Groups do last-minute jockeying on RFS rule — as Election Day nears

Source: Amanda Peterka, E&E reporter • Posted: Friday, September 12, 2014

Interest groups have launched a final push to influence the outcome of a controversial U.S. EPA proposal to lower the nation’s renewable fuel mandates.

The rule would for the first time scale back the amount of both corn-based ethanol and advanced biofuels that refiners must blend into petroleum gasoline and diesel. A final version is sitting at the White House Office of Management and Budget (Greenwire, Aug. 22).

The American Petroleum Institute, one of the most vocal critics of the renewable fuel standard, yesterday announced a new campaign that accuses the Obama administration of playing politics with the proposed rule. The group charges that the administration is using the rule to prop up Rep. Bruce Braley (D-Iowa) in his run for a Senate seat that’s key to helping Democrats retain control of the upper chamber.

API is asking that EPA maintain its proposed targets, which represent a 16 percent reduction in overall renewable fuels compared with the level Congress wrote into the renewable fuel standard for 2014. EPA has proposed to lower the requirements largely on the argument of the existence of a blend wall, or a 10 percent technical limit preventing more ethanol from being used in existing fuel infrastructure.

A coalition of biofuels supporters, on the other hand, is running a full-page advertisement in this weekend’sUSA Today warning that the rule as written would stymie the nascent cellulosic ethanol industry. The ad comes after advanced biofuels producers and Sen. Dick Durbin (D-Ill.) separately wrote letters this week expressing concerns about both the proposal’s target for advanced biofuels and the methodology used to calculate it.

EPA officials, including Administrator Gina McCarthy at an investors conference in New York City last week, have said that the final rule at OMB will mandate higher levels of renewable fuels given the increased gasoline demand since the rule was first proposed last November. But it’s still unclear just how different the final rule will be from the proposal, and interest groups plan on meeting with OMB officials in the coming weeks to try to sway opinion at the last minute.

Bob Greco, API’s director of downstream activities, said yesterday on a conference call with reporters that his group’s bottom-line message to the administration is that “the ethanol blend wall is real, and the administration can’t use gimmicks to avert it.”

API says it’s concerned that EPA appears to be relying on “specious reasoning” that flex-fuel vehicles — which run on up to 85 percent ethanol — are a potential solution to blend wall issues. Biofuels supporters have argued that more E85 use would expand the overall amount of ethanol that can be used in gasoline and diesel, but Greco said that E85 still represents much less than 1 percent of overall gasoline demand.

Reliance on E85 to get around the blend wall issue was among the “regulatory tricks” EPA may use to increase its targets in the final rule, Greco said. The overall goal, he added, appeared to be boosting the chances for Braley in Iowa.

Braley is in a tough race against Republican Joni Ernst for the seat of departing Sen. Tom Harkin (D). He has consistently and publicly pushed President Obama and EPA to raise the amount of renewable fuels in the controversial proposal. He has cast the battle over the standard as a choice between foreign oil and homegrown Iowan energy.

Braley’s opponent, on the other hand, has been more measured about her support for the RFS. Ernst says she supports the standard but on principle opposes mandates that pick winners and losers.

It’s not “unreasonable” that the administration could release a final rule shortly before the November elections that includes higher targets, a move that would allow Braley to claim credit for the increases, Greco said.

“We’re concerned about politics intruding on this,” Greco added. “This has gotten later and later. Frankly, EPA could have finalized this earlier in the year and been completely outside of the election cycle. But now it’s being dragged into the election cycle, it’s being dragged into election-year politics. That’s not the way to make this policy.”

API is running television and radio ads beginning this week inside the Beltway that urge members of the public to tell Obama to “stop playing politics. Fix the RFS.” Greco did not give the cost of the campaign but said that it was significant. He also said that API was in the midst of scheduling meetings with the Office of Management and Budget on the rule.

By law, EPA was supposed to finalize the proposal by Nov. 30 of last year. Biofuels supporters yesterday also said they suspected that politics were behind the lengthy delays in the issuance of the final rule.

“We’re shocked — shocked — that there’s gambling going on in this issue,” Jon Doggett, vice president of public policy at the National Corn Growers Association, said sarcastically yesterday on a conference call with reporters.

Biofuels supporters yesterday said they’re also concerned about McCarthy’s comments last week about the RFS and higher gasoline demand. The comments indicate that although EPA has increased the targets in the final rule that’s sitting at OMB, it’s still giving credence to the idea of a limit to the amount of renewable fuel that can be used in gasoline and diesel, said Brent Erickson, vice president of the environmental and industrial section at the Biotechnology Industry Organization.

Congress, Erickson said, intended for the renewable fuel standard to push biofuels past that limit through changes to fueling infrastructure and advances in technology.

“We found those comments to be disappointing,” Erickson said. “They are signaling that they are sticking with the flawed methodology.”