In August, Corn Plus, one of the oldest biofuel plants in the state of Minnesota, closed. Forty employees lost their jobs. The reasons for a slump in the biofuels industry are many, but one stands out: a Trump administration policy allowing a substantial number of gasoline refineries to skip blending biofuels into their product.
The blending exemptions are a vexing problem for Rep. Jim Hagedorn from Minnesota’s First District. Hagedorn is a consistent supporter of President Donald Trump. But he also represents the region in the state hurt most by the Trump administration’s ethanol exemptions. There are two biodiesel and 11 ethanol plants across southern Minnesota, and many farmers there grow the corn and soybeans commonly converted to biofuels.
Billions of gallons short
Support for biofuels is something that most elected officials in Minnesota have gotten behind in one way or another. Biofuel advocates thought the Trump administration was on board as well, at least for a short time. In May, the administration ended a summertime ban on the use of E15, a blend of gasoline with 15 percent ethanol.
But that brief moment of goodwill was cut short because of a much larger problem for the industry: Small Refinery Exemption (SRE) wavers, biofuel exemptions issued to gas refineries with demonstrable “disproportionate economic hardship.”
The biofuels industry says that the EPA has been too lax in its definition of hardship. Since 2016, the EPA under President Trump has granted over 85 Small Refinery Exemption (SRE) waivers. The previous administration granted only 23 exemptions over the prior three years.
The substantial number of SRE waivers have allowed oil and gas refineries, even large refineries like Exxon-Mobil and Chevron, to avoid placing the mandated amount of biofuel in their gasoline. Minnesota’s biofuel refineries, soybean producers, and corn producers say this is economically disastrous for the region, drastically reducing national reliance on biofuels and cutting into already an industry already hurt by trade war with China.
On October 4th, a deal resolving the biofuel industry’s problem with the exemptions was supposed to be sealed: the Trump Administration’s EPA said it would revise the standards for the number of SRE waivers that can be issued in 2020.
But those plans, at least for the moment, aren’t being followed through on. Instead, the EPA, in the rulemaking process, proposed language that has left refineries and crop producers uneasy. The EPA is supposed to ensure 15 billion gallons of biofuel are placed into the gasoline supply. But under the exemptions, this hasn’t happened: it’s looked more like 11-billion gallons. Industry leaders are worried that the EPA’s proposed language is not specific enough to assuage their concerns about again not meeting the mandate.
“Our number one ask to the president and, we’ll continue to do that, is to make sure that that that 15 billion gallons means 15 billion,” said Kevin Paap, the President of the Minnesota Farm Bureau, as well as a soybean and corn farmer from Southern Minnesota. “And I think, you know, hopefully his message to EPA has been: ‘Let’s make sure this happens.’”
In an interview with Iowa Public Television, Iowa Sen. Chuck Grassley seemed visibly annoyed: “I shouldn’t have to go back to the president and say anymore,” he said. “If the President and the people advising him say we have a deal, we have a deal.”
Hagedorn is a member of the House Biofuels Caucus. He is also a cosponsor of the Renewable Fuel Standard Integrity Act of 2019, a bill drafted by Agriculture Chair Rep. Collin Peterson to publicly make available who is receiving small refinery waivers and impose an annual deadline to submit petitions for SRE’s.
“I expect the EPA to uphold the president’s promise made on October 4, 2019, to rural America and to implement the Congress’s intent on the Renewable Fuel Standard,” Hagedorn wrote in a recent letter to the EPA. “I write to you today in frustration. In the last three years, waivers granted to refineries by your agency have eliminated four billion gallons of ethanol.”
Awaiting new rules
A letter signed onto by 60 organizations, including Minnesota Corn Growers Association and the Minnesota Soybean Association, was sent to the White House directly in early November: “Mr. President, we share a common vision regarding the RFS. We want to reopen biofuel plants and restore demand for America’s farm products … The [EPA’s] proposal — as written — will not provide the relief we believe you are seeking.”
The EPA plans to publish their finalized plan for 2020 biofuel blending requirements imminently. Industry leaders like Paap are watching closely. He intends to ensure, if he can, nothing less than strict guidelines that keep the mandate at 15 billion gallons.
“That’s the deal farmers built plants on. That’s the deal farmers invested in. And, we’re continuing to worry about those weighed gallons, and the fact that they really need to be reallocated,” Paap said.
When asked if Hagedorn believes President Trump could do more to push the EPA to uphold their end of the bargain, Hagedorn did not offer an answer. Instead, he said much of what he has said before: he has repeatedly told the USDA, the EPA, and even the White House that they need to follow through with the president’s promise: “I look forward to seeing a final RFS rule in the coming weeks that is good for ethanol, biodiesel, corn farmers and our rural way of life.”