WASHINGTON — U.S. Sens. Deb Fischer, R-Nebraska; Tammy Duckworth, D-Illinois; and Dick Durbin, D-Illinois, introduced bipartisan legislation June 14 that would bring transparency to the U.S. Environmental Protection Agency’s small refinery exemption process and ensure refiners meet their biofuel blending requirements.
The new legislation was introduced on the heels of the EPA’s late May ruling removing the summertime restriction on the sale of E15, a gasoline blend containing 15% corn-based ethanol.
The bill requires refineries to submit an application for a small refinery exemption by June 1 and requires the EPA to fully account for exempted gallons so that biofuel targets are met in earnest.
Additionally, the legislation prevents refineries from concealing exemptions as confidential business information, allowing the public greater insight into who is receiving these waivers and why.
“EPA’s track-record on handouts to big oil through small refinery exemptions has eliminated markets at a time when growers and producers face true economic hardship,” said Growth Energy CEO Emily Skor.
“U.S. ethanol consumption recently fell for the first time in 20 years. Across the heartland, many biofuel plants have shut their doors or idled production. Farm income plummeted $11.8 billion over just the last three months, the steepest drop since 2016. It’s clear that the ‘economic hardship’ is happening in America’s farm belt — not in oil company boardrooms.
“This bipartisan legislation can help restore transparency and integrity to the abusive exemption process. By providing the public with more information, accounting for exemptions and ensuring biofuel targets are met in full, farmers and producers across the nation can count on stable biofuels demand and continue providing cleaner and more affordable fuel choices at the pump.”
A group of ethanol proponents brought their concerns about the small refinery exemptions and their support for E15 to Capitol Hill last month.
Eammon Byrne, Lakeview Energy chief operating officer and director, was among those delivering their messages to the Illinois delegation of House and Senate members and while the E15 issue was settled, there’s still unfinished business.
Byrne’s group included representatives from Adkins Energy in Lena, Illinois, and Big River Resources, Galva, Illinois.
“It was interesting hearing both sides of the story when you know the actual story but everybody has their own spin on the story,” Byrne said.
“We had two days with a very full agenda, everybody managed to meet with us — from downtown Chicago to rural Illinois — each of those representatives took time to hear our story and they realize I think that whether it be Chicago, Peoria or wherever, agriculture is important to Illinois and even the Chicago people realize that ethanol is doing a lot to clean up the air in largely populated cities like Chicago, Los Angeles and whatnot.”
Byrne said the move to lift the E15 summertime ban has the ability to create up to 7 billion gallons of new demand. The 50% increase equates to about 2 billion bushels of new corn demand for the Corn Belt. However, it will take time to develop the infrastructure.
“While that was a positive, the big negative that we were trying to address was the whole issuance of small refinery exemptions. This administration, the U.S. EPA, issued about 2.5 billion gallons of small refinery exemptions in 2018 which essentially is destructed demand by up to 2.5 billion gallons,” Byrne said.
“The problem with it is there’s no transparency on why these are given. So, basically anybody that applied for an exemption got one, and they’re supposed to be given out in cases of hardship. Yet, we had companies like Exxon who make more money probably in an hour than most of us make in a year and received these exemptions which has completely decimated the margin environment in our industry.”
Fifty-four applications for exemptions were submitted in 2018 and all of them were granted. In previous years, seven or eight exemptions were the norm.
“When EPA Secretary Scott Pruitt got into power he did it across the board and cited confidentiality as the reason he couldn’t have any transparency and had companies like Exxon receiving small refinery wavers,” Byrne said.
As part of their lobbying efforts to lawmakers, Byrne stressed the need for helping the farm economy.
“It’s no secret that farm income is down 25% over the last quarter and the price of corn and soybeans has dropped substantially in the same period. Likewise in our industry, in the ethanol industry which a lot of farmers are shareholders in, as well, we’ve seen our margins drop substantially over the past year, as well,” Byrne said.
“You’re out there reporting on ag issues on a day-to-day basis and you’re hearing the pain that a lot of our corn and soybean farmers and ethanol plants are experiencing at the moment and then they just hand out these waivers.
“There was a fair amount of sympathy across the board as we met each of these delegates. Whether it be Democrat or Republican, when we outlined the inequity of what’s happening I think there’s kind of a view there, well, look, E15 is going to solve all of the ethanol industry’s problems, which it would be a big help, I’m not denying that, but it’ll take time to build that out.
“You just don’t turn on 7 billion gallons of demand. It could take five years or more to build that out, but on the other side in one fell swoop they take about 2.5 billion gallons of demand with their small refinery exemptions. I think when we lay that out to the legislators they quickly realize the inequity on both sides of the aisle, which is encouraging. The problem you have in Washington at this moment is getting consensus and getting people to agree to anything no matter how rational it is.”