With an eye toward shoring up Farm Belt support less than two months before the election, President Trump directed the EPA to deny dozens of oil refiner requests for retroactive waivers from U.S. biofuel laws, Reuters reported on Wednesday.
Under the U.S. Renewable Fuel Standard, refiners are required to blend billions of gallons of ethanol into their gasoline every year. But the EPA, which administers the program, can grant waivers to small facilities that prove that compliance would put them in financial straits.
The Trump administration has roughly quadrupled the number of exemptions given out to refiners, including some to small facilities owned by huge companies like Exxon Mobil and Chevron, as well as to operations owned by billionaire Trump ally Carl Icahn. The rise in exemptions has spurred anger in farm states, including Iowa, the country’s top corn producer.
In January, the U.S. 10th Circuit Court of Appeals ruled that the Trump administration had been too free with the waivers. The court set a standard for the exemptions that would greatly reduce the numbers of waivers the EPA can grant, saying that waivers given to small refineries after 2010 could be approved only as extensions of pre-existing waivers. Most recipients of waivers in recent years have not continuously received them, and refiners sent in waiver applications to come into compliance with that court ruling.
By telling the EPA to deny those applications, Trump effectively shut down the refiners’ attempts to come into compliance with the court ruling.
“The move … marks the end of an effort by the refining industry to come into compliance with a January court decision that said the Trump administration should not have given out some waivers in previous years,” Reuters wrote. “The waivers have been a battleground for the influential oil and corn lobbies, both major constituencies for Trump as he seeks re-election in November.”
In March, the administration chose not to appeal the court’s ruling, drawing a rebuke from the oil refiners’ main lobbying group. “It is astonishing that President Trump has abandoned our country’s small-refinery workers and the communities that rely on these critical facilities in this time of national crisis and economic uncertainty,” said Chet Thompson, head of the American Fuel & Petrochemical Manufacturers group.
And just last week, two refiners, CVR Refining and HollyFrontier Corporation, asked the U.S. Supreme Court to review the appeals court ruling.
Still, the Reuters story came as something of a surprise. Just last month, Politico reported that Trump “appears set to postpone politically fraught decisions on ethanol until after the November election to avoid a backlash from the feuding agriculture and petroleum sectors,” citing sources in both industries who had been in conversations with the White House.
Nearly 40% of the annual U.S. corn crop is used to make ethanol and co-products such as distillers’ grains, used as a livestock feed.
Ethanol advocates, including the Renewable Fuels Association, the National Corn Growers Association, the National Farmers Union, and the American Coalition for Ethanol, welcomed the news. “We are encouraged by reports that President Trump has called upon EPA to reject these absurd gap-year waiver petitions out of hand. If the reports are accurate, it is our hope that EPA swiftly acts upon the president’s directive and closes the door once and for all on the refiners’ brazen attempt to rewrite history,” they said in a joint statement.
“At the same time, we are disappointed, but not surprised, by the refiners’ eleventh-hour petition to the Supreme Court to review the Tenth Circuit decision. In April, these same refiners asked the Tenth Circuit to re-hear the case, and the court swiftly and unanimously denied that request, and the Supreme Court should do the same,” they added.
The debate over waivers is not new. In August 2019, a dozen House members called on the Government Accountability Office to review the explosion in ethanol waivers awarded by the EPA since 2017. The lawmakers said that according to an Energy Department analysis, many of the small-volume refineries that applied for waivers did not need them. “Our concerns stem from the economic consequences to our rural communities created by exempting nearly 4 billion gallons of small-refinery exemptions from the [Renewable Fuel Standard], a standard intended to expand the nation’s renewable fuels sector,” said the lawmakers in a letter spearheaded by Rep. Abby Finkenauer, an Iowa Democrat.
That same month, POET, the largest U.S. ethanol producer, was forced to shut its plant in Indiana due to what it called the EPA’s “mismanagement” of the ethanol mandate. “Unfortunately, the oil industry is manipulating the EPA and is now using the RFS to destroy demand for biofuels, reducing the price of commodities and gutting rural economies in the process,” POET chief executive Jeff Broin said at the time. The company, based in Sioux Falls, South Dakota, had decreased production at half of its 28 refineries in seven states and said it would reduce corn processing by 100 million bushels.
The price of U.S. renewable fuel credits for 2020 rose on Wednesday to their highest since March 2018. Credits traded at 55¢ each, up nearly 18% from the previous session, Reuters reported.