The U.S. Environmental Protection Agency (EPA) said it has begun weighing requests to suspend the U.S. ethanol mandate, which requires refiners to blend ethanol into gasoline, and is seeking public feedback.
The governors of North Carolina and Arkansas asked the agency last week to temporarily waive the U.S. quota on ethanol made from corn, because the worst drought in 50 years has driven corn prices higher and hurt livestock producers who depend on the grain for feed.
The EPA asked on Monday for public comment on the need for an ethanol waiver. The 30-day comment period will begin once the notice is published in the Federal Register.
"This notice is in keeping with EPA's commitment to an open and transparent process to evaluate requests the agency receives under the Clean Air Act, and does not indicate any predisposition to a specific decision," agency spokeswoman Alisha Johnson said in a statement.
By law the agency has until Nov. 13 to make a decision on the waivers, meaning EPA could act on the requests after national elections on Nov. 6.
Aimed at reducing U.S. reliance on foreign oil, the Renewable Fuels Standard, or RFS, would require 13.2 billion gallons of ethanol to be made from corn this year.
The EPA is seeking input on whether the RFS would severely hurt the economies of Arkansas, North Carolina or any other part of the United States and what effect a waiver would have on ethanol demand and corn prices.
The agency is also asking, if a waiver is needed, how much should the mandate be eased and when should it apply.
A petition by Texas Governor Rick Perry in 2008 was rejected when the agency said waiver requests had to show the mandate itself was severely harming a region's economy and not just contributing to economic damage.
U.S. livestock groups have argued that complying with the mandate at a time of historic national drought is causing major economic harm to meat and dairy producers.
It is unclear that a waiver would weaken corn prices. Refiners will likely continue buying almost as much ethanol even without the mandate since they use it as an additive to make cleaner-burning fuel required in much of the country.
Ethanol industry groups say the mandate offers some flexibility for fuel blenders responsible for complying with the RFS, including the ability to buy bankable credits if blenders can not buy enough physical ethanol to meet requirements.