Trump Intervention Triggered EPA's Surprise Biofuel Waiver Decision: Sources

August 16, 2019

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by Humeyra Pamuk (Reuters) A phone call from U.S. President Donald Trump last week ended a nearly two-month-long review of the nation’s biofuels program, three sources familiar with the matter said, with the White House siding in favor of oil refiners over corn growers.

Trump gave Andrew Wheeler, head of the U.S. Environmental Protection Agency, the green light for the regulator to announce it had granted 31 small refinery exemptions out of the 40 applications, saying he wanted the issue off his desk, the sources said.

Trump’s call triggered a flurry of action within the EPA, leading up to a surprise Friday afternoon announcement, after weeks of negotiations between U.S. government agencies failed to make progress in addressing farmers’ concerns.

“The president has heard from all sides and in the end he has had enough of it. He called Wheeler and gave him the green light,” a source familiar with knowledge of the matter said.

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Since Trump took office, the EPA has more than quadrupled the number of waivers it has granted to refineries, including some operated by giants Exxon Mobil and Chevron Corp, saving the oil industry hundreds of millions of dollars, but enraging farmers who claim the exemptions threaten demand for one of their staple products. READ MORE

Corn Industry Battered By Shocking Ethanol Decision (OilPrice.com)

IOWA FARMERS TO TRUMP: “YOU’RE STABBING US IN THE BACK” (Iowa Starting Line)

EPA: 2 additional SREs filed for compliance year 2018 (Ethanol Producer Magazine)

Grassley wants RFS waiver info from SEC filings (DTN The Progressive Farmer)

Hein: Trump should uphold his biofuels commitment (The Gazette)

Letters: Farmers voice their concerns about refinery exemptions (Telegraph Forum)

Buttigieg Sells His Soul To King Corn To Win Some Votes (Hot Air)

Freshman Stressing Ag Issues: Iowa Congresswoman Sees USMCA Passing House; Challenges EPA on Waivers (DTN Progressive Farmer)

Thune talks ag and energy at the fair (Farm Forum)

Trump directive ended review of ethanol requirements: report (The Hill)

Corn Industry Battered By Shocking Ethanol Decision (OilPrice.com/Yahoo! Finance)

Republican Iowa senator says Trump EPA 'screwed us' with biofuel waivers (Reuters/Yahoo! News)

Grassley says EPA ‘screwed’ farmers with biofuels exemptions (Seattle Times/Associated Press)

Excerpt from OilPrice.com: The move upset a fragile balance between the two industries, infuriating farmers and ethanol producers. The market for renewable identification numbers (RINs), which are the credits refiners can buy to offset their blending obligations, went haywire after the increase of waivers from EPA. The lack of policy clarity led higher volatility and lower prices for RINs, and politicians from farm states – allies of President Trump – demanded EPA stop issuing so many waivers. Trump tried to stay above the fray, fearing angering one side over the other, and told his lieutenants to hash out a compromise.

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But the administration just issued a shocking decision to the corn and ethanol industries. On August 9, the EPA announced its decision on 2018 waiver requests, approving 31 of them while denying six. The decision appears to be an attempt to offer something to both sides, but the biofuels industry was incensed. “The Trump Administration’s approval of 31 refinery exemptions from the Renewable Fuel Standard is just devasting news for our industry,” said Iowa Renewable Fuels Association (IRFA) Executive Director Monte Shaw in a press release. “With this action, President Trump has destroyed over a billion gallons of biofuel demand and broken his promise to Iowa voters to protect the [Renewable Fuels Standard].”

Ahead of the announcement, prices for RINs plunged to 11 cents, down from 20 cents a day earlier, according to Argus. “At a time when ethanol plants in the Heartland are being mothballed and jobs are being lost, it is unfathomable and utterly reprehensible that the Trump Administration would dole out more unwarranted waivers to prosperous petroleum refiners,” Geoff Cooper, CEO of Renewable Fuels Association, said in a statement, calling the EPA decision a “total shock.”

Refiners, on the other hand, welcomed the decision.

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For farmers, the hits keep on coming, and EPA’s decision is merely the latest in a series of blows from Washington. The U.S.-China trade war has battered the U.S. Midwest, as farmers have all but lost access to the Chinese market. China has turned to Brazil for ethanol and for soybeans. Prices for U.S. soybeans, corn and other agricultural commodities have plunged.

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Futures prices for corn-based ethanol plunged to a five-year low for the time of year, falling to $1.27 per gallon on Wednesday, down roughly 25 percent since June. “The Trump administration has totally annihilated the margins for ethanol producers,” Charlie Sernatinger, head of global grains futures with ED&F Man Capital Markets, told the Wall Street Journal.

Meanwhile, the U.S.-China trade war is in danger of escalating, despite the decision by Trump to hold off until December. The Trump administration has offered payouts as compensation to farmers hit by the trade war, but financial stress in the agricultural sector is growing. Bankruptcies are rising sharply. READ MORE

Excerpt from DTN Progressive Farmer: Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said he wants to use Security and Exchange Commission (SEC) filings to highlight the extent to which major oil companies are benefitting from the small refiner exemptions relative to their Renewable Fuel Standard (RFS) obligations.

“We cannot let (oil companies) hide behind proprietary information,” Grassley told reporters Tuesday. “If they are getting help from the government, the government needs to know the basis for their help and the public needs to know.”

Confidentiality provisions currently preclude EPA from disclosing specific information on individual SREs granted. READ MORE

Excerpt from Reuters/Yahoo! News: "They screwed us...when they issued 31 waivers," Grassley told the broadcaster. "Compared to less than 10 waivers during all the Obama years...What's really bad isn't a waiver, it's that it's been granted to people who aren't in hardship," he said. READ MORE