Finally, some good news for ethanol and biodiesel from the U.S. Environmental Protection Agency. Administrator Andrew Wheeler announced Sept. 14 the agency will reject dozens of requests by the oil industry for small-refinery exemptions. The waivers have been granted by EPA since 2016, allowing oil refiners to reduce the amount of ethanol and biodiesel blended into the nation’s fuel supply.
The Renewable Fuel Standard is a federal law requiring an increasing amount of ethanol and biodiesel to be used in the U.S. each year. But since 2016, EPA in the Trump administration has approved 85 SREs, which have cut ethanol and biodiesel use by 4 billion gallons.
EPA’s new move to reject the RFS waiver requests by oil refiners follows requests by Iowa lawmakers asking President Donald Trump to stop granting the so-called economic hardship waivers to oil companies. Renewable fuels groups last month warned the president that without action to stop the waivers, he risked losing rural voters, a bloc vital to his reelection bid.
Reversal in EPA biofuel policy
Reversing his agency’s stand, Wheeler wrote a letter to refiners on Sept. 14 saying EPA will deny 54 of 68 retroactive waiver requests. “This decision follows President Trump’s promise to promote domestic biofuel production, support our nation’s farmers and strengthen our energy independence,” Wheeler said. “At EPA, we are delivering on that promise by following the rule of law and ensuring that 15 billion gallons are blended into the nation’s fuel supply.”
For nearly two decades, ethanol and biodiesel have benefited farmers, boosting corn and soybean prices. Iowa produces more ethanol and biodiesel than any other state and is a national leader in growing corn and soybeans used to make these biofuels. Commenting on Wheeler’s announcement, Monte Shaw, executive director of the Iowa Renewable Fuels Association, said, “The long refinery exemption nightmare should be over.”
Iowa government officials and farm leaders welcomed the EPA announcement. They note that farmers have struggled in recent years as trade wars have slashed exports, the coronavirus slammed the brakes on demand for ethanol and gasoline, and the severe winds of a derecho in August damaged an estimated 14 million acres of corn and soybeans across about one third of Iowa.
Farm economy needs help
“As Iowa farmers grapple with trade disruptions, a global pandemic and the damage done by a devastating derecho, it’s critical that we take action to help our ag economy,” said Gov. Kim Reynolds, a Republican who hosted Trump in Cedar Rapids on Aug. 18 to view the storm damage.
In January, a federal appeals court ruled that EPA “exceeded its authority in granting certain waiver exemptions.” The court said SREs granted by EPA after 2010 could be approved only as extensions of pre-existing waivers. But most oil refineries receiving waivers in recent years haven’t continuously received them. So, refiners sent in retroactive waiver applications to try to comply with the court ruling. This year EPA has been considering 54 requests for the “gap” waivers and 30 new waivers oil refineries are seeking for 2019 and 2020.
Shaw says the retroactive waivers were a blatant attempt by some oil refiners to skirt the RFS, which was originally passed by Congress in 2005. “With gap-year waivers denied, the number of refiners eligible to apply for — let alone receive — an RFS exemption going forward is reduced to single digits,” he says. “Rejecting the waiver petitions is the right thing to do and a big step forward toward fully restoring integrity to the RFS.”
Oil industry isn’t pleased
The oil industry isn’t happy with the new EPA decision, and says this action by the Trump administration will hurt workers. “The announcement by EPA and the proposed cash payment plans are bad for the refining industry, it’s workers and consumers — all of whom the president has promised to protect,” said the Fueling American Jobs Coalition, in a statement. This coalition is a group of union workers, gas station owners and independent U.S. oil refiners.
“The decision to deny the 54 retroactive RFS exemption requests is critical to upholding the spirit of the RFS and the growing demand for cleaner-burning biofuels,” said Iowa Secretary of Agriculture Mike Naig. “Iowa leads the nation in renewable fuel production. Our state is home to 43 ethanol plants capable of producing over 4.5 billion gallons annually, and 12 biodiesel facilities producing 400 million gallons annually. The biofuels industry provides jobs in rural communities, additional markets for ag products, and gives consumers more choices at retail fuel pumps.”
The Iowa Corn Growers Association has repeatedly pushed the Trump administration to deny the gap-year waivers. “We are glad EPA is taking steps to uphold the integrity of the RFS by denying the vast majority of the refinery petitions,” said ICGA president Carl Jardon. “For the RFS to be upheld entirely, the EPA should apply the 10th Circuit Court decisions on SREs nationwide and similarly deny the remaining gap-year waivers.
“When it is upheld, the RFS is one of America’s most successful energy policies, requiring environmentally friendly, renewable biofuels be blended into the U.S. fuel supply. By having the gap waivers denied and looking to deny future waivers, this helps secure the RFS for the future and allows some certainty for Iowa farmers in a year that has had few rewards.”
Getting RFS back on track
Grant Kimberley, executive director of the Iowa Biodiesel Board, says: “We are pleased to hear the administration’s announcement to deny most gap-year petitions for small-refinery exemptions to the RFS for past compliance years. With those waivers denied, and assuming EPA applies the recent court ruling nationwide, the exemption issue we have battled for so long should significantly improve. This turnaround would set the RFS on the right track again.”
Iowa Soybean Association President Jeff Jorgenson adds: “We thank President Trump and EPA Administrator Wheeler for this decision that will hold EPA to its obligation to enforce the RFS as the law of the land. Iowa’s biodiesel plants and soybean farms and our communities will benefit from putting an end to the slow leak that has hampered the RFS.”
“The Iowa Farm Bureau is pleased the Trump administration is upholding the rule of law regarding small-refinery exemptions or ‘gap year’ hardship waivers,” says IFB President Craig Hill. “In granting those waivers, EPA allowed oil companies to bypass the biofuel blending mandates required by the Renewable Fuel Standard. Renewable fuels are a major driver of Iowa’s economy and critical to the vitality of our rural communities. We look forward to continuing our work with the administration and lawmakers to restore integrity and certainty to our biofuels industry that our rural communities rely upon.”
An election year issue in Iowa
Mid-September news reports indicate the Trump administration is developing a plan to provide financial aid to oil refineries whose Renewable Fuel Standard waivers were recently rejected. The aid would also be aimed at offsetting potential economic damage, such as loss of jobs by oil industry workers.
With the presidential election upcoming, Iowa Democrats point out that President Donald Trump created many of the problems U.S. farmers face today. Democrat party leaders criticize the president for not acting sooner in denying the RFS waiver requests by the oil industry.
“Denying the waivers 50 days ahead of the election is an obvious political move to help the president’s reelection efforts,” says Patty Judge, co-founder of Focus on Rural America, an organization supporting progressive causes.
U.S. Sen. Chuck Grassley, a Republican northeast Iowa farmer, says he’s “glad EPA listened to the common sense of farmers and biofuel producers and is denying these waivers.”
Support for renewable fuel is a contentious issue in the race for U.S. Senate in Iowa, between Sen. Joni Ernst, a Republican, and challenger Theresa Greenfield, a Democrat and a Des Moines businesswoman.
Ernst says Trump answered her call for the waiver requests to be thrown out. Greenfield criticizes Ernst for voting to confirm the appointment of Wheeler to head the EPA, as Wheeler is a former energy industry lobbyist “whose agency issued 85 RFS waivers, devastating our farmers.”
Stay tuned. The election is Nov. 3. Be sure to vote.