Supreme Court on Monday Hears Oral Arguments Re: WOTUS Challenge to Clean Water Act

Employment report Friday | Flurry of Fed speakers again | CR signed into law | Prop 12 challenge

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October 01, 2022 04:18 PM

Employment report Friday | Flurry of Fed speakers again | CR signed into law | Prop 12 challenge

Washington Focus

Congress has departed the Capitol and will not return until Nov. 14, after Nov. 8 elections.

President Joe Biden signed the continuing resolution (CR) into law Friday evening, but the real battle will come after lawmakers return to make final decisions on fiscal year (FY) 2023 spending.

Some CR highlights:

The House passed the CR Friday by a vote of 230 to 201, with only 10 Republicans backing it. The Senate was a more bipartisan vote of 72-25.
House Republicans overwhelmingly opposed the measure. Some wanted to extend government funding into January, when they may have more leverage over setting federal spending for the full fiscal year, depending on the results of the midterm elections. Others argued the measure needed to do more to address border security.
The CR finances the gov’t through Dec. 16 and buys lawmakers more time to agree on legislation setting spending levels for the 2023 fiscal year.
The stopgap spending bill generally keeps spending at current levels, though it does provide more than $12.3 billion in Ukraine-related aid, on top of a total of about $54 billion approved earlier this year. Congress has now committed more military aid to Ukraine than it has to any country in a single year since the Vietnam War.
Disaster assistance other than ag aid was attached to the stopgap bill, including $2.5 billion to help New Mexico communities recover from the Hermit’s Peak/Calf Canyon fire, the largest wildfire in the state’s history; $2 billion for a block grant program that helps communities recover economically from recent disasters; and $20 million for water and wastewater infrastructure improvements that were previously authorized for Jackson, Miss. It contains a provision that would allow the Federal Emergency Management Agency to tap $18.8 billion to cover the cost of current and future national disasters. Ag disaster aid (ERP extension) was not included in the CR but is expected to be part of the omnibus spending bill lawmakers will deal with in December.
Mandatory livestock price reporting was extended through Dec. 16. The program requires meatpackers to report to USDA the prices they pay for cattle, hogs, lambs, and other information. USDA uses the data to publish twice-daily reports with pricing information, contracting for purchase, supply and demand conditions for livestock, livestock production, and livestock product values.
An additional $1 billion for a program that helps low-income households heat their homes was included. And it transfers $3 billion from a Pentagon aid program to the State Department for continued Afghan resettlement operations.
The CR includes reauthorization of the Food and Drug Administration’s user fee agreements for five years, which ensures the agency can continue crucial product safety reviews and won’t need to issue pink slips for thousands of employees working on drug and medical device applications. Some 3,500 employees would have faced layoffs or furloughs. The agency held off sending official notices to employees, citing expectations that Congress would act.
The measure includes $400 million to increase hiring at the Social Security Administration.

Monday marks the first day of the Supreme Court’s new term, and the justices will hear oral arguments Monday morning in a closely watched challenge to the Clean Water Act (CWA), passed in 1972 to protect all “Waters of the United States (WOTUS) — including streams, rivers, lakes and wetlands — from harmful pollution.

The issue: Business groups and home builders argue that legal confusion over the definition of WOTUS has created regulatory chaos for businesses and property owners. “Without clear guidance from this Court, the Chamber’s members will continue to endure an expensive, vague, and time-consuming process whenever they need to determine whether a project or activity will impact waters subject to federal jurisdiction,” the U.S. Chamber of Commerce wrote in a brief.

Reason for the case: The Supreme Court ruled in June that the Environmental Protection Agency (EPA) overstepped its authority under the Clean Air Act to slash planet-warming emissions from power plants.

The case: It’s Sackett v. EPA and centers on a long-running dispute involving an Idaho couple named Chantell and Michael Sackett. Their legal battle began in 2007, when they tried to build a home on their land near Idaho’s Priest Lake. EPA said the property contained a wetland, and that the couple needed to obtain a CWA permit or face heavy fines. Their land contains no body of water, and the law authorizes EPA to regulate only “navigable waters” in interstate commerce. EPA still ordered construction work halted and threatened huge penalties if the Sacketts didn’t obtain a federal permit, which typically requires more than two years and $250,000 in consulting costs. EPA’s argument: The Sacketts’ lot was connected to a wetland though it was separated by a 30-foot paved road, and that wetland was connected to a man-made ditch that was connected to a non-navigable creek that was connected to Priest Lake, which was navigable. The Sacketts, represented by the conservative Pacific Legal Foundation, have won at the Supreme Court before. They want the justices to significantly narrow the definition of WOTUS so that their property — and others like it — would not be subject to the CWA.

Outlook: Damien Schiff, a senior attorney at the Pacific Legal Foundation who will argue the case on Monday, said he is “quietly optimistic” that the Sacketts will prevail. He noted that Chief Justice John G. Roberts Jr. signed Scalia’s opinion in Rapanos, while Justice Neil Gorsuch signaled in the Clean Air Act case that he is “skeptical of broad EPA interpretations of statutes.” Jon Devine, who leads the Natural Resources Defense Council’s federal water policy team, said the adoption of Scalia’s narrow test could remove CWA protections for roughly 19% of streams and 51% of wetlands in the country. “That would be catastrophic,” he said, “for the water quality purposes of the act.”

More info: Oral arguments in Sackett v. EPA begin at 10 a.m. ET on Monday, both in person and online. Link to National Pork Producer Council’s Sackett brief.

Another important SCOTUS case ahead: Proposition 12 case: pigs and interstate commerce. On Oct. 11, the court will hear National Pork Producers Council v. Ross, a challenge to a California law that seeks to reduce cruelty to animals by requiring that pork sold in the state come from breeding pigs housed in spaces that allow them to move around freely. The law forbids the sale of most pork in California unless the pig it comes from was born to a sow that was housed with 24 square feet of space. But most sows around the nation are kept in much smaller enclosures. “These pens,” the groups challenging the California law wrote in a Supreme Court brief, “provide around 14 square feet of space and — for hygiene, safety, and animal-welfare and husbandry reasons — do not allow the sow to turn around.”

Impact: Given the size of California’s market, pork producers say, the state effectively seeks to regulate businesses outside its territory in violation the Constitution.

Background: A unanimous three-judge panel of the U.S. Court of Appeals for the Ninth Circuit, in San Francisco, rejected the argument that the law’s out-of-state effects made it invalid. “State laws that regulate only conduct in the state, including the sale of products in the state, do not have impermissible extraterritorial effects,” Judge Sandra S. Ikuta wrote for the panel.

What’s at stake: The Supreme Court’s ruling could have implications for many other laws, including state laws addressing climate change and out-of-state travel to obtain abortions.

NPPC and the American Farm Bureau Federation will present oral arguments that California’s 2018 ballot measure violates the U.S. Constitution’s Commerce Clause, which grants Congress the power to regulate trade among the states and restricts states from regulating commerce outside their borders. Because more than 99% of the country’s sows live outside of California and the state accounts for nearly 15% of the domestic pork market, NPPC says Proposition 12 would have the effect of dictating the pork production practices of hog farmers in other states.

More info: Link to NPPC’s brief.

On the elections front, the only debate in Arizona’s Senate race will take place on Oct. 6. The debate between Democratic incumbent Sen. Mark Kelly and Republican challenger Blake Masters will be hosted by the Arizona Clean Elections Commission and broadcast on PBS.

In North Carolina, voters will see Rep. Ted Budd (R-N.C.) and Democrat Cheri Beasley on the debate stage on Oct. 7 in the race for North Carolina’s open Senate seat. The debate will air on Spectrum News 1 and take place in Raleigh. The race remains a dead heat.

WTO is a paper tiger. Some trade policy wonks laugh when they read or hear reports that a country is going to file a case against another at the WTO. Reason: For more than five years, the U.S. has blocked appointments to the WTO appellate body, the final arbiter in trade disputes, rendering the body nonfunctional so that countries’ appeals have remained in limbo. The U.S. blocked the appointments as leverage to demand reforms to the WTO’s dispute resolution mechanism, but these reforms are unlikely to occur anytime soon due to the need for consensus and growing U.S./China trade hostilities.

Russia said it has withdrawn its troops from the once-occupied city of Lyman, as Ukraine’s eastern counteroffensive recaptures more territory. Lyman, a key transportation hub, had been an important site in the Russian front line for ground communications and logistics. Now Ukraine can push farther into the occupied Luhansk region, which is one of four regions Russia illegally annexed Friday.

Ukrainian President Volodymyr Zelenskyy said his government would apply to join NATO. The alliance is unlikely to say yes: Ukrainian membership while the Russian invasion continues would oblige NATO to go to war with Russia, which the U.S. and its European allies remain loath to do.

Meanwhile, the Biden administration has imposed sanctions on Elvira Nabiullina, the governor of Russia’s central bank, as part of a new package of measures intended to stiffen its financial punishment of Moscow in the wake of its annexation of territory in eastern Ukraine. The move against Nabiullina came as the Treasury department widened its sanctions against Russia to include several of the country’s top economic officials, besides individuals and legislators associated with the invasion of Ukraine.

Economic Reports for the Week

Friday brings the usually important Employment report.

Monday, Oct. 3

Institute for Supply Management releases its Manufacturing Purchasing Managers’ Index for September. Consensus estimate is for a 52.3 reading, roughly even with the August data. The prices-paid component of the index has fallen for five consecutive months through August, for a total of nearly 25 points. That indicates that manufacturers are paying less for raw materials and gives hope that some of the cost savings will be passed on to the consumers soon, partially relieving inflationary pressures.
Census Bureau reports construction statistics for August. Total construction spending is expected to decline 0.15% month over month to a seasonally adjusted annual rate of $1.76 trillion.
IHS Markit Manufacturing PMI, Final
Federal Reserve speakers: Bostic gives opening remarks at technology conference; Williams speaks at Hispanic Chamber of Commerce conference.

Tuesday, Oct. 4

Bureau of Labor Statistics releases the Job Openings and Labor Turnover Survey (JOLTS). Economists forecast 11.2 million job openings on the last business day of August, similar to the July total. Job openings continue to outpace the number of unemployed by nearly a 2-1 margin, which Federal Reserve Chairman Jerome Powell has stressed must come into better balance.
Factory Orders
Federal Reserve speakers: Logan delivers welcoming remarks at Atlanta Fed event; Williams delivers opening and closing remarks; Mester is at Chicago Fed payments conference; Jefferson discusses impact of technology on economy; Daly takes part in moderated Q&A session.

Wednesday, Oct. 5

MBA Mortgage Applications
ADP releases its National Employment Survey for September. The economy is forecast to add 200,000 private-sector jobs, after a rise of 132,000 in August. Job growth has slowed from the rapid pace of the past year.
ISM releases its Services PMI for September. The forecast is for a 56 reading, about one point fewer than in August.
Trade Balance
IHS Markit Services PMI, Final
Federal Reserve speaker: Bostic speaks at Northwestern University.

Thursday, Oct. 6

Department of Labor reports initial jobless claims for the week ending on Oct. 1. In September, claims averaged 207,000 a week, higher than the multidecade lows reached in March but well below the previous three months. With the holiday season approaching, employers might be trying to hold on to their workers, after struggling to fill positions over the past 18 months.
Fed Balance Sheet
Money Supply
Federal Reserve speakers: Evans participates in Q&A; Cook delivers first speech as Fed governor; Waller on the economic outlook; Mester on the economic outlook.

Friday, Oct. 7

BLS releases the jobs report for September. The consensus estimate is for an increase of 250,000 in nonfarm payrolls, after a gain of 315,000 in August. The unemployment rate is expected to remain unchanged at 3.7%.
Wholesale Inventories
Consumer Credit
Federal Reserve speaker: Williams participates in moderated Q&A session.

Key USDA & international Ag & Energy Reports and Events

Friday brings the FAO World Food Price Index. There’s a Global Grain Outlook conference in Baku, Azerbaijan, Oct. 4-7. On Thursday, Brazil’s Conab releases data on area, yield and output of corn and soybeans.

On the energy front, Wednesday has OPEC+ ministers, including from Saudi Arabia and Russia, meeting by videoconference to decide on November production policy.

Monday, Oct. 3

Ag reports and events:

Export Inspections
Crop Progress
Commodity Costs and Returns
Amber Waves, October issue
Milk Cost of Production Estimates
Cotton System Consumption and Stocks
Fats & Oils: Oilseed Crushings, Production, Consumption and Stocks
Grain Crushings and Co-Products Production