EPA delays its decision on temporarily lowering ethanol requirements for gas

Tuesday, July 22, 2008 | 9:45 p.m. CDT

LUBBOCK, Texas — The Environmental Protection Agency on Tuesday put off a decision on Texas’ request to temporarily lower ethanol requirements for gasoline, a change Gov. Rick Perry says is needed to rein in corn prices.

EPA Administrator Stephen Johnson said the agency needs more time to review more than 15,000 public comments and consult with other departments. A decision had been due Thursday; the agency now says it hopes to have a decision in early August.

An energy bill passed in December required 9 billion gallons of ethanol to be blended into gasoline from Sept. 1 to Aug. 31 of next year. Perry, a Republican, asked the EPA in April to drop the Renewable Fuels Standard requirement to 4.5 billion gallons because the demand for ethanol is raising corn prices for livestock producers.

Perry said in a statement that he’s glad Johnson and his staff are being diligent.

“We still believe the solution to the unintended consequence of this federal RFS mandate is simple: a one-year, 50 percent waiver,” Perry’s statement said. “The RFS waiver is an essential step toward decreasing the devastating statewide, national and international impact of skyrocketing feed and food costs.”

More than four dozen House Republicans and two dozen GOP senators, including presidential candidate John McCain, have written to EPA in support of the waiver. The state of Connecticut also supported Texas’ request.

Corn prices have risen markedly over the last year with the increased demand for ethanol, and prices of foods containing or dependent on corn have risen along with them. In some poor countries, climbing commodity prices have touched off food riots.

Circumstances, though, have changed since Perry made the request, said David Gibson, executive director of the Texas Corn Producers Board, an industry group opposed to the waiver.

In the past three weeks the bushel price for corn on the Chicago Board of Trade futures market has dropped by more than 25 percent, he said.

Corn for December delivery had risen to an all-time high of $7.96 a bushel late last month, but it fell below $6 a bushel Tuesday amid improved weather and falling oil prices.

A report from the U.S. Agriculture Department earlier this month showed that planted acres increased by more than a million acres over the previous month, despite many Midwest fields getting flooded, Gibson said.

“We want to make sure it’s done in an accurate and correct way,” Gibson said of the EPA’s decision.

This year’s corn crop is far from a done deal, said Ross Wilson, president and chief executive officer of the Texas Cattle Feeders Association.

“We’re by no means out of the woods on this deal because the crop is late developmentally,” he said. “We hope they will finish the analysis expeditiously because livestock producers are still suffering from high feed price, at least partially brought on by the unintended consequences from the current ethanol policy.”

Cattle are still going to feedlots but are staying out on pasture longer, Wilson said. If the ethanol mandate remains, livestock supplies will shrink as more corn is diverted for biofuel, he said.

“And that’s going to eventually translate to the meat case,” Wilson said, alluding to higher prices for beef.

Matt Hartwig, spokesman for the Renewable Fuels Association, said he wasn’t surprised by the delay.

“I don’t think that anyone’s shocked that the federal government is a little behind schedule,” he said. “This is the EPA taking extra time to dot all the i’s and cross all the t’s to ensure their explanation as to why they will be denying Governor Perry’s request is comprehensive.”

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