EPA refuses to waive ethanol mandate

The Environmental Protection Agency is rejecting requests from states and meat industry groups to waive regulations that require the blending of ethanol into gasoline.

EPA rejected petitions from nearly a dozen states, including Texas, Virginia, and Maryland, for waivers of the federal Renewable Fuel Standard (RFS).

“[T]he agency has not found evidence to support a finding of severe ‘economic harm’ that would warrant granting a waiver of the Renewable Fuels Standard,” EPA said Friday.

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Opponents of the RFS say drought-driven spikes in corn prices and reduced harvests should prompt the agency to relax the requirements, which require refiners to blend billions of gallons of ethanol into gasoline.

Livestock, poultry and food industry groups dismayed at the amount of corn used for ethanol have joined states in calling for EPA to back off the ethanol mandate. EPA also faced congressional pressure to ease the requirements.

But EPA tossed aside their arguments.

“We recognize that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers,” said Gina McCarthy, EPA’s top air regulator, in a statement. “But our extensive analysis makes clear that Congressional requirements for a waiver have not been met and that waiving the RFS will have little, if any, impact,” she said.

The ethanol industry applauded EPA’s decision.

Renewable Fuels Association President Bob Dinneen lauded EPA for “basing its decision on thoughtful analysis of the facts and not emotion or panic,” and said the fuel standard is working as designed.

“The flexibility that is built into the RFS allows the marketplace to ration demand, not the government. Indeed, the ethanol industry has responded to the market by reducing output by approximately 12%. Other users of corn have responded to a lesser degree,” he said in a statement.

EPA is requiring 13.2 billion gallons of ethanol to be blended into gasoline in 2012, rising to 13.8 billion next year.

The decision drew quick attacks from food groups and environmentalists.

“This year’s catastrophic drought seriously reduced corn yields and has lead to a situation where the RFS’ unsustainable mandates force ethanol fuel to commandeer a shrunken pool of available corn for food and livestock feed,” said Rob Green, executive director of the National Council of Chain Restaurants.

Said Michal Rosenoer, biofuels policy campaigner at Friends of the Earth: “If the worst U.S. drought in more than 50 years and skyrocketing food prices are not enough to make EPA act, it falls to Congress to provide relief from our senseless federal support for corn ethanol.”

But EPA largely disagreed with claims that waiving the ethanol mandate would affect prices.

“EPA’s analysis shows that it is highly unlikely that waiving the RFS volume requirements will have a significant impact on ethanol production or use in the relevant time frame that a waiver could apply (the 2012-2013 corn marketing season) and therefore little or no impact on corn, food, or fuel prices,” EPA said in a summary of its decision.

The ethanol mandate was first created in a 2005 energy law and expanded in 2007 legislation.