Arkansas, N. Carolina ask EPA to waive ethanol mandate

WASHINGTON Tue Aug 14, 2012 8:30pm EDT

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WASHINGTON (Reuters) - The governors of North Carolina and Arkansas joined two of their Northeast peers on Tuesday in asking the federal government to temporarily suspend the ethanol quota, piling pressure on President Barack Obama to make a tough choice months before the election.

The worst drought in 50 years has sent corn prices to record levels, straining meat and dairy producers that use the grain as feed. Governors Mike Beebe from Arkansas and Beverly Purdue from North Carolina sent the requests in letters to the Environmental Protection Agency.

"We've gone ahead and filed our letter. We'll see how it goes," said Matt DeCample, a spokesman for Beebe. The Arkansas letter was sent to Reuters by the governor's staff.

The Renewable Fuels Standard, or RFS, which requires 13.2 billion gallons of ethanol to be made from corn this year "has imposed severe economic harm to my state's swine, poultry, dairy and cattle producing regions," said the letter from Purdue to EPA head Lisa Jackson.

The letter from North Carolina was shown to Reuters by ethanol and livestock industry groups. Purdue's office would not confirm that the letter had been sent.

The EPA did not immediately respond to a request for comment about the new letters.

Jan Psaki, an Obama campaign spokeswoman, said the president, who campaigned in Iowa on Tuesday, has been a strong supporter of ethanol and cellulosic ethanol, which one day could be made in commercial levels from non-food crops.

"He absolutely believes in it, he thinks it's a driver of the economy here and a key component of renewable energy," Psaki told reporters before news broke of the new requests.

The RFS is strongly supported by swing states in the November 6 election that grow corn for ethanol, including Iowa, Ohio and Michigan.

Last week the governors of Delaware and Maryland, two poultry producing states, sent letters to the EPA asking for relief from the mandate to mix ethanol into gasoline. [ID:nL2E8JAFAH] Like Obama, all four of the governors are Democrats.

In 2008 the EPA refused a petition by Texas Governor Rick Perry to waive the requirement. The agency said in its rejection that petitions would have to show that the mandate itself caused severe economic harm to a region, state or the country, and that it did not just contribute to any such harm.

Beebe and Purdue join a growing movement, both at home and abroad, calling for a suspension of the U.S. mandate including Jose Graziano da Silva, the top U.N. food official.

It is unclear that a waiver would dampen corn prices. Refiners will likely continue buying almost as much ethanol even without the mandate since they use it as an additive to make cleaner-burning fuel required in much of the country.

In addition, ethanol industry groups say the mandate also offers degrees of flexibility to fuel blenders who are ultimately they ones responsible for meeting the mandate. The flexibilities include the ability to purchase bankable credits if blenders aren't able to buy enough physical ethanol to meet their requirements.

(Additional reporting by Jeff Mason in Iowa; Editing by Gary Hill and Ed Davies)

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