EPA Refuses Texas Ethanol Waiver Request

Published November 1, 2008

The U.S. Environmental Protection Agency has denied a request by Texas Gov. Rick Perry (R) to reduce the state’s ethanol consumption mandate imposed by the federal agency.

Food Prices Rising

In June, Perry asked the Environmental Protection Agency (EPA) for a 50 percent reduction in the mandate, which specifies how much ethanol must be used in the state for fuel. Nationally, EPA requires consumers purchase 9 billion gallons of corn ethanol for automobile fuel in 2008. The 2009 mandate is 11.1 billion gallons.

Perry submitted the request in response to consumer and livestock industry hardships created by rising corn and soybean prices. At the time of Perry’s waiver request, the price of corn had risen to nearly $7 a bushel, compared with a 2006 cost of $2.60 a bushel.

Ethanol diversion has reduced the availability of corn for livestock feed and other purposes, increasing prices in both current and futures markets. The supply reduction affects not only U.S. food prices but also global prices, because the United States supplies a large portion of the global food market.

The corn required for the 2008 ethanol mandate will constitute 23 percent of the expected 2008 U.S. corn crop.

With so much corn taken out of the food and feed market, prices of soybeans, another feedstock for animals, have increased almost as much as corn, up almost 100 percent during the period 2007-2008. That has hurt producers of beef, pork, and poultry. The National Hog Farmer Web site reports U.S. hog farmers lost an average of $30 on every hog marketed for sale in 2007-2008.

Texans Struggling

Texas Sen. John Cornyn (R) was among several U.S. senators to sign a letter to EPA requesting a waiver of the ethanol mandate. He has sponsored a bill to freeze mandates at 2008 levels.

When he learned of EPA’s refusal to grant Perry’s waiver request, Cornyn said, “This decision is very disappointing and, frankly, represents a blind eye by the federal government to the high food prices that Texas is struggling with each day. Since this mandate was implemented, the livestock industry in Texas has faced historically high feed costs, which are being passed on to the consumers.”

John Dale Dunn, M.D., J.D. ([email protected]) is a civilian emergency medicine faculty member at Carl R. Darnall Army Medical Center, Fort Hood, Texas. He is a policy advisor for The Heartland Institute and the American Council on Science and Health.