EPA Rejects Ethanol Waiver Request

EPA denied a request by Texas Gov. Rick Perry to waive 50 percent of the 9-billion-gallon Renewable Fuel Standard (RFS) on Aug. 7. The first-of-its-kind waiver request was seen as a critical test of RFS, which calls for rising ethanol quotas in coming years and is central to an effort by the Bush administration to reduce the nation’s dependence on foreign oil.

That program has come under fire in recent months as corn prices have hit new peaks and global concerns have increased about the wisdom of using food to make a transportation fuel, as well as the environmental impacts of doing so.

  • Texas Gov. Perry’s reaction

Texas Gov. Rick Perry vowed to stand buy livestock producers in his state after EPA denied a request to waive 50 percent of the 9-billion-gallon Renewable Fuel Standard on Aug. 7, the Houston Chronicle reports.

"After the ruling, Perry fired back at regulators he said don’t fully appreciate the devastating impact high corn prices have had on the state’s pork, poultry, beef, and other livestock industries," according to theChronicle.

In a telephone interview with the newspaper, Perry said that "’the idea that they have some bureaucratic definition that constitutes severe economic harm is really nonsense to me. They need to look at reality. We got people that are hurting.

“’I think this is the early stages of the destruction of the Texas livestock industry,” he said. The first-of-its-kind waiver request was seen as a critical test of the Renewable Fuel Standard, which calls for rising ethanol quotas in coming years and is central to an effort by the Bush administration to reduce the nation’s dependence on foreign oil.

That program has come under fire in recent months as corn prices have hit new peaks and global concerns have increased about the wisdom of using food to make a transportation fuel, as well as the environmental impacts of doing so.

  • Reaction from the Ethanol Promotion and Information Council (EPIC)

The Ethanol Promotion and Information Council (EPIC) was pleased with EPA’s decision. In a press release, EPIC stated that the decision ensures that consumers will continue to benefit from an expanding supply of domestically produced renewable fuel, which is helping to lower gas prices.

Those savings at the pump are considerable — as much as $500 per year for the average family, according to estimates by Merrill Lynch, Iowa State University, and others.

“Today’s decision is an important win for American consumers,” said EPIC Executive Director Toni Nuernberg. “People are justifiably focused on pocketbook concerns in today’s economy. Ethanol is one of the few things helping families save money.”

  • DTN commentary on EPA’s next steps

DTN Refined Fuels Editor Brian Milne says EPA is obligated to review ethanol market conditions in December. Then EPA will work with the U.S. Department of Energy and USDA to identify expected demand for transportation fuels in the upcoming year.

Milne says the federal government would then assign the annual RFS commitment that dictates the Renewable Volume Obligation for each refiner, importer, and in some cases, gasoline blenders.

It will be USDA’s role to decide whether there would be enough feedstock to support the annual RFS. In the Aug. 7 decision against the Texas waiver request, EPA Administrator Stephen L. Johnson said that EPA found that there will be adequate feedstocks available to meet the 9-billion-gallon RFS for 2008.

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