Obama Said to Reject Request to Ease Corn-Based Ethanol Law

Photographer: Patrick Fallon/Bloomberg

Corn is unloaded from trucks into the grain elevator at an ethanol plant. Close

Corn is unloaded from trucks into the grain elevator at an ethanol plant.

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Photographer: Patrick Fallon/Bloomberg

Corn is unloaded from trucks into the grain elevator at an ethanol plant.

President Barack Obama’s administration rejected a request from the governors of eight U.S. states to waive requirements for blending corn-based ethanol into gasoline, said a person familiar with the decision.

Market conditions don’t justify such a move, said the person, who declined to be identified because he isn’t authorized to speak for the Environmental Protection Agency. Gasoline refiners will be required to blend 13.2 billion gallons of the biofuel this year, the EPA said in rejecting petitions from the governors of Arkansas, North Carolina, Maryland, Delaware, Georgia, Virginia, New Mexico and Texas as well as members of Congress.

This year’s U.S. corn harvest is forecast at 10.725 billion bushels, the smallest in six years because of the drought. About 4.5 billion bushels will be used to make ethanol in the year starting Sept. 1, or about 42 percent of the 2012 crop, the USDA estimated on Nov. 9.

Ethanol production has fallen 14 percent this year to 824,000 barrels a day in the week ended Nov. 9, or 12.6 billion gallons on an annualized basis, Energy Department data show.

Denatured ethanol for December delivery fell 1.8 cents, or 0.8 percent, to $2.317 a gallon at 9:26 a.m. local time on the Chicago Board of Trade. Prices have gained 5.2 percent this year.

Under the 2007 energy law that established national renewable-fuels requirements, the EPA can suspend the program if it would severely harm the economy of a state, region or the U.S. The legislation calls for the U.S. to use 15 billion gallons of biofuels, such as ethanol, annually by 2015 and 36 billion gallons by 2022. Half of that amount will have to come from “next generation” or cellulosic sources such as grasses and wood waste, and not from corn.

Cathy Milbourn, a spokeswoman for the EPA in Washington, didn’t immediately respond to telephone messages and e-mails.

To contact the reporters on this story: Mario Parker in Chicago at mparker22@bloomberg.net and Alan Bjerga in Washington at abjerga@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net and Jon Morgan at jmorgan97@bloomberg.net

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