Notice of Receipt of a Request for a Clean Air Act Waiver to Increase the Allowable Ethanol Content of Gasoline to 15 Percent

July 20, 2009 Docket Clerk Environmental Protection Agency Mailcode: 6102T 1200 Pennsylvania Avenue, NW Washington, DC 20460 RE: Docket No. EPA-HQ-OAR-2009-0211 Notice of Receipt of Clean Air Act Waiver Application to Increase the Allowable Ethanol Content of Gasoline to 15 Percent Producer-directed and consumer-focused, the National Cattlemen's Beef Association (NCBA) is the nation's oldest and largest national trade association for cattle producers, representing over 230,000 cattle producers through direct membership and our state and breed affiliates. We appreciate the opportunity to provide comments per the request published in the Federal Register on April 21, 2009 (Volume 74, Number 75 Pages 18228-18230) with regards to Growth Energy's waiver application to increase the allowable ethanol level in gasoline from 10 percent to 15 percent. Corn ethanol production is significant to the cattle industry because of its impact on feed grain prices. In 2008, livestock producers experienced significantly higher feed costs as a direct result of competing demands for corn and by higher energy prices. Since January of 2008, cattle feeders have lost a record $5.2 billion in equity due to high feed costs and economic factors which have negatively affected beef demand. According to the United States Department of Agriculture (USDA) Economic Research Service (ERS), in 2008, feed costs for livestock, poultry and dairy reached a record high of $45.2 billion – an increase of more than $7 billion over 2007 costs. Yet farm gate cattle and calf receipts have essentially remained flat, at between $49 and $50.2 billion during the past five years. As of late, the biggest problem for the cattle industry has been that corn prices have not paralleled the deflationary trend across the entire economy — a direct result of government mandates for ethanol production. Before the government mandates an increase in the percentage of ethanol blended into gasoline, an independent and comprehensive assessment must be performed in order to determine how such an increase will impact corn and cattle markets, and if corn production will be able to accommodate a higher mandate. It is important for the government to evaluate how any changes to the Renewable Fuel Standard (RFS) will affect all industries that depend on corn, not just the ethanol industry. Increasing the blend percentage before a thorough assessment is complete will have serious ramifications on all industries that use corn. Cattlemen are committed to energy independence and the development of the renewable fuels industry. However, this energy commitment continues to create challenges for cattle producers. Due to punitive tariffs on imported ethanol and the fact that commercial production of cellulosic ethanol is still several years away, an increase in the blend percentage will predominately affect corn feedstock. It is projected that increasing the blend percentage from 10 percent to 15 percent would require an immediate 4.5 billion gallons of ethanol, and would require approximately 1.6 billion bushels of corn. Based on 2008 yields, to reach this level, 10.4 million more acres of corn would need to be planted. The additional 1.6 billion bushels of corn for a 15 percent blend is nearly equivalent to the two billion bushels of corn the cattle industry converts into beef in one year. Increasing the blend percentage before assessing how the market or production will be able to adjust is favoring one segment of agriculture at the expense of another. Cattle producers support an open and free market as the best driver of competition and innovation in all industries, including the renewable energy sector. Artificially diverting more of the corn crop to ethanol production, without considering the possible negative impacts on other industries, is bad public policy. Increasing the blend percentage to 15 percent would drastically affect the cattle…