Pain at the pump for farmers

MARY REICHARD, HOST: Coming up next on The World and Everything in It: a legal and political fight over gasoline.

Fifteen years ago, Congress created the Renewable Fuel Standard program. One goal of that program was to reduce greenhouse gas emissions.

To do that, fuel sold in the United States had to contain a minimum volume of renewables, like corn-based ethanol. So when you fill up your car, you choose from a variety of gas blends that include ethanol.

NICK EICHER, HOST: But the Renewable Fuel program included some exemptions. For example, the EPA can grant a waiver— if a small refinery can prove it’s too costly to add ethanol to its gasoline.

For years, EPA gave out only a handful of these ethanol waivers. For comparison, the Obama administration issued only seven waivers in 2017. 

Since President Trump took office, that number has risen to an average of 28 per year.

That’s made corn growers and ethanol producers unhappy. They say EPA is breaking the law by giving out so many waivers. And now a federal court agrees.

Here’s WORLD Radio’s Sarah Schweinsberg.

SARAH SCHWEINSBERG, REPORTER: President Trump has championed ethanol since the early days of his 2016 campaign. Here he is speaking to a group of farmers in Iowa last summer. 

TRUMP: Today we honor America’s cherished farming heritage… and we celebrate the bright future that we are forging together powered by clean, affordable, American ethanol. 

That’s why the increase in small refinery exemptions under the Trump administration surprised corn growers like Robert Walsh. Walsh farms in southeastern South Dakota. 

WALSH: I knew at the time that he supports coal and the petroleum energy sectors. I didn’t expect him to go all gangbusters and change policy to improve ethanol consumption, but I didn’t anticipate any type of policy that would reduce ethanol consumption

Walsh says farmers have already been hurt by President Trump’s trade war with China—a top importer of U.S. soybeans. And now, thanks to the dramatic increase in ethanol waivers, farmers are also suffering from reduced demand for corn. 

WALSH: It reduces the price of ethanol to the point that the ethanol plants have to reduce production… So there are immediate ramifications for not blending. 

Brian Jennings is president of the American Coalition for Ethanol. Jennings says farmers aren’t the only ones hurt by the exemptions. Ethanol has become an economic boon for rural communities. 

JENNINGS: Ethanol and the renewable fuel standards have indeed, um, increased the demand for corn by billions of bushels, uh, added value to that corn, uh, which has enabled those farmers to spend money in their local communities and support those local communities. 

As ethanol demand increased, new ethanol plants provided thousands of jobs. Now, industry leaders blame waivers for shutting down 15 of those plants.

That’s why a coalition of biofuel groups, including the American Coalition for Ethanol, challenged three EPA waivers in court. 

Last month, the 10th U.S. Circuit Court of Appeals ruled in their favor—striking down the three exemptions. The EPA gave the refineries “extended” exemptions. The court said the exemptions can’t be extended because they had expired years earlier. 

JENNINGS: EPA will have to deny those waivers they approved, um, and force those refineries to comply.

Brian Jennings says that line of reasoning could also apply to the dozens of other “extended” exemptions the Trump administration has granted. 

Oil refineries take issue with both the ruling and the charge that the waivers have hurt ethanol. Rich Moskowitz is general counsel for the American Fuel and Petrochemical Manufacturers. 

MOSKOWITZ: Ethanol consumption in the United States remains at its highest levels ever. The waivers are a red herring. 

So who’s right? 

Scott Irwin is an agricultural economics professor at the University of Illinois. He says both sides have a point. Under the Trump administration, production of the E-10 blend has remained steady. E-10 fuel contains 10 percent ethanol and 90 percent gasoline.

IRWIN: We’re using no more or no less, uh, ethanol as a percentage of all of our gasoline today than we did before SREs.

But, Irwin says, the ethanol waivers have capped ethanol market growth. And that’s why farmers are frustrated. Demand for soybeans has dropped because of trade wars, so farmers are planting more corn. But demand for corn hasn’t grown. 

IRWIN: The real point of contention is, um, has to do higher ethanol blends, E-15, and E- 85 and there’s no doubt that the SREs have put a lid on growth in higher ethanol blends. 

In the meantime, another challenge to the ethanol waivers is pending in the Washington D.C. Court of Appeals. To make up for the exemptions and the lost gallons of ethanol, a biofuel coalition wants the EPA to increase the amount of ethanol refineries must use in the future. 

Democratic presidential hopefuls hope to use the ethanol waiver issue to drive a wedge between President Trump and some of his strongest supporters. Senators Amy Klobochar and Bernie Sanders say if elected, they would remove the waivers. Farmer Robert Walsh says that’s attractive for some voters in farm country. 

WALSH: I know that Trump has lost some support from certain farmers in the area that, um, originally voted for him… They’ll probably provide a no vote versus voting, uh, towards one of the Democratic candidates.

Reporting for WORLD Radio, I’m Sarah Schweinsberg.

(AP Photo/Charlie Riedel, File) In this July 26, 2013, file photo, a motorist fills up with gasoline containing ethanol in Des Moines. 

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