Senators with opposite views of the ethanol mandate verbally leaned on EPA administrator Andrew Wheeler on Wednesday, with one asking for relief from the requirement to mix the biofuel into gasoline and the other calling for him to unflinchingly enforce it. Wheeler said he has not reached a decision on petitions to waive the RFS during the coronavirus pandemic.
Gasoline consumption has plunged as a result of stay-at-home orders, pulling down ethanol with it. With a recession on the horizon, both industries are scuffling for sales and seeking help from Washington. The Trump administration says it will fill to the brim the Strategic Petroleum Reserve. In response, two midwestern senators proposed a feedstock reimbursement for biofuel plants.
The governors of six oil-producing or refining states petitioned the EPA last month for an RFS waiver because of the financial impact the coronavirus has had on the petroleum sector and the cost of compliance with the RFS. The EPA rejected similar state petitions in 2008 and 2012, saying waivers were justified only if the RFS caused severe economic harm.
When Sen. Joni Ernst of Iowa, the No. 1 corn and ethanol state, asked Wheeler if he would follow precedent, Wheeler replied, “Everything we have done under the RFS program in this administration has looked to past precedent as well as the requirements of the Clean Air Act and ever-changing litigation decisions we receive from court decisions.”
Wyoming Sen. John Barrasso, who signed a letter in support of the governors’ petitions, warned Wheeler that small communities in his state will suffer under an appellate court decision that effectively blocks the EPA from exempting small refineries from the RFS. Barrasso chairs the Senate committee that oversees the EPA. He and Ernst questioned Wheeler during a committee hearing.
“We are looking to see what relief we can provide everyone,” said Wheeler. “The ethanol industry is also hurting as well.” Small refineries “in particular” feel the effects of the collapse in gasoline sales, he said.
Ethanol production fell to record lows during April. The Renewable Fuels Association (RFA), a trade group, said the industry was running at 60 percent capacity this week. Of the 204 ethanol plants nationwide, 60 were running at normal levels while 144 were partially or completely idle.
Biofuel producers would qualify for a federal reimbursement of 75 percent of the money they spent to buy feedstocks, such as corn or soybean oil, from Jan. 1 to March 31 under a bill filed by Sens. Chuck Grassley of Iowa and Amy Klobuchar of Minnesota. The USDA would be in charge of reimbursements. “This bill will help ensure biofuel producers survive this economic downturn and also ensure corn and soybean farmers have a place to sell their products,” said Grassley.
The House passed a coronavirus bill last week that included payments to ethanol makers for losses incurred this year. If producers had been forced offline for at least one month between Jan. 1 and May 1, they would qualify for a USDA payment of 45 cents a gallon based on half of the volume they produced during the corresponding month or months in 2019.
An Energy Department report said that ethanol production totaled 27.9 million gallons a day in the week ending on May 15, the highest weekly figure in six weeks. “However, production remains tempered due to Covid-19 disruptions, coming in 38 percent below the same week in 2019,” said the RFA.
To watch a video of the Senate Environment and Public Works Committee hearing, click here.