EPA denies RFS waiver

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The U.S. Environmental Protection Agency (EPA) on Friday announced that the agency has not found evidence to support a finding of severe “economic harm” that would warrant granting a waiver of the Renewable Fuels Standard (RFS). The decision is based on economic analyses and modeling done in conjunction with the USDA and U.S. Department of Energy (DOE).

“We recognize that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers,” said Gina McCarthy, assistant administrator for EPA’s Office of Air and Radiation. “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.”

To support the waiver decision, EPA conducted several economic analyses. Economic analyses of impacts in the agricultural sector, conducted with USDA, showed that on average waiving the mandate would only reduce corn prices by approximately one percent. Economic analyses of impacts in the energy sector, conducted with DOE, showed that waiving the mandate would not impact household energy costs.

A coalition of livestock, poultry and dairy organizations expressed extreme disappointment with the EPA's decision.

The National Council of Chain Restaurants issued the following statement from Executive Director Rob Green on EPA’s decision: “We are very disappointed in the Environmental Protection Agency’s decision not to grant a waiver from the Renewable Fuel Standard ethanol mandate.

The National Corn Growers Association (NCGA) expressed its gratitude for the decision. “The National Corn Growers Association supports the Environmental Protection Agency’s decision to deny the Renewable Fuels Standard waiver request.  We believe Administrator Jackson appropriately recognized petitioners did not properly prove severe nationwide economic harm had occurred thereby creating no justification for a waiver of the RFS,” said NCGA President Pam Johnson.

Earlier this summer governors of nine states along with 156 U.S. House members and 26 U.S Senators officially petitioned the EPA to grant the RFS waiver. In addition, the waiver was requested by many poultry and livestock groups.

In comments to the EPA in October, the National Pork Producers Council (NPPC) said a waiver of the federal requirement for the production of corn ethanol was needed because the mandate, along with the 2012 drought, have pushed up prices of feed grains causing severe economic harm to pork producers.

The RFS requires 13.2 billion gallons of ethanol to be made from corn in 2012 and 13.9 billion gallons in 2013. The amounts will use about 4.7 billion and 4.9 billion bushels, respectively, of the nation’s corn crop. The USDA estimates that just 10.7 billion bushels of corn will be harvested this year.

EPA is responsible for developing and implementing regulations to ensure that transportation fuel sold in the United States contains a minimum volume of renewable fuel. The RFS program regulations were developed in collaboration with refiners, renewable fuel producers, and many other stakeholders.

The RFS program was created under the Energy Policy Act (EPAct) of 2005, and established the first renewable fuel volume mandate in the United States. As required under EPAct, the original RFS program (RFS1) required 7.5 billion gallons of renewable- fuel to be blended into gasoline by 2012.

According to EPA, under the Energy Independence and Security Act (EISA) of 2007, the RFS program was expanded in several key ways:

  • EISA expanded the RFS program to include diesel, in addition to gasoline;
  • EISA increased the volume of renewable fuel required to be blended into transportation fuel from 9 billion gallons in 2008 to 36 billion gallons by 2022;
  • EISA established new categories of renewable fuel, and set separate volume requirements for each one.
  • EISA required EPA to apply lifecycle greenhouse gas performance threshold standards to ensure that each category of renewable fuel emits fewer greenhouse gases than the petroleum fuel it replaces.

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fl  |  November, 19, 2012 at 09:05 AM

if there is no change in the price of corn from waiving the RFS, then wouldn't one assume no change in demand. Would someone explain to me why a mandate is needed in the first place. I guess what i learned in econ101 was wrong or else the EPA is.

Texas  |  November, 19, 2012 at 10:02 AM

Excellent point on demand and price. The statement that the DOE determined that waiving the mandate wouldn't impact household energy costs was equally off base since the hardship is centered in food and feed costs.

MO  |  November, 19, 2012 at 09:49 AM

Remind me again to which political party the NCGA donates the most money to. If I may restate Ms. / Mrs. McCarthy's statement: Our extensive analysis makes clear that donations from the NCGA far out way those from livestock producers and other groups combined to Congressional candidates. Since congress is who controls our funding we have concluded that the requirements for a waiver have not been met.

kansas  |  November, 19, 2012 at 09:53 AM

Who is really surprised by this obviously political "finding"? This is a Golden Opportunity for livestock producers to ally themselves with the Consumer Groups, Environmental Groups, and Food Processors & Retailers to call EPA out as the Crony-Capitalist Exploiters and Bullies of the "little guy" that they've become. This is the EPA, that "crucifies" - to set an example, that has become a corrupt tool of whoever throws the most money towards it's "owners'" campaign funds. Producers have very few opportunities like this to combine forces and collaborate with groups that are generally our nemisis - Don't Miss Out!

November, 19, 2012 at 11:50 AM

Amazing that the EPA did not report this finding before the election.

Ed & Emma    
MA  |  November, 28, 2012 at 08:46 PM

EPA obviously applied affirmative action in the employment of Gina McCarthy and she was the best blonde for the job!!

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