EPA turns down states' request for ethanol waiver

WASHINGTON (AP) - The Environmental Protection Agency has denied requests from several governors to waive production requirements for corn-based ethanol.

A renewable fuels law requires that 13.2 billion gallons of ethanol be produced by this year and 15 billion gallons be produced by 2015. That's good for corn farmers, but it's angered poultry, hog and cattle farmers. They say they've seen big jumps in corn-based feed costs as corn is diverted to make ethanol vehicle fuel.

States requesting the waiver say reduced corn production due to this year's drought has made the problem even worse.

Gov. Mike Beebe, D-Ark., said in a letter to the EPA in August that ethanol production was taking a "terrible toll" on animal agriculture in his state and that consumers would pay more for food as a result.

Governors of North Carolina, New Mexico, Georgia, Texas, Virginia, Maryland, Delaware, Utah, and Wyoming also asked for the waiver, along with members of Congress and a coalition of farm groups and other industries that have opposed increased ethanol production.

The EPA said Friday that the agency has studied the effects of waiving the requirement and officials believe it would have had little impact on corn prices.

"We recognize that this year's drought has created hardship in some sectors of the economy, particularly for livestock producers," said Gina McCarthy, assistant administrator of the EPA's Office of Air and Radiation. "But our extensive analysis makes clear that congressional requirements for a waiver have not been met and that waiving the Renewable Fuel Standard will have little, if any, impact."

Under the EPA's interpretation of the renewable fuels law, first passed in 2005 and then significantly expanded in 2007, it is not easy to qualify for a waiver. The EPA can grant a waiver if the agency determines that the set ethanol production would "severely harm" the economy of a state, region or the entire country. It's not enough if the standard just contributes to the harm, the EPA said, noting the agency also has a high threshold for the degree of harm done.

A coalition of livestock, poultry and dairy organizations reacted angrily to the decision.

"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," the coalition said in a statement.

Environmental groups also have opposed increased ethanol production, saying the excess corn planting is tearing up the land.

Scott Faber, a lobbyist for the Environmental Working Group, said this most recent waiver denial may further energize ethanol opponents to lobby Congress to repeal the entire renewable fuels law and not "tinker with a safety valve that is too tight for either a Democratic or Republican administration to turn."

The Bush administration turned down a request by Texas Gov. Rick Perry in 2008 to waive the mandate because of drought in his state.