Battle Against EPA & Waivers Isn’t Over

A deal is a deal. At least it should be.

But when dealing with the EPA and the Trump administration on ethanol obligations and promises, don’t bank on it. The government changes direction more frequently than a hungry South Dakota walleye. What’s promised one day is sometimes squashed the next. It’s enough to make your head spin.

This has been one of the most challenging corn crops ever. So, it was a big deal when President Trump pledged to live up to the 15 billion gallon ethanol blending requirements of the Renewable Fuel Standard (RFS).

But then the Environmental Protection Agency (EPA) turned around and cut back on that pledge. And that’s a bum deal for corn farmers.

Big deal or bum deal? Which is it going to be?

South Dakota Corn Growers Association President Doug Noem of Bryant says the frustration among corn farmers and the ethanol industry is growing.

“We get this promise that the waivers procedure will be changed and the RFS will be upheld to its standards, then the next day we get an announcement that it’s not what we expected,” Noem said. “It’s hard for me, and many of our growers, to trust what comes out of D.C. until it comes out in writing. It’s the same thing with trade issues. One day you hear an agreement is close, the next day you hear it’s going to be a while.”

Ethanol proponents are calling it a “bait and switch” maneuver–a tactic of offering or advertising something that looks like a great deal to gain favor, then following up with something less desirable.

“It gives a person whiplash,” SDCGA Executive Director Lisa Richardson said about the everchanging policy decisions.

To Keith Alverson of Chester, who worked on biofuel issues as a past chairman of the National Corn Growers Association Ethanol committee, the Washington D.C. rhetoric is tiresome.

“It’s the same old story we’ve had out of this EPA. They tell us one thing and go do another. We can’t trust them to do what the letter of the law says,” Alverson said. “They’ll do whatever they get told to do or what oil companies tell them to do. It’s incredibly frustrating. It feels like Charlie Brown and the football.”

The Renewable Volume Obligation, or RVO, is where the EPA tinkered with the president’s deal. The RVO determines how much biofuel oil refiners will blend into the motor-fuel mix.

President Trump announced October 4 that he had directed the EPA to follow the letter of the law and use a three-year average of renewable fuel gallons actually waived by the EPA to account for waivers going forward. However, the EPA proposal that was released 11 days later called for a three-year average of the Department of Energy’s recommended waivers, rather than an average of the renewable fuel gallons actually waived by the EPA. Huge difference.

The bottom line is the RFS mandates a total of 15 billion gallons to be blended and that requirement should be met. 15 billion gallons is 15 billion gallons.

The EPA’s slap in the face to the agriculture industry is especially painful at a time when the forces of nature are pummeling South Dakota farmers. Floods, rain and muddy soil left a high percentage of fields unplanted. And as October nears an end, nearly 40 percent of the state’s soybeans and nearly 85 percent of the corn remain in fields.

A top priority for corn farmers across the country is to boost demand for corn by increasing sales of higher ethanol blends. The Trump Administration’s action that lifted summer restrictions and allowed year-round sales of E15 was welcome news. But the EPA’s ongoing practice of allowing refiners to forgo RFS blending requirements threatens to undo those gains.

Bowing to Big Oil, the EPA announced in August the approval of 31 more controversial small-refinery waivers equating to 1.43 billion gallons of ethanol. To put that in perspective, South Dakota’s 16 ethanol plants produce a little more than one billion gallons. Those waivers are a serious blow to the industry.

Since President Trump took office, the oil-friendly EPA has granted 85 waivers, freeing companies from using four billion gallons of renewable fuel. Those waivers amount to 1.7 billion gallons more than the Department of Energy had recommended.

This was the final straw for many ethanol plants that were already struggling. More than 30 biofuel plants across the country have closed or slowed production in recent months.

Ethanol plants are the lifeblood of the economy in many rural communities, particularly in South Dakota where the industry employs more than 11,000 people and adds more than $980 million to the gross domestic product, according to a study by ABF Economics conducted for the Renewable Fuels Association.

So, what can be done about the EPA’s lack of commitment to the RFS?

First of all, a coalition of renewable fuel and agricultural trade organizations has filed a petition with the Court of Appeals, challenging the EPA’s process in excepting refineries from their RFS obligations for 2018. The coalition includes the National Corn Growers Association, American Coalition for Ethanol, Growth Energy, National Biodiesel Board, National Farmers Union and Renewable Fuels Association. South Dakota Corn is involved as a member of the NCGA. Those national groups and state associations also testified in Congress this week and will submit comments to the EPA.

But that’s not enough. The EPA and President Trump need to hear directly from farmers.

“It’s hugely important that they hear from us. Individual comments are absolutely essential,” Noem said. “If individual farmers can make a comment, that carries more weight than anything. Give them a call, send them an email and tell them to stand behind the RFS, that we need help on ethanol. Anything like that will get their attention.”

Here’s the deal. We’re asking you to visit https://www.ncga.com and tell the EPA to do the right thing and honor the president’s deal on ethanol. You can also call the White House at 202-456-1111 or 202-456-1414 or email by going to https://www.whitehouse.gov/contact/. Please don’t wait. Because 15 billion gallons of ethanol is a big deal for corn farmers.

Ethanol Policy Timeline

June 12 – Ag and biofuels industry applauds President Trump’s approval of year-round E15 sales but warns him that continued abuse of SREs will push an industry already hurt by trade disputes and previous SRE demand destruction over the edge.

Aug. 9 – The EPA grants another 31 SREs, resulting in immediate reductions in ethanol and biodiesel margins and corn prices. It is estimated that 70 percent of the nation’s ethanol plants were losing money on every gallon they sold after this action. Farmers and biofuels supporters were up in arms.

Aug. 29 – Responding to the outrage in farm country, President Trump tweets that a “giant package” is coming to help stop the havoc wreaked by SREs.

Sept. 12 – Midwestern lawmakers meet with President Trump to hash out a deal. The meeting focuses on ensuring the RFS is kept whole by prospectively accounting for future SREs using a three-year rolling average of past SREs actually granted. At no time during this meeting is the use of the lower (and ignored) DOE recommendations for SREs discussed.

Sept. 16 – Siouxland Energy ethanol plant in Sioux Center, Iowa, shuts down.

Sept. 24 – W2Fuel closes its biodiesel plant in Iowa along with another plant in Michigan. Twenty-eight biofuels plants around the country are now shut down.

Oct. 3 – White House and EPA officials hold a briefing call for agriculture and biofuels supporters to review President Trump’s deal. On the call, in response to a specific question, biofuels supporters are told that the proposal would be to project future SREs based on actual waived gallons from the prior three years.

Oct. 4 – As part of the Trump deal rollout, EPA Administrator Andrew Wheeler goes on radio and announces: “Yes, there may be waivers next year, because those are required under the law, but what we’re doing is we are putting forth 15 billion gallons plus an additional amount based upon what we’ve given out in the last three years in the waivers…”

Oct. 15 – EPA unveils its proposed supplemental rule that was supposed to reflect President Trump’s deal. Instead, the use of actual SREs granted is replaced with the use of DOE recommendations, which are roughly half the amount of what EPA has done over the last three years. The EPA proposal does not guarantee that RFS levels will be met.

Oct. 16 – Iowa ag and biofuels leaders hold a press conference to call on President Trump to force the EPA to stand by the deal that he agreed to with elected officials, that was briefed to industry leaders and that was promised by Administrator Wheeler.

Oct. 17 – After EPA questions the accuracy of ag and biofuels leaders, Iowa Governor Reynolds steps forward to set the record straight and debunk the false narrative that the EPA has tried to peddle since their proposal became public.

Oct. 29 – Congressional hearing about small-refinery waivers. Biofuels industry representatives accused the Trump administration of “rampant abuse” of the so-called SREs freeing refineries from their annual ethanol blending obligations, while the nation’s top refining association argued the program was critical to national security by keeping petroleum fuel producers in business.

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