Supporters, opponents of RFS waiver duke it out in comments to EPA

Source: Amanda Peterka, E&E reporter • Posted: Monday, October 15, 2012

Supporters and opponents of the renewable fuel standard have responded in force to requests that U.S. EPA waive the corn ethanol requirements for up to a year due to concerns that ethanol production caused high corn prices during the drought.

Almost everyone who has a stake in the fate of the domestic biofuels industry responded to a call from the agency for comments on the waiver requests. Among the more than 2,000 comments received, state and national biofuels, agriculture, livestock, environmental, restaurant and oil organizations weighed in, along with several governors and local officials.

The responses to the requests reflect deep divisions over the standard, which is expected to be a key energy issue in next year’s Congress. Supporters say that the standard has helped reduce the price of gas and grow the domestic biofuels industry, while opponents say it has taken away from the food and livestock feed sectors by earmarking corn for ethanol production.

EPA is likely to decide on the waiver requests in November, about 90 days after it received initial petitions from several livestock-state governors.

At least one major organization, the National Corn Growers Association, is urging the agency to delay its decision until after Nov. 9, when the Department of Agriculture will release its next monthly report on the U.S. corn crop, which was severely affected by the drought conditions over the summer.

“We believe any decisions on the waiver made prior to the November 9, 2012, crop production report will be premature,” NCGA President Pam Johnson wrote in comments submitted yesterday. “USDA will continue to refine the crop production estimates throughout the fall. There is potential for this yield forecast to change, up or down, as well as future changes in harvested acreage.”

EPA’s decision will come down to whether the renewable fuel standard, which this year requires 13.2 billion gallons of traditional ethanol production, has caused severe economic harm to a region or state.

The agency has set a high bar for its decision, refusing a request in 2008 by Texas Gov. Rick Perry (R) after intense flooding in his state. EPA ruled that the governor had to show that the RFS, rather than the flooding itself, had caused economic harm.

Opponents of a waiver include biofuel trade groups, ethanol companies, agriculture organizations and officials from areas where ethanol production has made a significant impact on the local economy.

They say that economic harm caused this year should be pinned on the drought and not on the standard. They point to academic studies showing that a waiver would not significantly or immediately reduce the price of corn, which was at $8.37 a bushel yesterday, because of the flexibility built into the standard.

Ethanol supporters have a strong ally in Iowa Gov. Terry Branstad (R), who urged EPA Administrator Lisa Jackson to maintain the standard to ensure a “stable and strong economic future” for his state.

His comments were echoed by Iowa Sen. Tom Harkin (D), who has championed rural renewable energy programs on the national level.

“While there is little doubt that this summer’s widespread drought has had negative impacts, especially on poultry, dairy and livestock producers, I believe there is little evidence or likelihood of severe economic harm resulting from implementation of the RFS,” Harkin wrote.

Biofuels organizations and companies also warned that waiving or changing the standard could steer investors away from next-generation biofuels.

“If the RFS could be waived on the flimsy evidence contained in the letters now before the agency, EPA would send the wrong signal to the investment community, whose participation is vital to the further development of the American biofuels industry,” wrote Tom Buis, CEO of ethanol trade group Growth Energy.

In their comments, livestock industries point to decreased production, which they argue is a symptom of high corn prices brought on by ethanol production.

In a 175-page comment that includes several studies, the National Chicken Council says that the poultry industry has seen the biggest decrease in growth in more than four decades since the renewable fuel standard was put into place. The demand for corn, which makes up 70 percent of chicken feed by weight, has been artificially increased by the standard, NCC President Mike Brown wrote in his comments.

“In sum, the RFS is causing severe economic harm to the U.S. economy, and the 2013 requirement must be waived,” Brown wrote.

Livestock-state governors, including Perry, have also weighed in in favor of the waiver.

“RFS may have been a well-intentioned effort to move our country toward energy independence, but it has, predictably, done much more harm than good,” Perry wrote. “Not only is it driving up grocery prices for all families, it is also putting increasing strain on businesses.”

Several proponents of a one-year waiver also pushed for longer-term reform to the renewable fuel standard, including a coalition of environmental and anti-poverty groups that linked the RFS to the global food crisis and environmental degradation due to land-use changes

American Fuel & Petrochemical Manufacturers President Charles Drevna, a vocal critic of ethanol on Capitol Hill, also urged the agency to take a more long-term view toward the renewable fuel standard, which he called a “flawed” policy.

Drevna said that granting just a one-year waiver will not significantly reduce ethanol use in the short term, citing a study done by the oil industry-backed Energy Policy Research Foundation Inc.

“If EPA decides to grant a waiver, the agency should express its intent to issue not only an initial waiver,” Drevna wrote, “but also subsequent extensions covering future time periods, as ethanol shortages in the current year will have ramifications in future years.”