Lobbyists swarm D.C. as EPA mulls cutting biofuels mandate
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 testimony.
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 become.
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 Institute.
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