Georgia latest U.S. state seeking to end federal ethanol rule

Aug 21, 2012, 11:38 AM EDT

* Poultry-producing state says ethanol raising feed costs

* EPA mulling suspension of ethanol mandate

* Livestock farms say drought, ethanol rules driving up corn

By Patrick Rucker

WASHINGTON, Aug 21 (Reuters) - Georgia, the center of U.S.poultry production, is adding its voice to a string of statesasking Washington to help ease pressure on corn prices bysuspending rules that send a large share of the crop to produceethanol.

Ethanol fuel made from corn is blended with gasoline under afederal program meant to encourage domestic energy sources, butthe rules can be waived under a formal appeal from a state.

Livestock farmers complain that demand for ethanol wronglydiverts a large share of the feed corn they need and drives upprices already inflated by a long dry season.

"The unprecedented drought experienced in major crop areasof the country, especially throughout extensive areas of theMidwest and South, has significantly decreased crop yields,"Georgia Governor Nathan Deal wrote in a letter seen by Reutersthat seeks a waiver of the ethanol mandate.

Poultry farmers in Georgia are spending about $1.4 millionmore in feed costs per day due to the drought and ethanol rules,the governor said, and those higher costs are causing direeconomic harm.

In recent weeks, five states have urged the U.S.Environmental Protection Agency to suspend the ethanol mandate,which would require that 13.2 billion gallons (50.3 billionliters) of ethanol be made from corn this year. The agency saidon Monday that it would consider that request.

Ethanol, however, is strongly supported by therenewable-fuels lobby and by lawmakers and farmers in the U.S.corn belt.

The EPA has until around mid-November to decide on thewaiver requests, meaning the agency could wait to rule on thecontentious issue after national elections on Nov. 6.

Congressman Bob Goodlatte, a Republican from Virginia whohas called for a waiver of ethanol requirements, said the EPAshould make a decision as soon as possible.

"Time is of the essence in this effort, and farmers andconsumers alike need answers and relief sooner rather thanlater, not long after the growing season is over and the damagehas been done," Goodlatte said.

The agency will collect comments from the public for 30days, as it attempts to gauge what effects the mandate will haveon the economy.

After rejecting a petition from Texas Governor Rick Perry in2008, the EPA said waiver requests have to prove that themandate itself is the cause of severe economic harm to a regionand not just a contributing factor.

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