Anti-RFS bill in US Congress draws sharp fire from biofuels industry

From Washington comes the news that a group of four Democratic and Republican lawmakers said that they will introduce once again a RFS Reform Act bill, the latest in a series of bills aimed at eliminating markets for corn starch that compete with poultry and dairy interests.

The legislation is not yet available via Congress.gov, however, the RFS Reform Act that Goodlatte introduced in 2013 states:

RFS Reform Act of 2013 – Amends the Clean Air Act to revise the renewable fuel program. Requires “renewable fuel,” beginning on January 1, 2014, to be advanced biofuel.

Revises the renewable fuel standards by: (1) decreasing the volume of renewable fuel that is required to be contained in gasoline sold or introduced into commerce in the United States in 2014 through 2022; and (2) eliminating the separate advanced biofuel volume requirements for those years.

Requires the Administrator of the Energy Information Administration, in estimating the projected volume of cellulosic biofuel production in the next year, to determine for each cellulosic biofuel production facility: (1) the average monthly volume of biofuel produced by such facility based on the actual volume produced through October 31 of the current year, and (2) the estimated annualized volume of biofuel production for such facility for the current year. Requires the estimate of cellulosic biofuel projected to be sold or introduced into commerce in the following year to equal the total of the estimated annual volumes of cellulosic biofuel production for all such facilities.

Requires (currently, authorizes) the Administrator, in any year in which the Administrator reduces the applicable volume of cellulosic biofuel required in gasoline, to also reduce the applicable volume of renewable fuel and advanced biofuels required by the same (currently, by the same or a lesser) volume.

Prohibits the Administrator of the Environmental Protection Agency (EPA) from allowing the introduction into commerce of gasoline containing greater than 10-volume-percent ethanol. Nullifies waivers from requirements for new fuels and fuel additives that were granted before this Act’s enactment and that allow the introduction of such gasoline for use in motor vehicles.

Nullifies portions of the rule entitled, “Regulation to Mitigate the Misfueling of Vehicles and Engines with Gasoline Containing Greater Than Ten Volume Percent Ethanol and Modifications to the Reformulated and Conventional Gasoline Programs.”

Virginia’s Bob Goodlatte, Arkansas’ Steve Womack, California’s Jim Costa and Vermont’s Peter Welch are the co-sponsors.

The background

A similar bill introduced by Goodlatte in 2013 failed in the House.

The bill calls for the elimination of mandates to blend corn starch ethanol in gasoline, would repeal an EPA waiver that permits 15 percent blends of ethanol in passenger cars made after 2001, and would tie mandates for other biofuels to actual production volumes, rather than setting targets.

“We’re going full bore again with this Congress,” Goodlatte told Reuters, and he tipped to the business news wires ervice that he will also introduce a bill completely repealing the RFS in this Congress.

Goodlatte also introduced HR 1461 in 2013, the Renewable Fuel Standard Elimination Act, which died in committee. Womack’s H.R. 1482, the Renewable Fuel Standard Amendments Act, also died in the previous Congress.

The bill is aimed at eliminating or limiting the use of corn starch for biofuels, with the presumption that the loss of demand would cause corn prices to collapse and reduce costs for dairy cattle and poultry, which eat corn feed.

So, it essentially pits corn farmers against dairy and poultry farmers over who gets more value out of a pound of chicken or a gallon of milk. The bill is likely to be supported by oil-patch interests, who would like to limit competition for gasoline.

Bottom line, it’s an anti-competitive bill disguised as a pro-competition bill — since, on the surface, it elimates corn ethanol mandates that some lawmakers see as an unreasonable intrusion of a public iinterest nto the competition between private enterprises. But the practical impact — since transport fuel retail marketing is largely controlled through the petroleum supply chain — is to restrict competition at the pump, and thereby decrease competition for corn.

The bill’s future? Unlikly to make it out of committee, more unlikely to pass in the House, DOA in the US Senate and definitely a veto-drawing measure for President Obama’s pen.

Reaction from industry

Jeremy Funk, Communications Director, Americans United for Change

“You could safely say there is no bigger cheerleader for Big Oil in Congress than Bob Goodlatte.  This is the same Congressman who held a press conference last year shilling for Big Oil and calling for a repeal of the RFS as cleanup efforts were still underway after an entire tanker’s worth of crude oil spilled in his District. What Goodlatte didn’t mention was that repealing the RFS would inevitably lead to more dependence on dirty crude oil and more spills and oil-industry related disasters like that in Lynchburg.

“Make no mistake: Goodlatte’s bill is written by-and-for Big Oil and is as much an assault on Virginia jobs as it is on renewable fuels. The Renewable Fuel Standard pumps nearly $2 billion into Virginia’s economy every year and puts thousands of people to work, but Congressman Goodlatte wants to mess with success because he’s completely in the tank for Big Oil.  Goodlatte’s legislation is nothing but another handout for the big oil industry that already reaps $4 billion in pointless taxpayer subsidies every year.  This is all about helping Big Oil put their cheaper, cleaner renewable fuels competition out of business.”

“The RFS isn’t just good for Virginia’s economy, it’s good for the environment by cutting down on carbon pollution. It’s good for consumers who’ve saved on average $1.09/gallon at the pump.  And it’s good for national security by cutting down our nation’s dependence on oil from unstable regions overseas by 45 percent. Goodlatte may be a lost cause when it comes to renewable fuels after Big Oil has given him more than 135,000 reasons to keep his head in the sand. But Goodlatte’s constituents should really take with a grain of sand any of his claims that scrapping the RFS is somehow good for Virginia.”

Renewable Fuels Association CEO Bob Dinneen

“Today’s legislation may be familiar, but it is still a reckless paean to Big Oil. It is a callous effort that reneges on a government commitment upon which billions of dollars have been invested. As a direct result of the RFS, more than $30 billion has been invested in infrastructure and expanded production capacity, creating an industry that is responsible for nearly 400,000 jobs and contributes $44 billion to the GDP. Rep. Goodlatte would put all of that at risk to protect Big Oil’s monopoly, sending a dangerous chill through the investment community that will forever more question the government’s resolve.

“Moreover, the legislation is predicated on a false premise that the RFS is contributing to increased food and fuel costs when the exact opposite is true. Goodlatte clearly overlooks the fact that ethanol reduces the cost of gasoline at the pump while also contributing more than 39 million metric tons of high-protein animal feed fed to livestock and poultry here and abroad. Indeed, Rep. Goodlatte is introducing his bill on the heels of the largest corn crop in history, lowering the price of a bushel to less than what it was when the RFS was passed and less than the cost of production. This bill is a slap in the face to corn farmers across the country who responded to the RFS with increased production and yields. The result of this bill will be increased farm program costs and pain across rural America.

Tom Buis, CEO, Growth Energy

“This bill does nothing to address the critical policy goal of achieving U.S. energy independence, nor will it lower the price of food as the bill authors claim. Instead, it is a gift to special interest groups who are only concerned with maintaining their record profits. The RFS Reform Act is nothing more than a way for Big Oil to prevent market access to a higher octane, price competitive product, such as E15. While E15 is a voluntary choice for consumers and retailers, oil companies know that E15 will provide consumer savings and superior engine performance that cuts into their bottom line and they will do everything in their power to stop it. This legislation is a wish list for opponents of the RFS who want to kill the RFS and all the successes Americans have realized as a result of the policy.

“This proposal is also a gift to Big Food in their effort to extend their record profitability by blaming ethanol for food price increases. For the past two years, American farmers have produced record corn crops while receiving market prices that are now below their cost of production. This has provided an economic boon to the integrated U.S. livestock and chain restaurant industries that tout their profitability to their stakeholders while consumer food prices, led by the meat sector, continue to escalate. The RFS is the most successful energy policy this nation has enacted in the last forty years. It creates jobs and investment at home that cannot be outsourced, revitalizes rural economies, improves the environment and reduces our dependence on foreign oil.

“Any changes to the program would have a devastating effect, creating uncertainty in the marketplace and halting investment in new technologies for biofuel production. This so-called ‘reform’ bill is drafted to enrich a few special interests by ensuring that the fossil fuel industry retains its control over the transportation fuel marketplace by limiting market access and competition from products they don’t control while short-changing the American consumer.”

National Council of Chain Restaurants Executive Director Rob Green

“NCCR applauds Chairman Bob Goodlatte., Rep. Peter Welch, Rep. Steve Womack, and Rep. Jim Costa for introducing this important legislation to repeal the RFS corn ethanol mandate. This timely bill recognizes that the RFS is broken public policy and that Congress should act before the RFS does more damage to the U.S. economy.

“Our members, which include quick-service, fast-casual and table-service restaurants strongly support efforts to repeal the RFS mandate. As long as the RFS is law, it will continue to adversely affect America’s chain restaurants, their small business franchisees and their customers.

“We look forward to working with Chairman Goodlatte to enact legislation which ends the failed RFS mandate once and for all.”