Trump administration sides with big oil over ethanol

So far, Minnesota ethanol producer Al-Corn Clean Fuel has managed to stay in what CEO Randall Doyal calls a "holding pattern" after the Trump administration sided with the oil industry in a recent standoff over the nation's renewable fuels policy.

But other ethanol producers aren't as fortunate, including the nation's largest — Sioux Falls, S.D.-based POET. On Tuesday, the company said it will close an Indiana facility. It has also reduced production at half of its 28 biorefinery locations, resulting in job consolidations and an additional 100 million bushel-a-year drop in corn processed in Minnesota and six other states.

POET didn't hesitate to lay blame in its Aug. 20 statement. It blasted the administration's recent decision, saying "oil bailouts" are forcing it to lower production and that "family farmers and rural communities suffer" as a consequence. POET's ire is understandable. This year's wet weather and the trade war with China have already delivered a one-two punch to Midwest agricultural producers. The last thing they need is a third economic hit.

That's why President Donald Trump should swiftly reverse his administration's recent decision to grant oil companies 31 additional waivers from the Renewable Fuel Standard (RFS) law. The waivers weaken demand for biofuels, hurting the Midwest, while boosting oil firms.

If Trump won't act, Congress should. A good start: passing a bill championed by Rep. Collin Peterson, D-Minn., that would guard against brazen oil industry giveaways like this.

Congress passed the RFS to decrease reliance on oil imports and boost homegrown biofuels. It requires refineries to buy and blend biofuels into the fuels they produce. The volumes are set annually.

But under Trump, the U.S. Environmental Protection Agency (EPA) has granted a growing number of "hardship" waivers to these requirements, allowing even refineries owned by big, highly profitable oil companies to add less ethanol to their gasoline. The waived gallons measure in the billions, which is why the administration's recent ethanol-friendly move to allow year-round sale of E15 fuel (which contains a higher ethanol blend) doesn't come close to offsetting the waivers' harm.

The number of waivers granted has quadrupled during the Trump administration, according to a Reuters report. Tensions heightened when EPA officials announced this month that they had approved 31 of 40 waivers sought. Less than 10 such waivers had been granted during "all the Obama years," noted an angry Iowa Sen. Chuck Grassley, a Republican, in an Iowa interview.

The move also drew a fiery response from Peterson. "It adds insult to injury that the EPA is recklessly handing out so-called 'hardship waivers' to oil refineries at the expense of farmers who are struggling from low commodity prices, bad weather and the ongoing tariff war," he said. "The EPA won't even tell us who are getting the 'hardship waivers' or why, but the impact in rural America is seen everyday in the prices offered at local grain elevators and now the pink slips for ethanol plant workers."

Peterson's bill would reduce secrecy in the waiver process and take action to protect RFS biofuel targets. Cosponsors include Minnesota Reps. Angie Craig, a Democrat, and Republican Jim Hagedorn.

At Claremont, Minn.-based Al-Corn, Doyal is hopeful his facility, which has 52 employees, can outlast competitors lacking Al-Corn's economies of scale. But much of the industry's headwinds are blowing needlessly. Trump will correct course if he cares about the Midwest.