Last month, the governors of eight states and almost 200 members of Congress asked the U.S. Environmental Protection Agency to suspend rules that mandate production of ethanol for use in gasoline.

On Friday, the EPA said no.

The request to suspend parts of the 2007 Renewable Fuel Standard came from concerns that the feed corn essential to those states' agricultural businesses would be diverted to supply ethanol refineries.

The 2007 rule mandates that increasing amounts of ethanol be used in U.S. vehicle fuel, as part of a broader national effort to cut oil imports and improve energy security.

On Saturday, The Detroit News reported that the EPA said it had not found sufficient evidence that support the finding of severe "economic harm" it would require to warrant granting a waiver.

An agency official said the EPA did not find that the requirements laid down by Congress for granting a waiver had been met--and that, based on its analysis, waiving the rules would have had little effect on corn prices anyhow.

Although about two dozen academics and scientists had testified for the waiver, it was opposed by the National Corn Growers Association.

Corn prices have quadrupled since 2005 as ethanol production has soared in response to the mandate. The trade group pointed out that the income of corn growers nationally had risen almost 50 percent since 2007, when the law took effect.

The Congressional act passed in 2007 mandates that 36 billion gallons of ethanol to be used to fuel U.S. vehicles by 2022. That's more than three times the 11.1 billion gallons that were used in 2010.

The issue of ethanol requirements is likely to crop up again in future Congressional sessions.

Corn is the least efficient way to produce ethanol--just one-quarter as productive as switchgrass or other cellulosic feedstocks--and distribution of E85 ethanol has not notably expanded over the last few years.

Conversion from the current standard E10 gasoline (with a maximum of 10 percent ethanol) to blends up to E15 will likely be slow, stymied by the expense for gas stations of having to install "blender pumps" that can dispense varying blends of the fuel.

Already, parts of the Act are not being complied with. A recent study, for instance, suggests that requirements for advanced cellulosic ethanol simply cannot be met.

The requirement has divided the food industry, with some parts fighting the ethanol mandate on the grounds that it destabilized prices of corn, soybeans, and wheat, producing sharp rises that hurt both consumers and food and fuel producers.

Last year, Congress ended subsidies for ethanol production, in place since 1980, as well as import tariffs on imported ethanol.


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