Would Trump use $300m from USDA for oil refiners?

In same week Trump denies RFS gap-year waivers, reports surface he could give same refiners money from CCC.

Jacqui Fatka, Policy editor

September 17, 2020

5 Min Read
Trump ethanol big oil billboard.jpg
Rural America 2020

The Trump Administration’s Environmental Protection Agency finally denied 54 of the pending 99 small refinery exemption (SRE) requests from oil refiners to blend less ethanol under the Renewable Fuel Standard (RFS). However, that action could quickly be overshadowed by news this week that, in return for denying those waiver requests, President Donald Trump would provide $300 million to oil refiners. Even more concerning is that those funds would come out of the U.S. Department of Agriculture’s Commodity Credit Corp. (CCC).

The CCC is the same mechanism used to provide farmers with Market Facilitation Program (MFP) payments and this year’s Coronavirus Food Assistance Program (CFAP). This week, USDA’s handling of CCC funds came under fire by Senate Agriculture Committee ranking member Debbie Stabenow (D., Mich.) because MFP payments were not distributed equally and favored southern farmers.

Patty Judge, co-founder of Focus on Rural America, said denying the 54 RFS waivers that were previously denied from 2011 to 2018 was merely the Trump Administration doing what a circuit court ordered it to do earlier in the year to do. EPA still has not been acted on 44 waivers, 14 of which are also gap-year waivers and 31 of which are for the 2019 and 2020 blending requirements.

While speaking with Judge during a Focus on Rural America call, former Agriculture Secretary Tom Vilsack said he strongly expects that no action will be taken on the remaining waivers until after the election. He also was highly critical of the reports that the President indicated that he would offer $300 million through the CCC fund in lieu of the waiver approvals, as the CCC is designed specifically to be used by USDA for the purpose of helping farmers.

Early during the coronavirus pandemic, Vilsack had called on Agriculture Secretary Sonny Perdue to creatively use his authority at USDA to offer aid to the ethanol industry. However, at the time, Perdue said he did not have the authority. Vilsack said he would expect those same questions to be asked and answered with regard to the $300 million payment being considered for the oil industry. “My hope is resources dedicated to those who need it most,” Vilsack said.

“Giving away Commodity Credit Corp. funds to Big Oil that were meant for struggling farmers would be an outrage,” Sen. Chuck Grassley (R., Iowa) said in a statement. “Thankfully, the law is clear, so there’s no reason to believe Secretary Perdue would ever consider such a thing. Given the Trump Administration’s rejection of gap-year SREs this week, it’s not a surprise that Big Oil is looking elsewhere for government handouts.”

Stabenow added in a statement on the oil bailout: “It is outrageous for the Administration to even consider taking away millions from our farmers to bail out Big Oil. Over and over, the Trump Administration has sided with oil companies over family farmers. This would be yet another insult to hard-working biofuel producers who are already struggling under a mismanaged RFS program and an erratic trade policy. It’s time for the President to stop paying lip service to farmers and stand up for American agriculture,” she said.

Vilsack said Democrat presidential nominee Joe Biden had a strong statement on the importance of the bond with farmers that was cemented in the RFS. “Shortly after that statement, Trump made decisions on the waivers. I think that indicates that the Trump campaign had work to do in rural places,” he said.

Vilsack added that in 2016, the President made three promises to rural America: better trade deals, massive investments in infrastructure on broadband and transportation and support for renewable fuels. So far, the results have not lived up to those promises, Vilsack said.

Rural America 2020, a network of farmers and rural leaders working to educate and activate rural Americans on the dangers of current rural policies, announced a major new campaign Thursday focused on Trump’s broken promises to the ethanol industry. The campaign, “Trump’s Broken Ethanol Promise,” will highlight how despite the President’s promises to boost ethanol demand, he has undermined the ethanol industry and the farmers it supports by granting a record number of waivers to Big Oil and by failing to follow through on other commitments.

The effort will include a nearly $300,000 digital ad campaign targeting farmers and rural residents in Iowa, Minnesota, Wisconsin, Michigan and Ohio. The campaign also includes nearly 30 digital billboards in prominent locations across Iowa, Minnesota, Wisconsin, Michigan and Ohio over the next 30 days.

Iowa farmer Doug Thompson, a member of the Iowa Rural America 2020 steering committee, said, “In 2019, President Trump came to Council Bluffs [Iowa] and promised farmers that we’d be seeing increased demand for ethanol through year-round E15, but that promise amounted to nothing, since the President quadrupled the number of exemptions for big oil companies so they could get out of ethanol requirements. Today, E15 can be found in less than 1% of America’s filling stations. That’s why I’m proud that today we are putting up billboards in Council Bluffs and across the Midwest that remind people that Trump broke his promise.”

Surprisingly, the American Fuel & Petrochemical Manufacturers (AFPM) is not supportive of the $300 million either.

An AFPM spokesperson said, “If the Administration truly wants to make things right with refiners, they need to prioritize permanent reforms to make the RFS less expensive so it’s not a threat to good manufacturing jobs. This is not the way to do it. It certainly won’t make up for losing lifelines that have helped refineries of all sizes shoulder the cost of RFS compliance, and it will do nothing to restore industry confidence in an Administration that has shown it will sacrifice refineries and union jobs whenever they think it’s politically expedient.”

Earlier in the week, when EPA denied the waivers, AFPM president and chief executive officer Chet Thompson stated, “Telling ethanol interests everything they want to hear in a press release is not going to increase the amount of ethanol that gasoline can absorb or do anything to help farmers and ethanol producers. EPA knows this, and now they need to answer how they plan to correct the 2020 RFS volumes artificially inflated because of small refinery exemptions that will no longer be granted and how they will protect consumers and U.S. energy security by ensuring 2021 standards are achievable.”

About the Author(s)

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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