States Denied Waiver of Ethanol Mandate

Federal regulators rejected a plea from several states to waive the requirement for gasoline producers to blend ethanol into their fuel, saying the economic conditions necessary for such a waiver did not exist.

Governors of eight states told the U.S. Environmental Protection Agency earlier this year that the mandate to use ethanol was driving up food costs, especially after the drought this summer proved to be the worst in decades.

At the heart of their petition is fear the severe drought would reduce the amount of corn available for ethanol and farmers would have to divert corn from food and livestock uses to meet the ethanol requirement, which is part of the renewable-fuels standard. This diversion would increase corn prices and bring down the economies of those eight states.

“We recognize that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers,” Gina McCarthy, assistant administrator for the EPA’s Office of Air and Radiation, said in a Nov. 16 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.”

The law requires that fuel refiners include 13.2 billion gallons of ethanol in 2012 and 13.8 billion gallons in 2013.

The states wanted EPA to reduce the standards for 2012 and 2013 as the agency deemed necessary, but EPA’s analysis, conducted with the U.S. Department of Agriculture, determined that the ethanol standard will increase food prices by only about 1% in 2012 and 2013. A separate analysis with the Department of Energy found the standard would have no effect on home-heating costs.

Those conditions do not meet Congress’ requirement for a waiver or decrease in the standard, EPA said.

© 2012, Transport Topics Publishing Group. All rights reserved.

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