(Repeats to widen distribution)
By Cezary Podkul
WASHINGTON Dec 5 Industries with millions of
dollars at stake over the U.S. government's plan to lower the
amount of biofuel that must be used in 2014 will air their
grievances on Thursday in one of the most divisive policy
debates of the year.
The Environmental Protection Agency (EPA) has been flooded
with interest from stakeholders ahead of what could be a raucous
meeting about the Renewable Fuel Standard, or RFS.
The meeting comes nearly three weeks after the Obama
administration proposed slashing how much renewable fuel -
mostly corn-based ethanol - needs to be blended into the U.S.
fuel supply, bowing to pressure from the petroleum industry.
The move was a historic reversal that followed intense
lobbying by the petroleum industry and a coalition of groups
ranging from chain restaurants to lawn-mower manufacturers.
Some 144 industry representatives are scheduled to testify
on Thursday in a marathon hearing that will feature at least 24
separate panels and last for 12 hours at a suburban Washington,
Among those assigned to speak will be representatives from
the biofuels industry, anti-hunger groups, bakers, petroleum
refiners, small-engine manufacturers, lawmakers and the governor
of Iowa, the largest U.S. corn-producing state.
"I've never seen one like this. It just shows you how
strongly folks feel," said Kris Kiser, president of the Outdoor
Power Equipment Institute, which represents manufacturers of
chainsaws and other power equipment.
Thursday's sprawling event shows the intense interest in the
future of biofuels - and caps a year of fierce lobbying that has
raged in Washington between pro- and anti-ethanol interests. An
unprecedented leak of the EPA's controversial proposal weeks
ahead of its official release further inflamed the debate.
The 2007 law mandated a total of 18.15 billion gallons of
renewable fuel blending next year. The EPA's proposal requires
just 15.21 billion gallons.
The EPA has warned that the country is approaching a point
where the RFS would require the use of more ethanol than can be
blended into gasoline at the 10 percent level that dominates the
U.S. fueling infrastructure.
Refiners have said this so-called "blend wall," if left in
place, would force them to export more fuel or produce less
gasoline, leading to shortages and higher prices at the pump.
The use of a higher, 15 percent ethanol blend, known as
E-15, is a big part of the debate. The EPA has declared E-15
safe for cars, SUVs and light trucks built from 2001 forward,
now the majority of the U.S. fleet. But refiners say the blend
risks damage to car engines, as well as chainsaws, boats and
The EPA proposed cutting the corn ethanol portion of the
2014 mandate from the 14.4 billion gallons called for by law to
about 13 billion. Based on projected gasoline demand, that level
of ethanol use would be slightly less than 10 percent of total
U.S. gasoline consumption.
A public comment period for its proposals will run through
late January, and a final rule could take months after that.
CORN PRICES AT RISK
Ethanol supporters warned ahead of Thursday's meeting that
the lower mandate could seriously hurt U.S. corn prices
and trigger job losses across rural America.
"The decision the EPA is going to make will have dramatic
implications on the economic viability of communities all across
this Midwest agricultural heartland," Iowa Governor Terry
Branstad said on call with reporters that previewed his planned
Cutting the mandate could cost 45,000 jobs nationally, said
Branstad. Biodiesel producers, who face a two-year freeze on
production mandated by the RFS, have also warned of layoffs.
"There will be dozens and dozens and dozens of
bankruptcies," said Stu Lamb, chief executive of Viesel Fuel, a
Florida biodiesel manufacturer who warned he could go out of
business if the EPA proposal is enacted.
CHAINSAWS AND CHAIN RESTAURANTS
But across Washington on Wednesday, lobbyists previewing
their arguments in favor of cutting the mandate underscored how
diverse the opposition to rising ethanol requirements has
Meat producers, including turkey and beef groups, have
complained about the billions of bushels of corn diverted to
fuel production from animal feed, driving up their costs.
"Since its inception in 2007, biofuel mandates have been a
primary catalyst for rising food input costs - including corn,
up 48 percent and soyoil, up 36 percent," food industry analyst
Bill Lapp, president of Omaha-based Advanced Economic Solutions,
said in prepared testimony.
Those higher costs - some $12 billion over seven years - are
ultimately passed on to the consumer, Lapp said.
"This issue affects chainsaws and chain restaurants," Rob
Green, executive director of the National Council of Chain
Restaurants, said at a lunch hosted by the American Petroleum
Institute, the oil industry's top lobbying group.
Green said he ended up on the same side of the issue as the
oil industry because the heightened demand for corn resulting
from the mandate was driving up feed prices, which in turn get
passed on to restaurant owners.
The broad interest in the issue indicates that, whatever the
EPA decides, a legal challenge is sure to follow.
"I fully expect that . . . the policy will be litigated,"
said Jack Gerard, chief executive of the American Petroleum
(Reporting by Cezary Podkul; Editing by Ros Krasny and Lisa