Trump administration walks away from ethanol court battle, angering oil refiners

The Trump administration has walked away from a chance to appeal a court decision on its refinery waiver program, delivering a win to ethanol producers while angering oil refiners.

The 10th Circuit Court of Appeals had ruled that the Environmental Protection Agency’s (EPA) program, which grants economic hardship waivers to small oil refineries that are otherwise required to blend ethanol into their supply, shortcut national goals for ethanol use. 

The Trump administration had previously asked for a two-week extension to file an appeal to the case, but ultimately filed nothing before the midnight Tuesday deadline. 

“It is astonishing that President Trump has abandoned our country’s small refinery workers and the communities that rely on these critical facilities in this time of national crisis and economic uncertainty,” the American Fuel and Petrochemical Manufacturers, which represents oil refineries, said in a statement. 

The tension between the oil industry and ethanol producers has been a continually tricky issue for Trump, who views both as part of his base. But farm groups, particularly in corn-heavy bellwether Iowa, had made it increasingly clear Trump was at risk of losing their vote.

The waiver program has grown drastically under the Trump administration. The Obama administration issued 10 hardship waivers over eight years, while the Trump’s has issued more than 80 in his first term. 

Ethanol producers have long argued the EPA is not properly analyzing criteria to receive the waivers, nor considering the nation’s goal to use 15 billion gallons of ethanol each year.

They sued over three such waivers, prompting a January decision from a three-judge panel of the 10th Circuit forcing the EPA to reconsider.

Though the Trump administration did not appeal the decision, refiners have appealed in the hopes of hearing the case before the full circuit.

But ethanol producers want the 10th Circuit decision to be applied more broadly.

“The Trump administration’s decision today not to join the refiner appeals is good news in the midst of dark time for American biofuels producers, who are still hurting from three years of refinery exemption abuse, trades wars, and the demand-destruction caused by the spread of and global response to the coronavirus,” the Iowa Renewable Fuels Association said in a statement.

“But the future is still in limbo. We hope the Trump administration will quickly make clear to the market that they intend to do the right thing and apply the 10th Circuit Court decision nationwide.”

The choice not to appeal also exposes a split within the oil industry.

The American Petroleum Institute, the largest industry group, said it was pleased EPA did not appeal the decision.

“This decision is consistent with Congress’ intent when it enacted the Renewable Fuel Standard. Going forward, the EPA should move immediately to apply the court’s decision nationwide,” the group said, echoing the calls of the ethanol industry.

But it also called for the EPA to walk away from another sticking point — requiring larger refineries to make up for the ethanol quantities that small refineries are exempted from adding in.

Meanwhile, ethanol industry groups argue the EPA needs to make up for lost time — asking the agency to require refineries add 500 million gallons of ethanol the industry received waivers for in 2017.

“This is EPA’s opportunity to turn the page and start a new chapter—one in which the Agency faithfully follows the law,” the industry coalition that filed the suit, including the Renewable Fuels Association, said in a statement.

—Updated at 11:36 a.m.