EPA Won't Waive RFS for Texas

LANSING - Aug 7/08 - MFB -- Today's decision by the U.S. Environmental Protection Agency (EPA) to deny a Texas governor's request to waive the country's Renewable Fuels Standard (RFS) mandate is a smart move because continued ethanol production is one of many strategies that must be followed to help free consumers and farmers of escalating energy costs, according to the Michigan Farm Bureau (MFB).

"In denying the request from Texas Governor Rick Perry to cut the RFS mandate in half, the EPA came to the same conclusion as Farm Bureau, and that's that the RFS mandate is not the sole cause behind the run-up in prices paid by livestock farmers for animal feed or the higher food costs that consumers are paying at the grocery store. Rather, a combination of factors has led to these increased costs, mainly soaring prices for oil," said Bob Boehm, manager of the MFB Commodity and Marketing Department.

Recognizing this, the EPA concurred with Farm Bureau that it would be a mistake to halt progress on domestic ethanol production because the renewable fuel is one of many strategies that can help reduce America's dependence on foreign oil.

"By continuing to expand America's supply of ethanol to offset our oil needs we can target and treat a major root of the problem," said Boehm. "That's not to say that we don't recognize the financial burdens being experienced by livestock farmers who are paying more for corn to feed their animals. It's just that ethanol is part of an established agenda designed to help livestock and crop farmers alike cope with rising costs for necessities like fuel and petroleum-based fertilizer.

"That agenda hasn't changed so the EPA is right in not veering from it now, especially since the RFS plays a crucial role in fostering the continued development of second- and third-generation biofuels made from products other than corn, such as cellulosic ethanol and biomass-based biodiesel."

Corn Prices Down Despite Ethanol

Boehm added that even with the RFS in place, the price of corn has dropped during the past few weeks as crop projections that were once dim as a result of flooding and other weather-related problems begin to perk up.

"This tells us that the market is reacting naturally to changing fundamentals," said Boehm. "It also illustrates that commodity prices can fall as quickly as they rise."

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, according to EPA Administrator Stephen Johnson.

Johnson said 15,000 public comments were submitted in response to the waiver request. In making its decision, the agency considered these comments along with several other factors such as estimates for corn prices with and without the RFS mandate and the latest reports on world corn stocks.

The agency's analysis found that waiving the RFS mandate would cut an insubstantial amount, only 5 cents, from the per-bushel price for corn, while global commodity outlooks predict a sufficient corn crop to meet demand for food and fuel, he said.

It's been estimated that ethanol currently saves the average family as much as $500 per year in fuel costs at the pump.