With the proposed 2014 Renewable Fuel Standard reducing the demand for ethanol nationwide, the Minnesota Department of Agriculture is estimating losing $610 million and 1,500 jobs as a result. Dropping crop prices, increasing taxes for crop subsidies and local economic impacts have been on the minds of those connected to the industry. CHRIS HANSON/SUBMITTED PHOTO
With the proposed 2014 Renewable Fuel Standard reducing the demand for ethanol nationwide, the Minnesota Department of Agriculture is estimating losing $610 million and 1,500 jobs as a result. Dropping crop prices, increasing taxes for crop subsidies and local economic impacts have been on the minds of those connected to the industry. CHRIS HANSON/SUBMITTED PHOTO
He spent almost 16 years seeing the Preston POET Biorefining plant go from a design sketch to its current annual production of 46 million gallons of ethanol. Now, at the time when Rich Eichstadt is retiring from an industry he witnessed rise, he is less sure about how the industry and its producers will do in the future.

On Nov. 15, 2013, the Environmental Protection Agency (EPA) released its 2014 Renewable Fuel Standard (RFS) proposal. The RFS federal program dictates how much renewable fuel will be contained in United States transportation fuels. In the proposal for 2014, it had been calculated that a 2007 projected demand for 18.15 billion gallons was too high and reflected a demand for 15.21 billion gallons.

This is the first time the EPA will be requesting less renewable fuel than what was targeted. The same will be true for advanced biofuels and cellulosic biofuels. Biomass-based diesel fuels will remain steady.

This looming reduction in demand is causing concern throughout the ethanol industry and agriculture sector at large. After the proposed 2014 RFS was released, the Minnesota Department of Agriculture has been working to spread awareness throughout the state of the impacts that could be seen. MDA Commissioner Dave Frederickson commenced a tour of the state's ethanol plants on Monday, Jan. 6, and visited Preston's POET plant first.

The conference room at the plant held around 40 concerned farmers, business owners, contractors, city administrators, POET and MDA representatives. Held as an informal roundtable discussion, attendees were able to voice their concerns and information directly to Frederickson.

City of Preston Mayor Kurt Reicks and Public Works director Jim Bakken told of the impact the POET plant has had on the city. The plant represents one-eighth of the city's tax base and has a strong influence on the city's utility rates: 60 percent of water, 25 percent of sewer and 15 percent of electrical.

"If not for the ethanol plant, everyone's bill would be going up," explained Eichstadt.

Several area business owners told the Commissioner that many of their jobs had been created as a direct result from the plant. The plant itself employs 40 people. Eichstadt explained the 2014 RFS would affect jobs both physically at the plant and those tied to it.

"It wouldn't happen immediately, but over a period of time," he said.

Noting it wasn't known how specific plants would be affected, Eichstadt also recalled economic problems seen six years ago when a few ethanol plants in the state closed.

MDA Communications Officer Michael Crusan said the estimated numbers could equate to a loss of 110 million gallons annually. According to Crusan, this could be enough to see two whole plants close.

Though the thought of the Preston POET plant closing would be the worst-case scenario for the region, Eichstadt said the prognosis from the RFS still isn't good.

"No doubt, it would have a huge impact on the agricultural community," he said. He recalled the corn prices 15 years ago, $1.60 per bushel, and remarked, "Nobody wants to go back to those kind of days."

Current corn prices are hovering around $5 dollars per bushel, but Eichstadt said that would go down because of the RFS.

Almost 500 farmers in a 60-mile radius sell around 16 million bushels of corn to POET in Preston. With demand going down and supply remaining high, future production in the field and at the plant would be affected.

According to Eichstadt, this is exactly what the oil industry wants. He attributed the proposal for an amended RFS as influenced by the oil lobby. "They are pulling out the stops to diminish the impact of ethanol," he stated.

Crusan explained that both political parties recognize the need for a strong biofuel industry and that he wasn't sure what was causing the call for renewable fuel reductions.

"Our main focus is how we stop it," Crusan said.

The visit from Frederickson aimed to do just that. During the hour-long meeting, he encouraged those in attendance to provide public comments to the RFS on how it would impact them.

Eichstadt said the issue is well known in the agriculture community, but noted the impacts would affect taxpayers throughout the region.

"If they get an overwhelming response that this is not something the public wants to see, they might say 'We aren't going to do this,'" said Eichstadt.

The deadline for receiving public comments is Jan. 28. Comments can be received online at www.regulations.gov, email at a-and-r-docket@epa.gov, or mail at Air and Radiation Docket and Information Center, Environmental Protection Agency, Mailcode: 2822T, 1200 Pennsylvania Ave. NW, Washington, DC 20460.

The RFS goes into effect after the public comment period