Spinning straw into gold

At first glance, the brewing controversy over Gridley’s proposal to build an ethanol plant on the edge of town seems simple: The city wants it; the residents of the neighborhood where it will be built don’t.

End of story, right?

Not quite. The real story behind the plant is much more complicated than that. It involves years of unfunded state and federal mandates, well-intentioned but poorly researched environmental protections, whispered suggestions from powerful agriculture lobbyists, the growing cost and political instability of Middle Eastern oil, and a rural city in search of permanent jobs for its residents.

But when you come right down to it, it all begins with that most innocuous of substances: Scarecrow stuffing. Horse food. Manger bedding. Straw.

People who live in south Gridley know more than they probably want to know about straw. Many of them have been staring at 14 huge, monolithic stacks of it since they appeared without warning in a former orchard last winter.

The straw now molders in the back portion of an 80-acre block, surrounded on all sides by small businesses, family homes and orchards. Bordered on the east by Highway 99, pushed back from the road but still visible through the trees, the straw—all 18,000 tons of it—sits covered in huge blue-and-white tarps, looking like a misplaced city of circus tents. Each bale stack is at least 30 feet high and as many feet wide, stretching as far back as 200 feet.

The outside of the bales are dry to the touch, and the straw dissolves easily into dust when crumbled between one’s fingers. It’s easy to imagine it burning but less imaginable that it could be turned into a high-octane fuel additive.

But that is just what the city of Gridley intends to do with it. If its plan works, local farmers will have a more environmentally friendly way to dispose of rice straw (as opposed to burning it), Gridley will add a few dozen jobs to keep its young people from leaving town, and the city might even make a few bucks selling ethanol to oil companies. In their pursuit of this goal, city leaders have procured and spent almost $6.5 million in federal funds, and another $3 million is currently on its way from the Department of Energy. They have devoted countless hours of staff time, some of it donated for free, and spent thousands of city dollars as well.

There’s just one problem. Nobody has ever found a proven way to make ethanol out of rice straw.

“People are always amazed it’s going to be the city of Gridley, but someone’s got to do it,” said Gridley energy commissioner and former City Councilman Tom Sanford, defending what he termed the town’s “odyssey” to bring a straw-fed ethanol plant to Butte County.

The city brought the straw to Gridley at a cost of about $200,000 in an effort to show potential plant financers that a supply of straw large enough to feed the plant existed. But much to the chagrin of neighborhood residents, the city fell out with the plant’s main contractor and was forced to park the straw there indefinitely.

It now serves as a sort of place marker, a monument to the influence of agriculture on the local economy, and a tangible symbol of the progress and pitfalls of the city’s quest to provide a single solution for the problems of unemployment, agricultural waste and declining city revenues.

Neighbors say the straw has brought with it a minor plague of mice and flies and reminds them every day that the land they built their homes and lives around won’t be an orchard forever. The city is in the process of annexing the land, which has been zoned for industrial use for at least 10 years but has never been used for anything but growing fruit and nut trees. Exactly what will take the place of the straw and when the plant will be built are questions the city can’t readily answer. But if it gets what it wants, there is no question that the neighborhood will be unalterably changed.

Gridley city leaders hit upon the idea of an ethanol plant in 1994, when it came to their attention that the city stood to lose a huge chunk of revenue when its municipal utility’s long-term power contracts ran out in 2004. The cheap electricity contracts have helped keep the city afloat during hard times, providing a much-needed boost to the city’s general fund. Those contracts have recently been renewed, but at the time Gridley leaders worried that 60 percent of the utility money might vanish, leaving Gridley with an enormous hole in its modest budget.

“We need full-time, permanent jobs,” said City Administrator Jack Slota, pointing out that the agriculture industry, which city residents rely upon for employment, is seasonal, cyclical and sometimes unpredictable. “Gridley’s unemployment rate is about 10 percent,” he said. “Most of the kids who graduate high school here have to go out of the area to find jobs.”

Nobody knows how many jobs the plant would create, however, because even after eight years of study the plant has yet to make it to the design stage. In fact, although city leaders say they are now working with four companies that have come up with innovative ways of making ethanol, the actual technology the plant would utilize has yet to be invented. At one point, the city had an agreement with a Massachusetts company, BC International (BCI), which claimed to have bio-engineered a microscopic organism that could break down rice straw into the raw material needed for ethanol production. But the deal went up in flames when BCI proposed a plant that was much bigger than what the city had envisioned, and Gridley was once again stuck holding the short straw.

“In order for [the BCI plant] to be economic, it had to be really big,” Sanford said. “We were looking at 355,000 tons a year of rice straw. At about 2.1 tons per acre, that is one-and-a-half times what is produced in Butte County. That put a hold on the project, at least for the time being.”

The BCI plan also ran counter to what Gridley leaders say they are looking for, a plant that emits no foul odors, does not pollute and uses very little water. It is an idealistic—some would even say utopian—vision that the city has been pursuing for close to eight years now.

Seized with the idea and undeterred by the obstacles in their path, Gridley leaders have forged ahead with the project, writing grants, making industry contacts and compiling volumes of data on everything from the chemical makeup of rice straw to the foreign-trade consequences of oil dependency. While Sanford went before Congress to lobby for funds and support, Slota attended events like, “So You Want to Build an Ethanol Plant II,” a trade conference held in November 2001 at the Cornhusker Hotel in Lincoln, Neb. There, Slota learned under the auspices of the American Coalition for Ethanol how other communities have been able to finance and manage ethanol plant projects.

But even after all that work, the plant has only a “50-50 chance” of ever being built, said Gridley Mayor Frank Cook, who added that, even if the plant never makes it off the drawing board, the money and time the city has put into it have been well spent.

“The government’s collecting taxes from us. If we can get some of that money back and put it toward something that’s going to help Gridley, then why shouldn’t we?”

At around the same time the city was pondering the loss of electricity revenues, California rice farmers were grappling with the problem of phasing out the burning of rice straw. In 1991, the state gave rice growers 10 years to cut back their burning by 75 percent as a way to reduce air pollution. Though it was a major victory for environmental groups, it proved a costly burden for rice farmers, who were suddenly faced with finding an alternative disposal method for about 1.5 million tons of straw that nobody had ever tried to find a use for.

Growers who tried turning the stuff back into the soil soon found that the process encouraged the growth of crop diseases, which forced them to spend more money on fungicides. Some growers flood their fields in the off-season to form ponds for fish farming or duck hunting, which decomposes some of the straw, but the expense, acreage and labor necessary for flooding rules it out for many growers.

Ken Collins, spokesman for the Gridley area’s Rice Farmers Cooperative, said the 1991 mandate has cost state rice farmers plenty. Before the burn ban, a farmer could get rid of his straw for little more than the price of a book of matches (the actual estimate is $3 an acre). Now, Collins said, farmers are spending about $45 an acre to do the same job. The rice farming industry now spends about $19 million a year to harvest, bale and dispose of the straw, in addition to the $40 or $50 million groups like Collins’ have spent over the last decade trying to find new ways of collecting and marketing the straw. A state promise to help find alternative uses for it never materialized, he said.

“Their interpretation of the law is ‘tough shit,'” he said. “We met our obligation to quit burning, [but] there’s no market for straw. We’re ready to go, but there’s nowhere to go. As an industry, we’re a little disappointed.”

Efforts by farmers and inventors to find viable markets for the straw have met with limited success. While environmental and industry groups tout its value as everything from a building material to a source of food for livestock, the cost of harvesting and baling the straw has proven too much for the fledgling market to bear. So when the farmers heard about Gridley’s idea for a rice-straw-fueled ethanol plant, they immediately gave their support.

"[The city is] trying to solve a problem,” Collins said. “I’m no expert on ethanol production. I’m an expert on growing rice and baling straw. If you look at it as just ethanol, well, maybe it doesn’t work. But if you look at it as solving a rice straw problem, solving an energy problem, solving an unemployment problem, well then, maybe it does work.”

Those opposed to the plant are not questioning whether the city’s solution will work, but rather why it needs to be in their neighborhood.

The area in question is a hodge-podge of family homes, small businesses and well-established orchards. On a drive through the area on a warm spring day, one is likely to see residents sipping cold drinks on weathered lawn furniture, peering at any unfamiliar cars that drive by. Within a mile radius of the proposed plant site are a park and Little League field where kids practice chasing down grounders with their dads.

At the nearby Haskell Apartments, one of three small residential-care facilities in the area, an ambulance idles in the driveway. In a tiny side-street neighborhood of cinderblock houses, traditional Mexican music blares from one of the dwellings, built as cheap housing for the families of farm laborers. The whole neighborhood sits in the shadow of one of the world’s largest canneries, which now operates only about six weeks out of the year.

Down the street and around the corner a pair of typical Gridley residents, Barbara and John Gately, own a well-kept suburban house. John runs a video store on the town’s main drag, and Barbara works as a kindergarten teacher in Yuba City. They own their home on Losser Street, built 10 years ago on five acres of land that is also planted with walnuts.

They have never been politically active, never protested anything, never had a reason to fight City Hall, they said, until they caught wind of the ethanol plant. The Gatelys are convinced that, if the plant is built, its sights and smells will greet them every time they leave their house. They aren’t happy about the prospect.

“I just keep thinking, ‘How dare they?'” Barbara said. “How dare they come in to our neighborhood and put in something that’s going to impact our environment and our children’s environment for years to come? Gridley High is in terrible shape—it hasn’t changed since I graduated—and here they go and spend all this money buying 20,000 tons of moldy rice straw.”

Looking out the Gatelys’ front window, the blue-and-white tarps covering the massive straw stacks can be seen through a eucalyptus grove. If and when the ethanol plant is built, it would almost certainly dominate the view from not just their home, but also from almost every home and business in the neighborhood.

Aesthetic concerns are the least of their worries, however. From what they’ve been told in researching the proposed plant, its construction could bring with it a non-stop flurry of truck traffic, a malodorous stench that would be inescapable even indoors, a plague of mice and vermin from the stored straw, and the ever-looming possibility of a catastrophic explosion or a release of noxious chemicals.

Motivated by what they view as a threat to their lifestyle, the Gatelys, much to their own surprise, have emerged as the de-facto leaders of a rag-tag group of overwhelmed and angry neighbors who don’t trust city leaders or their quest to make Gridley the ethanol capital of the Sacramento Valley.

Although most of the nearby residents interviewed for this story were sympathetic to the plight of the rice farmers and some said they believed an ethanol plant might be a good idea, all thought putting it in the middle of a residential neighborhood was wrong. They cited concerns about the plant’s use of groundwater, the smell it could produce, and an almost certain drop in property values. Most of all, though, residents complained that the city had not done enough to inform them about the plant and questioned the wisdom of its placement within city limits.

“I’m not entirely opposed to [the plant], but it’s the unanswered questions,” said Robert Mack, who lives less than a mile from the site. “If they had been open and honest about it, if they would answer our questions, then maybe people would feel better about it.”

City officials say the plant’s proposed location makes it possible for the city to provide it with sewer, electrical and water connections, thus making it cheaper to build and operate. They also think it will fit in well with an industrial-agricultural research park that they plan on building next to the plant.

But some residents have health concerns. One of them is Rozanna Smith, 34, who lives a few blocks from the project site. After talking to her pediatrician, she is very worried that her son, Kody, 18 months, who suffers from respiratory problems, will be further sickened by emissions from the plant.

Other residents who live nearby are straddling the fence between activism and apathy, believing that the plant is a pipe dream that will never actually materialize.

The residents may be a disorganized bunch, but one thing they do have working for them is a wealth of information, much of it posted on the Internet, compiled by a loose affiliation of people from all over the country who have fought against ethanol plants in their own neighborhoods.

Bob Scidmore is one of the most outspoken members of the growing anti-ethanol movement. A resident of Menomonie, Wis., he began to question the idea of ethanol when he learned of city plans to build a corn-fired plant in his hometown. Since then, he has spent much of his free time researching ethanol production, going so far as to take a family trip across the Midwest so he could visit 14 plants that are already in operation. What he saw and smelled on that trip was enough to launch him into the fray of anti-ethanol activism.

In his opinion, ethanol is little more than a scam that makes a lot of money for big agriculture and energy firms at the expense of the towns they build plants in.

“You can generally smell [an ethanol plant] once you get in the 10-mile range,” he said. “The ethanol industry will tell you it smells like a brewery, or like grandma’s cooking. Well, unless your grandma cooks with spoiled beer, then … I don’t know. My grandma never cooked that way.”

Scidmore said all the plants he has ever seen look like oil refineries, complete with belching smokestacks and huge, metal storage tanks. He likened the plants’ odor to that of a concentrated swill from discarded soda and beer cans left in a closed container to stew in the sun for a few weeks.

Statements like that, made on his Web site and to the press, have gotten the attention of people all over the country who now call Scidmore for advice as to what position they should take on plans to build ethanol plants in their own communities. Scidmore said he tells them all the same thing.

“Don’t let them turn a spade of dirt until everything’s in writing,” he said. “I get calls from all over the country from communities where a company has gone in there, and before people even know it’s being planned, a plant goes up.”

Gridley city officials insist they don’t want it to be that way. They say their plant will be a “closed-loop system” in which water and waste materials are recycled back into the process, the odor will not be a problem, and truck traffic and noise will be either minimized or mitigated. They point out that the land the plant is to be built on is already zoned for industrial use and that they, too, live in the community and don’t want to see its value diminished. But they are stuck when it comes to providing specific details on how the plant will actually look, smell and operate, because no one has ever built a plant that does what the city wants it to do.

If Gridley finds itself in an uproar over ethanol, it certainly won’t be alone. Ethanol plants have generated controversy (and often lawsuits) in cities and towns across the country.

Ethanol itself has been a political hand grenade in the United States since the 1970s. Some 70 percent of it is made in 15 Midwestern states, and agricultural lobbyists hired by international firms such as Archer Daniels Midland have guaranteed the profitability of Midwest ethanol by securing huge government subsidies for its production. Currently, U.S. taxpayers spend more than $1 billion a year to help prop up the ethanol industry.

When Jack Slota calls ethanol “moonshine,” he’s not just whistling “Dixie.” Pure ethanol is essentially grain alcohol—college kids know it (and drink it) in a bottled and diluted form marketed under the brand name “Everclear.” Though it can be made from almost any type of grain, it is usually distilled from a large mash of corn or sugar cane. It can be used as straight fuel in engines that are designed for it, but in most cases it is used as an additive to gasoline.

Adding ethanol as an “oxygenate” is supposed to make gasoline burn cleaner, thus reducing the amount of smog-causing particles that belch from the tailpipes of those 15-mile-per-gallon SUVs that Americans seem to love so much.

Responding in 1990 to a quarter-century of public demand that the government do something about acid rain and air pollution, the Environmental Protection Agency (EPA) put together the federal Clean Air Act, which requires that California gasoline be blended with oxygenates. Many lawmakers outside of the Corn Belt saw the mandate as a pork-barrel handout to the influential agriculture companies and started looking for ways around the requirement.

Furthermore, because ethanol had to be trucked in from the Midwest, California refineries found they could save money by substituting methyl tertiary butyl ether (MTBE), a by-product of the petroleum refining process. Unfortunately, MTBE, which is suspected to be carcinogenic, proved itself to be an environmental nightmare, contaminating an unknown but potentially significant amount of the state’s groundwater. It is now scheduled to be phased out of use by 2004.

So although California may have stalled the ethanol requirement, it never managed to dodge it. Unless the oil companies come up with something else to put in our gas, we will all be driving around with ethanol in our tanks in a couple of years.

You’d think that would make environmentalists happy, and it probably would, were it not for a growing chorus of scientists who are tearing apart the notion that oxygenated gasoline has any effect on reducing air pollution. Even the EPA, which came up with the idea in the first place, now admits that spiking gas with ethanol (or MTBE, for that matter) does little to reduce smog. Although it does burn cleaner, it produces other chemicals that cancel out its benefits.

What’s more, research suggests that the practice of growing corn (the prime feedstock for ethanol plants) for the sole purpose of producing ethanol is a huge waste of energy and puts more pollution into the atmosphere than is saved by using so-called “gasohol” blends.

David Pimental, a professor at Cornell University, published a study last year that blasts the inefficiency of ethanol production. Pimental’s research shows that it takes 131,000 BTUs (a measurement of a unit of energy) to make a gallon of corn ethanol, which contains only 77,000 BTUs. If the engines in our SUVs were ever converted to run on pure corn ethanol, drivers would have to shift into four-wheel-drive, because there wouldn’t be any roads left to drive on. We’d need to use 97 percent of all the land in the United States to grow corn—not to eat, but to fuel our beloved automobiles.

Of course, Pimental’s numbers have no bearing on the proposed Gridley plant, which would run on a feedstock that, unlike corn, is essentially a waste product. But they are relevant because if enough research shows that ethanol doesn’t solve the problem of air pollution and is inefficient as an alternative fuel, then the political winds that keep ethanol production aloft could shift, turning Gridley’s new plant into a relic of the ethanol age before it is even built.

No one can say whether the city’s quest will end in glory or defeat. If the plant is built in a way that neighbors can live with, then Gridley will have positioned itself on the ground floor of what may be a lucrative new energy market. But if it fails, city leaders will have spent more than $10 million in taxpayer money and alienated an increasingly vocal group of residents over their cherished dream of spinning straw into gold.