EPA Nears Ethanol Decision; Rule Waiver Pits Livestock, Corn Farmers

The Environmental Protection Agency will decide this month whether to reduce the amount of corn-based ethanol used in the nation's 240 million gas tanks because of this summer's drought. The governors of eight states and nearly 200 members of Congress asked the EPA to waive requirements of the Renewable Fuel Standard signed into law in 2007 by President George W. Bush that mandate the production of a certain quantity annually of the alternative fuel.

The Michigan Farm Bureau said it opposes granting the waiver, saying it doesn't believe keeping the requirements in place "would severely harm the economy of Michigan at this time. We do not have final harvest numbers, making it premature to determine what our total crop supply will be in 2012."

Michigan poultry and livestock producers are affected by higher corn prices.

The governors of Maryland and Delaware, also home to poultry producers, told the EPA on Thursday that without a waiver they would face "the loss of thousands jobs."

In August, a top United Nations official urged the Obama administration to suspend ethanol requirements under the 2007 Renewable Fuel Standard as fears of food shortages grow around the world. The law assures big demand for corn. It is popular in corn-growing states, making it politically difficult to waive the requirements.

The standard is opposed by many groups, including livestock producers who say the diversion of corn to ethanol raises feed prices — and, ultimately, prices at the supermarket.

The Michigan Farm Bureau said state farmers planted about 2.6 million acres of corn in 2012. Corn is the state's largest crop. In a typical year, Michigan produces 322 million bushels of corn depending on weather and acres planted. The estimated demand for livestock, dairy and poultry feed in Michigan is typically about 70 million bushels.

Two dozen prominent scientists and academics wrote the EPA supporting the waiver, including John M. DeCicco and Ivette Perfecto from the University of Michigan School of Natural Resources and Environment.

"The (Renewable Fuel Standard) diverts potential food crops to produce fuel, which drives up food price volatility and global food prices," they wrote.

The National Corn Growers Association, including the Michigan branch, said it opposes the waiver, noting that average annual farm income has jumped from $63 billion before the law to $90 billion on average between 2007-2012. The group didn't dispute that the drought has caused higher feed prices, but said "higher feed prices are only one piece of a complicated economic puzzle." It said petitions haven't met the burden of showing "severe harm to the economy." Corn prices have jumped more than 400 percent in the last seven years as the U.S. has boosted the amount of corn-based ethanol.

Under the 2007 law, the nation is increasing the use of ethanol in vehicles to 15.2 billion gallons this year, up from 5 billion gallons in 2007. By 2022, the U.S. must use 36 billion gallons of biofuel, though 21 billion gallons are supposed to be from advanced cellulosic ethanol. To use the ethanol required, the EPA has approved the use of a higher blend of ethanol fuel called E15 — which is 15 percent ethanol — up from E10 used at most pumps today.

The higher blend of fuel is only approved for vehicles from 2001 and newer, because automakers say engines can be corroded by E15. They have fought the fuel, arguing it could also hurt newer vehicles.

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