EPA opens review into US corn ethanol mandate


WASHINGTON -- The Obama administration on Monday gave the first official signal that it is reviewing a federal mandate requiring energy companies to blend ethanol into gasoline after state governors questioned the wisdom of using corn for fuel in the midst of a drought.

The Environmental Protection Agency said it received formal requests from the governors of Arkansas and North Carolina to ease the renewable-fuel standard, triggering a 90-day review that could lead to the agency’s first-ever decision to reduce or waive the mandate.

The EPA’s announcement had been expected after the governors’ requests were made public last week.

The EPA is requiring refiners this year to blend 13 billion gallons of corn-based ethanol into the nation's gasoline supply under a mandate adopted by Congress in 2005 to reduce US dependence on foreign oil.

The requirement is expected to jump to nearly 14 billion gallons in 2013.

Cattle ranchers and poultry producers have also requested that the EPA considering lowering the ethanol mandate, citing higher prices for animal feed made from corn.

The livestock industry says ethanol producers exacerbate that problem by consuming 40% of the nation's corn crop.

The ethanol industry says that number is actually less than 26% after accounting for the high-protein ethanol byproducts used for animal feed. It says ethanol companies are having a relatively small impact on corn prices.

Ethanol producers are confident the Obama administration will keep the renewable-fuel standard in place.

The last time the EPA was asked to waive the mandate, in 2008, the agency rejected the request and said states have to prove “severe harm.”

Dow Jones Newswires

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