US House adds to farm bill a provision that would end subsidies for installing biofuel blending pumps in rural areas, where demand for such fuel is highest; change could make it more difficult for US to implement RFS

Allison Oesterle

NEW YORK , January 30, 2014 (Thomson Reuters Corp.) – (Fixes spelling of president in last paragraph)

Lobbyists opposed to mixing more ethanol in gasoline scored another victory on Wednesday after the U.S. House of Representatives passed a farm bill with a provision removing subsidies for biofuel blending pumps in rural areas.

The provision, tucked into page 735 of the 949-page farm bill, could make it more difficult for gasoline blended with higher concentrations of ethanol to find its way to rural areas, where demand for the fuel is greatest.

That, in turn, could make it more difficult for the United States to implement a program known as the renewable fuel standard, or RFS, which mandates increasing amounts of biofuels like corn-based ethanol be blended into the nation's fuel supply.

The subsidy cut is also a blow to the Obama administration, which in 2010 set a goal of helping gasoline station owners install 10,000 blender pumps over the next five years to promote consumption of higher-ethanol gasoline. Blender pumps mix gasoline and ethanol for sale at gas stations.

"We figure there will be a lot fewer blender pumps if it's not subsidized by the federal government," said Wayne Allard, vice president of government relations for the American Motorcyclist Association, which lobbied for the provision.

Allard said his group wanted to limit the chance that motorcycle owners will damage their engines by buying gasoline blended with higher amounts of ethanol than the 10 percent norm.

The lobbying victory follows a November move by the U.S. Environmental Protection Agency to reduce for the first time the amount of ethanol required to be blended into U.S. gasoline supplies. The EPA proposed the cuts in part due to concerns over the lack of infrastructure, such as blender pumps needed to sell gasoline with greater concentrations of ethanol.

"There is irony in the fact that EPA has proposed cutting back on the RFS because of their concern about the availability of infrastructure to satisfy higher blends of ethanol while the Congress eliminates funding for blender pumps," said Bob Dinneen, head of the Renewable Fuels Association, which represents ethanol producers.

"The U.S. ethanol industry remains committed to growing demand and opening new markets, which will require expanded infrastructure," he said.

Gasoline blended with higher concentrations of ethanol, such as 15 percent, or E15, has been most popular in rural areas, which are targeted by the subsidy removal.

There are only 59 stations across 12 states that currently sell E15, according to a list published by the RFA. Most of them are in corn-producing states such as Iowa, Kansas and Illinois. Although growing, that total is still miniscule compared with the 120,000 to 125,000 U.S. gasoline stations, according estimates by the American Automobile Association.

Wednesday's vote does not guarantee the subsidy cut will become law, but there is little opponents of the provision can do to stop it. The Senate is expected to vote on the same version of the bill as early as next week, at which point it will go to President Obama for signing into law.

Leaders of the House and Senate agriculture committees have said they expect the president will sign the bill .

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