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EPA denies Texas RFS reduction petitionBy Jennifer Bremer
The U.S. Environmental Protection Agency has denied a request submitted by the State of Texas to reduce the nationwide Renewable Fuels Standard, EPA administrator Stephen Johnson announced Aug. 7. Working with the departments of energy and agriculture, EPA considered more than 15,000 public comments and determined that the RFS is not causing "severe harm" to the economy. This means that the total volume of renewable fuels mandated by law to be blended into the fuel supply will remain at 9 billion gallons in 2008 and 11.1 billion gallons in 2009. Corn growers across the nation, hailed the EPA's decision as they prepare for the second-largest corn harvest in history and consumers clamor for solutions to high gasoline prices. "We're very grateful but not surprised by the EPA's decision, given the fact that projections are calling for another bountiful harvest," said National Corn Grower's Association president Ron Litterer, a corn grower from Iowa. "We hope that those who have been critical of corn ethanol because of its perceived connection to higher retail food prices will work with us to help achieve a diversified and comprehensive solution to high energy prices and our reliance on foreign oil." Based on reams of scientific, economic and industry data put before the agency, the EPA's decision turned down a request by Gov. Rick Perry, R-TX, to cut the renewable fuels standard in half for one year. Perry had cited ethanol's affect on feed and food prices, despite a study by Texas A&M University researchers that the requested waiver would have little impact. According to the study, "relaxing the RFS does not result in significant lower corn prices. This is due to the ethanol infrastructure already in place and the generally positive economics for the industry. The ethanol industry has grown in excess of the RFS, indicating that relaxing the standard would not cause a contraction in the industry." Perry's request had to prove to the EPA that there is severe harm to the U.S. economy, that the harm is directly caused by the implementation of the RFS and reducing the RFS would redress that claimed economic harm. The state's two-page petition failed all three tests. In its decision, the EPA found that waiving the RFS would only reduce corn prices by as little as 7 cents per bushel. "After reviewing the facts, it was clear this request did not meet the criteria in the law," said Johnson. "The RFS remains an important tool in our ongoing efforts to reduce America's greenhouse gas emissions and lessen our dependence on foreign oil, in aggressive yet practical ways." Corn growers across the nation praised the EPA's decision, agreeing that a change would not affect corn prices, food prices or ethanol production. "This is a victory for consumers because ethanol lowers gas prices, reduces air pollution and reduces our dependence on expensive foreign oil. Every independent study has confirmed that using corn to make this cheap, clean, American-made fuel has no significant impact on food prices," said David Gibson, executive director of the Texas Corn Producers Board. The Iowa Corn Growers Association leaders were pleased with the decision as well, as Iowa leads the nation in corn production and in processing corn into ethanol. "If you dig into the facts, it's clear that an RFS waiver would not be good for Americans, since it would increase gasoline prices for all of us," said Tim Recker, ICGA president and a grower from Arlington. "We are very pleased that the EPA's analysts crunched the numbers and believed the facts. Sustaining the RFS is important for U.S. consumers and for Iowa farmers." Recker noted that ethanol use saves consumers about 45 cents per gallon every time they buy motor fuel. "The RFS has put us on the road to relying more on U.S. produced biofuels and less on high-priced foreign oil. There's no reason to turn back," said Recker. "The RFS is the right fuel policy for America. We can all applaud the EPA for making the right decision today." U.S. Senator Charles Grassley, R-IA, who has been a leading supporter of the ethanol industry, also applauded the decision. "Today's ruling is a victory for clean energy, rural America, and national security, and a blow to those who have used ethanol as a scapegoat for rising fuel and food prices. The EPA realized that the facts clearly stood in ethanol's corner," Grassley said. "The bottom line is that ethanol is extending our fuel supply and actually lowering gas prices. Congress provided certainty to ethanol producers when it passed the Renewable Fuels Standard. The ruling will allow farmers to continue to plan for and meet the fuel and food needs of the future." However, some members of livestock industry felt differently about the ruling. In response to the ruling, Andy Groseta, rancher from Cottonwood, Ariz., and president of the National Cattlemen's Beef Association, said in a statement, "The cattle producers that make up the NCBA are disappointed with the EPA's decision not to grant a waiver from the RFS. We had hoped that the Administration would recognize the hardship cattle producers are facing with tight corn supplies and high prices for feed. "Our industry has suffered a record of nearly $1.5 billion in cattle feeding losses between January and June of 2008, which constitutes the severe economic impact necessary to prompt a waiver from the RFS mandate." Jesse Sevcik, vice president for legislative affairs for the American Meat Institute said, "Diverting a third of our corn crop to ethanol production has driven corn and all feed prices up to levels that are severely impacting U.S. meat and poultry producers as well as consumers. "Our industry has already seen a contraction in production, resulting in smaller herd sizes and higher meat prices for consumers. Governor Perry recognized that a near tripling of feed prices would cost Texas livestock and poultry farmers greatly, put meat industry employees out of jobs and strain Texans' wallets. The same is true across America and unfortunately the decision by the EPA ensures that this will continue to be the case unless Congress acts to restructure the ethanol mandates, taxes and tariffs," Sevcik said. Recently, the Texas A&M study was validated by economists at Purdue University, who tied most of the recent spike in corn prices to higher oil prices, which had in turn caused the demand for ethanol and corn to jump. "The higher energy costs, the higher everything else costs," Litterer said. "Corn ethanol helps provide energy independence and keep energy prices down. It's part of the solution to the real problem."
Jennifer Bremer can be reached by phone at 515-833-2120, or by e-mail at jbremermaj@hotmail.com. 8/18/08 Date: 8/14/08
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