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Ethanol vortex hits

On one of the coldest days of the year, ethanol was generating heat Thursday, both in the Midwest and in Washington, D.C., where opponents to an EPA proposal to trim the biofuels mandate has whipped up a storm of opposition.

In Des Moines, Iowa, the state's governor, Terry Branstad, a Republican, convened a day-long bipartisan "Hearing in the Heartland" that drew state officials from Indiana to Nebraska and farmers and biofuel industry representatives from Missouri to Minnesota.

Branstad said he and others had asked the EPA to hold a hearing on its proposed rule that trims the Renewable Fuel Standard by almost 3 billion gallons from the level expected in the 2007 energy law. The smaller RFS also has the effect of lowering the mandate for corn ethanol from 13.8 billion gallons in 2013 to about 13 billion this year.

"We asked for one here right at ground zero in the Heartland. They chose not to do it," Branstad said of his request to EPA. "That's why we're having one on our own.

In Washington, a group of 31 senators released a letter they sent to EPA Administrator Gina McCarthy yesterday, protesting that the rule will hurt the nation's energy security, environment, and economic growth, especially in rural areas.

"Congress passed the RFS to increase the amount of renewable fuel utilized in our nation’s fuel supply. The administration’s proposal is a significant step backward – undermining the goal of increasing biofuels production as a domestic alternative to foreign oil consumption,” the senators wrote. "Further, the proposed waiver places at risk both the environmental benefits from development of advanced biofuels and rural America’s economic future."

A similar letter from 30 members of the House went to McCarthy last week.

Thursday, the National Corn Growers Association thanked members of both parties who led the effort.

"We especially appreciate the leadership of Senators Richard Durbin (D-IL), Charles Grassley (R-IA), Al Franken (D-MN), and John Thune (R-SD), and Representatives Kristi Noem (R-SD) and Cheri Bustos (D-IL), for encouraging their colleagues to sign these letters," NCGA president, Martin Barbre, said.

The letter from members of the House said that "the significant reduction in renewable volume obligations under this proposed rule could destabilize the renewable fuel industry and send the wrong message to investors. This risks jobs and threatens the development of advanced and cellulosic biofuels that bring higher-level ethanol and biodiesel blends to consumers; 75% of the current vehicle fleet is approved to operate on E15."

The messages in Des Moines were similar.

"It's estimated the EPA proposal would cost 45,000 jobs," Branstad said. "We're trying to create jobs, not destroy them, in this country."

Indiana's soy biodiesel industry would be hurt as well as its ethanol producers, said that state's Lt. Governor, Sue Ellspermann, who also serves as the state's agriculture secretary.

"This proposal is backtracking on the accomplishments made in the past 10 years," she said.

Several testifying in Des Moines said that even when the EPA's proposal was leaked to the media last November, it had an effect on the industry.

Aaron Schlenker, senior merchandising manager for ADM in Cedar Rapids, Iowa, said that the lower prices for ethanol should be incentivizing the sale of higher blends of ethanol by gasoline retailers.

"We were very close to that last fall," he said. Now, if the EPA rule holds up, it will set a precedent that would make it easier for EPA to waive the mandate in the future, he said.

Ben Steffen, a dairy and corn farmer from Humboldt, Nebraska, said that the lower RFS could reduce demand for corn by 500,000 bushels this year, and that since the lower RFS was leaked last November, corn futures have fallen by 5%.

Under the 2007 energy law, "a 10% ethanol blend was never supposed to be the only blend in the fuel market," he said.

The testimony from the Des Moines hearing is being sent to EPA, which has set next Tuesday, January 28, as the deadline for submitting comments. Many ethanol and ag groups have simplified the process of sending a letter to EPA. Here's the NCGA Web page for comments.

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