Washington Insider-- Monday

By DTN's Washington Insider

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Senate Panel Set to Grill EPA, Army Corps on 'Waters of the U.S.'

A joint hearing Wednesday of the Senate Environment and Public Works and House Transportation and Infrastructure committees will examine the likely effects of the administration's proposed "Waters of the United States" (WOTUS) rule. EPA Administrator Gina McCarthy and Assistant Secretary of the Army for Civil Works Jo-Ellen Darcy will be the featured witnesses at the hearing where they will be questioned on the WOTUS rule that the two agencies jointly proposed last April. The agencies expect to issue the final rule as early as this April.

Republican leaders in both chambers indicated early in this session of Congress that they would seek to block the rule, calling it regulatory overreach and a federal attempt at controlling local land-use decisions.

The WOTUS rule would bring under federal jurisdiction a range of previously unregulated bodies of water as well as wetlands that affect the chemical, physical and biological integrity of larger, navigable downstream waters. The rulemaking's significance lies in its ability to "clarify" which waters and wetlands fall under the definition of "Waters of the United States." Once defined as WOTUS, the waters then would be subject to Clean Water Act jurisdiction, which, in turn, would trigger federal Clean Water Act requirements, such as permitting, state water quality certification and oil spill response planning.

Depending upon how the final rule is written, it has the potential to bring under federal regulation a significant number of additional acres. Senators are expected warn McCarthy and Darcy that they soon will introduce legislation that will prevent their agencies from issuing or administering the WOTUS rules.

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Goodlatte to Reintroduce Bill to Repeal Corn Ethanol Mandate

House legislation that would remove the renewable fuel standard's corn ethanol mandate is expected to be reintroduced in the House this week by Rep. Bob Goodlatte, R-Va., as part of an ongoing campaign by opponents of the requirement to revise the nation's biofuel energy provisions.

The legislation reportedly would cap the amount of ethanol allowed in gasoline at 10% and eliminate the corn ethanol blending mandate, leaving only the requirement for petroleum refiners to blend advanced biofuels –– such as biomass-based diesel and cellulosic ethanol –– into the fuel supply. In the previous Congress, a similar bill, also sponsored by Goodlatte, had 82 cosponsors.

Congressional opposition to the corn ethanol mandate could be stronger this year that previously was the case. Nonetheless, it currently appears unlikely that Congress will jettison the renewable fuels standard that favors corn ethanol, choosing instead to take the shorter step of modifying or "reforming" the mandate.

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Washington Insider: New Ethanol Fight

U.S. energy policies continue to feature renewable fuels, but have been increasingly under pressure for several months, or more. For the past two administrations, the assumption had been that practical, commercial cellulosic ethanol was just around the corner, so development funds were poured into that effort — the petroleum industry was mandated to “temporarily“ blend mandated amounts of grain ethanol into the gasoline supply.

Then, reality intruded. Commercial cellulosic ethanol does not appear to be really in the cards, at least not anytime soon. New, much cheaper sources of fossil fuel are appearing in U.S. markets and the mandated amounts of ethanol for blending have not jibed with the blending share requirements no matter how hard advocates flogged the issue.

And, increasingly, unintended consequences of shifting ag resources to fuel crept into the food and fiber system, creating early benefits for crop producers but also hardships for many livestock producers. The politics of dealing with those stresses have intensified, while captains of the ethanol juggernaut have been unwilling or unable to unravel most of them.

Now, as really cheap fossil fuels make it harder for renewable fuels to compete, the once elegant framework of U.S. renewable energy policies is increasingly seen as an artifact of the past, at least by opponents.

Last week, legislation that would remove the renewable fuel standard's corn ethanol mandate was promised in the House as opponents begin to launch a new push to alter energy provisions.

The renewable fuels standard (RFS) Reform Act, authored by Rep. Bob Goodlatte, R-Va., is expected soon, Beth Breeding, a spokeswoman for the congressman told the press. The legislation would cap the amount of ethanol allowed in gasoline at 10 percent and eliminate the conventional ethanol blending mandate, leaving only the requirement for petroleum refiners to blend advanced biofuels, such as biomass-based diesel and cellulosic ethanol, into the fuel supply. The measure had 82 cosponsors in the last Congress.

"The RFS needs fundamental reform, and we urge you to join us by cosponsoring legislation to accomplish this task," Goodlatte, Rep. Peter Welch, D-Vt., and other lawmakers said in a "Dear Colleague" letter sent to members of Congress. The lawmakers claim to be frustrated with the Environmental Protection Agency's ongoing delays in issuing the annual renewable fuel standard requirements and have vowed to change it this year.

The standard, expanded by 2007 energy law, requires 15 billion gallons of conventional corn ethanol and 21 billion gallons of advanced ethanol in the nation's motor fuel supply by 2022. That approach is opposed by refiners such as Chevron Corp. and ExxonMobil Corp. but supported by ethanol producers such as Archer Daniels Midland Co. and Abengoa Bioenergy.

Among the lawmakers who have vowed to take aim at the standard in the current Congress is Rep. Fred Upton, R-Mich., chair of the House Energy and Commerce Committee. Upton led an effort by other senior Republicans on the committee in the 113th Congress but failed after oil companies pushed to have the standard repealed, and ethanol producers said they didn't want any changes.

The standard required refiners and blenders to use 18.15 billion gallons of renewable fuel in 2014. More than 14 billion gallons of the total was to be met by the use of corn ethanol, a level set to increase in subsequent years.

Opponents argue the requirement to use corn for fuel has pushed up prices for food and livestock without providing the expected environmental benefits — a charge supporters are having difficulty challenging. "The federal government's creation of an artificial market for the ethanol industry has, quite frankly, created a domino effect that is hurting consumers," the lawmakers' letter said.

Part of the concern links back to EPA’s failure to define a renewable fuel standard rule for 2014 or 2015, although the agency now says it will issue rules for 2014, 2015 and 2016 this year. Still, this disarray leaves the policy increasingly vulnerable to opponents who now are expected to push hard to fundamentally change the system, Washington Insider believes

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(GH/CZ)

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