The Associated Press published a big “investigative report” blasting ethanol policy and the ethanol industry this week.

The report claims that the boom in ethanol has increased soil erosion, caused water pollution, increased the amount of carbon released into the atmosphere and expanded the dead zone in the Gulf of Mexico. Ethanol industry supporters are fighting back, arguing that the AP story overstates the impact of ethanol and pointing out other factors that have reduced the size of the Conservation Reserve Program.

There are, no doubt, some inaccuracies and exaggerations in the AP story. But it will strike a chord with a lot of people outside of agriculture and influence public opinion.

That might be enough for Congress to revise or eliminate the Renewable Fuels Standard next year.

In its rebuttal of the AP story, the Renewable Fuels Association pointed out that CRP acreage has been declining due to budget cuts and the fact that Congress lowered the cap to 32 million acres.

In addition, by law, biofuels must reduce greenhouse gas emissions by at least 20% compared to gasoline to qualify for the mandate and the latest models from the Argonne National Laboratory put ethanol’s emission reductions at 34 percent.

The AP story further ignores the fact that about a third of corn used for ethanol is recycled back into livestock feed as Distillers Dried Grains.

RFA says the AP story “totally lacks context and fails to make comparisons to other fuels at all”. Still, it may be difficult for RFA’s rebuttal information to reach as wide an audience as the AP story did. (It was second only to stories about Philippines hurricane damage in major media that picked it up.)

EPA expected to announce the biofuels blending requirements for 2014 soon.

Some reduction from the 18.15 billion gallons under the current Renewable Fuels Standard is likely; but a lawsuit challenging whatever EPA announces is almost certain.

A spokesman for the Biotechnology Industry Organization said “Groups within the biofuel industry are fully committed to challenging the rule in court if the EPA changes how it implements the standard.”

On the other hand, the oil industry stands ready to challenge the rule if the mandate is not lowered. Here’s another rub: The way the law is written, it is not at all clear that EPA even has the authority to lower the mandate because of the blend wall problem.

Bottom line then? The level of biofuel blending requirements may remain unresolved even after EPA makes its announcement.

The EPA is also moving forward with another proposal that would essentially give itself jurisdiction under the Clean Water Act for all natural and artificial tributary streams, lakes, ponds and wetlands that affect the chemical, physical and biological integrity of downstream navigable waters.

This could make almost any body of water subject to permitting of pollution discharges and cleanup costs.

This proposal has been sent to the Office of Management and Budget for approval. Previous Supreme Court rulings have made it clear that EPA must show a hydrological connection to navigable waters before they can regulate those waters.

In other news from Washington, the House-Senate conference committee trying to work out an overall budget for the government is facing a December 15 deadline to complete work, but held just its second meeting this week.

About the only thing coming from the meetings so far is an effort to lower expectations. The focus of the talks now appears to be how much to trim discretionary spending over the remainder of the fiscal year. There is still a good chance that “savings” squeezed from farm bill negotiations will be the cornerstone of any overall budget agreement. That doesn’t bode well.