Citing drought, livestock groups push bill to limit production of ethanol

Source: By Zack Colman, • Posted: Tuesday, July 24, 2012

Livestock producers are backing legislation that would let the Environmental Protection Agency (EPA) limit the amount of corn used for biofuels.

The groups and their allies in Congress say the restrictions are necessary to lower costs during times of low supply, but they are running into opposition from ethanol supporters.

The bipartisan bill (H.R. 3097), sponsored by Reps. Bob Goodlatte (R-Va.) and Jim Costa (D-Calif.), would let the EPA drop corn ethanol production quotas by as much as 50 percent depending on a ratio of available corn relative to use.

Costa said he is trying to get the House Energy and Commerce Subcommittee on Energy and Power to pick up the bill. With the National Weather Service predicting drought conditions could last until October, he said House GOP leaders might be forced to act.

“We’ll see what happens in the next week or two,” Costa said. “But I think pressure on Republicans is going to continue to help.”

Proponents say the EPA needs more flexibility in the renewable fuel standard (RFS), which requires 15 billion gallons of corn-based ethanol production by 2036, to respond to changing corn projections.

“The federal government is mandating that the ethanol industry gets the corn first, and that everyone else gets what’s left over,” Kristina Butts, executive director of legislative affairs with the National Cattlemen’s Beef Association, told The Hill on Monday.

Opponents of the bill argue the RFS builds in plenty of maneuverability regarding corn harvests. The bill also will make it more difficult for corn growers to decide how much to plant.

A drought this year has pummeled corn yields, driving up long-term prices that could hurt cattle ranchers as corn feed becomes more expensive. The EPA-administered RFS has drawn flack from conservatives in recent weeks who say it artificially creates a market for a product that wouldn’t otherwise succeed.

If House leadership cannot summon the will to call the farm bill for fear of forcing GOP freshmen to make politically difficult votes, Costa said his bill could offer some relief for rural America.

“In light of the drought affecting crops nationwide, I think it’s time to review the fuel standards,” he said.

The Cattlemen’s Association is targeting lawmakers who want a more “market driven” process for selling ethanol to support the bill, Butts said. It also is looking toward senators who last year voted to kill a 45-cent subsidy for every gallon of ethanol blended into traditional fuel.

The basic flaw in the RFS is that it picks winners and losers, Butts said.

“They’re artificially propping up one industry over another when you have many interests using corn,” she said.

“If the drought situation continues to get worse, you’re going to continue to see this conversation elevated in Washington,” she continued. “It’s really getting to be a scary situation out in the Midwest.”

The EPA has deflected calls to change its RFS policy on economic grounds before.

In 2008, the EPA rejected a petition from Texas Gov. Rick Perry asking for a waiver from the RFS because he said complying with it hurt the economy. The EPA denied the waiver because the RFS contributed to, but did not cause, those economic conditions.

Andrew Walmsley, director of congressional relations with the American Farm Bureau Federation, said the bill is more about bringing down the RFS than securing food supplies. He said the drought has merely offered another attack avenue against the RFS.