Wallaces Farmer

Trump has held series of meetings between ethanol supporters and oil lobby.

Bloomberg, Content provider

April 16, 2018

3 Min Read
U.S. Sens. Jodi Ernst and Charles GrassleyAlex Wong/GettyImages

by Jennifer A. Dlouhy and Mario Parker

Even as President Donald Trump floats the idea of more ethanol sales, critics say moves by his Environmental Protection Agency would undercut the support to corn farmers.

On Thursday, Trump said the government probably would allow the year-round sale of gasoline containing as much as 15 percent ethanol, a blend known as E-15. But some lawmakers and ethanol producers say the change is undermined as the EPA continues its longstanding practice of issuing hardship waivers to some oil refineries.

At the heart of the matter is demand for ethanol, usually made from corn. A federal mandate requires a certain amount of biofuel blending, a regulation that oil refineries have long complained is too expensive and burdensome. The EPA’s waivers allow some of them to skirt the requirements.

The "EPA’s practice of giving away secret hardship waivers to the country’s biggest oil refining companies needs to stop," five Republican senators from top corn-producing states including Chuck Grassley and Joni Ernst of Iowa said in a joint statement late Thursday. The waivers are "effectively gutting" national biofuel quotas and are "another backdoor attempt" to destroy ethanol regulation, they said.

Trump has held a series of meetings in recent months to carve out a biofuels deal that satisfies the agriculture and oil lobbies, which also happen to represent two of his most important constituencies: farmers in the rural Midwest and blue-collar workers in industrial areas. The two sides have clashed repeatedly over the Renewable Fuel Standard, a complicated policy that crosses political lines. 

On Thursday, farmers cheered as Trump said the government would probably allow year-round sales of E15, a change from current policy that restricts its sale during the summer in areas where smog is a problem. But in a meeting with farm-state lawmakers and governors, Trump also indicated there would be a two-year transition for the change, with "no guarantee" it would happen, and he stressed that he would be "helping the refineries" who have complained about the biofuel mandate.

Trump’s EPA already is doing just that. It has encouraged some 38 eligible oil refineries to apply for waivers and granted more than two dozen of them. A federal law allows exemptions for facilities that use no more than 75,000 barrels of crude per day, and a court ruling last year made winning waivers easier. 

"The court basically said that, under the statute, EPA is required to give small refinery exemptions more liberally," Jeff Holmstead, the former assistant EPA administrator, said in an emailed statement Thursday. What’s more, the law "does not make a distinction between small refineries owned by small parent companies and small refineries owned by large ones." 

The EPA’s decision to issue the waivers undermines Trump’s “longstanding support” for the mandate, 13 U.S. senators said in an April 12 letter to EPA Administrator Scott Pruitt. The agency should immediately cease issuing waivers and provide a list of companies that have received them, they said. 

Exxon Mobil Corp. has applied for at least one waiver, according to people familiar with the process who asked for anonymity to discuss the confidential program. Its 61,500 barrel-a-day facility in Billings, Montana, would qualify based on capacity. Suann Guthrie, an Exxon spokeswoman, declined to comment. 

Billionaire Carl Icahn’s CVR Energy Inc.’s Wynnewood, Oklahoma, refinery, has a capacity below the 75,000-barrel threshold and could also qualify for the exemption. Brandee Stephens, a spokeswoman for CVR, declined to comment on whether the company sought a waiver. Icahn, a former special adviser to Trump on regulations who has advocated for changes to the program, didn’t respond to several messages requesting comment. 

The EPA’s waiver decisions "are based on refinery-specific information" and Department of Energy analyses, EPA spokesperson Liz Bowman said by email. "We continue to work through petitions received for 2017."

--With assistance from Kevin Crowley and Laura Blewitt.

To contact the reporters on this story: Jennifer A. Dlouhy in Washington at [email protected]; Mario Parker in Chicago at [email protected]

To contact the editors responsible for this story: Jon Morgan at [email protected]

Millie Munshi, Patrick McKiernan

© 2018 Bloomberg L.P

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