POLITICS: PennAve

Opponents of biofuel mandate prepare for renewed congressional push

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Opponents of a federal biofuel mandate plan to lay the groundwork at a Thursday Environmental Protection Agency hearing for a renewed charge to repeal the measure.

The rule's detractors say last month's EPA proposal to reduce fuel blending targets for 2014 emboldened their legislative push, adding that the rationale the agency offered didn't address concerns about engine safety and corn and fuel prices.

"We're only going to enhance" pressure, American Petroleum Institute CEO Jack Gerard told the Washington Examiner on Wednesday. "When you start adding everybody else ... there's a lot of activity out there taking place."

At issue is last month's EPA proposal to reduce the amount of biofuels such as ethanol that refiners must blend into transportation fuel next year. The agency said refiners would need to blend 15.21 billion gallons of biofuel, down from a scheduled 18.15 billion.

The move blindsided the biofuels industry, which has been scrambling to drum up its supporters to persuade the EPA to keep the original targets.

Some experts have suggested that the EPA's move gave lawmakers space to relax legislative action on the renewable fuel standard. The House Energy and Commerce Committee had pledged to tackle the matter, but it hasn't given a timetable for releasing a bill — and some of its senior Republicans support parts of the mandate.

Bob Dinneen, president of biofuel industry group the Renewable Fuels Association, said he thought the legislative tack had "lost some steam" even before the proposed EPA changes.

"Members are finding out how difficult it is to reform or tweak" the mandate, Dinneen said during a Wednesday media call, adding that an outright repeal, as the American Petroleum Institute is advocating, "seems to be off the table."

API and other groups, however, said the EPA move generated momentum for the legislative approach.

"We think Congress needs to act and will act," Rob Green, executive director of the National Council of Chain Restaurants, said at a Wednesday event hosted by API. "The EPA ruling won't stop that."

In its proposed changes, the EPA cited concerns about the "blend wall," a term the oil industry has used to describe the complications refiners face in meeting the fuel mandate's accelerating targets while U.S. oil consumption declines because of the economic downturn and more efficient vehicles.

The oil industry says the drop in consumption would force refiners to do one of two things: pump out more E15 fuel — gasoline with 15 percent ethanol, compared with the standard 10 percent — to meet the mandate; or buy more renewable fuel credits, which it says caused the value of those credits to spike.

The EPA has said E15 is safe to use in cars made in 2001 or later, though it did give a nod to concerns about infrastructure — few E15 fueling stations and storage tanks exist — when it proposed changes to the blending targets.

Manufacturers that produce goods with smaller engines say the fuel is dangerous for their products, and most automakers won't cover E15-related engine damage.

"We are not comfortable dropping E15 in," said Patrick O'Connor, legislative counsel with the NAFA Fleet Management Association, which represents companies and governments that own vehicle fleets.

Mike Brown, president of the National Chicken Council, said the EPA's rationale for reducing the requirements didn't get at the heart of what concerns poultry producers — the impact of corn ethanol production on corn prices.

Brown said his industry has seen $8.8 billion worth of corn feed price increases since the mandate was expanded in 2007.

"My problem has not gone away, and I'm not going away from the Hill until it's fixed," he said.

But Matt Erickson, an economist with the American Farm Bureau Federation, said that record corn prices last year of more than $8 per bushel were attributed to widespread drought. He said corn production is expected to jump 30 percent to 14 billion bushels this year, pushing futures prices for corn to $4.32 per bushel.

The biofuels industry contends that deviating from the marks Congress established would spook investment in biofuels, hurting rural communities and thwarting development of next-generation fuels that are starting to come online.

In a Wednesday media call, Republican Iowa Gov. Terry Branstad — whose state is the largest corn ethanol producer in the nation — said the Obama administration was "caving in to Big Oil" by altering the renewable fuel standard.

"It's oil money behind all of this," Branstad said of the range of groups lining up to oppose the fuel mandate. "They have a lot of money and they have a lot of resources. And they've been able to fool a lot of people before, but I don't think they should be able to get by with doing it again."

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