U.S. representatives discuss RFS; senators request RFS waiver

By Anduin Kirkbride McElroy | April 08, 2008
Web exclusive posted May 8, 2008 at 4:19 p.m. CST

The U.S. House Subcommittee on Energy and Air Quality Hearing met May 6 to discuss issues, implementation and opportunities for the new renewable fuels standard. The Energy Independence & Security Act of 2007, which was passed and signed into law in late December, increased the renewable fuels standard (RFS) to 36 billion gallons per year by 2022. It differentiates between starch-based ethanol and other feedstock sources, capping conventional biofuel (corn-based ethanol) at 15 MMgy in 2015, and then advanced biofuels are required to meet the remaining requirement.

After hearing prepared testimony, committee members grilled experts from the U.S. EPA, Natural Resources Defense Council, Renewable Fuels Association, National Petrochemical and Refiners Association, KL Process Design Group LLC, Grocery Manufacturers Association, National Corn Growers Association, POET LLC and Oxfam America. Issues included ethanol's energy balance, eliminating the ethanol import tariff and food prices.

As part of the hearing, ranking committee member Rep. Joe Barton, R-Texas, issued a statement that corn-based ethanol should be excised from the RFS. "The renewable fuel mandate enacted just last December diverts vast acreage from food production to fuel production," Barton said. "It also explains the spike in corn prices from $2 a bushel just a couple years ago to the record price of over $6 a bushel last month. Farmers who had grown wheat to feed a growing nation and a hungry world are switching to corn because we've legislated it into profitability. To accomplish a rational energy and food policy, I believe we need to excise corn-based fuel from the renewable fuel mandate altogether. Instead we should focus on cellulosic ethanol, coal-to-liquid, butanol, and compressed natural gas. All these fuels would alleviate our dependence on unreliable foreign energy without squeezing our food supply."

Barton's statement is similar to one issued May 2 by 24 Republican senators. Sen. Kay Bailey Hutchison, R-Texas, Sen. John McCain, R-Ariz., and 22 other Republican senators sent a letter to U.S. EPA Administrator Stephen Johnson, asking him to begin the process of examining alternatives to the renewable fuel standard included within EISA.

The letter said the renewable fuel amounts required in the bill - 15 billion gallons of ethanol and 1 billion gallons of biodiesel by 2015 - would severely impact food and feed prices. "To meet this requirement, 30 percent of our corn crop and our vegetable oils will have to be diverted into our fuel supplies," the letter said.

The senators said the "food-to-fuel mandates" frustrate consumers and animal agriculture producers, and they expressed concern that such mandates and subsidies have contributed to higher domestic and global food prices. While the letter acknowledged that they may not be the only cause of high food prices, it said they are the only factors that can be reconsidered in light of changing circumstances.

"Congress gave the EPA authority to waive all or portions of these mandates, as well as authority to structure the mandates for the benefit of all Americans," the letter read. "It is essential for the EPA to respond quickly to the consequences of these mandates. Congress made the mandates in the EISA different from existing mandates to provide flexibility and to encourage innovation in advanced and cellulosic fuels. We believe today's circumstances merit the use of this flexibility We urge you to take the forgoing into consideration as part of your current rule making process and ask that you provide us with a status report at your earliest convenience."

Also signing the letter were Sens. Wayne Allard, R-Colo.; John Barrasso, R-Wyo., Robert Bennett, R-Utah, Richard Burr, R-N.C., Susan Collins, R-Maine, Bob Corker, R-Tenn., John Cornyn, R-Texas, Mike Crapo, R-Idaho, Jim DeMint, R-S.C., Elizabeth Dole, R-N.C., John Ensign, R-Nev., Mike Enzi, R-Wyo., Lindsey Graham, R-S.C., Orrin Hatch, R-Utah, James Inhofe, R-Okla., Johnny Isakson, R-Ga., Lisa Murkowski, R-Ark., Richard Shelby, R-Ala., Ted Stevens, R-Alaska, John Sununu, R-N.H., David Vitter, R-La., and Roger Wicker, R-Miss.

When the U.S. Senate passed its version of EISA in June 2007, only 27 senators voted against the bill, and seven didn't vote. Thirteen of the senators who voted no also signed onto this letter to the EPA. Of the remaining 11, Sens. Collins, Corker, Crapo, Ensign, Murkowski, Stevens and Sununu previously voted for EISA; Sens. McCain and Shelby didn't vote on the bill, and Sens. Wicker and Barrasso were not in the Senate at the time.

Long-time ethanol advocate, Senator Richard Lugar, R-Ind., did not sign the letter. According to Press Secretary Andy Fisher, Sen. Lugar would not sign on to the letter because the legislation provides procedures for when a waiver is appropriate. "The legislation has a procedure for waivers in it," Fisher told Ethanol Producer Magazine. "The expectation from lawmakers would be that the administration would follow that procedure."

Text of the letter:

May 2, 2008

The Honorable Stephen Johnson
Environmental Protection Agency
Ariel Rios Building
1200 Pennsylvania Avenue, N.W.
Washington, DC 20460

Dear Administrator Johnson:

We are writing to convey the frustrations of consumers and animal agriculture producers about the consequences of food-to-fuel mandates that the U.S. Environmental Protection Agency (EPA) is currently implementing and to inquire about the pending rule-making process for the Energy Independence and Security Act of 2007 (EISA).

EISA essentially requires fuel marketers to blend 15 billion gallons of corn ethanol and directs 1 billion gallons of bio-diesel into the nation's fuel supplies by 2015. To meet this requirement, 30 percent of our corn crop and our vegetable oils will have to be diverted into our fuel supplies, severely impacting food and feed prices. Congress gave the EPA authority to waive all or portions of these mandates, as well as authority to structure the mandates for the benefit of all Americans. We believe the EPA should begin the process of examining alternatives that ease the severe economic and emerging environmental consequences that are developing in America as a result of the mandate.

We are very concerned that food-to-fuel mandates and subsidies have contributed to higher domestic and global food prices. According to USDA, 25 percent of America's corn crop was diverted to produce ethanol in 2007, and 30 to 35 percent of our corn will be diverted in 2008. This problem will only be compounded as we move towards 2015 with ever increasing mandates. Further, farmers are supplanting other grains with corn, thereby, decreasing supply and increasing prices of numerous agriculture products. Although many factors may contribute to high food costs, food-to-fuel mandates are the only factors that can be reconsidered in light of changing circumstances.

American families are feeling the financial strain of these food-to-fuel mandates in the grocery aisle and are growing concerned about the emerging environmental concerns of growing corn-based ethanol. It is essential for the EPA to respond quickly to the consequences of these mandates. Congress made the mandates in the EISA different from existing mandates to provide flexibility and to encourage innovation in advanced and cellulosic fuels. We believe today's circumstances merit the use of this flexibility.
The Bureau of Labor Statistics reports that food inflation is rising by 4.9 percent and other studies predict that food inflation could increase by 7 to 8 percent in the next few years. We are concerned that inflationary pressure on food will only escalate in the coming months and could be further complicated by severe weather. We urge you to take the forgoing into consideration as part of your current rule making process and ask that you provide us with a status report at your earliest convenience.
Sincerely,

Kay Bailey Hutchison, R-Texas
John McCain, R-Ariz.
Wayne Allard, R-Colo.
John Barrasso, R-Wyo.
Robert Bennett, R-Utah
Richard Burr, R-N.C.
Susan Collins, R-Maine
Bob Corker, R-Tenn.
John Cornyn, R-Texas
Mike Crapo, R-Idaho
Jim DeMint, R-S.C.
Elizabeth Dole, R-N.C.
John Ensign, R-Nev.
Mike Enzi, R-Wyo.
Lindsey Graham, R-S.C.
Orrin Hatch, R-Utah
James Inhofe, R-Okla.
Johnny Isakson, R-Ga.
Lisa Murkowski, R-Ark.
Richard Shelby, R-Ala.
Ted Stevens, R-Alaska
John Sununu, R-N.H.
David Vitter, R-La.
Roger Wicker, R-Miss.