Reuters – The United States upheld its program to turn a large share of the corn crop into ethanol for motor fuel Nov. 16, 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 one per cent.

“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 per cent of the U.S. corn crop is used to make ethanol.

This was the second time that the EPA denied a waiver. In 2008, regulators rejected a Texas petition to halve the mandate temporarily.