EPA moves to heal rift with ethanol industry over waivers for the oil industry

Source: By John Siciliano, Washington Examiner • Posted: Monday, September 24, 2018

The Environmental Protection Agency took a big first step on Thursday toward rectifying a major rift with the ethanol industry over the agency’s approval of dozens of waivers freeing oil refiners from a federal mandate to blend the corn-based fuel.

The step announced by EPA acting Administrator Andrew Wheeler would reveal to the public, for the first time, how and when it granted special waivers to over two dozen refiners to help them bear the cost of meeting its Renewable Fuel Standard, or RFS, regulations. Critics of the waivers say that they harm the ethanol program and the nation’s agriculture sector and farmers.

“For the first time, EPA is providing new information to the public on small refinery exemptions and [ethanol credit] trading,” said Wheeler in a statement. “Increasing transparency will improve implementation of the RFS and provide stakeholders and the regulated community the certainty and clarity they need to make important business and compliance decisions.”

The ethanol industry and top GOP lawmakers like Sen. Chuck Grassley of Iowa have pressed EPA for months to reveal which oil companies received “hardship” waivers, allowing them to ignore ethanol blending mandates. The ethanol industry and farm groups even sued, arguing that the waivers granted by former EPA chief Scott Pruitt were illegal.

More importantly, they want the ethanol that the refiners were freed from blending to be added to next year’s annual targets. That amount is over 1 billion gallons of renewable fuel.

Grassley, Sen. Joni Ernst, R-Iowa, and others have been leaning on Wheeler to do something, arguing that the waivers have destroyed demand for corn ethanol at a time when farmers are struggling.

President Trump’s tariffs have made the situation worse, with China targeting U.S. grains and ethanol in its first wave of retaliatory actions against Trump’s trade policy, according to industry officials. Trump has issued billions of dollars in aid to farmers, but the industry and senators still want the fixes that Trump had promised earlier this year to help ethanol producers sell more of their product.

Lawmakers from the House biofuel caucus sent a letter to Wheeler on Wednesday, prodding him to take action on relaxing rules to move more ethanol into the market. The biodiesel industry soybean producers sent a letter to Trump on Thursday, prodding him to act to save farmers by expanding the market for the soy-based fuel under the EPA program.

Secretary of Agriculture Sonny Perdue, who has been sympathetic to the farmers’ plight, said Thursday, that for farmers, the ethanol program “is one of the top issues” they follow on a daily basis.

“We hear concerns about lack of transparency around the issuance of small refinery waivers and we are hopeful these changes will put everyone on a level playing field to receive the information at the same time,” Perdue said.

The industry had mixed responses to the dashboard announcement.

“This is a step in the right direction, and we applaud acting Administrator Wheeler’s initial efforts to provide greater transparency to the RFS program,” said Renewable Fuels Association President and CEO Bob Dinneen, one of the top ethanol lobbyists in Washington.

Dinneen explained that the action will put everyone on the same page, ethanol producers and oil refiners alike, when it comes to information that could give one sector an advantage over another.

That may prevent refiners from “obtaining market-moving information before other participants in the marketplace,” he said. “That’s important because it appears the [ethanol credit] market was gamed earlier this year by a small group of refiners who were privy to sensitive information regarding compliance exemptions before the rest of the market knew what was going on,” he added.

Nevertheless, he says more information will be needed from EPA. “Market participants and the public deserve to know exactly who is receiving small refinery exemptions and what criteria is being used by EPA in making the decision to grant or deny a waiver request,” Dinneen said.

Other groups representing the biodiesel industry said the announcement is too little, too late.

“Additional transparency in the RFS program is welcome, but it comes very late and doesn’t solve the problems EPA has recently created,” said Kurt Kovarik, federal affairs vice president for the National Biodiesel Board.

He says the dashboard helps to validate the industry’s arguments that EPA’s oil refinery waivers have reduced demand for biodiesel.