The Environmental Protection Agency this month announced 31 small oil refineries were exempt from ethanol blend requirements. File photo by Brian Kersey/UPI | License Photo
Aug. 22 (UPI) -- U.S. lawmakers are calling for an investigation into the Environmental Protection Agency's decision to exempt 31 small refineries from using ethanol in their fuel blends, as is required by federal law.
The request comes weeks after the EPA granted the refineries waivers from the Renewable Fuel Standard, the federal program that requires oil refineries to include a certain level of renewable fuels in their gasoline and diesel. The agency said those refineries "demonstrated disproportionate economic hardship" trying to comply with the regulation.
Lawmakers and industry experts say that in granting those waivers, the EPA has dramatically decreased the demand for ethanol, sending prices plummeting and forced several plants to halt production.
That in turn means less demand for the corn and soybeans used to make the biofuel, putting even more strain on Midwestern farmers struggling from the loss of their international markets to trade disputes.
"Our concerns stem from the economic consequences to our rural communities created by exempting nearly 4 billion gallons of fuel," said a letter to the Government Accountability Office, signed by 12 members of the House Biofuels Caucus.
The Department of Energy, however, "had no concerns about the [many of the same] refiners' financial viability," the bipartisan letter, sent by Rep. Abby Finkenaur of Iowa, a Democrat, alleges.
"This raises questions about the review process and what other factors the EPA is considering in approving the waivers," the letter said.
Ethanol futures prices fell to a five-year low in the wake of the Aug. 9 announcement, according to the Chicago Mercantile Exchange. And, on Tuesday, the United States' largest ethanol producer, POET, announced it was shutting its Indiana plant and reducing operations at several multiple other plants because of the waivers.
"Our industry invested billions of dollars based on the belief that oil could not restrict access to the market and EPA would stand behind the intent of the Renewable Fuel Standard," POET's chairman and CEO Jeff Broin said in a statement.
"Unfortunately, the oil industry is manipulating the EPA and is now using the [Renewable Fuel Standards] to destroy demand for biofuels, reducing the price of commodities and gutting rural economies in the process."
The number of waivers granted under the Trump administration has more than tripled those awarded during the Obama administration, according to the EPA.
This has contributed to at least 15 plants either idling or permanently closing in 2018, according to the Renewable Fuels Association.
"Ethanol production and demand continue to slide, prices continue to sink and margins continue to bleed red," association president and CEO Geoff Cooper said in a statement.
"Meanwhile, the waivers are eroding corn demand, with the USDA cutting its estimate of corn use for ethanol by 225 million bushels -- the equivalent to erasing demand for the entire Michigan corn crop."