Government

Ethanol fuel rule 'under attack,' Ernst says

Iowa lawmakers, and former Gov. Branstad, press Trump

U.S. Sen. Joni Ernst answers questions Tuesday during a town hall meeting with employees at the DuPont Industrial Biosciences facility in southwest Cedar Rapids. (Jim Slosiarek/The Gazette)
U.S. Sen. Joni Ernst answers questions Tuesday during a town hall meeting with employees at the DuPont Industrial Biosciences facility in southwest Cedar Rapids. (Jim Slosiarek/The Gazette)
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CEDAR RAPIDS — Trump administration efforts to quell anger throughout the Farm Belt over decisions this month to exempt more than 30 oil refiners from putting as much ethanol in gasoline as the law requires do not appear to be working with Republican U.S. Sen. Joni Ernst.

Exempting 31 of 37 refineries in the latest round of decisions from complying with the nation’s biofuel law is having “negative economic impact on every piece of Iowa’s fuel supply chain,” Joe Kilburg, DuPont Industrial Biosciences facility manager in Cedar Rapids, told Ernst as he kicked off her town-hall style meeting Tuesday with employees there. The facility makes enzymes used in biofuel production.

“We appreciate your fight for Iowa biofuels and dedication to working to hold the line in Washington to stop this messing around,” Kilburg said.

“The Renewable Fuel Standard is under attack,” Ernst responded, adding “there is a big concern out there that our RFS, our way of life here in the Midwest, is under attack.”

Farmers already bearing the brunt of Trump’s trade war with China say his support of the hardship biofuel waivers has destroyed ethanol demand. Corn farmers “get the short end of the stick” when exemptions are granted, Ernst said.

“I don’t think the president fully understood how detrimental it would be by giving those waivers,” Ernst later told reporters, adding that President Donald Trump needs to be “educated” on the harm done.

“I guarantee you that we are focusing on the administration and making him understand how important this is for the Midwest,” Ernst said.

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“We” includes Republican Sen. Chuck Grassley, who told reporters Tuesday that “not only is the government not keeping its word, but it’s also screwing the farmer when we have low (corn) prices.”

Trump’s Environmental Protection Agency granted the exemptions just as Democratic candidates hoping to challenge him in 2020 spoke at the Iowa State Fair and sought to position themselves as fighters for the corn-based ethanol.

One of the visitors to the State Fair also was former Iowa Gov. Terry Branstad, now the U.S. ambassador to China.

He spoke during a lengthy Oval Office meeting Monday to Trump about the situation, expressing concern about the harm the waivers will cause rural America, including Iowa — a state Trump carried in 2016 and likely will need again for reelection.

Iowa is the nation’s largest producer of corn and ethanol; President Barack Obama won the state handily twice before it swung heavily to Trump in 2016.

In addition to Branstad, the meeting included Deputy Agriculture Secretary Stephen Censky, White House trade adviser Peter Navarro, White House economic adviser Larry Kudlow and National Security Council official Matthew Pottinger. Agriculture Secretary Sonny Perdue and EPA Administrator Andrew Wheeler joined the meeting by phone.

“It was helpful having Ambassador Branstad step in as well and say, ‘Listen, the farmers are angry, the ethanol producers are losing ground, we see that plants will be shut down if you don’t do something,” Ernst said. “He’s hearing it from all different sides.”

But that also includes “Big Oil,” she warned.

Oil industry allies, including Republican U.S. Sen. Ted Cruz of Texas, have made the opposite pitch during administration discussions on the issue, arguing that support from refinery workers in Pennsylvania and other battleground states is also at risk if the president strengthens biofuel mandates, which are costly to refiners.

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“We’re always going to have those oil interests out there,” Ernst said. “This is the mantra in Washington — Big Oil versus Big Corn. I never thought of us as Big Corn, but I guess we’re Big Corn.”

It’s unclear that the Trump administration could do to appease farmers. The EPA already has changed a rule to allow year-round sales of E15, a fuel with a higher blend of ethanol, as a way of increasing demand.

Ernst suggested also requiring larger refineries to produce the biofuel the administration has exempted the small refineries from blending.

“What it basically boils down to for the American farmer is about 500 million bushels of corn that needs to be reobligated into ethanol at those other facilities,” she said.

The EPA doesn’t appear to be buying the argument Ernst makes.

In a statement Tuesday, the agency said there was “zero evidence” the waivers have hurt demand for ethanol — an assertion biofuels producers dispute.

The nation’s largest ethanol producer, POET, announced Tuesday it was cutting production at its plants and blamed the hardship waivers.

“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. 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,” said POET President and Chief Operating Officer Jeff Lautt in a statement.

Since 2017, Trump has tried to broker a compromise on biofuel policy between ethanol and oil industry interests, but the design of the Renewable Fuel Standard makes it nearly impossible to satisfy both sides simultaneously.

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The discussions center on a 14-year-old federal law that dictates oil refineries use biofuel, such as corn-based ethanol and soybean-based biodiesel, to satisfy annual quotas set by the EPA.

The statute authorizes the EPA to issue exemptions for small refineries facing a “disproportionate economic hardship,” but biofuel proponents argue the administration has handed out the waivers much too freely.

l Comments: (319) 398-8375; james.lynch@thegazette.com

Reuters and the Bloomberg news service contributed to this report.

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