White House says it is sticking with 2020 biofuel plan, despite farmer objections

[December 19, 2019]  By Stephanie Kelly

NEW YORK (Reuters) - The Trump administration plans to stick with its proposed 2020 biofuel blending requirements, the White House said on Wednesday, despite anger among farmers that the plan does too little for corn growers.

The decision could undermine President Donald Trump's support among farmers, an important constituency in the November 2020 election. Some U.S. farmers have already been hurt by the United States' prolonged trade war with China.

"The Administration is moving forward to finalize the 2020 RVO (Renewable Volume Obligations) in line with the agreement that the President made this fall," White House spokesman Judd Deere said.

Deere confirmed he was talking about a proposal unveiled by the Environmental Protection Agency in October, which was intended to compensate the biofuel industry for the administration's expanded use of refinery waivers, but which the industry has largely panned as insufficient.

Under the U.S. Renewable Fuel Standard, oil refiners are required to blend some 15 billion gallons of corn-based ethanol into their gasoline every year, but small facilities can be exempted if compliance would hurt them financially.

The Trump administration's EPA has roughly quadrupled the number of the so-called Small Refinery Exemptions, something corn farmers and biofuel producers say has deeply undercut demand for ethanol.

The oil industry says the waivers are needed to preserve blue-collar refining jobs and disagrees with the claim that the waivers destroy demand.

The EPA plan, devised after weeks of negotiations with both the oil and biofuel industries to resolve the issue, would raise the biofuels volumes that some refineries must blend in 2020 based on U.S. Energy Department recommendations for volumes that should be exempted.

Biofuel interests wanted the regulation to be based on volumes that have actually been waived, since the EPA has routinely waived more blending volumes than the DOE has recommended.

Grain bins are seen in front of crops at Knuth Farms in Mead, Nebraska, U.S., August 28, 2019. Photo taken August 28, 2019. REUTERS/Stephanie Kelly

On Tuesday, more than 1,700 farmers and biofuel advocates sent a letter to Trump, criticizing EPA's proposal and asking him to directly intervene in the debate.

By then, the decision had already been reached. White House economic adviser Larry Kudlow told the Iowa Corn Growers Association during a meeting in Washington on Tuesday that the administration was sticking with the EPA's proposal, two sources familiar with the matter said.

The plan is expected to be finalized by Friday, one source said. The final rule for 2020 blending requirements is already past its end-November deadline.

"EPA has reviewed all comments received during the comment period from the public and we plan to finalize the rule this winter," EPA spokesman Michael Abboud said.

Support across key Midwestern states helped propel Trump to the presidency in 2016, a trend he is hoping to replicate in next year's election.

But some farmers have threatened to withdraw support because of his administration's handling of biofuel policy.

The biofuels news, however, comes amid progress in the United States' trade war with China, a dispute that has been especially damaging to U.S. farmers.

It also comes as Congress readies a vote on the nation's new trade pact with Mexico and Canada, an agreement also expected to boost farmers' fortunes.

Renewable fuel (D6) credits for 2019 traded at 12.75 cents each on Wednesday, down from 13.25 cents in the previous session, traders said.

(Reporting by Stephanie Kelly in New York and Jarrett Renshaw in Philadelphia; Editing by Richard Valdmanis and Matthew Lewis)

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