Branstad: EPA chief misled ethanol producers, farmers

WASHINGTON – As the White House moves closer to a decision on how much ethanolshould be included in the gasoline supply, Iowa Gov. Terry Branstad charged the head of the agency overseeing the mandate with being misleading in her support for renewable fuels.

In an interview, Branstad said Gina McCarthy, head of the Environmental Protection Agency, promised during an appearance at the Iowa State Fair in August of 2013 that she was supportive of renewable fuels and was focused on repairing strained relations between the farming community and the regulatory agency. It was one of her first speaking engagements after taking the job a month earlier.

Instead, the EPA proposed a few months later cutting how much ethanol must be blended into the country’s gasoline supply as part of the Renewable Fuel Standard in 2014, and has since delayed announcing a final decision. As a result, ethanol and other agricultural supporters believe she has failed to follow through on her pledge, Branstad said. The seven-year-old Renewable Fuel Standard requires refiners to buy alternative fuels made from corn, soybeans and other products to reduce the country’s dependence on foreign energy.

“Gina McCarthy misled us when she said she was supportive of renewable fuels and we had every reason to believe that we’re going to get a fair shake out of the EPA. We feel that we’ve haven’t,” Branstad said. “I don’t think they realize the significant damage they’re doing to the Midwestern agriculture economy.”

Iowa is the nation’s leader in renewable fuels production. It has 42 ethanol refineries capable of producing more than 3.8 billion gallons annually and 12 biodiesel facilities with the capacity to produce nearly 315 million gallons annually.

EPA spokeswoman Liz Purchia said the agency disagreed with Branstad’s comment. She said the United States is using more biofuels than ever and Iowa has played a major role in that growth.

“The agency’s overarching goal is to put the (Renewable Fuel Standard) program on a path that supports continued growth in renewable fuels over time,” Purchia said. “But it’s important to remember that RFS is one piece in an overall comprehensive strategy to move this industry forward.”

The EPA first proposed last November sharply cutting ethanol produced from corn to 13 billion gallons compared to 14.4 billion gallons set by Congress for this year. The agency said the marketplace could not absorb the amount of ethanol that had been mandated in the 2007 law. While White House officials, including Agriculture Secretary Tom Vilsack, have said the EPA will likely restore at least some of the proposed cuts to the mandate when it’s finalized later this fall, ethanol supporters say the damage already has been done.

Branstad and other backers of the renewable fuel say the proposed reduction and delay in announcing a final rule have contributed to the drop in corn prices that now are hovering around $3.30 a bushel — below the cost of production for some farmers. In 2012, corn prices were above $8 a bushel as much of the Corn Belt sweltered under its worst drought in decades.

Last week, Branstad and Lt. Gov. Kim Reynolds spoke with Shaun Donovan, director of the Office of Management and Budget, the agency tasked with vetting proposed regulations such as the annual ethanol blending requirement. During the 10-minute phone call they emphasized to him the damage to the state’s economy. In Iowa, Branstad estimated the financial damage has been “billions of dollars.”

The EPA’s failure to fully back the mandate, critics say, has thwarted investment in ethanol made from corn and plant waste; discouraged farmers from buying new equipment; and resulted in jobs not being created in rural economies. The delay also has made it difficult for ethanol producers and companies that blend the renewable fuel into gasoline to plan for a rule that is several months late being put in place.

“Those are pretty strong words (from Governor Branstad),” said Chad Hart, an Iowa State University associate professor of economics. “Here you see the governor’s frustration that it has taken this long, that(it) is basically a year behind. I think it does require some stronger language. You would like to see things move quicker than this.”