Refineries count losses from Trump’s Iowa promises

Source: By Marc Heller, E&E News reporter • Posted: Tuesday, August 25, 2020

President Trump’s promise in Iowa last week to personally take up biofuel policies with EPA may have cost refineries tens of millions of dollars, industry representatives told the president in a letter.

Small-refinery owners urged the president yesterday not to give in to pressure from biofuel groups that want the agency to more strictly adhere to ethanol-blending mandates.

At issue are the waivers EPA gives to small refineries that say they are being hurt financially by the federal requirement to either blend biofuel or, as an alternative, buy renewable fuel credits. Refiners have filed dozens of petitions for waivers covering several years.

“Following your statements in Iowa,” the refiners told Trump in a letter, prices for renewable fuel credits spiked, adding $240 million to refiners’ costs within a week, “costs we are unable to bear.”

Trump spoke last week in Cedar Rapids, where he’d visited to talk about federal aid to corn farmers hit by severe thunderstorms that flattened their fields. He appeared jointly with Iowa Republican Sens. Chuck Grassley and Joni Ernst.

Prompted by Ernst — who pressed Trump to help stop EPA from granting retroactive waivers — the president said, “I’ll speak to them myself. I’ll do it myself,” according to a White House transcript.

Ernst and biofuel groups say EPA would break the intent of the renewable fuel standard by exempting refineries from past compliance years. But the refiners pushed back yesterday, telling Trump that at least three small refineries have closed since the COVID-19 pandemic began and that denying the waivers won’t help farmers or address the RFS’s problems.

“Without your support, this country is sure to lose many more of its small refineries, which does no good at all,” the leaders of 11 refining companies wrote.

The companies included American Refining Group Inc., Continental Refining Co. and Par Pacific Holdings.

In his remarks, Trump didn’t say whether he would make a case with EPA for not granting waivers. And he noted his decision earlier in his term to clear the way for year-round availability of a higher-ethanol fuel called E15, a fuel mix with 15% ethanol.

When Ernst noted the difficulty the ethanol industry and farmers are facing from the pandemic and the storms, Trump replied, “But they’ll be ready when the market comes back. They’ll be ready like never before, right?”

In their letter to Trump, refining companies said their industry and farmers have joint interests because refiners need ethanol to make higher-octane blends. But small refiners have limited opportunities because the system compels them to buy “exorbitantly priced” renewable fuel credits.

EPA has been weighing the petitions for waivers for months, and news reports have suggested a decision may not come before the November election.

Trump’s decision to promote E15 is also hitting bumps. American Fuel & Petrochemical Manufacturers has sued the administration, saying EPA illegally lifted seasonal restrictions on E15 to meet Trump’s promise.

That decision went beyond the agency’s authority, the organization said. Changing the regulations around E15 requires an act of Congress, the group told E&E News today.

“It doesn’t matter how much political pressure the corn ethanol lobby applies,” an AFPM spokesperson said.

Biofuel groups pushed back last week, telling the U.S. Court of Appeals for the District of Columbia Circuit that the complaint should be dismissed.

Among the technical questions in that lawsuit is whether E15 is more volatile — and thus more of an ozone pollution threat in summer — than the E10 gas that’s typically sold at filling stations. Biofuel groups said it’s less volatile, and AFPM said it’s more volatile.