Congress Returns to Confront Same Must-Complete Issues with Consensus Lacking

Will EPA this week finally release much-delayed RFS decisions?

Jim Wiesemeyer

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November 28, 2021 06:16 PM

Will EPA this week finally release much-delayed RFS decisions?

Washington Focus

Must-have issues linger for returning lawmakers, with the most important being:

Immigration reform: On Tuesday, Nov. 30, Democratic staff will meet with the Senate parliamentarian to discuss the path forward on immigration reform, according to two sources familiar with the matter. The meeting comes after the House last week passed the party’s social spending bill, which included a provision that allows millions of undocumented immigrants to apply for work permits and receive temporary protection from deportation. Some initial discussions on this topic have been held, including a meeting yesterday.
Defense policy: As Congress returns, the first topic is the annual defense policy bill, which could take up the first week of December. There will also be a House-Senate conference that could take up more time.
FY 2022 spending: Dec. 3 is when the current stopgap measure funding for the government expires. Most expect another continuing resolution (CR), but the length of this is still being debated. Some Democrats have mentioned Dec. 17 but that apparently lacks GOP support. All this concerns spending for fiscal year 2022, which began Oct. 1.
Debt ceiling: Dec. 15 is the date that Treasury Secretary Janet Yellen says is the new deadline for dealing with the debt ceiling to avoid default on the nation’s debt. Private forecasts have a longer deadline — Wrightson ICAP, which tracks the debt limit, now says it believes the Treasury Department has until the middle of January before the nation hits the borrowing cap. Senate Majority Leader Chuck Schumer (D-N.Y.) and Minority Leader Mitch McConnell (R-Ky.) are talking so a potential compromise may be near. Republicans have said they want Democrats to tack the debt limit onto reconciliation and increase the debt limit on a party-line vote. But Democrats are still pushing for a bipartisan solution. But McConnell is insisting that Democrats will need to raise the debt ceiling along party lines this time, after he assented to a short-term patch. That means using the so-called reconciliation process to evade a GOP filibuster.
BBB vote in Senate: The Senate will not take up the social spending/climate change bill dubbed Build Back Better (BBB) until the second week of December, at the earliest. Many see just before Christmas as the deadline for considering the $1.75 trillion measure. Biggest focus is on centrist Sen. Joe Manchin (D-W.Va.) for months has forced major changes in the measure and has also proposed delaying consideration until sometime in 2022. Depending on what happens, Manchin’s credibility is on the line if he gives in to Democratic leaders.

Federal Reserve Chairman Jerome Powell and Treasury Sec. Janet Yellen will head to the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday for CARES Act oversight. This will be the first time lawmakers have to hear and question Powell since President Joe Biden announced his renomination to the Fed. Biden said that climate change was a factor in his decision to renominate Powell for a second term and to nominate Fed Governor Lael Brainard for the position of vice chair. Powell is likely to face questions about tapering, interest rates and inflation.

Several policymakers and business leaders are slated to appear at the Reuters NEXT event Wednesday through Friday. Among those scheduled to speak at the virtual global conference are Yellen, European Central Bank President Christine Lagarde, Federal Reserve Bank of Atlanta President and Chief Executive Raphael Bostic, International Monetary Fund Managing Director Kristalina Georgieva, PayPal Holdings Inc. President and CEO Dan Schulman and others.

The almost laughable EPA delay in announcing RFS details is facing a Nov. 30 “deadline” which it has missed several times in the past. It will be interesting to see what the so-called independent agency proposes on several Renewable Fuel Standard (RFS) issues. The announcements will have market and political implications and are guaranteed to garner responses from the different stakeholders involved.

RFS issues include 20221 and 2022 RVOs (mandate levels) with a possible retroactive reduction in 2020; and the proposed process from EPA on how they are going to determine RFS levels for 2023 and beyond. EPA may make some comments on RVO waivers, but there is no real “deadline” per se, though the recent op-ed (link) by former EPA Administrator Andrew Wheeler indicated those were in part delayed by the Supreme Court but the analysis has been done so it is not really clear why there has been a delay.

In an intent-to-sue letter to EPA, Growth Energy said the EPA has not followed the law. “Under the Clean Air Act, ‘EPA must by Nov. 30 of each year calculate and promulgate ‘renewable fuel obligations that’ will ‘ensure that the program’s requirements are met’ in the upcoming year,” the group said.

Regarding hearings, House Ways and Means subcommittee will hold a hearing Thursday on the impact of Chinese trade practices recently spent several days in Asia talking with her counterparts.

The House Transportation and Infrastructure Committee will hold a hearing Thursday titled “The Evolving Cybersecurity Landscape: Federal Perspectives on Securing the Nation’s Infrastructure.”

Nominations: Senate Commerce, Science and Transportation Committee will hold a meeting Wednesday to consider the nomination of Jessica Rosenworcel to be a member of the Federal Communications Commission. The committee also will hold a hearing on the nomination of Gigi B. Sohn to be an FCC commissioner.

Food summit. Foreign Policy (FP) holds the FP Virtual Summit: Food+, with the theme “Mobilizing Global Solutions for Climate-Smart Food;” runs through Thursday. Maura Barry Boyle, senior deputy assistant administrator in USAID’s Bureau for Resilience and Food Security and interim global water coordinator; Maciej Golubiewski, head of cabinet of commissioner for agriculture at the European Commission; and Bob Reiter, head of research and development for crop science at Bayer, participate in a panel on “Farming Forward: Climate-Resilience and the Future of Agriculture;” Rep. Jim Baird (R-Ind.) and Del. Stacey Plaskett (D-Virgin Islands) participate in a discussion.

National Christmas Tree lighting. The National Park Service and National Park Foundation on Thursday host the 99th annual National Christmas Tree Lighting ceremony.

Economic Reports for the Week

A few big economic releases are due. The Conference Board Consumer Confidence Index is out Tuesday, the Fed’s Beige Book is coming on Wednesday and the Bureau of Labor Statistics’ jobs report is scheduled for Friday.

Monday, Nov. 29

National Association of Realtors releases its Pending Home Sales Index for October. The consensus estimate is for a 117 reading, roughly even with the September figure. The index, a forward-looking indicator of home sales, based on contract signings, fell 8%, year-over-year, in September and has declined for four consecutive months from the previous year’s levels.
Dallas Fed Mfg. Survey
Federal Reserve. Fed Chairman Jerome Powell delivers pre-recorded remarks at New York Innovation Center. Fed Governor Michelle Bowman delivers remarks at the Virtual Symposium on Indigenous Economies. New York Fed President John Williams scheduled to speak.

Tuesday, Nov. 30

S&P CoreLogic releases the Case-Shiller National Home Price Index for September. Economists forecast a 19.5% year-over-year gain, slightly less than August’s 19.8% jump, which was a fifth straight record increase for the index.
Institute for Supply Management releases its Chicago Purchasing Manager Index for November. Expectations are for a 68.9 reading, roughly even with the October data. The index is slightly below its record peak, hit in May.
FHFA House Price Index
Conference Board releases its Consumer Confidence Index for November. The consensus call is for a 110.4 reading, about three points below October’s. The index is sharply down from its postpandemic high, reached this summer, in part due to inflation concerns.
Federal Reserve. Fed Chairman Jerome Powell testifies on the CARES Act before the Senate Banking, Housing and Urban Affairs Committee. Fed Vice Chair Richard Clarida delivers remarks on Fed Independence: Foundations and Responsibilities. New York Fed President John Williams scheduled to speak.
China’s official PMI reports will give the latest pulse check on the world’s second-largest economy, with economists’ forecasts anticipating an improvement for manufacturers as power shortages abated.
Consumer price data published by the European Union’s statistics agency is expected to show that the annual rate of inflation in the eurozone rose to 4.5% in November from 4.1% in October. That would be the fastest rise in consumer prices in the 24-year history of the series, taking it further above the European Central Bank’s 2% target.

Wednesday, Dec. 1

MBA Mortgage Applications
ADP releases its National Employment Report for November. Private-sector employment is expected to increase by 510,000 jobs after rising by 571,000 in October.
Census Bureau reports data on construction spending. Economists forecast a 1% month-over-month increase for construction outlays, to a seasonally adjusted annual rate of $1.59 trillion.
PMI Manufacturing Final
The Institute for Supply Management’s manufacturing index for November have economists forecasting another solid month for new orders and output but also rising prices and long wait times for materials.
Federal Reserve Beige Book
Federal Reserve. Fed Chairman Jerome Powell to testify on the CARES Act.

Thursday, Dec. 2

Department of Labor reports initial jobless claims for the week ended on Nov. 27. Claims hit a 52-year low in this past week’s report, and the four-week average is now only slightly higher than prepandemic levels.
Motor Vehicle Sales
Fed Balance Sheet
Money Supply
Federal Reserve. Fed Governor Randal Quarles delivers remarks to the American Enterprise Institute; San Francisco Fed President Mary Daly, Richmond Fed President Thomas Barkin, and Atlanta Fed President Raphael Bostic scheduled to speak.

Friday, Dec. 3

Bureau of Labor Statistics releases the jobs report for November. Economists forecast a 525,000 gain for nonfarm payrolls, and for the unemployment rate to tick down a tenth of a percentage point to 4.5%.
ISM releases its Services PMI for November. The consensus estimate is for a 65 reading, versus October’s 66.7, which was a record for the index.
Factory Orders
PMI Composite Final

Key USDA & international Ag & Energy Reports and Events

Organization of the Petroleum Exporting Countries and allies are meeting Thursday to discuss their output policy while they are closely watching how the new omicron variant of the coronavirus will affect markets. On Friday, oil prices saw their biggest single-day decline since April 2020, falling $10 a barrel on fears that the new variant will dampen demand and slow economic growth.

On the ag report front, Wednesday brings another USDA update on farm income, but it is rising production costs that have garnered the recent spotlight.

Monday, Nov. 29

Ag reports and events:

Export Inspections
Crop Progress
Egg Products