The newest catchphrase being bandied about the halls of regulatory buildings in Washington D.C. is the “ethanol blend wall.” The term represents a growing struggle between the lobbying efforts of the American Petroleum Institute and the Agricultural Retailers Association. At issue is the 2007 Renewable Fuel Standard congressional mandate that calls for the increased use of ethanol in fuel blends.
According to oil industry lobbyists, however, drops in consumer gas usage during the past six years makes the further adoption of ethanol blends problematic. The Environmental Protection Agency (EPA) appears to be backing that claim by dialing back on 2014 biofuel targets from 18.15 billion gallons to only 15.21 billion gallons in what is seen as an oil industry victory.
According to ethanol proponents, the oil industry has been chaffing at the potential loss of market share since the law took effect, and this legal challenge represents just the latest attempt to turn back the renewable energy clock. Oil industry proponents counter that the drop in domestic demand for gasoline threatens to push past the 90/10 window that calls for 10 percent of all refined fuel to contain ethanol. They argue that, under current targets, the 10 percent window will quickly expand to 15 percent, which will prove problematic for retail service stations that don’t have the infrastructure to dispense higher blends, and argue that the majority of automobile warranties only cover 10 percent ethanol blends. Whether an auto warranty from such companies as Carchex would be invalid if the blend wall moves past 10 percent is still unclear, but ethanol proponents dispute the oil industry’s findings.
In response to oil industry efforts to roll back 2014 target numbers, Renewable Fuels Association president, Bob Dinneen, announced “Any plan to roll back the targets under the guise of addressing the blend wall would be patently unlawful.”
In the past, the Renewable Fuels Association has asserted the belief that the EPA has enough flexibility to make changes to reflect market realities without having to amend the law in the U.S. Congress. It is this flexibility that is at the heart of the current dispute, as partisans on both sides seek to influence the environmental watchdog agency.
Follow the Money
In a town where money talks, both sides have attempted to advance their legislative agenda through lobbying efforts. All indications suggest that the much larger and well funded oil industry is winning the battle. According to OpenSecrets.com, a consumer watchdog group, ethanol supporters put up $640,000 for federal lobbying efforts in 2013 and registered $1.3 million in 2012. Conversely, the principle oil industry advocate, the American Petroleum Institute, put in $4.3 million, with $7.3 million in lobbying efforts in 2012.
With the stakes so high, we can expect both to vigorously defend their positions among a backdrop of declining fuel demands, and heightened efforts by oil industry lobbyist to slash the estimated blend wall targets.
If you’ve ever worked in a government regulated industry, you know that the amount of paper that accumulates due to forms, data sheets, policies, SOPs, and quality manuals is monumental. Besides that, paper is constantly being printed and thrown away so that only the most up-to-date documents are being used. In a government regulated industry there are enough rules and procedures to comply without having to worry about whether or not your documents are current during an audit.
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