Reactions To EPA Denial Of Texas RFS Waiver Request

Aug 7: Various reactions are being expressed to U.S. EPA's decision to deny the request from Texas to reduce the nationwide Renewable Fuel Standard (RFS) by 50%. As a result of the denial, the required total volume of renewable fuels, such as ethanol and biodiesel, mandated by law to be blended into the fuel supply will remain at 9 billion gallons in 2008 and 11.1 billion gallons in 2009 [See WIMS 8/7/08]. Nearly all of the 162 U.S. ethanol biorefineries currently utilize corn as the feedstock and have a current capacity of 9,407 million gallons per year (mgy) with 4,208 mgy of expansions under construction [See contacts below].

Texas Governor Rick Perry who requested the waiver 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."

Secretary of Energy Sam Bodman issued a release and said, “Clean, green, domestic, sustainable biofuels that reduce greenhouse gas emissions and increase our energy security are a crucial part of America’s energy policy. Advanced biofuels are just one part of a diverse portfolio of renewable energy and efficiency technologies that the Department of Energy is pursuing. . . In June, DOE announced an estimate that gasoline prices would be between 20 cents to 35 cents per gallon higher without ethanol, a first-generation biofuel. Also, without biofuels, DOE estimates that the U.S. would have to use 7.2 billion more gallons of gasoline in 2008 in order to maintain current levels of travel, a 5 percent increase. Since 2007 DOE has dedicated more than $1 billion in non-food based, sustainable, and cost competitive second-generation cellulosic biofuels research and demonstration. The Bush Administration is committed to continually monitoring the situation and is open to considering all policy options with respect to biofuels moving forward."

U.S. Senator James Inhofe (R-OK), Ranking Member of the Senate Environment and Public Works Committee, commented saying, "In the face of mounting questions and growing concern surrounding the corn-based ethanol mandates, today’s decision is a disappointment. In my home state of Oklahoma, the ethanol mandates are undoubtedly causing severe economic hardships for many cattlemen, pork producers, poultry producers and consumers."

The Alliance of Automobile Manufacturers (AAM) responded to the EPA decision saying, "The Alliance is pleased with EPA’s decision. Alliance members are working hard to do their part to help achieve the goals of renewable fuels standard. Alliance members have already produced more than 12.5 million alternative-fuel vehicles, including 5.5 million Flex-Fuel Vehicles (FFVs) capable of operating on a blend up of up to 85% ethanol, and 6 million diesel powered vehicles capable of operating on 5% biodiesel fuel. Yet only about 1 in 100 of the nation’s gas stations currently offer E85 fuel, with an even smaller percentage offering biodiesel blends. If the U.S. is to continue on the road to energy security, it is critical that the federal government continue to encourage growth in biofuels production and in the infrastructure needed to deliver these fuels to customers across the nation." AAM is a trade association of 10 car and light truck manufacturers including BMW Group, Chrysler LLC, Ford Motor Company, General Motors, Mazda, Mercedes-Benz USA, Mitsubishi Motors, Porsche, Toyota and Volkswagen.

Pilgrim's Pride Corporation, the largest chicken company in the United States and Puerto Rico and the second-largest in Mexico said, "We are extremely disappointed . . . The RFS has caused feed ingredient prices to spiral out of control, inflicting extreme economic damage on food companies, and ultimately, on consumers, in the form of increased food costs. We expect our company's feed-ingredient costs for fiscal 2008 will increase $900 million from last fiscal year as a result of the U.S. government's failed ethanol policy. It's apparent that the government intends to blindly pursue this misguided and destructive policy despitereams of data demonstrating its negative impact on the environment, food prices, and world hunger. Not only are the 2008 mandates destructive, but the scheduled mandate next year will again increase another 16.7% from corn, consuming an additional 4.5% or more of the 2009-2010 corn crop than the anticipated 34% of the crop being consumed this year for ethanol production."

The American Meat Institute (AMI) issued a statement saying, “. . .using a third of our corn crop for ethanol production has driven corn and all feed prices up to levels that are severely impacting U.S. meat and poultry producers as well as consumers. . . 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 number of other food, restaurant and grocery associations expressed disappointment in the decision.

Access a release from Governor Perry (click here). Access 55-pages of supplemental arguments submitted by Texas on August 6 (click here). Access a release and link to additional information from DOE (click here). Access the statement from Senator Inhofe (click here). Access a release from AAM (click here). Access the statement from Pilgrim's Pride (click here). Access the AMI statement (click here). Access another release from AMI with other association comments (click here). Access a prepublication copy of the FR announcement (click here). Access the EPA docket for the action with all comments received and background information (click here). Access EPA's RFS Program website for further details and background (click here). Access a complete list of U.S. biorefineries and a locational map (click here). [*Energy, *Agriculture]