In 2016, POET Biorefining at Hanlontown expanded operations by adding equipment and increasing production capability.
Three years later, production rates and jobs may be in jeopardy and the company says that recent decisions by the Environmental Protection Agency are to blame.
Following the EPA's granting of 31 waivers that exempt small oil refineries from complying with the nation’s biofuel law, POET Hanlontown General Manager Kelly Hansen said that two individuals at the facility in Worth County have been displaced because of the decision and 100 total positions have been affected.
Half of POET's 28 plants have been turned down to a reduced rate for production, according to Hansen.
"Here in Hanlontown, we have not reduced rate. We are still running at full rate," Hansen said.
But in a statement, POET announced it would idle production at its bioprocessing facility in Cloverdale, Indiana.
"POET has reduced production at half of its biorefineries, with the largest drops taking place in Iowa and Ohio. As a result, numerous jobs will be consolidated across POET’s 28 biorefineries and corn processing will drop by an additional 100 million bushels across Iowa, Ohio, Michigan, Indiana, Minnesota, South Dakota, and Missouri," the company wrote.
At issue is how those waivers are interpreted with the Renewable Fuel Standard which generally requires refineries to blend renewable sources — including corn-based ethanol — into the nation’s fuel supply or to buy credits instead. More exempt fuel could then translate to less of a need for biorefining and corn processing.
"The waivers that have been granted are really the primary reason for this," Hansen said. "A large percentage of the corn produced in Iowa is produced for ethanol and if ethanol production suffers, the farmer will suffer."
With the EPA's decisions, Democratic U.S. Representatives Abby Finkenauer (whose district includes Worth and Mitchell counties) and Dave Loebsack (whose district occupies the southeast corner of Iowa) are calling for a review of the waiver grants that exempt small oil refineries from complying with the nation’s biofuel law.
Finkenauer and Loebsack want the federal Government Accountability Office to investigate how the waiver program is being applied under the RFS.
"Our concerns stem from the economic consequences to our rural communities created by exempting nearly 4 billion gallons of fuel from the RFS, a standard intended to expand the nation’s renewable fuels sector," they wrote in a letter to Gene Dodaro, the U.S. comptroller general. "By 2016, the ethanol industry has grown to support over 339,000 U.S. jobs and driven $41 billion in economic activity by supporting corn and soy markets and reducing gasoline prices."
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Finkenauer, Loebsack and other members of the bipartisan House Biofuels Caucus, including Iowa Democratic U.S. Rep. Cindy Axne, have joined Republican U.S. Sens. Chuck Grassley and Joni Ernst in criticizing the waivers they say hurt the renewable fuel industry in the state.
"They screwed us," Grassley said last week when asked about the latest round of waivers — 31 — granted by the EPA. In addition to the number of waivers, "it’s that it is being granted to people that really aren’t (experiencing) hardship, and that is where it ought to be identified."
And companies such as POET have argued that the decisions come at an inopportune time.
According to Hansen, the Trump administration has been supportive of the year-round sales of E-15 fuel which could help increase demand but not as much if things stay pat.
"We expect, longer term, that that helps in terms of demand," Hansen said. "Number one because ethanol is more environmentally friendly than gasoline. If waivers continue, that will continue to offset demand. We view the waivers as illegal. They do not comply with the parameters the EPA has to work under. The White House has the ability to do some things to correct that and we’re hoping that will happen."
The fuel standard allows the EPA to provide waivers to small refineries that demonstrate compliance with the rule would create significant economic hardship for the facility. Between 2013 and 2015, the EPA granted no more than eight waivers in a year, according to Loebsack and Finkenauer. But the EPA retroactively approved 19 waivers for 2016, then proceeded to grant 35 waivers in 2017, which is equal to removing a total of 1.82 billion gallons of renewable fuel in 2017 alone.
"With the recent approval of 31 waivers for 2018, it is imperative that we fully understand how EPA is reaching these conclusions despite (the Department of Energy’s) viability analysis," wrote Finkenauer.
Sen. Joni Ernst added her support to the call for an investigation. After speaking to employees at Dupont Nutrition & Biosciences in Cedar Rapids, which produces enzymes used in biofuels, Ernst said the investigation might increase transparency on how the EPA defines small refinery.
"To me it looks like some of those small refineries are associated with larger refineries like Exxon or Chevron. We do need to get to the bottom of that," Ernst said.
Due to the process used by the EPA to review waiver applications, it’s unknown how many of the recent 31 exemptions are being granted to large and profitable oil companies.
ExxonMobil and Chevron are among those that received these economic hardship exemptions.
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