SCOTUS ruling favors oil interests over ethanol, Iowans criticize decision

By: - June 25, 2021 1:43 pm
ethanol plant

A flag flies at the Southwest Iowa Renewable Energy ethanol facility prior to a visit from President Donald Trump on June 11, 2019, in Council Bluffs, Iowa. (Photo by Scott Olson/Getty Images)

The U.S. Supreme Court has added stress to an already agitated ethanol industry, overturning a 10th Circuit Court decision and voting 6-3 to allow broader biofuels waivers for oil refineries.

Dissenting judges said a waiver that never existed can’t be extended. The case revolved around whether small oil refineries can ask for a waiver if they haven’t qualified and possessed the waiver continuously.

Predictably, ethanol interests and grain-state lawmakers blasted the decision. Previously, associations of ethanol producers and farmers have said the industry could take a $20 billion hit over six years if the government continues to let oil refineries off the hook for buying a certain amount of ethanol under federal law. The 10th Circuit had ruled refineries had to get the waiver continuously to qualify, but the high court majority disagreed.

Iowa is the nation’s top producer of corn and the ethanol made with it, and a major source of soybeans and biodiesel. 

Gov. Kim Reynolds, a Republican, called the decision a “setback.”

Gov. Kim Reynolds
Gov. Kim Reynolds discusses legislative issues in her office at the Statehouse on Dec. 19, 2019 (Photo by Kathie Obradovich/Iowa Capital Dispatch)

“Today’s ruling by the U.S. Supreme Court is a disappointing setback for Iowa agriculture and our renewable fuel industry,” Reynolds said in a statement “The decision not only undermines demand for ethanol and biodiesel, but creates an environment where waivers could grow exponentially.  

“Now more than ever, we need the Biden administration to take a clear stance against small refinery exemptions in order to limit the negative impact of this ruling,” Reynolds added. 

The U.S. House of Representatives’ Biofuels Caucus, led by Democratic U.S. Rep. Cindy Axne of Iowa and several colleagues, said the decision could cause financial damage to farmers.

“We are concerned with the potential consequences of today’s Supreme Court’s decision, which could have a devastating impact on farmers and producers who are still fighting to recover from the volatile markets, unpredictable weather, and trade instability of the past several years,” the caucus wrote. 

“However, we are encouraged that the Environmental Protection Agency had reversed its position on small refinery exemptions prior to the Supreme Court’s final opinion, and we urge the Administration to apply the same logic in deciding not to grant future waivers. Today’s decision underscores the importance of the RFS Integrity Act; we will continue to fight for the enactment of this legislation to support family farmers and the clean biofuels industry,” the caucus added.

Republican U.S. Rep. Ashley Hinson represents Iowa’s 1st Congressional District. (Photo submitted by Ashley Hinson campaign)

U.S. Rep. Ashley Hinson, R-Iowa, said in a statement: “This is a devastating blow to farmers in Iowa and across the nation. The administration must not grant these exemptions to small oil refineries and should work to maintain the integrity of the renewable fuel standard, and I will continue calling on them to do so.”

U.S. Sen. Joni Ernst, R-Iowa, tweeted that the decision “makes the stakes absolutely clear.” She said the U.S. EPA can side with farmers, or with oil companies. She vowed to defend the Renewable Fuel Standard, which sets minimum purchases of biofuels for refineries.

Iowa’s senior senator, Republican Chuck Grassley, tweeted that he disagreed with the decision, but noted it appears to still “put tight guardrails” on exemptions. “Small refinery exemptions are simply handouts to Big Oil,” he added.

Monte Shaw, executive director of the Iowa Renewable Fuels Association, said the decision appears to still require refineries to show economic hardship, something biofuels backers have contended doesn’t exist.

“We are extremely disappointed the Supreme Court didn’t uphold the 10th Circuit Court ruling on eligibility to request RFS refinery exemption extensions,” Shaw said in a statement.

“We fully expect the Biden EPA to keep their commitment to the (Renewable Fuel Standard) and to apply the 10th Circuit Court standards relating to economic harm, and as a result, to deny the vast majority of RFS exemption extension requests that are pending or that will be submitted in the future,” Shaw added.

American Fuel & Petrochemical Manufacturers President and CEO Chet Thompson said in a statement that the decision “upholds Congress’s vision for the Renewable Fuel Standard small refinery relief program and the ability for small refineries experiencing disproportionate economic hardship to petition” for relief through the waivers.  

“AFPM is very pleased with this ruling and hopes that EPA now moves expeditiously to provide critical relief to those small refineries that have demonstrated disproportionate economic harm resulting from the RFS,” Thompson wrote.

“RFS compliance costs hit all-time highs this month, nearing 25 cents per gallon,” Thompson added. “The program is hurting consumers and jeopardizing the viability of refineries across the country, as well as the jobs and communities they support. Further delay from the administration in setting achievable annual volume standards, issuing small refinery waivers, and responding to numerous petitions for relief will make a bad situation even worse.”

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Perry Beeman
Perry Beeman

Perry Beeman has nearly 40 years of experience in Iowa journalism and has won national awards for environmental and business writing. He has written for The Des Moines Register and the Business Record, where he also served as managing editor. He also is former editorial director of Grinnell College. He co-authored the recently published book, "The $80 Billion Gamble," which details the lottery-rigging case of Eddie Tipton.