspects of the financial reform legislation from Sen. Johanns, just click here (MP3- 4:55).

Farm Bill

A news release issued on Wednesday by Sen. Mike Enzi (R-Wyoming) stated that, “U.S. Senators Mike Enzi and John Barrasso, both R-Wyo., are fighting to keep payments in the pockets of farmers who need it most. Enzi and Barrasso sent a letter today to President Barack Obama requesting that payments in the Food, Conservation and Energy Act of 2008 be targeted appropriately and in a fiscally responsible manner.

“The letter pushes back against a final rule Obama released on Jan. 7 regarding limitations on who can receive taxpayer-funded farm subsidy payments. The rule will help smaller farms secure program payments but unfortunately failed to include a strict interpretation of the term ‘active personal management’ that would ensure that program payments are targeted toward actively engaged, bona fide farmers.

“‘The flimsy definition currently used for ‘active personal management’ leaves too much room for abuse to creep in and keep the money out of the pockets of farmers who need it most. The President needs to keep our hardworking farmers and ranchers in mind and change his rule to work with them instead of against them,’ Enzi said.”

The release added that, “In a bipartisan effort, Senator Tim Johnson (D-S.D.) and Russ Feingold (D-Wis.) also signed on to the letter.”

Agricultural Economy

The AP reported yesterday that, “A survey of rural bankers in 10 Midwest and Plains states released Thursday showed signs of promise amid prolonged financial weakness in the agriculture industry.

“The overall index for the Rural Mainstreet economic report fell to 44.2 in April from 47.4 in March. The April 2009 index was 21.7.

“The index ranges between 0 and 100. A score below 50 suggests the economy will contract in the next few months; above 50 indicates the economy will expand.”

The AP article added that, “Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are surveyed.

“The monthly confidence index, which tracks bankers’ economic outlook six months out, rose for the second straight month, from March’s 54.3 to 60.2.

“Bankers appeared to be encouraged by prices for farmland and cattle. The April farmland-price index rose above neutral growth for the third consecutive month, to 59.5 from 58.2 last month and 41.2 a year ago.

“Michael Johnson, chief executive officer of Swedish American State Bank in Courtland, Kan., said 800 acres recently sold at an all-time high, and Larry Rogers of Utica, Neb.-based First Bank reported a 143-acre farm sold for $8,025 an acre.”

A news release issued on Wednesday by Sen. Al Franken (D-Minn.) indicated that, “[Sen. Franken] urged U.S. Department of Agriculture (USDA) Secretary Tom Vilsack to take quick action in response to disastrously low milk prices. Minnesota’s dairy farmers are still struggling to recover from last year’s historic low prices and milk prices are projected to remain below the cost of production. Sen. Franken joined 21 of his colleagues in a letter to Secretary Vilsack outlining potential solutions to help struggling dairy farmers.”

“The USDA took several proactive steps in response to low dairy prices last year. Similar actions should be taken this year, such as continuing the Dairy Export Incentive Program (DEIP), expediting DEIP payments and using the Dairy Product Price Support Program (DPPSP) to bolster the falling prices for non-fat dried milk, barrel cheese, and cheddar block cheese.”

In other news, the AP reported yesterday that, “German conglomerate Bayer CropScience should pay a dozen Arkansas farmers nearly $50 million for allowing a genetically altered strain of rice to escape into the commercial market, damaging rice prices in 2006, a jury ruled Thursday.

“An attorney for the farmers, Scott Powell, said the jury decided on the judgment after less than two hours of deliberations Thursday afternoon in Lonoke County.

“The farmers claimed an experimental rice strain developed by Bayer called Liberty Link was allowed to make its way into the stream of commercially marketed rice. Liberty Link was developed to withstand a popular herbicide that kills weeds in the fields.”

And in international news, Bloomberg writer Gemma Daley reported yesterday that, “Chinese investment in Australian farms increased 10-fold in the past six months, real estate agents said, as Australia relaxed rules governing residential property purchasing and buyers see opportunities in agriculture.

“‘They are interested in large scale cattle farms, they are cashed up and see a financial opportunity here in a secure investment environment,’ said Geoff Hickson, real estate manager at Landmark Operations Ltd. ‘There has been a big increase from Chinese buyers in the past six months, it has grown 10-fold.’”