EPA Faces U.S. Senate Biofuels Grilling

U.S. lawmakers will grill the nation's environmental regulator over its handling of a controversial renewable fuels program at a hearing on Thursday, the first since new biofuels targets provoked a furor among corn farmers and oil refiners.

The much-anticipated hearing by the Senate subcommittee on regulatory affairs and federal management will likely increase congressional attention to the pitfalls of the decade-old biofuels policy as it faces a fresh wave of criticism from policymakers, the oil industry and environmentalists.

But many experts say a major legislative overhaul, which would need approval in Congress, is unlikely with an election less than two years away.

Still, senior Environmental Protection Agency (EPA) official Janet McCabe will likely face tough questions from the group of 10 senators about years-long delays to the biofuels quotas and the future of the decade-old Renewable Fuels Standards, which critics say has inflated prices of food and fuel at the pump.

They will be the EPA's first public comments since the agency unveiled late last month long-awaited targets for the amount of corn-based ethanol and other biofuels must be used in the nation's motor fuel supply.

Ahead of the hearing, Republican Senator James Lankford, who chairs the committee, said he wants "clarity" from the Obama administration on its biofuel mandates, which he says are unattainable.

"If the actions of the EPA and the way they are trying to artificially push ethanol usage increases costs for consumers without environmental benefits and it doesn't help us with national security it begs the question: why are we doing this," the senator from Oklahoma, an oil-rich state, said.

Introduced in 2005 and a pillar of two presidential administrations, the RFS was aimed at cutting America's dependence on foreign oil and shift the nation to cleaner energy sources.

Supporters of the program refute claims that the policy drives up costs and the EPA disclosed in a report last week that it sees no net increase on fuel prices from the program.

The oil industry fears losing a bigger share of the fuel market and companies including Tesoro Corp have threatened legal action to fight the latest proposal.

For corn-based ethanol producers, like Archer Daniels Midland Co and Poet LLC, the rules do not go far enough.

Questioning will also address the possibility of resetting quotas laid out by Congress in 2007. Critics say the agency has overstepped its authority in setting the latest targets below those 2007 levels.

By Chris Prentice