CAMPAIGN 2014

EPA extension of RFS deadline 'a gift package' for Braley in Iowa?

The Obama administration on Friday may have handed Rep. Bruce Braley (D-Iowa) a needed leg up in the race for a key Senate seat in the heart of ethanol country.

On Friday, U.S. EPA extended by three months the June 30 deadline for refiners to meet 2013 renewable fuel blending requirements. The action essentially ensures that the agency will not release a controversial final rule setting the 2014 requirements until late summer, industry watchers say -- right when Braley is in the thick of campaigning for the seat of retiring Sen. Tom Harkin (D-Iowa).

EPA's renewable fuel standard proposal for 2014 called for steep cutbacks in the amount of ethanol and advanced biofuels that refiners must blend into petroleum this year. Braley has been vocally opposed to the rule and has for months called on the Obama administration to raise the targets.

EPA's final rule is widely expected to call for slightly higher ethanol and advanced biofuel targets, and delaying the rule's release to later in the summer could allow Braley to claim credit for influencing the White House to raise the targets just a couple of months before the November elections.

"A release closer to or during the August congressional recess could bode well for Braley," said ClearView Energy Partners LLC in an analysis. "Braley could campaign at home arguing that his efforts resulted in increased targets for the largest biofuel-producing state."

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Braley is key to Democrats' chances of retaining the Senate in the upcoming November elections. He will face Republican Joni Ernst, a state senator and lieutenant colonel in the Iowa Army National Guard who cruised to victory in her primary last week.

A poll of likely voters conducted last week by Loras College found that Ernst was leading Braley by nearly 6 points. Other polls have found Braley and Ernst to be neck-and-neck.

In order to win, Braley will need to show that he has the Obama administration's ear on issues that are important to Iowans, said Craig Robinson, founder and editor in chief of The Iowa Republican, a political newsletter. The renewable fuel standard is among the top issues on that list.

"It's one thing to have the right position on an issue. It's another thing having the weight and ability to effectively lobby for legislation that benefits your state," Robinson said. "I think it's important for him to show that he can be an effective advocate for Iowa issues like this in the Senate."

The Obama administration released its proposed 2014 renewable fuel standard rule in November. For the first time, the rule called for a decrease in the amount of ethanol and advanced biofuels that refiners must use in 2014 compared to both last year's production levels and the targets written into the 2007 statute that created the RFS. EPA justified the rule on the grounds that there are limits to the amount of renewable fuel that can be used in cars and fueling infrastructure (E&ENews PM, Nov. 15, 2013).

The proposed rule set off a groundswell of opposition in rural America and among RFS supporters in Congress. According to the Renewable Fuels Association, EPA received tens of thousands of public comments in opposition to the rule, mostly from the Midwest.

"We certainly have a lot of supporters not only in rural areas, but across the country, and a lot are up for re-election," said Anne Steckel, vice president of federal affairs for the National Biodiesel Board. "It would seem that that it would be very important for the administration to listen to what those folks are saying when they're in tough races."

Nowhere has the opposition been fiercer than in Iowa, where more ethanol is produced than anywhere else in the country and where renewable fuels are a rural pocketbook issue more than anything else. The $5.6 billion industry, which represents about 4 percent of Iowa's gross domestic product, has helped revitalize rural towns and contributed to record good times for farmers.

"It's not just the ethanol industry and the farms, but all the vendors and suppliers and buyers that deal with both of those industries, everything from tractor manufacturing to seed corn to enzyme companies to the transportation sector to local retailers in those communities," said Tom Buis, CEO of ethanol trade group Growth Energy, of the industry's economic impact.

Iowans saw the value of their agricultural products increase more than 50 percent between 2007 and 2012, from $20.4 billion to $30.8 billion, according to the latest census of agriculture released by the Agriculture Department. Crop sales increased 68 percent during that time.

"People vote on pocketbook issues. They always have," Buis said. "They're the biggest driver of votes. Sure, I think [the rule is] going to have political implications out there."

Braley has publicly been in the midst of the EPA proposal backlash since the beginning. He's signed onto several letters urging the administrator to reconsider and to meet with Midwestern lawmakers. He's met with EPA Administrator Gina McCarthy over the proposal and testified at the agency's public hearing on the standard.

He helped VoteVets.org, a progressive veterans organization, deliver more than 110,000 signatures to EPA opposing the rule.

On Friday, Braley penned a letter to EPA's inspector general asking the agency to investigate claims that the White House had given undue weight to lobbyists for Delta Air Lines Inc. and the Carlyle Group in proposing to roll back the standards.

"If anyone lobbied behind the scenes in an inappropriate way to roll back the RFS we deserve to know," Braley said in a statement. "Biofuels have meant tens of thousands of Iowa jobs, pumped billions into the Iowa economy, and moved the whole country closer to energy independence -- but it has deep-pocketed opponents and it's important to know if any of them acted inappropriately."

But up until now, Braley and other Democrats in biofuel-producing districts haven't been able to capitalize as much on support for renewable fuels as they otherwise would have been able to because of the proposed rule.

"It is a huge missed opportunity for the Obama administration and Democrats to lead on a front-burner economic issue in that region, particularly as Republicans equivocate between supporting local jobs and taking an ideological line against government programs," an industry source said. "Democrats like Bruce Braley could really be separating themselves on this, but this RFS proposal is really weighing them down."

The extension of the 2013 compliance period announced Friday could change all that (E&ENews PM, June 6). Stephen Brown, vice president and counsel for Tesoro Corp., said that delaying the 2014 final rule is clearly a political choice by the White House.

"The short-term priority is getting Bruce Braley elected to the United States Senate. By delaying the promulgation of the final rule, moving the final rule across the finish line, they hope to present Mr. Braley with this gift package he can campaign on," Brown said. "The long-term goal of the White House is pretty evident: not to do anything that jeopardizes Hillary Clinton's chances in the Iowa caucus in 2016."

EPA did not respond to a request for comment on the extension and when the White House Office of Management and Budget will begin its review of the final rule.

In its final rule, EPA is expected to increase the corn ethanol target from 13.01 billion gallons to as much as 13.6 billion gallons, and the advanced biofuels target from 2.2 billion gallons to as much as 2.6 billion gallons, according to an industry source.

The final rule is not likely to make biofuels supporters completely satisfied because the targets would still be lower than those written into the 2007 renewable fuel standard, and there are indications that the administration will not raise the target for biodiesel, a fuel made from soybean oil, animal fats and used cooking grease.

But it will give campaign fodder to Braley, said Dennis Goldford, a political scientist at Drake University in Des Moines, Iowa.

"Does the sun rise in the East? He's a politician. They'll claim credit for the sun rising in the East," Goldford said. "He's in a really tough fight, and just as [Ernst] will, he'll claim credit and disperse blame whenever and however it will suit their election purposes."

Goldford said he would also expect to see Braley raise the argument that a Republican Senate majority would be more likely than a Democratic one to pass legislation to repeal the renewable fuel standard.

A win with the renewable fuel standard could also allow Braley, a trial lawyer, to repair some of his credibility among farmers that was damaged when he was caught on tape earlier this year dismissing Iowa Sen. Chuck Grassley (R) as a farmer with no law experience. The comment was meant to demonstrate the implications of Republicans taking over the Senate -- Grassley would likely become chairman of the Judiciary Committee.

Though Braley has apologized, the gaffe continues to dog his campaign. Ernst, on the other hand, has been pushing her conservative credentials in television ads that showed her castrating a hog and firing a handgun, a message that has played well among GOP faithful in the rural southwestern part of the state.

Ernst has said she supports the renewable fuel standard even though she says she does not generally believe in government subsidies or picking economic winners and losers.

"It's the good old honest rural agricultural values versus the big-city slicker," Goldford said.

To be sure, health care and the country's general fiscal situation are likely to surpass renewable fuels in importance as the election nears. And Braley will likely receive most of his support from Iowa's urban areas where ethanol issues are less important.

But voters will be keeping an eye on renewable fuels issues as the election approaches, Iowa political watchers said.

Ethanol as an issue "does tell you something about the candidates: Do they really understand its impact on the rural economy in Iowa?" Robinson said.

While times have been good for farmers in recent years, there's a lot of uncertainty now with the grain markets, the dollar and exports, said Will Rogers, chairman of Polk County Republicans, who formerly worked for Iowa agriculture associations and Republican campaigns in the state.

"What's happening is, I think, there's maybe more people keeping a keen eye on this thing," Rogers said. "They're saying, hey, if you take [the RFS] away, that might be the straw that breaks' the camel's back in terms of the agriculture economy. ... Actually rolling it back really kind of pulls the rug out from underneath people's feet."

Twitter: @apeterka | Email: apeterka@eenews.net

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