EPA Denies Texas’ Request for RFS Waiver

In late April, Texas Governor Rick Perry officially requested a waiver from the Renewable Fuels Standard. The request had drawn backing from a host of meat and farming industry organisations spelling out what they saw as the dangers to the industry from the RFS.

The American Meat Institute, and more than 15,000 other concerned citizens and organizations submitted comments in support of the petition, citing multiple reasons the waiver should be granted, including a number of economic harms caused by the corn-ethanol mandates which are already apparent, severe and imminent.

In those comments, AMI President and CEO J. Patrick Boyle noted that the “new, elevated ethanol mandates, enacted by Congress in December 2007, are and will continue to severely harm the economy of Texas, our members and the United States of America if the EPA does not grant this waiver.”

Following the EPA decision, Gov Perry said: "I am greatly disappointed with the EPA’s inability to look past the good intentions of this policy to see the significant harm it is doing to farmers, ranchers and American households. For the EPA to assert that this federal mandate is not affecting food prices not only goes against common sense, but every American’s grocery bill.

"Denying Texas’ request is a mistake that will only increase the already-heavy financial burden on families while doing even more harm to the livestock industry. Good intentions and laudable goals are small compensation to the families, farmers and ranchers who are being hurt by the federal government’s efforts to trade food for fuel. Any government mandate that artificially props-up a single industry to the detriment of millions of Americans is bad public policy.

"Congress specifically created an emergency waiver provision for situations like these and EPA refuses to implement it."

In response to EPA’s decision, the AMI's Patrick Boyle said “using a third of our corn crop for ethanol production has driven corn and all feed prices up to levels that are severely impacting US meat and poultry producers as well as consumers.”

Boyle noted that the tripling of corn prices has done severe economic harm to the meat and poultry industry. “The meat and poultry industry has already seen a contraction in production, resulting in smaller herd sizes and higher meat prices for consumers. Governor Perry recognized earlier this year that a near tripling of feed prices would harm Texas livestock and poultry farmers greatly, put meat industry employees out of jobs and strain Texas consumers.

"The same is true all across the country, and unfortunately EPA’s decision ensures that this will continue to be the case unless Congress acts quickly to restructure the ethanol mandates, taxes and tariffs.”

A spokesman for teh National Cattlemen's Beef Association said: "The cattle producers that make up the National Cattlemen’s Beef Association (NCBA) are disappointed with the Environmental Protection Agency’s (EPA) decision not to grant a waiver from the Renewable Fuels Standard (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 we believe constitutes the severe economic impact necessary to prompt a waiver from the RFS mandate.

"With the ethanol mandate increasing from nine billion gallons in 2008 to 11.1 billion gallons in 2009, this situation will only worsen. The government is drastically increasing the demands on our corn supply in a time of record prices. Several million more planted corn acres will be needed in 2009 at a time when competition for acreage is already very tight.

However, the American Farm Bureau Federation said the EPA decision sends a positive signal regarding the substantial economic benefits of renewable fuels.

“We’re pleased that the EPA did not turn its back on the promise of renewable fuels,” said AFBF President Bob Stallman. Texas requested a 50-percent waiver of the national volume requirement for the RFS.

Implementation of the RFS will continue as legislated in the Energy Policy Act of 2007, according to the EPA.

The RFS target for 2008 is 9 billion gallons of renewable fuels including ethanol and biodiesel. That rises to 11.1 billion gallons in 2009 and 36 billion gallons in 2022.

According to Stephen Johnson, EPA administrator, the Texas request did not meet the criteria for a waiver. EPA is authorized to waive the national RFS if the agency determines mandated biofuels volumes would cause “severe harm” to the economy or the environment. While acknowledging that high commodity prices are having economic impacts, EPA’s extensive analysis found no compelling evidence that the RFS mandate would cause severe economic harm during the time period specified in the Texas waiver request.

“In addition to strengthening the first-generation biofuels industry, the RFS plays a crucial role in fostering the continued development of second- and third-generation biofuels including cellulosic ethanol, biomass-based biodiesel and other advanced biofuels,” said Stallman.

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