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Farmers Anxious About Tentative Agreement on Executive Branch Biofuels Blending Rules

Bloomberg writers Jennifer A Dlouhy, Jennifer Jacobs, and Josh Wingrove reported last week that, “Global disputes over trade and nuclear weapons have consumed plenty of President Donald Trump’s time and attention — but a narrow, domestic clash over U.S. biofuel policy may be giving those issues competition.

Trump has held more than a half dozen meetings and helped broker at least three near-deals on U.S. ethanol and biodiesel mandates since he moved into the White House. Despite the intense Oval Office negotiations, a lasting compromise between warring oil and biofuel interests has eluded the commander-in-chief. And now his patience may be wearing thin.

“‘The president is tired of dealing with this,’ Senator Chuck Grassley, a Republican from Iowa, told reporters Tuesday. ‘He’s more or less said so many times.'”

The Bloomberg writers explained that, “Advocates for corn-based ethanol and soybean-based biodiesel say the Environmental Protection Agency has too eagerly granted oil refineries waivers exempting them from mandates compelling them to use the renewable fuels. Oil industry allies, at the same time, have implored the administration to keep issuing the waivers and rein in the costs of tradable credits they use to prove they’ve fulfilled annual blending quotas.”

Graph from Seth Meyer on Twitter, September 20, 2019 (@SethMeyerMU, https://twitter.com/SethMeyerMU/status/1175052257798365186). Dr. Meyer is a Research Professor at the Food and Agricultural Policy Research Institute at the University of Missouri.

“Trump already promised a ‘giant package’ of changes he boasted would make farmers happy while keeping oil refineries in business. But it looks like he’ll have to get through at least one more meeting first. More senators — this time from states with big refining interests — are seeking an audience with the president this week,” the Bloomberg article said.

Meanwhile, Donnelle Eller reported last week at The Des Moines Register Online that, “U.S. Sen. Chuck Grassley says he won’t be cheering a Trump administration biofuels fix until the Environmental Protection Agency has ‘put it on paper.’

‘I’ve been hoodwinked so many times, not just by the EPA on this issue, but by other bureaucracies as well, so I’m going to see if what we talked about is the end product,’ Grassley told reporters Tuesday.

The Register article pointed out that, “Grassley said President Donald Trump, Vice President Mike Pence and other administration officials ‘seemed to agree‘ with Midwest Republicans at a meeting last week that ‘any waived gallons are put back in.'”

And Des Moines Register writer Stephen Gruber-Miller reported on Wednesday that, “Gov. Kim Reynolds expressed optimism about a deal negotiated with President Donald Trump last week to mitigate the damage to Iowa’s ethanol industry caused by federal waivers for oil refineries, but cautioned that she’s still waiting to see the final version on paper.”

Also last week, Reuters writer Stephanie Kelly reported that, “President Donald Trump on Thursday discussed biofuels policy with senators from U.S. oil states, including Louisiana Senator Bill Cassidy, who said the president was engaged on the issue that has pitted Big Oil and Big Corn against each other.”

With respect to this meeting, Jennifer Jacobs, Jennifer A Dlouhy, and Mario Parker reported at Bloomberg late last week that, “In Thursday’s meeting, Trump pressed senators from states with significant refining assets about a wave of ethanol plant closures the biofuel industry has blamed on the waivers. Trump highlighted the Sept. 16 decision to idle production at the Siouxland Energy Cooperative in Northwest Iowa — the subject of a front-page article in the Des Moines Register — during the wide-ranging discussion on biofuel and foreign policy.

Trump repeatedly told the senators ‘I’m getting killed’ over the refinery waivers, two of the people said, as agricultural interests elevate the issue and Democratic candidates vying for the White House highlight the exemptions while stumping in Iowa. The president also stressed he wanted to make sure farmers were being taken care of, according to people familiar with the discussion.

Oil-state senators countered that refining jobs in other swing states are at stake, as they urged the president to continue granting exemptions for small facilities that make gasoline and diesel — and take separate action to rein in the costs of complying with the U.S. biofuel mandate.”

Joseph Morton reported last week at the Omaha World- Herald Online that, “The ethanol industry is waiting anxiously to see if a tentative deal to boost production of the corn-based fuel will stick.

“‘We are holding our breath,’ Renewable Fuels Nebraska Executive Director Troy Bredenkamp told The World-Herald. ‘We are crossing our fingers.'”

The article indicated that, “Grassley and fellow Iowa Republican Sen. Joni Ernst have said they need to see the proposal on paper before they feel comfortable that it will hold.

‘We have seen EPA throw us under the bus before,’ Ernst said Thursday.

On Friday, DTN writer Todd Neeley reported that, “With a reported big deal for biofuels in flux, an economist at the University of Illinois Urbana-Champaign put forward a plan on Thursday to account for more than 4 billion gallons of biofuels exempted to small refineries from the Renewable Fuel Standard from 2016 to 2018 by President Donald Trump’s EPA.”

The DTN article stated that, “‘This is not an impossible task and can be accomplished by making the following two changes to upcoming annual EPA rulemakings,’ [farmdoc’s Scott Irwin] writes.

“Irwin suggests EPA could provide a blanket waiver for small refineries as part of the 2020-2022 annual rulemaking. ‘This will allow SREs to be accounted for when computing the final percentage standards for each year,’ he said.

“In addition, Irwin said the agency could add 1.35 billion gallons to total renewable volumes for 2020-2022, ‘to restore the reduction in volumes over 2016-2018 due to SREs. The total reduction in renewable volumes over 2016-2018 is 4.05 billion gallons, or an average of 1.35 billion gallons. In this way, the backfilling of the SRE reductions in total volume is spread out over three years.'”

Also last week, the the Food and Agricultural Policy Research Institute at the University of Missouri released a three-page report titled, “Implications of Renewable Fuel Standard Waivers and Exemptions on Biofuel and Agricultural Markets.”

The report stated that, “Annual Renewable Fuel Standard (RFS) requirements are subject to waivers and small-refinery exemptions that reduce the implemented volumes relative to legislated quantities. Without speculating what the ‘correct’ level should be, we use economic models to assess how increases in certain parts of the mandated volumes affect biofuel, agricultural and related markets.”

Keith Good

Keith Good is the social media manager for the farmdoc project at the University of Illinois. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily FarmPolicy.com News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.

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