Democratic Presidential Hopeful Klobuchar Proposes Revamping EPA Ethanol Rules

May 30, 2019 Updated: May 30, 2019

WASHINGTON—Democratic presidential hopeful Amy Klobuchar on May 25 called for revamping Environmental Protection Agency (EPA) rules that govern how refineries use ethanol in gasoline products, a proposal aimed at the politically critical state of Iowa.

Part of a series of farm policies that also addressed access to capital and bankruptcy assistance, Klobuchar, a U.S. senator, said the EPA’s waivers that allow refineries to avoid the requirements are “misguided” and said financial institutions are manipulating the biofuels credit trading market.

She called for new compliance standards and additional oversight.

Klobuchar is one of more than 20 Democrats vying for her party’s presidential nomination. If she is going to be successful, her campaign needs to galvanize support in the heavily agricultural state of Iowa, which holds the first primary contest in the nation. Iowa is the country’s leading producer of corn, which is used to produce ethanol.

Klobuchar, who represents Minnesota—another agriculture-heavy state that borders Iowa to the north—in the Senate, has been trailing in polls on the Democratic presidential field.

In a Reuters/Ipsos poll earlier this month, she garnered support of only 1 percent of respondents. Former Vice President Joe Biden led the poll, with 29 percent of Democrats and independents saying they would vote for him in the state nominating contests that begin next winter.

The Renewable Fuel Standard (RFS) program that mandates ethanol use is a more-than-decade-old regulation aimed at helping farmers and reducing U.S. dependence on oil. The policy has helped farmers by creating a huge market for ethanol and other biofuels, but oil refiners say compliance is prohibitively expensive.

Under the program, refiners are required to blend biofuels into the nation’s gasoline pool or purchase credits from those that do, but smaller refineries with a capacity of less than 75,000 barrels per day (bpd) can obtain a “hardship waiver” if they prove that compliance with RFS would cause them significant financial strain.

The Trump administration has made extensive use of such waivers in the past two years, saving refiners money but angering the corn lobby, particularly after major companies such as ExxonMobil Corp. received exemptions for certain facilities.

By Humeyra Pamuk and Ginger Gibson