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EPA Says No to RFS Waiver

posted on November 16, 2012

Wall Street pulled out of a three-day slump after President Obama and Congressional leaders expressed confidence in their ability to strike a deal averting the Fiscal Cliff.

While the players offered few specifics on how they will avert the massive package of tax hikes and spending cuts, the solution will likely be implemented in two phases: with steps now averting the fiscal crisis coupled with promises of broader tax reform in the New Year.

The optimistic developments were welcomed on Wall Street Friday where all three major indices rallied dramatically on the news. But other announcements in Washington this week were decidedly less popular with some constituencies – especially a controversial Obama Administration ruling on ethanol.

EPA Says No to RFS Waiver

The Environmental Protection Agency announced Friday that it is denying requests from a handful of governors to waive production requirements for corn-based ethanol.

In a statement Friday, EPA officials said "We recognize that this year's drought has created hardship in some sectors of the economy, particularly for livestock producers.  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." -Gina McCarthy, Assistant Administrator, EPA Office of Air and Radiation

The Renewable Fuels Standard, or RFS, requires that 13.2 billion gallons of ethanol be produced annually by the end of 2012 and the mandate increases to 15 billion gallons by 2015.

Arkansas Governor Mike Beebe (pron. BEE-bee) petitioned EPA in August to waive the ethanol production mandate saying it was taking a "terrible toll" on animal agriculture in his state and that consumers would pay more as a result.

Governors of North Carolina, New Mexico, Georgia, Texas, Virginia, Maryland, Delaware, Utah, and Wyoming joined Beebe in requesting the waiver, along with some members of Congress and a coalition of farm groups and other industries.

EPA’s decision to deny the waiver was cheered by the American Coalition for Ethanol which said, "Despite millions of dollars spent by Big Oil and Big Food to shamelessly attack American-made ethanol, it comes as no surprise EPA denied the requests to waive the RFS because the facts are on our side. -Brian Jennings, ACE Executive Vice President .

But the decision was not well received in the livestock sector.  In a statement, National Cattleman’s Beef Association officials said, "In light of the most widespread drought to face the country in more than 50 years, the refusal to grant this waiver is a blatant example of the flawed policy of the RFS.  The artificial support for corn ethanol provided for by the RFS is only making the situation worse for cattlemen and women by driving up feed costs." -NCBA President J.D. Alexander.

This is the second time EPA has considered an RFS waiver request. In 2008, the state of Texas formally requested that ethanol production mandates be suspended. 

In both cases, EPA analysis concluded that ethanol production requirements did not impose severe harm.

Tags: EPA ethanol National Cattlemens Beef Association NCBA RFS


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