Government

White House sides with EPA over USDA objections on biofuel

Iowa Gov. Kim Reynolds says she'll keep pressing for a change

Steve Westra, plant manager, walks inside the wet distillers bunker at the Siouxland Energy Cooperative in Sioux Center. The ethanol plant is among several that have been idled as the market for biofuels faltered. (Kathryn Gamble/Washington Post)
Steve Westra, plant manager, walks inside the wet distillers bunker at the Siouxland Energy Cooperative in Sioux Center. The ethanol plant is among several that have been idled as the market for biofuels faltered. (Kathryn Gamble/Washington Post)

Administration officials warned that an Environmental Protection Agency plan for boosting biofuel-blending requirements violated the spirit of a deal brokered by President Donald Trump.

The White House blessed it anyway.

The back-and-forth is revealed in newly released documents from a White House review of the EPA’s biofuel proposal before it was publicly released Oct. 15.

The documents, uploaded to a government regulatory docket late Monday, show the U.S. Department of Agriculture initially warned the plan was inconsistent with an earlier White House promise to ensure “more than 15 billion gallons” of conventional biofuel, such as corn-based ethanol, are required to be blended into the nation’s fuel supply beginning in 2020.

The documents shed light on a last-minute fight between the EPA and the USDA that briefly delayed the proposal’s release. Ultimately, the EPA prevailed in the skirmish, and the White House Office of Information and Regulatory Affairs signed off on the agency’s approach.

Despite that White House intervention, Republican Iowa Gov. Kim Reynolds said at a weekly news conference Wednesday she’d continue to push for the rule to be changed and may appear at an Oct. 30 public hearing about the proposal set by the EPA in Ypsilanti, Mich.

“We will file written comments and we’re still looking at the schedule to see if we can get there. I think I’ve made it pretty clear to the EPA what the agreement was and that will be reflected in the comments that we submit,” she said. “If I can, I will because I think it’s important. But I think they also understand where I stand on the issue.”

The USDA’s complaints mirrored those of ethanol and biodiesel industry advocates, who blasted the EPA’s rule as a bait and switch.

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“This is not what we agreed to,” Monte Shaw, head of the Iowa Renewable Fuels Association, said last week.

Farmers who spoke at a news conference said questions over the proposed rule continue to threaten crop prices and, along with catastrophic weather and trade uncertainty, create serious financial concerns.

Trump carried Iowa by nearly 10 points in 2016, and some questioned whether he could do that again.

At issue is an Oct. 1 agreement to raise biofuel-blending requirements and offset EPA waivers exempting some small refineries from the mandates. In one batch alone, the Trump administration’s EPA granted refineries 31 exemptions from adhering to the nation’s renewable fuels law.

When the administration outlined the deal Oct. 4, the EPA said it would seek public comment on a proposed rule ensuring more than 15 billion gallons of conventional ethanol are blended into the fuel supply beginning in 2020 despite the waivers.

However, the EPA’s formal proposal to codify the deal, released a week and a half later, raises the possibility that the increases in blending requirements will not be high enough to offset the waivers, effectively undercutting the 15-billion-gallon target. The reason is that EPA based its adjustment on a lower possible total — Energy Department recommendations for waivers that were sometimes disregarded — instead of higher levels the EPA actually granted.

The USDA pushed unsuccessfully for the EPA to offer a second proposal based on actual waivers, according to the newly released documents. Ultimately, the White House Office of Information and Regulatory Affairs sided with the EPA, after EPA Administrator Andrew Wheeler and Agriculture Secretary Sonny Perdue spoke about the issue, according to people familiar with the call.

That Office of Information and Regulatory Affairs is meant to resolve interagency disputes and policy concerns, noted Amit Narang, a regulatory policy advocate with the watchdog group Public Citizen.

“But here,” he said, “it’s clear OIRA ran roughshod over USDA objections and sided with EPA for political reasons,” Narang said.

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Both farmers and oil workers are key supporters of Trump, and this issue has tested his ability to satisfy the competing constituencies.

EPA spokesman Michael Abboud said the proposed rule “is the proposed text from our announced agreement with the White House and USDA on Oct. 4.” Representatives of the Agriculture Department and the White House press office did not respond to requests for comment, though Perdue predicted Monday that farmers would be fine once they fully understand what Trump had done.

Biofuel industry advocates said they will keep pushing the EPA to alter course, possibly with another personal intervention from the president.

“I have to take him at his word.” Reynolds said Wednesday. “He told us that we had a deal.”

Still, there were no signs Trump had any regrets about the plan.

During a meeting with members of his cabinet, Trump said the deal was approved, ready to sign and “is going to be terrific for the small refiners.”

But biofuels groups have filed a petition in the U.S. Court of Appeals in Washington against the EPA, challenging the agency’s process for granting the waivers.

The petition challenges the EPA’s process for granting waivers to the 31 oil refineries.

“We are going to hold the EPA accountable under the law for the damage it has done to rural communities, biofuel producers, and farm families,” said Growth Energy Chief Executive Emily Skor.

Bloomberg, Reuters and Rod Boshart of The Gazette Des Moines Bureau contributed.

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