Ag Policy Blog

Sen. Charles Grassley largely seemed resigned Tuesday as he complained about EPA granting 31 small refinery exemptions to the Renewable Fuels Standard.

"The bottom line is EPA is undermining congressional intent and the RFS and surely hurting farmers in Iowa and rural America," Grassley said on a call with reporters Tuesday.

The Iowa Republican did note EPA denied some exemption requests. "That was kind of a shock because I didn't expect them to deny any," Grassley said. "That denial of a few was not enough. I'm very skeptical if every company receiving these waivers truly needs them."

The senator added, "Now more than ever, farmers need certainty. Ensuring the RFS is upheld and the RVO (renewable volume obligations) estimates are reasonable are two common-sense ways for government that can deliver that certainty."

USDA on Monday dropped corn demand for ethanol slightly -- 25 million bushels -- to 5.475 billion bushels, despite also lowering the average price for a bushel of corn by 10 cents for the 2019-20 crop.

When asked about whether President Donald Trump could step in and stop the waivers, Grassley pointed out several trips were made to the White House on the small refinery exemptions.

"I've even had conversations with the president's daughter on EPA as one example because I figured she's close to him and let her tell him she has heard it from Grassley as well," he said.

Agriculture Secretary Sonny Perdue said last week that talks about the exemptions were still ongoing just days before EPA announced the small refinery exemptions late Friday.

Grassley said he believes the 31 waivers are unjustified, "particularly when you have small refineries connected with companies that have billions in profits." The senator also pointed out the small refinery exemptions became more common when RINs certificates were trading at 80 cents to $1 a gallon, not 20 cents.

"So what's the point? If it was an economic problem when it was 80 cents, it's less of an economic problem at 20 cents, it seems to me."

D6 RINs were trading at 20 cents before EPA made its announcement. They fell to around 12 cents afterwards.

Grassley noted Sen. Deb Fischer of Nebraska has legislation to address small-refinery exemptions, but Grassley said it's highly unlikely the oil lobby would let anything like that pass Congress right now.

"I believe the chances of getting an RFS issue up of any nature, about the waivers or anything else, is very much a gamble," Grassley said. He added, "We could be hurt by people who are against the RFS and there are a lot of powerful forces that are against it."

Those problems highlight some of the risks of getting legislation to recalibrate renewable fuel requirements by the end of 2022 when the RFS legislation essentially turns over even more authority to the EPA administrator.

Grassley also was stunned to learn Trump was speaking Tuesday at a Shell petrochemical company about growth in the oil and natural gas industries.

"He's speaking to a chemical company today?!"

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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