Ethanol groups add lobbying firepower for mandate fight

Ethanol groups add lobbying firepower for mandate fight

Two ethanol groups have signed contracts with high-powered lobbying firm Heather Podesta + Partners amid a growing fight over the future of the federal ethanol mandate. 

Growth Energy, an industry group, and Poet, a leading American ethanol producer, filed lobbying paperwork this week detailing contracts with the firm.

A Growth Energy spokesman said the advocacy will focus on “protecting” the Renewable Fuel Standard (RFS), pushing to waive usage limits on certain ethanol blends and shaping tax reform measures in Congress this year.

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A Poet official said the firm would be “assisting us on our policy priorities, which include the Renewable Fuel Standard and tax reform.” 

The new contracts come amid a simmering debate within the ethanol industry over the future of the RFS, the federal mandate requiring ethanol to be blended into gasoline supplies.

Both Growth Energy and Poet have opposed a proposal, pitched by Trump-administration advisers, to shift the task of complying with the mandate to a new segment of the fuel production line.

That proposal was first floated by Carl Icahn, a billionaire investor and refinery owner who is a special adviser to President Trump. In February, the plan won buy-in from the Renewable Fuels Association, a key ethanol industry group. 

Under the proposal, fuel wholesalers, rather than refiners, would be obligated to ensure that the RFS’s ethanol blending requirements for gasoline are met.

Refiners say such a proposal would make the RFS fairer by spreading the obligation to others in the fuels industry. But some ethanol interests say such a reform would pull the rug out from under the mandate, causing chaos within the ethanol industry.

The Renewable Fuels Association in February said it wasn’t pleased with the idea of changing the point of obligation. But, the group’s president said then, the White House had promised to make the switch in exchange for issuing a waiver that allows gasoline blends with 15 percent ethanol to be sold year-round, something long sought by the ethanol industry.

“I was told in no uncertain terms that the point of obligation was going to be moved, and I said I wanted to see one of our top agenda items moved,” Renewable Fuels Association President and CEO Bob Dinneen told Bloomberg at the time. 

After the outlines of the deal were reported, Growth Energy “denounced” the plan, calling it “illegitimate.”

Poet’s top spokesman wrote an op-ed in The Hill in February opposing the proposal.

“Falling cropland values and low commodity prices are draining rural America of economic opportunities,” Kyle Gilley, Poet’s senior vice president of external affairs and communications, wrote.

“A change in the point of obligation eviscerates the incentive for retailers to bring higher ethanol blends into the market, capping demand for homegrown fuels made from agricultural products.”

The Trump administration has yet to formalize and implement an RFS overhaul. But the point of obligation debate is a major source of uncertainty for the ethanol industry, which is still trying to determine how Trump and a GOP Congress will address the fuels mandate. 

The conflict has also attracted the attention of lawmakers. Last week, a bipartisan group of 23 senators wrote to the White House urging Trump to oppose changes to the point of obligation.

Icahn’s role in RFS discussions has also raised eyebrows.

He is the majority owner of a large fuel refinery and has previously said compliance with the RFS costs him up to $200 million a year, meaning he stands to personally benefit from changing the fuel blending obligation standards.

A group of Democrats last week asked the White House counsel's office to clarify Icahn’s position in the White House, and if officials are planning to formally order a change in the RFS.

“Mr. Icahn has made no discernible effort to separate his extensive business holdings from his broad mandate to address ‘strangling regulations’ as special advisor to the President,” the Democrats wrote in a letter. 

“Instead, he has taken the first opportunity to leverage his newfound political power for his own personal gain.”

Icahn defended his work on the RFS earlier this month, telling Bloomberg, “I own a refinery, so obviously I have an interest in it, but there are 12 other refineries that are getting killed worse than mine."

He added, "I own a refinery. Who knows it better than me? Why shouldn’t I advocate?”

- This story was updated at 9:13 a.m.