Minnesota ethanol producers laud EPA decision not to appeal waiver ruling

The Trump administration has decided not to appeal a court ruling that would sharply reduce its use of waivers exempting refineries from the nation's biofuels regulation, cheering the corn lobby but drawing anger from oil refiners.

The administration had until the end of March 24 to file a challenge, but by early March 25, no such filing had been entered, according to a case docket on the U.S. government's electronic-access service for court records.

Officials for the Environmental Protection Agency and the White House did not respond to requests for comment on Wednesday.

The decision appears to end a yearslong battle between the rival oil and corn industries, two critical political constituencies for President Donald Trump, over the waiver program.

Refiners argue the waivers are critical to keeping small refining facilities in business, but agriculture representatives said they have been overused and hurt farmers by eroding demand for corn-based ethanol.

The EPA's decision not to appeal the court ruling on refinery waivers was applauded by Minnesota's ethanol industry.

"It's very good news," said Brian Kletscher, board president of the trade group Minnesota Bio-Fuels Association and CEO of Highwater Ethanol in Lamberton, Minn. "We are thrilled about it. … It's not only good news for the ethanol industry, but for the agricultural industry and [corn] farmers as they go into planting season."

Minnesota is the nation's fourth-largest ethanol-producing state with 17 operating plants. The industry has been reeling in Minnesota and across the country for well more than a year, with many ethanol companies mired in red ink, some to the point of shutting down. Corn Plus, a good-size ethanol cooperative in the southern Minnesota town of Winnebago, closed in September.

Ethanol producers' biggest problem right now is the sharp fall in demand for transportation fuel due to the coronavirus threat. By law, ethanol must be mixed into gasoline, but even with plummeting gas prices, consumers are driving much less. Ethanol prices have hit lows not seen in many years, and some biofuel producers have already cut production.

The stakes have only grown recently, as the oil industry also is hard hit by the economic impact of the coronavirus pandemic.

Under the U.S. Renewable Fuel Standard, refiners are required to blend billions of gallons of ethanol into their gasoline every year. But the EPA, which administers the program, can give out waivers to small facilities that prove that compliance would put them in financial straits.

The Trump administration has roughly quadrupled the number of waivers the EPA grants to refiners. Reuters reporting has shown that some of those waivers have been going to small facilities owned by huge, profitable companies like Exxon Mobil and Chevron Corp., as well as to operations owned by billionaire Trump ally Carl Icahn.

The waiver program was cast into question in January after the 10th Circuit Court of Appeals ruled that the Trump administration had been too free with the waivers and set a standard for the exemptions that would greatly reduce the numbers of waivers the EPA can grant.

Since the ruling, the EPA has been in deliberations with the White House and the Department of Justice over how to respond.

The country's main lobby group for oil refiners blasted the EPA's decision not to challenge the court ruling.

"It is astonishing that President Trump has abandoned our country's small-refinery workers and the communities that rely on these critical facilities in this time of national crisis and economic uncertainty," said Chet Thompson, head of the American Fuel & Petrochemical Manufacturers group.

Refiners involved in the court case have asked for a rehearing, but it is unclear if the requests would be granted in the absence of support from the EPA.

Sources had told Reuters earlier this month that the Trump administration was likely to adhere to the court's ruling and apply it nationally.

Includes reporting by Reuters and Star Tribune staff writer Mike Hughlett.