- The Washington Times - Thursday, April 2, 2015

Texas governors have not been fans of the federal government’s renewable fuels mandate, so it was a surprise to Gov. Greg Abbott when he discovered this week the Governors' Biofuels Coalition has been listing him as a key member of the group.

The freshman Republican says the GBC listed him without ever asking if he wanted to be a member — one of a host of Republican governors who say they were never asked and who say the green-friendly coalition may have skirted tax laws by listing them as “directors” on the GBC’s nonprofit forms filed with the IRS.

New Mexico has even threatened litigation if the GBC does not file amended tax forms that no longer list Gov. Susana Martinez as a director. Ms. Martinez, along with South Carolina Gov. Nikki Haley, Louisiana Gov. Bobby Jindal and Mississippi Gov. Phil Bryant all are listed as GBC “directors” on 2013 tax documents. All have withdrawn since September or intend to soon.

“Since Governor Martinez took office in 2011, the coalition has not treated her as a member. The coalition has never provided Governor Martinez with notices to its annual or special meetings or communicated with her in any meaningful way about the initiatives or lawsuits of the coalition,” Jessica M. Hernandez, general counsel for Ms. Martinez, wrote in a letter to the coalition last month.

“It would be a best practice for your organization to actually communicate with those elected officials who have not in fact affirmatively expressed their individual intent to be a member and actually determine if they seek membership,” Ms. Hernandez wrote.

Texas officials say they’ve asked the coalition to no longer list the state on its website while Mr. Abbott’s office investigates further, with a formal withdrawal possibly forthcoming. South Carolina intends to formally withdraw in the coming days.

“South Carolina will be sending a letter to withdraw from the coalition within the week,” said Chaney Adams, press secretary for Ms. Haley.

But the issue goes beyond erroneous membership lists on the coalition’s website. The GBC, founded in the early 1990s to promote ethanol, and which now also advocates for other biofuels, has been ruled a charity by the IRS, which means it is supposed to list its top officers and employees on its forms.

The GBC, in several filings, promised the IRS that the governors “affirmatively elected to join the coalition,” and said the governing body was chosen by majority vote of all of the governors involved and that the annual tax return was reviewed by at least some of those governors.

GBC Executive Director Larry Pearce said they send a letter to governors each year asking them whether they want to be part of the group. If they don’t get a reply, they assume that means the governor wants to be in.

He provided The Washington Times this year’s crop of letters, dated Jan. 26, 2015, addressed to 30 governors and signed by Iowa Gov. Terry Branstad, a Republican and GBC chairman, and Missouri Gov. Jay Nixon, a Democrat and the group’s vice chairman — though the letters wrongly identify Mr. Nixon as the governor of Illinois, not Missouri.

“To set the record straight, every year we send a welcome letter to all the governors outlining the work the governors are going to be working on and asking them to affirm their representative to the coalition,” Mr. Pearce said. “That gives the governors an opportunity to, one, reconsider whether they want to continue being a member or, if they don’t want to make any changes, to be silent.”

The GBC’s bylaws suggest that states simply will remain on the rolls even when a new governor comes to power and could be interpreted to mean that, as far as the coalition is concerned, it is a new governor’s responsibility to remove his state.

“The coalition shall be composed of the governors of states or chief executives of recognized United States Territories who have affirmatively elected to join the coalition. Membership will continue until 30 days after written resignation is submitted to the chair by the governor of a state,” reads a portion of section 3.01 of the GBC’s bylaws.

The coalition’s activities are somewhat shrouded. It had its last physical meeting in Sioux Falls, South Dakota, in March 2013 and hasn’t posted minutes of meetings since 2008.

Mr. Pearce said that because states have tight travel budgets, monthly conference calls have replaced meetings in recent years. He said the coalition each month sends an email to member states’ governors inviting them to join in the calls.

But state officials say that’s not the case.

Mr. Abbott’s office says it did not receive any correspondence from the GBC short of a phone call earlier this year seeking information on who in the governor’s office handles “energy issues.”

Officials say that sole conversation never touched on Texas’ membership in the group, which began when Gov. Ann Richards, a Democrat, signed Texas up in 1991. But Gov. Rick Perry was also listed through the end of his term, even though the Republican led a challenge to the EPA’s renewable fuels mandates, and Mr. Abbott had to work to have his own name removed.

Other states also say they have had no contact with the organization and did not receive emails about conference calls or the letters Mr. Pearce says were sent in January.

Asked whether it’s possible states such as New Mexico could have misplaced or overlooked several physical letters and dozens of emails, Mr. Pearce said, “It’s very possible.”

The group has also filed court briefs claiming to represent 32 governors, though at least four of those governors now say they did not know they were even listed as members.

Moving forward, Mr. Nixon’s office says the Missouri governor is open to making changes to how the coalition operates.

“We’re going to continue to work with Gov. Branstad to see how can this organization best serve its member states,” Nixon press secretary Scott Holste said Thursday. “If there have been areas where that needs to be strengthened, obviously we want to work with Governor Branstad in looking at that.”

As for wrongly identifying Mr. Nixon as the governor of Illinois instead of Missouri, Mr. Holste said the coalition was responsible for the letters and was provided a “signature block” of Mr. Nixon’s name to use on each letter.

The coalition advocates for, among other things, expansions of the federal Renewable Fuel Standard (RFS), though ethanol has fallen out of favor with many governors and lawmakers across the country.

Biofuels proponents face new questions about the RFS and whether it is financially and technologically feasible to increase the share of ethanol in American gasoline.

The Environmental Protection Agency has, on several occasions, pushed back requirements to increase the share of ethanol in fuel. The vast majority of gasoline sold in the U.S. contains 10 percent ethanol. Meeting the escalating requirements in the RFS would require increased use of gasoline containing 15 percent ethanol — a level few gas stations carry and one that critics say may hurt automobile engines.

Opponents of the RFS say one of its key original goals — to reduce the price at the pump — has been achieved not because of ethanol blending but because of increased domestic oil-and-gas production.

“The problems that the RFS was designed to solve — America’s dependence on foreign oil and an increasing trend in greenhouse gas emissions — are being taken care of mostly by the nation’s oil and gas industry and a sluggish economy,” the Institute for Energy Research said in a report released Wednesday.

But ethanol proponents say the fuel is as viable as ever and remains the best way to produce cleaner, cheaper gasoline. They also say global demand for American ethanol is creating economic opportunities for producers.

“Ethanol export demand remains robust, as blenders and refiners around the world recognize the economic benefits of using U.S.-produced ethanol,” Bob Dinneen, president and CEO of the pro-ethanol Renewable Fuels Association, wrote in a letter to congressional leaders this week.

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