Intense lobbying by corn producer groups and ethanol supporters during the last days of the Clinton administration means the California fuel market will remain open to ethanol in the future.
California requested a waiver from oxygenate requirements of the Clean Air Act, but the Clinton administration turned over the keys to the White House without taking action on the waiver request. Grower groups say the non-action leaves the door open for significant expansion of corn-based ethanol use.
"A California waiver was a real threat in the final days of the Clinton administration," says Gary Marshall, Missouri Corn Growers Association Chief executive officer. "Only pressure from key Midwestern leaders kept the door open for ethanol growth.
He credits a bloc of Midwestern congressmen for leading the effort to block the California waiver. "Missouri Corn Growers Association members and ethanol supporters joined a massive nation-wide grassroots lobbying effort to swamp the White House with phone calls as well," Marshall said. "Phone calls from the countryside definitely made the difference. With this victory, we have cleared a very important hurdle."
California primarily uses the fuel additive MTBE to meet oxygenate requirements of the Clean Air Act. Although MTBE fights air pollution, it is also critical source of drinking water pollution. California sought to get a waiver from the oxygenate requirement in gasoline, even though ethanol provides the same clean air benefits without any detrimental environmental impact.
The issue does not end with the hold-up on the waiver, however. The California waiver request will need to be addressed by the new administration.
Corn Growers leaders say, however, that prospects look good for ethanol. Marshall says the inaction represents a "clear victory for Corn Growers and the ethanol industry. given the tremendous political pressure on then-President Clinton to grant the waiver." California Gov. Gray Davis and the California congressional delegation had worked vigorously to obtain the waiver.
"It seems clear that the Clinton administration was not convinced by California's argument that using ethanol would interfere with the state's ability to meet pollution standards," says Marshall.
"Corn Growers, the Renewable Fuels Association, and our elected officials made their case with technical data showing the clean air benefits of ethanol. The ethanol industry has been breaking production records the past several months and is on pace to use 720 million bushels of corn this year."
California represents a potential market for more than 550 million gallons of ethanol, corn groups say.
The Bush administration and new Environmental Protection Agency Administrator Christine Whitman must now address the waiver request. Observers expect it will take time for the new leadership to prepare to act on the technical and politically complicated California oxygenate issue.
In the meantime, refiners may have to move forward with decisions on whether to use ethanol as MTBE is phased out completely in California over the next three years.