New price tag for ethanol: More pollution

But given the administration's full-throated backing for ethanol, industry officials and their supporters on Capitol Hill are confident that the EPA will proceed with the new rule despite complaints from environmental advocates and local officials.

The White House already helped write the rule change, according to e-mails that suggested wording to strengthen the case for lower standards.

Monte Shaw, executive director of the Iowa Renewable Fuels Association, said the change could benefit his fast-growing industry. He said he knew of some ethanol producers who had been hoping to expand under the terms of the new rule but had decided to proceed rather than wait.

In response to critics, he said, "There are always going to be people out there who say 'No, no, no' to something like this. But really, it is just a matter of what regulatory regime plants must follow and what is equitable."

More pollution

As proposed by the EPA, the rule would increase the amount of pollution allowed before an ethanol plant is considered a "major air emitter." The threshold now is 100 tons annually; the new threshold would be 250 tons. The move would mean most ethanol plants would not have to install the most effective air pollution equipment on the market. However, the higher threshold would not apply to plants in St. Louis and other areas that already have severe air pollution problems.

Being categorized as a major polluter can mean a longer permitting process, costly construction delays and more expensive air pollution equipment.

Deep down in the dense proposal, the EPA noted what environmentalists fear could occur at plants now just beneath the current, 100-ton limit: "Changing the facility classification … could allow these sources to increase their emissions by more than 149 tons and still remain minor sources."

In first proposing the new rule more than a year ago, the EPA asserted that Congress never intended for ethanol plants to be categorized with chemical facilities and other big polluters.

Many plants have been designed to produce less ethanol to avoid stricter environmental rules, ethanol producers told the EPA.

Echoing industry sentiments, the environmental agency wrote that failing to make the change "could potentially stymie the growth of the ethanol production industry which, in turn, could lead to reduced energy diversification and independence in this country."

The proposed rule reflected another industry concern: There is no consistent government regulation at present because alcohol distillation for liquor is regulated at the 250-ton threshold, as is another less-used form of ethanol production.

Environmental advocates, as well as state and local air pollution control officials, contend that the public would suffer by allowing the burgeoning industry to construct new plants or upgrade existing facilities without the best available equipment to capture or destroy pollutants.

William Becker is the executive director of the National Association of Clean Air Agencies, which represents more than 200 air pollution control agencies in states and localities. He said the reclassification would diminish regulation overnight.

"There's a pattern here of putting roadblocks in the path of states and localities to do their jobs," he said. "With the stroke of a pen, the administration would be redefining the importance of regulating these facilities."

Echoed Frank O'Donnell, executive director of the Washington-based nonprofit Clean Air Watch: "It will mean more pollution from ethanol refineries and more breathing problems for people who live near them."

Politicians on board

The proposed shift became known as the "Thune rule" after efforts by Sen. John Thune, R-S.D., to persuade the EPA to look differently at ethanol plants.

The freshman senator talked up the new rule to his colleagues in Congress and organized letters to the EPA last year that carried more than 30 signatures from senators and House members. Among those who signed letters were Sen. Christopher "Kit" Bond, R-Mo., and former Sen. Jim Talent, R-Mo.

Missouri Gov. Matt Blunt also submitted comments to the EPA endorsing the change. Blunt's letter called the new rule "very supportable from an environmental standpoint."

The rule would be a major departure from the EPA's effort to rein in air pollution from ethanol production.

Declaring what the agency referred to as a suspected "pattern of non-compliance," the EPA in 2002 began a campaign to force ethanol plants to clean up their emissions.

The agency has since won several multimillion-dollar settlements, forcing compliance with air pollution rules and installation of advanced pollution-control equipment known to regulators as Best Available Control Technology, state-of-the art equipment that captures and destroys pollutants before they reach the air.

Four years ago, Decatur, Ill.-based Archer Daniels Midland, a major ethanol producer, agreed to spend $350 million to upgrade air pollution equipment at agricultural processing plants, including ethanol plants, in 16 states.

In 2005, a small Missouri plant, Golden Triangle Energy of Craig, paid $30,000 in penalties for Clean Air Act violations and agreed to install pollution-control equipment.
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