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Farmers Stung by EPA's Waivers

  • Monday, 19 August 2019 13:21

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August 18, 2019

By Noah Fish

Producers of corn and ethanol say the Trump administration has bailed out refineries owned by large oil companies at their expense.

The Environmental Protection Agency granted biofuel waivers to 31 refineries on Aug. 9, displeasing the corn and ethanol industry.

Refineries are eligible for exemptions if they can prove they are in financial strife. The waivers free them from their obligation under the Renewable Fuel Standard (RFS) to blend biofuels into their gasoline or buy credits from others that do.

In 2017, the EPA granted 35 of 37 applications it received. Both Chevron and Exxon, two of the world’s most profitable energy companies, have been granted waivers by the EPA.  

Randy Doyal, CEO of Al-Corn Clean Fuel in Claremont, said he was surprised with the number of waivers. He said the decision takes away "a big chunk of demand" in a market that's already oversupplied.

"It will depress the price of ethanol, and when you add the volatility of the corn market, it keeps pushing us in the wrong direction," said Doyal. "It's causing some definite tightness in the ethanol industry."

That could cause more plants to scale back or be put up for sale, he said, but Al-Corn is not one of them.

Doyal said he wasn't shocked by the number of applications that came in for waivers last year, because the EPA has developed a pattern of granting them. What he is startled by is the EPA not meeting its legal obligation to reallocate the lost ethanol gallons.

Despite an order from the U.S. Court of Appeals, the EPA has said it will not reinstate the 500 million gallons withheld by the agency in 2016.

If the EPA is going to waive the lost gallons, it should be properly accounted for, said Doyal.

"So they've basically thumbed their noses and said no," said Doyal of the EPA. "That's incredible to me, from an administration that says it's on the side of the farmers and is looking out for them."

A decision on the waivers was delayed for months, which made Doyal think something was being worked out between the Department of Agriculture and the EPA to reassign lost gallons.

"And then we get nothing," he said.

The difference of reassigning the gallons compared to waiving them is crucial for the health of the market, said Doyal.

"I'm scratching my head wondering where the heck the EPA thinks they're going with this," said Doyal. "And it's rather concerning because they seem to have the support of this administration."

According to National Corn Growers Association, the Trump administration has undermined the Renewable Fuel Standard, granted more than 50 waivers to big oil companies and lost the industry more than 2 billion ethanol-equivalent gallons of fuel.

The hit to ethanol demand will affect famers growing corn in the Midwest, who sell most of their corn to ethanol plants. This comes at a time when farmers are also dealing with the loss of export markets due to ongoing trade disputes.

"Actions by the EPA are now also costing corn farmers ethanol markets at home," said Brian Thalmann, president of the Minnesota Corn Growers Association. "The billions of biofuel gallons lost through the issuing of waivers to oil refineries only benefit big oil companies while lowering the value of our nation’s corn crop."

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