* EPA turns down requests to waive mandate for second time
* Move to benefit ethanol producers
* Oil industry complains hard to comply with mandate
By Patrick Rucker and Timothy Gardner
WASHINGTON, Nov 16 The United States on Friday
upheld its program to turn a large share of the corn crop into
ethanol for motor fuel, saying it did not cause undue economic
harm despite steep competition for depleted U.S. grain supplies
after the worst drought in 50 years.
In August, as the drought seared the Midwest, the governors
of several livestock producing states including Georgia and New
Mexico asked the Environmental Protection Agency to suspend the
ethanol mandate. They said it pushed up prices for feed grain
and squeezed producers' profits.
But the EPA decided that the relief brought on by freezing
the mandate would not be significant and would reduce corn
prices only about 1 percent.
"We recognize that this year's drought has created hardship
in some sectors of the economy, particularly for livestock
producers," said Gina McCarthy, assistant administrator for the
EPA's Office of Air and Radiation.
"But our extensive analysis makes clear that ... waiving the
(Renewable Fuel Standard) will have little, if any, impact."
The EPA determined the mandate did not cause severe economic
harm, a requirement for waiving the measure.
Aimed at reducing U.S. reliance on foreign oil, the RFS
requires 13.2 billion gallons of ethanol to be made from corn
this year. About 40 percent of the U.S. corn crop is used to
Many oil companies oppose the RFS, saying it adds costs to
Patrick Kelly, a senior policy adviser at industry group the
American Petroleum Institute, said the EPA "applied an improper
and unnecessary high bar, which makes it questionable if any
waiver could ever be granted," and that the RFS had become
"increasingly unrealistic and unworkable."
This was the second time that the EPA denied a waiver. In
2008, regulators rejected a Texas petition to halve the mandate
Upholding the mandate could benefit ethanol producers like
Archer Daniels Midland and privately held POET.
Corn futures in Chicago were up 3-1/2 cents at
$7.24-3/4 a bushel on Friday, reversing early losses after news
the government would uphold the mandate, traders said.