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EPA denies ethanol mandate waiver requests

By Jennifer Carrico

The U.S. Environmental Protection Agency has decided not to grant a waiver on the federal mandate for the production of corn ethanol.

In July, a coalition of meat and poultry organizations asked the EPA for a whole or partial waiver of the amount of renewable fuel that must be produced under the Renewable Fuels Standard for the remainder of 2012 and for the portion of 2013 that is one year from the time the waiver would have become effective.

The RFS requires 13.2 billion gallons of corn-based ethanol to be produced in 2012 and 13.8 billion gallons in 2013, amounts that will use about 4.7 billion and 4.9 billion bushels, respectively, of the nation's corn. Some agricultural forecasters now are estimating that just 11.8 billion bushels of corn will be harvested this year, which is about 1.2 billion bushels less than in 2011.

The RFS has "directly affected the supply and cost of feed in major agricultural sectors of this country, causing the type of economic harm that justifies issuance of an RFS waiver," said the coalition in its petition.

In a Nov. 16 statement, EPA's assistant administrator at the office of air and radiation, Gina McCarthy, said, "We recognize that this year's drought has created hardship in some sectors of the economy, particularly for livestock producers. 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."

To support the waiver decision, EPA conducted several economic analyses. Economic analyses of impacts in the agricultural sector, conducted with the U.S. Department of Agriculture, showed that on average waiving the mandate would only reduce corn prices by approximately one percent. Economic analyses of impacts in the energy sector, conducted with the Department of Energy, showed that waiving the mandate would not affect household energy costs.

EPA found that the evidence and information failed to support a determination that implementation of the RFS mandate during the 2012-2013 time period would severely harm the economy of a state, a region, or the United States, the standard established by Congress in the Energy Policy Act of 2005.

Members of the coalition, which included livestock, poultry and dairy organizations, that originally asked for the waiver showed much disappointment in the decision.

"In light of the most widespread drought to face the country in more than 50 years, the refusal to grant this waiver is a blatant example of the flawed policy of the RFS," said National Cattlemen's Beef Association President J.D. Alexander, a cattle feeder from Pilger, Neb. "The artificial support for corn ethanol provided for by the RFS is only making the situation worse for cattlemen and women by driving up feed costs."

Producers from the crop side showed relief in the decision. "The National Corn Growers Association supports the EPA's decision to deny the RFS waiver request. We believe Administrator Jackson (EPA Administrator Lisa Jackson) appropriately recognized petitioners did not properly prove severe nationwide economic harm had occurred thereby creating no justification for a waiver of the RFS," said NCGA President and Iowa corn grower Pam Johnson.

"The ethanol industry plays a pivotal role in job creation throughout the country, supporting over 400,000 jobs nationwide. This includes many ethanol plants in rural America. The RFS advances the use of domestically produced renewable fuels, encourages new technologies and enhances U.S. energy independence," added Johnson.

Biofuel groups praised the decision as well. The American Coalition for Ethanol applauded the EPA for denying a request from a handful of states to waive the RFS.

"Despite millions of dollars spent by Big Oil and Big Food to shamelessly attack American-made ethanol, it comes as no surprise EPA denied the requests to waive the RFS because the facts are on our side," said Brian Jennings, ACE executive vice president. "EPA considered the flexibility built into the RFS, precedent established in 2008, and data which proved waiving the RFS wouldn't remedy the harm of the drought in making the right decision."

Frustration continued to be seen by the animal agricultural groups fearing higher feed costs.

"We are extremely frustrated and discouraged that EPA chose to ignore the clear economic argument from tens of thousands of family farmers and livestock and poultry producers that the food-to-fuel policy is causing and will cause severe harm to regions in which those farmers and producers operate," said the coalition who supported a waiver.

The most recent USDA crop production reports, while showing more corn than originally thought, still has production down nearly 13 percent from 2011, the lowest since 2006. The coalition said the ethanol industry will use more than 40 percent of the corn supply in 2013.

"We now have about one-third less of the corn that we need to adequately supply animal feed, ethanol, exports and sufficient carry-over levels," the coalition said. "But the government continues to mandate that a significant amount of the corn supply be blended next year into gasoline."

Members of the coalition that signed the petition included the American Feed Industry Association, American Meat Institute, American Sheep Industries Association, California Dairy Campaign, Dairy Producers of New Mexico, Dairy Producers of Utah, Idaho Dairymen's Association, Milk Producers Council, National Cattlemen's Beef Association, National Chicken Council, National Pork Producers Council, National Turkey Federation, Nevada State Dairy Commission, North American Meat Association, Northwest Dairy Association, Oregon Dairy Farmers Association, Southeast Milk Inc., United Dairymen of Arizona and the Washington State Dairy Federation.

Jennifer Carrico can be reached by phone at 515-833-2120, or by email at jcarrico@hpj.com.

Date: 11-26-2012



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