By STEVE BINDER
WASHINGTON, D.C. — On the heels of the U.S. Environmental Protection Agency’s (EPA) rejection late last year of waiving the Renewable Fuel Standard (RFS), 2013 is beginning with the federal ethanol mandate still under attack from certain quarters.
Some Republicans have signaled that they will call hearings on the RFS mandate beginning with the new, 113th Congress after it convenes beginning tomorrow (Jan. 3). On the public relations front, longtime opponents of the RFS – including Big Oil, the American Feed Industry Assoc. and the American Petroleum Institute – have a new colleague in opposing the RFS, the National Council of Chain Restaurants (NCCR).
Late last year a study the NCCR released, completed by PricewaterhouseCoopers, claimed the RFS has cost the fast-food industry up to $3.2 billion annually –anywhere from $2,800-$18,000 per restaurant. And the chair of the company that supplies food for 5,800 Wendy’s restaurants in the United States testified late last year the RFS has cost his restaurants between $20,000-$30,000 more per year for food.
“I have a responsibility to my employees, fellow franchisees, customers and my family to make sure Congress knows a well-intended idea (the RFS) turned out to be a very serious problem, and it’s getting worse,” said Ed Anderson, chair of Wendy’s Quality Supply Chain Cooperative.
“Each of our restaurants pay $20,000 to $30,000 more per year because of the (RFS). Maybe that’s not a big number for some people, but it is for us. That’s up to $174 million more of current food costs just for the Wendy’s system, 80 percent of which is owned by franchisees like us.”
The RFS took effect in 2005, was modified in 2007 and is designed in large part to lessen America’s dependence on foreign oil. It required 13.2 billion gallons of corn-based ethanol be blended into the nation’s gasoline supply for 2012, and that by 2020, the EPA will require approximately 36 billion gallons of renewable fuel be incorporated into the fuel supply.
The requirement has been criticized by feed, dairy, livestock and oil groups as a government mandate unnecessarily increasing the price of corn. That, combined with last year’s drought, led to requests the EPA waive the RFS requirements for a year, something the agency rejected in November.
EPA Assistant Administrator Gina McCarthy acknowledged the livestock industry was hit hard, but “our extensive analysis makes clear that Congressional requirements for a waiver have not been met and that waiving the RFS will have little, if any, impact.”
She said the EPA conducted several economic analyses in reaching its decision, and concluded a waiver would lower corn prices only by about 1 percent. Supporters of the waiver argued prices would have been lowered by up to $2 per bushel; corn was selling at more than a record $8 a bushel last year.
Renewable energy entities such as the Renewable Fuels Assoc. and Growth Energy criticized the restaurant group’s study, saying food prices overall are impacted most by energy costs, and then by transportation, packaging and marketing expenses.
Growth Energy CEO Tom Buis said the study was flawed: “The true culprit behind rising food prices is the cost of energy and, in particular, oil. Only 14 percent of the price of food is attributable to the cost of the commodity, while the rest can be attributed to energy costs and marketing.
He also charged the restaurant groups are attempting to “distort the facts in order to justify higher profits.”
Eight governors and more than 150 GOP House members supported the request to waive the RFS standard last year, and Rep. Bob Goodlatte (R-Va.) said he will continue to support legislation this year to repeal the RFS.
The chair of the House Judiciary Committee and a member of the Agriculture Committee, Goodlatte said he plans to hold more hearings on the RFS this year. The 156 House members who supported the RFS waiver will be likely supporters for his legislation.
But “if turns out that reforming the law is more feasible to solving the issue, then we’ll push for that” instead of a full repeal, he said.