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Trump denies 'gap-year' refinery exemptions

Trump needs to hang onto farmer support in Iowa.

By Kim Chipman and Ari Natter

The Environmental Protection Agency said it won’t retroactively exempt small oil refiners from biofuel blending requirements, a victory for ethanol producers as President Donald Trump attempts to shore up support in the U.S. Corn Belt.

The EPA said on Monday it would deny “gap-filling” petitions for 2011-18. Refineries didn’t provide information that would compel a change for the compliance years in question, according to the agency, which consulted with the Energy Department on the decision.

Federal law authorizes the EPA to grant the exemptions for small refineries that can prove they are facing a serious economic hardship complying with the biofuel-blending requirements.

A pressure campaign in Iowa -- the top U.S. ethanol-producing state -- had been heating up with just seven weeks until Election Day. Trump, who won the state four years ago, needs to hang onto farmer support to offset Joe Biden’s polling lead in other parts of the Midwest. Republican Senator Joni Ernst, who is in a tight race for re-election in Iowa, was part of an intense lobbying effort.

“We are grateful for President Trump taking this action after hearing from farmers and our elected champions,” Iowa Renewable Fuels Association Executive Director Monte Shaw said in a statement, adding that Trump is “on track” to uphold his promise to Iowa voters to protect the Renewable Fuel Standard.

Ethanol company shares rose, with Green Plains Inc. up as much as 8.9% and Pacific Ethanol Inc. 9.1%.

The waiver denial, coupled with Trump’s promise to allow higher-ethanol gasoline to be distributed using existing filling station pumps, helps both the ethanol industry and Trump’s cause in Iowa, Green Plains Chief Executive Officer Todd Becker said in an interview.

“The support of the American farmer is at stake,” Becker said.

”This is an extremely strong statement by President Trump that he’s supporting the farmers over the foreign oil companies,” said Steve Sukup, chief executive officer of Iowa-based Sukup Manufacturing Co., the world’s largest family-owned manufacturer of grain storage equipment.

Meanwhile, the American Fuel and Petrochemical Manufacturers called the Trump administration action the “latest betrayal of U.S. refinery workers.”

“The legacy of this administration’s handling of RFS will be fewer union refining jobs, facility closures, reduced U.S. refining capacity, and increased imports of foreign biodiesel,” AFPM CEO Chet Thompson said in a statement.

Trump administration officials have been considering a plan to offset the potential economic damage by giving them financial aid. The approach was being discussed by top Environmental Protection Agency officials, according to three people familiar with the matter who asked not to be named discussing the administration’s private deliberations.

It’s unclear what statutory authority -- or even financial account -- the EPA might tap for the aid, though agency officials are considering coronavirus-relief funding allotted to the Agriculture Department, the people said. Under that approach, aid would be distributed to small refineries denied waivers from biofuel quotas.

--With assistance from Jennifer A. Dlouhy.
© 2020 Bloomberg L.P.
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