Battle lines form on ethanol regs

Lawmakers and industry groups are gearing up for a monthlong battle over the future of the federal ethanol mandate. 

The Obama administration is set to finalize federal requirements for ethanol levels in gasoline by the end of the month, a deadline that has kicked off a flurry of public and behind-the-scenes lobbying over the Renewable Fuel Standard (RFS). 

{mosads}Corn growers and biofuel backers in Congress want the Environmental Protection Agency (EPA) to increase required ethanol levels beyond the targets it proposed in May, which were well below what lawmakers envisaged when expanding the RFS in 2007. 

But oil groups have led the charge against the mandate, warning that they can’t mix anymore ethanol into their gasoline supplies. They want Congress to overhaul the mandate — or repeal it altogether — a position that has some support from lawmakers across the political spectrum.

“We’ve got to just acknowledge that the corn-based mandate is a well-intended flop,” Rep. Peter Welch (D-Vt.) said. 

Welch, Rep. Bill Flores (R-Texas) and 180 other members signed a letter opposing the mandate last week, calling on the Obama administration to “limit the economic and consumer harm this program has already caused.”

The EPA flummoxed ethanol supporters in May when it proposed three years’ worth of blending targets, each well below the levels Congress set when expanding the RFS in 2007. 

EPA officials said then that they went as far as they could with the blending requirements. Most American gasoline today contains about 10 percent ethanol, and refiners say many vehicles on the road can’t supporter fuel with a higher ethanol content. The gasoline supply, they say, has hit its limit.

The letter from Welch is the latest volley in lawmakers’ efforts to push Obama for or against the rule. 

A House Science Committee subpanel will hold a hearing on the mandate on Tuesday, with members preparing to pepper witnesses on everything from its cost for consumers to its impact on the environment. 

Proponents of a higher threshold, meanwhile, are taking their case directly to the Obama administration. Sixteen members of the Congressional Black Caucus sent EPA Administrator Gina McCarthy their own letter on Monday, saying the RFS “has helped the environment, our economy and has increased our confidence in renewable fuels.”

A group of Midwestern senators sat down with White House Chief of Staff Denis McDonough in October to make the case for a high ethanol standard. 

“We think the standard is a strong one and should remain and should not be tinkered with, so we can get that kind of long-term innovation, investment that we want,” Sen. Amy Klobuchar (D-Minn.) said. 

Congressional support for the RFS is mixed. Many Democrats support the mandate, and they’re joined by a contingent of lawmakers from corn-producing states where support crosses political bounds. They say the mandate has bolstered the biofuels industry and helped the environment by reducing carbon emissions. Outside of the Midwest, Republican support is softer, and some Democrats like Welch oppose the rule because of concerns over the mandate’s impact. Industry groups say the mandate raises fuel prices and risks damaging engines that can’t handle high-ethanol fuel, claims supporters dismiss.   

Welch said farmers in his state are also worried the mandate has raised grain prices.

“If you’re in agriculture and you need to buy feed, this is bad for you,” he said. “If you’re in agriculture and you need to grow corn, this is good for you. It just creates cross-currents that are regional.”

Groups and members on both sides predict there is likely to be little legislative action on the RFS this session.

With a legislative fight probably off the table, the lobbying blitz has mostly focused on the blending requirements the EPA will finalize this month.

Ethanol groups say the EPA needs to do more than it has proposed. A biofuels group called Fuels America launched a seven-figure ad buy last week to make its case, urging Obama to finalize a strong rule with levels closer to the statutory requirement, over the objections of the oil industry. 

“We’re hoping that they have a change of heart and a change of mind, and raise those levels up to where they should be,” National Corn Growers Association President Chip Bowling said.

Oil interests have launched an ad campaign of their own. The ads, from the American Petroleum Institute, call the RFS “Washington red tape” and blame it for raising fuel prices. The American Council for Capital Formation, also, has launched an ad campaign against the rule in four states, including Ohio.

The ad blitzes are focused on the Washington, D.C., market and designed to appeal to Obama officials tasked with finalizing the rule, both sides said.

The administration isn’t tipping its hand. 

Klobuchar said McDonough, likewise, kept his thoughts to himself at the senators’ meeting. But Klobuchar said she, the ethanol industry and their allies are hoping the EPA revises its limits upward when the final rule comes out this month.

“It’s not like some boutique fuel. It’s actually a major part of our fuel supply,” Klobuchar said, crediting the mandate with helping to reduce the need for foreign oil imports. 

This story was updated with additional information at 11:50 a.m.