Iowa lawmaker asks EPA watchdog to probe refinery waivers

Source: By Marc Heller, E&E News reporter • Posted: Thursday, August 22, 2019

Iowa Rep. Cindy Axne is calling on EPA’s inspector general to investigate how the agency waives biofuel blending requirements for refineries, following a stream of such exemptions that’s sparked criticism from farm groups.

The Democrat said the exemptions for small refineries are dampening demand for ethanol and hurting companies that sell it, including the Iowa-based company Poet LLC, which announced yesterday it will idle a plant in Indiana due to EPA’s actions.

The lawmaker’s reaction is part of a broader blowback from ethanol groups and congressional allies following EPA’s decision last week to grant 31 economic-hardship exemptions to small refineries, totaling around 1.3 billion gallons of biofuel. The exemptions, allowed through the federal renewable fuel standard, free refineries from requirements to blend biofuel into gasoline or to buy renewable fuel credits.

“Iowa farmers have been warning this Administration for months about the devastating impact these waivers are having on our economy. We’re losing Iowa jobs as a direct result of Washington policies,” Axne said in a news release.

Axne, who is planning a news conference today on the issue, called the exemptions a misuse of EPA’s authority, aimed at benefiting a small number of companies with undue influence over the Trump administration.

She urged more transparency in the program. EPA doesn’t identify which refineries receive waivers, which companies consider private business information.

Ethanol advocates say the exemptions undermine benefits to the industry from another EPA decision earlier this year to allow summer sales of higher-ethanol fuel called E15. And while the agency has proposed to maintain congressionally mandated biofuel volumes for next year, small refinery exemptions trim that number in practice, industry groups say.

Poet, the ethanol company, said it will cease operations at its Cloverdale, Ind., plant over several weeks and consolidate jobs in other states. The plant accounts for more than 30 million bushels of corn a year, and hundreds of jobs will be affected, the company said.

“POET made strategic decisions to support President Trump’s goal of boosting the farm economy. However, these goals are contradicted by bailouts to oil companies,” Poet President and Chief Operating Officer Jeff Lautt said in a statement. “The result is pain for Midwest farmers and the reduction of hundreds of jobs and hundreds of millions of dollars of economic activity across Indiana.”

EPA and petroleum companies say that the exemptions are spelled out in the law and that the agency is compelled to grant them when refineries make the case that the biofuel mandate is a disproportionate economic hardship. The Fueling American Jobs Coalition, representing oil refiners, gas station owners and small retailers, said EPA “is following the law and the will of Congress to relieve RFS compliance burdens faced by small refineries across the country.”

Agency decisions on biofuel volumes for next year could play into the political atmosphere in the farm belt as Trump seeks reelection. The president campaigned in part on support for farmers and rural areas, including support for ethanol, and the administration has walked a political tightrope between oil and ethanol interests.

The administration has alternated between decisions that represent victories for corn farmers — such as summer sales of E15 — and wins for oil interests, such as easing the biofuel blending mandate for certain refineries.

With each decision, the administration sparks heavy criticism from one side and praise from the other. The pro-ethanol group Growth Energy said EPA “shatters rural hopes” with the exemptions.

Wheeler, traveling in Fairbanks, Alaska, told E&E News that the exemptions are spelled out in law and the RFS program is under constant review, but that there are no specific programmatic changes in the immediate works. On Monday, he took a call from Trump during a public event there.

The annual biofuel volumes for next year are under review at the White House Office of Management and Budget, Wheeler told E&E News, and the agency is also working on a reset of RFS volumes required because the program fell short of targeted volumes for three years in a row.

Reporter Geof Koss in Fairbanks, Alaska, contributed.