Wednesday, August 20, 2008

By Joseph Morton
WORLD-HERALD BUREAU

 

WASHINGTON -- The debate over ethanol and rising food prices was supposed to come to a head this week with a decision by the Environmental Protection Agency on whether to halve federal requirements for the use of renewable fuels.

But EPA Administrator Stephen Johnson said Tuesday he won't make that decision until next month.

Texas Gov. Rick Perry asked the EPA in late April for a temporary cut in the Renewable Fuel Standard law, which requires 9 billion gallons of renewable fuels such as ethanol to be blended into gasoline this year.

The law also allows the EPA to waive that standard in order to protect the economy, which was the basis for Perry's request.

Johnson was supposed to reject or grant such a request within 90 days. But he said he needs more time given the 15,000 public comments the EPA received on the issue and the need to consult with other federal departments.

As an indication of how important his decision is viewed in corn-growing states, Sens. Ben Nelson, D-Neb., and Chuck Grassley, R-Iowa, have insisted that Johnson meet with them before taking any action.

Iowa and Nebraska are the two leading states for ethanol production.

Nelson, Grassley and nearly a dozen other senators are demanding a meeting with the EPA's Johnson. The senators cited news reports that Johnson had met privately with Perry earlier this month.

"We are very concerned about any agreements being made behind closed doors with only one concerned party to this matter,'' the senators wrote.

Nelson said Tuesday that he was disappointed in the delay and called for "a thoughtful, open and honest decision-making process.''

EPA spokesman Jonathan Shradar said that Perry and Johnson did meet, but that the EPA administrator made no agreement with the Texas governor. He said Johnson would soon speak with the senators.

In requesting a reduction in the alternative fuel requirements, the Texas governor said booming ethanol production had driven up the price of corn, taking a toll on his state's livestock industry and increasing the cost of food at the grocery store.

Perry's arguments go to the heart of the public debate over biofuels.

Critics say ethanol production is the culprit behind higher prices at the supermarket. Ethanol supporters say there are many reasons -- from global weather conditions to higher worldwide food demand -- that are driving up prices. They also say ethanol is keeping gasoline prices from going even higher.

Both sides are closely watching the outcome of Perry's request for indications of where federal ethanol policy is headed.

Meanwhile, ethanol champions are pressing forward on other fronts.

Sen. Tom Harkin, D-Iowa, has introduced legislation that would allow use of tax incentives to jump-start ethanol pipeline projects.

One of the hurdles that ethanol faces is a lack of infrastructure to efficiently transport it from the Midwestern areas where it's produced to the East and West Coasts, where demand for fuel is high.