The Obama administration is set to take sides in the titanic lobbying battle over ethanol between the corn and oil industries — just eight weeks before the presidential caucuses in corn’s sacred ground of Iowa.
The decision, concerning how many billions of gallons of the corn-based biofuel must be blended into the nation's gasoline supply, threatens to create a political bind for Democratic front-runner Hillary Clinton, who may have to decide once again how far to distance herself from President Barack Obama on an issue of huge importance to a core voting constituency.
The mandate is wildly popular in Iowa, which produces more corn-based ethanol than any other, though it has largely fallen out of favor with green groups that once regarded it as a cleaner form of fuel than oil.
Many observers expect the Environmental Protection Agency to dial back the mandate — requiring refiners to use fewer gallons of ethanol than Congress had demanded when it created the program’s current version in 2007. That would probably still be more ethanol than the oil industry says the gasoline markets can handle without causing economic stress.
Clinton has been cagey about where she stands, offering few specifics beyond an op-ed in May, in which she called for getting the federal biofuels program "back on track."
The program, known as the Renewable Fuel Standard, “can continue to be a powerful tool to spur the development of advanced biofuels and expand the overall contribution that renewable fuels make to our national fuel supply,” Clinton wrote. Still, she added, “we also can’t ignore significant changes to the energy landscape since the [program] was expanded in 2007."
Clinton’s campaign has declined to respond to questions about her position on the ethanol program. But the administration’s decision will increase the pressure on her to say whether she agrees or disagrees with the EPA’s call to fall behind the specific gallon mandates that Congress had written into the law.
The ethanol industry’s political clout in Washington has waned considerably since Congress created the mandate’s current version, a move that was meant to stem then-soaring oil imports. The administration threw a scare into the industry two years ago by proposing to scale back the requirement, siding with an array of ethanol critics that include oil companies, food and soft-drink manufacturers, Delta Air Lines and AAA.
Any backsliding by the EPA below what Congress mandated is sure to spur a declaration of war by the biofuels industry and corn growers, which not incidentally employ thousands of Iowans.
“If it’s reduced by as much as one gallon, based on the rationale that’s in the draft proposal, I think you’ll see a lawsuit,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association.
And Iowa biofuels advocates say they already have private promises from Clinton and other candidates to support the ethanol volumes that Congress required. Shaw said that’s what he would expect based on Clinton’s own statements.
“I don’t think you hear her on the campaign trail saying, ‘I love corn ethanol,’” he said. “But she has made it very clear that she would follow the schedule and the law that’s there.”
At the same time, the ethanol program is facing criticism from many environmentalists, whom Clinton has been courting aggressively. Those greens have blamed the mandate for increasing fertilizer runoff and pushing up food prices, with no clear sign that it's reduced greenhouse gas emissions.
The 2016 Republican field is split, though, with Donald Trump, Mike Huckabee and Chris Christie all calling for a strong ethanol blending rule, while the pro-ethanol groups American Renewable Future have knocked Marco Rubio, Jeb Bush, Carly Fiorina and John Kasich as having inconsistent or undefined stances on the program. Ben Carson, Ted Cruz and Rand Paul have all attacked the program as a violation of free market principles — and Cruz, who’s running in third place in Iowa polling, was bold enough to tout his position during an agriculture summit there in March.
“The answer you’d like me to give is, ‘I’m for the RFS, darn it,’” Cruz, who has proposed repealing the mandate over five years, said at the time. But he added, “People are pretty fed up with politicians that run around and tell one group one thing and tell another group another thing.”
It’s still a rare presidential candidate who hopes to compete in Iowa while flouting the ethanol industry altogether, however.
The EPA’s decision is due by next week but could come as soon as Tuesday or Wednesday. It caps weeks in which both supporters and critics of the federal ethanol mandate have accelerated their public relations campaigns, including with dueling TV ads aired during NFL games.
In May, the EPA proposed a 2016 volume mandate for all biofuels, including biodiesel and advanced cellulosic fuels, of 17.4 billion gallons, well below the 22.3 billion gallons Congress had sought in the legislation. Corn-based ethanol would make up 14 billion gallons of that mandate, a billion gallons less than the law requires.
Since Clinton's op-ed supporting biofuels in May, she's tacked to the left on environmental issues, criticizing the now-denied Keystone XL pipeline and calling for prohibitions on oil drilling in Arctic waters.
Those stances have helped shore up her appeal to the green wing of her party, and though the pro-ethanol campaign group America's Renewable Future is "confident that Secretary Clinton will continue to be a champion for the biofuels industry and for the RFS, including corn ethanol," she may again split with her former boss.
Clinton’s reaction to the EPA biofuel rule “could be less about ethanol and more about the distance she wants to create between herself and the Obama administration,” said Jon Doggett, executive vice president of the National Corn Growers Association..
Shaw said that Clinton already has “clearly differentiated herself from President Obama" on the renewable fuel standard, as have her Democratic rivals, Bernie Sanders and Martin O’Malley, who both back a strong ethanol mandate.
Not everyone is convinced the issue will play the same role in the Iowa caucuses. Biofuels don’t stir up the same fervor among Iowans as it did in the 1980s or during the 2000 election, when George W. Bush’s full-throated support for ethanol helped him win the caucus, Sen. Chuck Grassley (R-Iowa) told POLITICO.
Grassley said that Iowa caucus voters have placed less emphasis on ethanol promises because they have become more concerned with foreign policy and Obama’s economic policies.
"I don’t think it’s getting the attention people thought it would,” Grassley said.
In a year when arguments against big government are resonating with voters, candidates have more room to walk away from the program, said Steve Grubbs, an Iowa operative currently working for Rand Paul’s campaign.
“The Iowa caucus is a battle of niches” Grubbs said. “The RFS is a very strong niche in Iowa, a big part of the agriculture community. But the free-market approach also has a very strong niche in the Iowa electorate.”
Still Republicans, and even Clinton to an extent, could use the program as a reason to go after the EPA, which is increasingly unpopular in rural America due to new water rules and other regulations, Doggett said.
“It’s going to provide a real opportunity for EPA bashing,” Doggett said. “The extent to which [Clinton] might want to avail herself to that opportunity or avoid it, that’s that bneedle she has to thread.”
