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Energy Cap-and-Trade Agreement

Congressman Henry Waxman (D-CA), chairman of the House Energy and Commerce Committee, announced various details of an agreement by committee Democrats on provisions of the “American Clean Energy and Security Act of 2009.” This is the major energy cap-and-trade bill that the House of Representatives plans to consider this summer. According to Congressman Waxman, the agreement provides for a combined 20% renewable energy and energy efficiency standard by 2020. Utilities would be required to obtain 15% of their electricity from renewable energy sources and demonstrate annual electricity savings of 5% from energy efficiency measures by 2020. If the governor determines that utilities in the state cannot meet the 15% renewable requirement, he/she may reduce the renewable requirement to 12% and increase the efficiency requirement by 8%. Under the agreement, the automobile industries will be provided incentives to make electric and advance-technology vehicles. Energy-intensive industries that compete in global markets will be provided incentives to improve their energy efficiency, as well as assistance to address the costs of transitioning to clean energy economy. Negotiations continue among Democrats. Currently, committee Republicans plan to offer dozens of amendments during committee consideration of the bill next week. They also plan to introduce their own energy bill, which will place more emphasis on traditional domestic energy production. Agricultural groups are waiting to see the final details of the bill.

Administration’s Budget Proposes Various Cuts for Agriculture — The Obama administration released its detailed fiscal year 2010 budget late last week and it contains many of the earlier proposals that received strong criticism from the agriculture community. The budget again contains the proposal to phase out direct payments to producers with gross sales revenue of more than $500,000 annually. The budget also contains the proposal to limit commodity payments to $250,000/person. USDA programs on the budget’s chopping block include the Conservation Reserve Program Set-Aside for Public Access, Cotton Storage Payments, Economic Action Program, High Energy Cost Grant, Public Broadcasting Grants, Resource Conservation and Development Program, Rural Empowerment Zones and Enterprise Communities Grants and the Watershed Flood Prevention Program. Cuts are also proposed for the Agricultural Research Service Buildings and Facilities, Crop Insurance Premiums/Underwriting Gains & Fees and the Market Access Program (MAP).

CRP Re-enrollment — USDA has announced it will allow producers to re-enroll up to 1.5 million of the 3.9 million acres set to exit the Conservation Reserve Program (CRP) this September. The limited number of acres eligible for re-enrollment will allow USDA to meet the 2008 farm bill’s cap of 32 million acres for CRP. USDA said, “CRP contracts with the highest environmental benefit or with the highest potential for soil erosion will be selected.” The signup period for producers to apply for extensions begins May 18 and runs through June 30.

U.S., EU Reaches Beef Deal — The United States and the European Union (EU) signed an agreement concerning the long-running dispute over hormone-treated beef. The agreement will provide additional duty-free access to the EU market of high-quality beef produced from cattle that have not been treated with growth-promoting hormones – 20,000 tons in the first three years and increasing to 45,000 tons beginning in the fourth year. Under the agreement, the United States will maintain existing sanctions and will not impose new sanctions on EU products during the initial three-year period, and will eliminate all sanctions during the fourth year. U.S. Trade Representative Ron Kirk said, “The agreement gives us an opportunity to add the EU to the leading export destinations for high-quality U.S. beef, which will provide a substantial boost for U.S. ranchers and meat packers and their employees.” This beef hormone dispute dates back to the late 1980s, when the EU banned beef from cattle raised with artificial growth hormones. In 1998, the World Trade Organization (WTO) found that the EU’s ban on U.S. beef was not supported by science and was inconsistent with WTO rules.

USDA Administrators Named — Secretary of Agriculture Tom Vilsack has named Rayne Pegg as administrator of USDA’s Agricultural Marketing Service and Julie Paradis as administrator of the Food and Nutrition Service. Pegg has served as the deputy secretary of Legislation and Policy for the California Department of Food and Agriculture. In that role, she was the principle advisor to both the secretary of the department and the cabinet of the governor of California on the department's legislative and policy issues. Paradis has been senior Washington, DC counsel for America’s Second Harvest. She served as deputy under secretary for food, nutrition, and consumer services in the Clinton administration and senior staff on the House Agriculture Committee. Paradis is very well respected on nutrition issues.

P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.