EPA Puts Off Renewable Fuels Waiver Decision to August

"We appreciate the good intentions behind the push for renewable fuels. In fact we’re diversifying our state’s energy portfolio at a rapid rate, but this misguided mandate is significantly affecting Texans’ family food bill," said Governor Perry in April when he made his initial request for a waiver. "There are multiple factors contributing to our skyrocketing grocery prices, but a waiver of RFS levels is the best, quickest way to reduce those costs before permanent damage is done."

The U.S. Environmental Protection Agency was scheduled to issue its decision on the waiver by July 24, but on Tuesday EPA Administrator Stephen Johnson said the decision would be delayed until August.

"Given the amount of work that remains to sufficiently answer the Texas request for a waiver from the Renewable Fuels Standard, it is now clear that a final decision on the request will not be completed by July 24," said Johnson.

"Shortly after receiving the waiver request, EPA initiated a public comment during which the agency received over 15,000 comments and a number of these comments raised substantive issues and included significant economic analysis," he said. "I believe it is very important to take sufficient time to review and understand these comments in order to make an informed decision."

"Additional time is needed to allow staff to adequately respond to the public comments and develop a decision document that explains the technical, economic and legal rationale of our decision," Johnson said.

The EPA is also required to consult with the Departments of Agriculture and Energy in considering whether to grant or deny the waiver request and has begun these consultations, the administrator explained.

"The process remains fair and open and no agreements have been made with any party in regard to the substance and timing of the decision on the waiver request," he said. "I am confident that I will be able to make a final determination on the Texas waiver request in early August."

Governor Perry said Tuesday, "I appreciate the diligent approach Administrator Johnson and his staff are taking in addressing our waiver request and the 15,000-plus comments they have received on this issue.

"We still believe the solution to the unintended consequence of this federal RFS mandate is simple: a one-year, 50 percent waiver," the governor said.

"The RFS waiver is an essential step toward decreasing the devastating statewide, national and international impact of skyrocketing feed and food costs," he said.

Corn prices rose 138 percent globally over the last three years and global food prices increased 83 percent over the same time period. "With the implementation of the new RFS mandate, some estimates predict corn prices will rise to $8.00/bushel for the 2008 crop, resulting in a negative impact of $3.59 billion to the state," the governor said.

National Biodiesel Board Chief Executive Officer Joe Jobe said it is important to remember that all renewable fuels qualify for the Renewable Fuels Standard, not just ethanol.

"If the RFS is waived or cut in half in 2008, then the growth of all biofuels, including 'advanced biofuels' such as biodiesel, will be severely hindered," Jobe warned.

"As Governor Perry himself pointed out just last month, alternative fuels such as biodiesel play in an important role in 'diversifying not only our energy portfolio, but our economic landscape,'" Jobe said.

"Beyond the environmental and energy security benefits provided by biofuels," he said, "the opportunity for green jobs and the continued economic development of biodiesel refineries in Texas must be taken into account by the EPA when evaluating whether to waive the RFS."

"While a delay is understandable considering the complexity of the issue before them, we urge the EPA to ultimately reject the waiver request. Gov. Perry had it right when he praised biodiesel for ‘providing a necessary alternative to fossil fuels without negatively impacting our food supply.’”

The Renewable Fuels Association, which represents the ethanol industry, says reducing the use of ethanol will not bring down grain prices for livestock producers and food processors in Texas.

"But eliminating 4.5 billion gallons of fuel from the marketplace - as the 50 percent waiver of the Renewable Fuels Standard sought by Governor Perry would do – will increase gasoline and diesel prices even more. While this may benefit Texas oil companies, it will certainly hurt consumers in Texas and the rest of the country," the organization said.

A recent study by Texas A&M University requested by Governor Perry's office found that, "Relaxing the RFS does not result in significantly lower corn prices."

The waiver request may actually have the opposite effect on corn prices, said National Corn Growers Association President President Ron Litterer. "This waiver request could potentially send a signal to the corn market that demand from the ethanol sector is not a sure thing. The response from farmers could be fewer planted acres of corn and higher corn prices."

The Texas A&M study also found that "corn prices have had little to do with rising food costs." This finding is bolstered by recent studies by the U.S. Department of Agriculture's Economic Research Service, Kansas City Federal Reserve, and other third parties.

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