Message exchanges reveal tensions among ethanol groups

WASHINGTON -- A nasty exchange of messages among the National Corn Growers Association, the Renewable Fuels Association and Growth Energy, the ethanol lobbying group headed by South Dakota-based ethanol plant builder and owner Jeff Broin and form...

WASHINGTON -- A nasty exchange of messages among the National Corn Growers Association, the Renewable Fuels Association and Growth Energy, the ethanol lobbying group headed by South Dakota-based ethanol plant builder and owner Jeff Broin and former Gen. Wesley Clark, has led to splits among the groups and revelations about why Broin and a handful of other ethanol leaders left RFA to form Growth Energy.

The messages have revealed that Broin and others established Growth Energy in 2008 because they did not think the NCGA and the RFA were lobbying hard enough for ethanol. Broin, Clark and Tom Buis, their Washington lobbyist, also are making the case that they have defended the industry and are pursuing its goals more vigorously than the other groups in the last two years.

NCGA, which lobbies for corn growers on a wide range of issues, RFA, which was founded in 1981 to make the case for ethanol, and Growth Energy have been at odds since Growth Energy was founded. Their battles became public Oct. 2 when NCGA President Darrin Ihnen, a South Dakota farmer, sent Renewable Fuels and Growth Energy a memorandum that he was tired of the "friction and divergence in the ethanol industry" and that the two groups needed to "reconcile immediately."

Ihnen suggested that the two groups agree to binding arbitration, with NCGA as the facilitator. RFA and Growth Energy each sent NCGA a letter Oct. 9 saying all corn and ethanol groups should work together, but rejecting the binding arbitration proposal as practically and legally impossible. RFA Chairman Chris Standlee emphasized Oct. 9 that his group has a long history of working with NCGA and wants to continue it.

Failing to unify


Growth Energy's Clark and Broin, in their reply to National Corn, said the founders of Growth had spent "countless hours and significant dollars" trying to unify the ethanol industry before deciding that they needed their own group.

Clark and Broin wrote that it was Growth Energy that formally asked EPA to increase the percentage of ethanol allowed in gasoline from 10 percent to 15 percent, contended it has responded more strongly in the "food vs. fuel" debate in which ethanol has been attacked for raising food prices, lobbied the hardest against EPA's proposal to use land use changes in other countries in analyzing the environmental impact of growing crops for renewable fuels in the United States and defended the tariff on imported ethanol and proposed country-of-origin labeling for gasoline.

Clark and Broin also said that Growth Energy and Renewable Fuels "can share common goals, but have a difference of opinion on how to reach those goals."

Sources close to all three groups said the heart of the dispute may lie in disagreement over how hard to push for ethanol compared with corn's traditional markets in domestic livestock feed and exports. Sources said that some ethanol industry participants think RFA does not push ethanol issues hard enough because one of its major backers is Archer Daniels Midland, which also processes corn for feed and may not want corn prices to rise too high.

An RFA spokesman disputed that Oct. 15, saying, "We represent everyone from the world's largest producer (ADM) down to the smallest farmer-owned cooperatives."

Growth Energy, meanwhile, says that the rising yields of corn will make ethanol a more important market for corn in the future.

"When we have excess grain, like we do, and idled corn ethanol plants, like we do, and we have an increasingly expensive reliance on foreign oil, there's an easy solution to all this -- ethanol," Buis said Oct. 13 in an e-mail.

Approach and policies


A source close to the corn ethanol industry said that the groups' current differences are more about approach than policies. But the source also said the corn growers and Growth Energy have different views on whether political capital should be used now to fight EPA's plans to use changes in land use patterns in foreign countries as an element in analyzing whether U.S. ethanol should qualify as a low-carbon fuel. The corn growers, the source said, thinks its most important battle will be over the reauthorization of the ethanol tax credit, which expires in 2010. Growth Energy has been using its political capital this year to urge Congress to stop EPA from using indirect land use analysis.

Working together?

After NCGA's board met Oct. 13, Ihnen said in an e-mail, "While disagreements within any industry are common and to be expected, it is vitally important that U.S. ethanol supporters work together on Capitol Hill. We have stressed this with our allies a number of times, and NCGA is moving forward with plans to work more closely with the Renewable Fuels Association and the American Coalition for Ethanol."

An RFA spokesman said the group would be "honored to continue working with NCGA and ACE to expand the market for American ethanol."

Brian Jennings, executive vice president of ACE, a South Dakota-based group that represents ethanol plants, farmers and investors, said, "The issues we have to tackle are so critically important, we all need to work together if we are going to prevail."

Buis said in an e-mail that Growth Energy would continue to pursue its goals.

"Growth Energy was created to be a proactive voice on behalf of domestic renewable fuels, the American farmer and ultimately the American economy," Buis said in an e-mail. "Growth Energy has provided valuable leadership in addressing the challenges -- dispelling the myths about food versus fuel; removing the arbitrary cap on ethanol blends; and seeking a congressional remedy to International Indirect Land Use Change penalties, one of the biggest threats to America's farmers and biofuels producers. We will continue to work with any group or individual that shares the vision of reducing our nation's dependence on foreign oil, creating jobs in rural America, improving our environment and revitalizing our rural communities. In the meantime, we will continue to do what's best for the American economy, and what's best for the American farmer."

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