EPA Considers Relaxing Ethanol Mandate

WASHINGTON, D.C. -- Devastating drought conditions in the Midwest have led the U.S. Environmental Protection Agency (EPA) to consider suspending the U.S. ethanol mandate, which requires refiners to blend ethanol into gasoline.

According to Reuters, the governors of North Carolina and Arkansas have asked the EPA to temporarily waive the U.S. quota on ethanol made from corn. Called the Renewable Fuels Standard (RFS), the mandate requires that 13.2 billion gallons of fuel be made from corn this year.

However, the drought has caused ethanol prices to substantially increase, causing the EPA to consider suspending the RFS. The federal agency is seeking public feedback about the issue. By law, the EPA must make a waiver decision by Nov. 13, a week after the presidential election.

"This notice is in keeping with [the] EPA's commitment to an open and transparent process to evaluate requests the agency receives under the Clean Air Act, and does not indicate any predisposition to a specific decision," Alisha Johnson, spokesperson for the EPA, said in a statement.

The EPA is not only asking the public if a waiver is needed. The agency also has asked how much the mandate should be eased and when it should apply.

U.S. livestock groups have argued that complying with the mandate during one of the worst-ever drought periods in history is causing huge economic harm to meat and dairy producers, reported Reuters.

If the EPA relaxes the RFS, it is unclear if -- or by how much -- corn prices would weaken.