Government

Critics unload on EPA's biofuel proposal

Farmers seeking relief from financial struggles

Steve Westra, plant manager, walks inside the wet distillers bunker at the Siouxland Energy Cooperative in Sioux Center. The plant is one of at least three in Iowa that have been idled because of a lack of demand for ethanol. (Kathryn Gamble/Washington Post)
Steve Westra, plant manager, walks inside the wet distillers bunker at the Siouxland Energy Cooperative in Sioux Center. The plant is one of at least three in Iowa that have been idled because of a lack of demand for ethanol. (Kathryn Gamble/Washington Post)

ANN ARBOR, Mich. — With U.S. farm bankruptcies at their worst in eight years, agriculture and renewable fuel interests tried again Wednesday to resurrect a deal they thought they already had clinched with the Trump administration to increase the corn and soybean market.

At a public hearing over proposed changes to the nation’s Renewable Fuel Standard held near Ann Arbor, Mich., King Corn and Big Oil reprised their ongoing battle over the biofuel rule but agreed on one thing: Neither side likes the Environmental Protection Agency’s attempt to mollify the competing constituencies that are key to the reelection of President Donald Trump.

At issue is a proposal unveiled this month by Trump’s EPA that would increase the amount of corn- and soybean-based biofuels that some oil refineries must blend next year to make up for volumes the agency expects to waive under its controversial Small Refinery Exemption program.

The latest fuel standard proposal was meant to both please farmers and secure a program the oil industry says is crucial to the survival of small facilities. But instead, it has drawn harsh criticism from both sides.

The corn industry says it does not go far enough — relying only on recommendations and not the actual data of the amounts exempted.

Farmers and biofuel operators thought they already had a deal with Trump in October to make up for the waived amounts. But when the proposal was revealed later, it left open the possibility that the EPA would use a lower number to calculate the missing biofuel than what has actually been lost.

The letdown comes as farmers already are coping with the effects of Trump’s trade war with China and with bleak weather that lowered harvest yields this fall and left huge swaths of farmland along the Missouri River under water.

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“It is not hard to understand why there is a growing sense of frustration in the heartland,” said Mike Naig, Iowa’s Republican agriculture secretary.

Iowa Gov. Kim Reynolds sent a video statement to the hearing, where the Republican noted the biofuel industry’s importance to Iowa’s economy — supporting 48,000 jobs — and cited the EPA’s “egregious disregard” for the fuel standard.’

U.S. farm bankruptcies in September surged 24 percent to the highest point since 2011, according to a report from the American Farm Bureau Federation, the nation’s largest general farm organization.

The report illustrates how the agriculture industry this season relies on the government to make ends meet: Almost 40 percent of projected farm profit this year will come from trade aid, disaster assistance, federal subsidies and insurance payments, according to the report, which is based on Department of Agriculture forecasts. That’s $33 billion of a projected $88 billion in total farm income.

On the other hand, the oil industry complains the EPA’s proposal is unfair to refineries that would have to do more blending to make up for the exempted volumes.

Patrick Kelly, a spokesman for the American Petroleum Institute, said during the hourslong hearing the proposal “punishes the companies already complying” with the law.

The oil industry has long complained about the cost of complying with the biofuel rule — citing it as a culprit in forcing into bankruptcy the East Coast’s largest refinery, run by Philadelphia Energy Solutions.

Small oil facilities of 75,000 barrels per day or less can secure exemptions from the rule in a confidential process, provided they prove compliance would cause them disproportionate economic harm.

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The EPA has roughly quadrupled the number of waivers granted to small refiners since Trump took office in January 2017 — some at his personal direction, Reuters has reported.

The oil industry says the waivers are crucial to the survival of small refineries that otherwise would face a high cost of compliance. The industry denies the small refinery exemptions have a meaningful impact on ethanol demand.

But ag interests note that some of the waivers have gone to enormously profitable companies that don’t need them.

One waiver, for instance, went to a refinery for Exxon Mobil — which later reported 2017 earnings of almost $20 billion.

Reuters and Bloomberg contributed to this report.

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