Minnesota farmers take fight over increased ethanol waivers to Washington

WASHINGTON — Minnesota corn farmer Richard "Swede" Syverson has been coming to the nation's capital for years to talk to legislators about the advantages of ethanol. His trip last week was his most urgent.

Along with nine other Minnesota farmers and ethanol producers, Syverson flew in to protest the Environmental Protection Agency's (EPA) increasing use of economic hardship waivers that cut the amount of ethanol small oil refineries are required to blend.

The move, Syverson and colleagues in the ethanol business contend, has reduced domestic consumption of ethanol for the first time in 20 years and left the country short of legally mandated national ethanol quotas.

Adding to the problem, the EPA has yet to make good on a promise by President Donald Trump to allow the year-round sale of E15, an ethanol blend that is 15 percent corn-based alcohol and 85 percent gasoline.

"Frustration is a pretty kind word," Syverson said when asked how he felt about EPA's actions. "The ethanol industry has been blindsided by waivers and the slow pace of adopting year-round sales of E15."

The angst led to a face-to-face lobbying mission on Capitol Hill by 70 members of the American Coalition for Ethanol (ACE), including 10 from Minnesota. They visited offices of lawmakers from 45 states. The ACE members asked Congress to intervene with regulators to "stop abusing small refinery waivers" and implement year-round E15 sales by June 1. Not doing both will severely damage the country's renewable fuels program, ACE members asserted.

The fly-in was the latest battle in a multimillion-dollar influence war between two behemoth interest groups — the corn industry and the petroleum industry.

For scientists like Jason Hill, this is a conflict with no good outcome. The environmental damages caused by either gasoline or ethanol are each bad enough to warrant a new direction in renewable fuel policy, said Hill, a professor of bioproducts and biosystems engineering at the University of Minnesota.

"The best gallon of fuel is the gallon you never use," he said. If we have to drive, "the best, most cost-effective option is to reduce fuel use with efficiency. If we could improve mileage by one mile per gallon, we will have done as much for reducing gasoline use as producing the billions of gallons of ethanol we produce each year."

Unfortunately, the country is not headed in that direction. The Trump administration rolled back new fuel efficiency standards set by the Obama administration. What's left is a tug-of-war pitting corn against oil.

The EPA, which granted its latest ethanol waiver two weeks ago, says it is abiding by its rules. Those rules give small refiners who can prove inordinate financial burdens a pass on meeting some of their ethanol production quotas. The problem for folks like Dan Root, a recently retired corn farmer and member of the Minnesota Corn Growers Association board of directors, is that the EPA appears to be catering to the interests of oil companies who don't like the ethanol requirements laid out in an annual federal rule called the Renewable Fuel Standard (RFS).

In 2015, according to Reuters news service, the EPA granted five requests for ethanol waivers. In 2017, the agency granted 35 requests. It is considering 39 more waiver requests from 2018. The waivers, Root said as he prepared to meet with members of Congress, affect billions of gallons of ethanol. Some waivers reportedly have gone to small refineries owned by big, highly profitable oil companies.

"The president says he wants to make farmers great again," Root explained. "But every time you turn around, there's another waiver granted."

The EPA counters that the RFS was not supposed to put small refineries out of business by imposing impossible compliance costs.

On Capitol Hill, Minnesota's senators, Democrats Amy Klobuchar and Tina Smith, have been outspoken critics of the increase in ethanol waivers.

Democratic Rep. Collin Peterson, chairman of the House Agriculture Committee, told the Star Tribune that "the administration's misuse of the small refinery exemption waivers undercuts the RFS, harms the rural economy and hurts farmers' bottom lines at a time when they are already faced with so many [other] challenges."

Republican Rep. Jim Hagedorn, an agriculture committee member, said in a statement that he has "encouraged the Trump administration" to implement year-round E15 sales "before the peak 2019 driving season." In the statement to the Star Tribune, Hagedorn also said EPA needs to "cease the misuse of small-refinery waivers that have undercut the ethanol industry."

In 2018, "seven to eight ethanol plants in Minnesota took down time [from production] because it was unprofitable to make ethanol," Syverson said.

Meanwhile, the oil industry has threatened to sue the EPA if it allows year-round sales of E15. The American Petroleum Institute (API) calls the renewable fuel standard a "broken program" and says increasing issuance of "small refinery exemptions" is "another attempt by EPA to make this broken program function." The API says it opposes small refinery exemptions because they "create an unlevel playing field for competing refineries."

With roughly 700 pumps capable of distributing E15, Minnesota leads the nation in availability of the higher blend ethanol. E15 is now available nine months of the year, but not in the summer because of possible pollution concerns.

The oil industry bases some of its arguments against ethanol on consumer pricing. Ethanol generally costs less per gallon than gasoline. The efficiency of each type of fuel then comes up for debate.

Detractors of E15, such as the petroleum industry, warn that it can ruin engines of older cars. Some automakers have voided warranties based on use of E15.

Environmentalists say ethanol mandates woo farmers into growing corn on land better left undisturbed.

Supporters say the fuel is safe for cars made after 2001, and consumers have the right to choose a lower-cost, more environmentally friendly fuel than gasoline.

Last week, the U.S. Department of Agriculture released a new study which concluded that "greenhouse gas emissions from corn-based ethanol are about 39 percent lower than gasoline."

The U's Hill says what's coming out of the tailpipe in cars burning gasoline and ethanol is not much different, but the pollution caused by ethanol production is actually worse than it is for gasoline.

This does not, however, make him a fan of gasoline.

Neither the petroleum lobby nor the corn ethanol lobby is arguing for the route the nation should be taking, he said.

The renewable fuels fight seemed likely to continue as Syverson, Root and other Minnesotans returned home from Washington. But Syverson was happy he made the trip.

"It's important," he said, "for legislators to hear from people like me who are affected by the actions they take."

Jim Spencer • 202-662-7432