Energy

Ethanol Lobby Sues Gov’t To Get More Subsidies

REUTERS/JIM YOUNG

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Michael Bastasch DCNF Managing Editor
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A coalition of ethanol lobbying groups filed a lawsuit against the Environmental Protection Agency (EPA) Friday to get the agency to mandate refiners purchase and blend more biofuels into America’s fuel supply.

Ethanol lobbyists are trying to get a federal court to overturn the EPA’s use of its “waiver authority” to mandate ethanol blending levels lower than what Congress set in a George W. Bush-era law forcing refiners to blend ethanol into fuel supplies — a massive financial benefit for corn growers and ethanol producers.

“Among other things, the petitioners intend to demonstrate that EPA’s interpretation of its general waiver authority under the Renewable Fuel Standard statute was contrary to the statute,” the ethanol lobbyists wrote in a fact sheet on their lawsuit.

The ethanol industry argues EPA can’t set biofuel blending requirements lower than what Congress mandated for “demand” reasons, but only for “supply” reasons. Refiners have been resistant to blending more ethanol into the fuel supply as blend levels higher than 10 percent could damage engines and fuel tanks.

Petroleum refiners were quick to come out against the ethanol-backed lawsuit against EPA, saying the agency was well within its authority to tailor the ethanol mandate to current market conditions.

“AFPM fully supports EPA’s decision to use its waiver authority to adjust the RFS volume mandates to reflect the E10 blend wall, vehicle and engine warranty restrictions, and overwhelming consumer rejection of higher-ethanol fuels,” Chet Thompson, president of the American Fuel & Petrochemical Manufacturers, said in a statement.

“This lawsuit is yet another attempt by the ethanol industry to use government mandates to force higher percentage ethanol blends upon consumers,” Thompson added.

For years, oil companies and refiners have lobbied Congress to pass legislation to repeal or reform the ethanol mandate, or Renewable Fuel Standard (RFS). Refiners dislike the RFS because it forces them to buy ethanol or fuel credits from producing companies and then blend ever-increasing amounts of it into U.S. fuels.

It wasn’t long ago that refiners hit what’s called the “blend wall” — the limit at which ethanol can be safely blended into the fuel supply. When refiners hit the “blend wall” in 2013, biofuel credit prices skyrocketed more than 1,000 percent during the first six months of that year.

“It is long overdue for Congress to repeal this broken program and for the biofuels industry to stand or fall on its own, without government subsidies,” Thompson said. “But in the meantime, it is clear that EPA has the authority to adjust unrealistic mandates to account for market realities.”

The EPA has come under intense scrutiny from environmentalists for mandating ethanol, mostly from corn, be blended into transportation fuels. Ethanol proponents have longed claimed ethanol is a more environmentally-friendly alternative to gasoline, but environmentalists are becoming skeptical that ethanol is actually better for the environment.

The EPA’s inspector general is now looking into whether or not the agency is accurately representing the environmental impacts of ethanol after a number of studies came out this year and last claiming ethanol harms air quality and damages car engines.

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