Iowa Leaders Applaud EPA Ruling On RFS

Corn Growers and others say EPA's rejection of requested waiver of Renewable Fuels Standard is the right decision.

Iowa Corn Growers Association leaders applaud the August 7 decision by the Environmental Protection Agency to reject a requested waiver of the Renewable Fuels Standard (RFS).

"If you dig into the facts, it's clear that an RFS waiver would not be good for Americans, since it would increase gasoline prices for all of us," says Tim Recker, ICGA president and a farmer from Arlington in northeast Iowa. "We are very pleased that the EPA's analysts crunched the numbers and believed the facts. Sustaining the RFS is important for U.S. consumers and for Iowa farmers."

Recker notes that ethanol use saves consumers about 45 cents per gallon every time they buy motor fuel. "The RFS has put us on the road to relying more on U.S. produced biofuels and less on high-priced foreign oil. There's no reason to turn back," he says. "The RFS is the right fuel policy for America. We can all applaud the EPA for making the right decision on this issue."

This means ethanol mandate will stay

The request for a waiver of RFS requirements was submitted by Texas Governor Rick Perry earlier this year. Iowa's U.S. Senators Charles Grassley and Tom Harkin, along with Iowa Governor Chet Culver and other key Iowa leaders opposed the waiver.

Iowa leads the nation in corn production and in processing corn into ethanol, notes Recker. The ICGA, which promotes policy issues on behalf of its grower members, is a leader in working for ethanol-friendly public policies like the RFS at both the state and national level.

"EPA has denied the request submitted by the state of Texas to reduce the nationwide Renewable Fuels Standard," said EPA chief Stephen Johnson, in making the announcement. "As a result, 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."

Why EPA denied the waiver request

The waiver request asked for a 50% reduction of the blending requirement. EPA staff conducted a detailed analysis, consulted with the departments of Agriculture and Energy, and carefully considered more than 15,000 public comments EPA received. "We examined the impact a waiver would have on ethanol use, corn prices and fuel prices," said Johnson. "This research found that the RFS mandate is not causing severe economic harm. Rather, the RFS is strengthening our nation's energy security and supporting America's farming communities."

Iowa Senators Harkin and Grassley both say the waiver denial shows the U.S. will pursue further advancement of domestically produced, renewable fuels.

Decision will help advance biofuels

In response to the EPA announcement denying the Texas RFS waiver, Harkin, who is chairman of the U.S. Senate Ag Committee, said "Renewable biofuels are one of the most important tools we have to reduce our dependence on foreign oil. EPA's decision to deny this waiver indicates we are going to stay the course in pursing a national strategy of increasing production and use of domestic, renewable biofuels."

"It also sends a strong signal to encourage investment in renewable sources of energy," says Harkin. "I commend EPA for denying this waiver and indicating that our country will continue to maintain a strong commitment to renewable energy. American agriculture, associated industries and rural communities in Iowa and around the country stand ready to meet the challenges to produce the biofuels, food, feed and fiber that are needed."

Victory for clean energy, national security

Grassley, who has been a leading Congressional voice for ethanol, met recently with EPA administrator Stephen Johnson along with several members of the Senate, to try to convince Johnson to deny the waiver. "The denial of the Texas waiver request is a victory for clean energy, rural America and national security," says Grassley. "It is a blow to those people who have used ethanol as a scapegoat for rising fuel and food prices."

Grassley adds, "The EPA realized that the facts clearly stand in ethanol's corner. The bottom line is that ethanol is extending our fuel supply and actually lowering gasoline prices. Congress provided certainty to ethanol producers when it passed the Renewable Fuels Standard. The August 7 ruling by EPA will allow farmers to continue to plan for and meet the fuel and food needs of the future."

Culver commends EPA for decision

Iowa Governor Chet Culver says "I commend EPA for denying Texas' request for a waiver. With gas prices hovering around $4 a gallon, approving the Texas waiver request would have been a huge step in the wrong direction. In fact, the Consumer Federation of America indicates that providing the waiver to the RFS would raise gas prices by 50 cents. It is a known fact that biofuels have played an important role in keeping our energy prices down. This waiver request, just like the attacks blaming ethanol for higher food prices, was without merit and the EPA made the right decision."

"As Iowans know, ethanol is necessary to achieving our dreams of energy independence. Iowa continues to feed the world, and now we fuel the world. With our abundant crops and investment in new renewable fuels technology, I know we can further reduce our dependence on imported oil, and bring gas prices down even more, by increasing the use of ethanol and biodiesel. As Governor, I will continue to do whatever I can to expand the use of biofuels, and I am confident that our state will continue to lead the way in creating a brighter, more energy-secure future for America."

Farm Bureau also supports decision

Citing its importance in reducing greenhouse gas emissions and lessening dependence on foreign oil, the EPA has elected to keep the current Renewable Fuels Standard intact, a decision supported by Iowa's largest farm organization—the Iowa Farm Bureau.

"We support EPA's decision to deny a partial waiver of the RFS because we believe that biofuels play an important role in a comprehensive energy solution," says IFB's policy advisor Mark Salvador. "Ethanol wasn't meant to be the sole answer to our energy needs, but it's an important part of a solution that includes research, agricultural innovation, conservation and exploration. Farmers need a market and regulatory environment that encourages more investment in affordable and environmentally-friendly energy, and we need to support initiatives like the RFS that move us in the right direction."
Studies by several groups including Iowa State University and Merrill Lynch, show that ethanol has lowered gasoline prices by 40 to 50 cents per gallon. While petroleum-based products have contributed heavily to food inflation, biofuels are actually helping consumers keep money in their pockets. According to American Farm Bureau economist Terry Francl, for every extra dollar spent on food, consumers save at least $2 in gasoline costs due to ethanol.

Livestock groups wanted a waiver

EPA's decision disagrees with Texas Governor Perry's contention that the mandate should be rolled back merely by showing that it was contributing to hurting one economic sector, the livestock industry. Under the law, the EPA said, the RFS mandate had to be causing severe economic harm to a region, state or the entire nation.

Ethanol producers see the EPA decision to deny the waiver request as a vindication of their industry, which has been blamed for the soaring price of food worldwide. Livestock organizations such as the National Cattlemen's Beef Association and the National Pork Producers and poultry organizations said the mandate was unfairly driving up their biggest input cost—corn for feed.

Perry's request was supported by groups representing food manufacturers, as well as the cattle, hog and poultry producers. He argued in a last-ditch plea to the EPA last week that the mandate has already "severely crippled" the livestock industry. Corn prices have dropped about $2 a bushel during the past month because yields for 2008 are likely to be much better than feared after this spring's flooding in the Midwest. That was a key factor in EPA's decision, says Bruce Babcock, an economist and director of the Center for Agricultural and Rural Development at Iowa State University.

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