As if the COVID-19 outbreak wasn't bad enough, now U.S. ethanol producers are facing the comeback of an old headwind as well: the opposition of the Trump administration. In January a federal appellate court ruled that the U.S. Environmental Protection Agency [EPA] had overstepped its bounds with its vastly-expanded allocation of small refiner exemptions [SRE], also known as "hardship waivers", to refiners both large and small. At the time, it was reported that the Trump administration intended to reduce its future allocations in response. This prompted a flurry of White House lobbying by the Congressional delegations of states with large refining sectors, however, and on March 5, Reuters reported that the Trump administration now intended to appeal the decision instead:
White House economic adviser Larry Kudlow recently informed Senator Chuck Grassley of Iowa, a vocal supporter of biofuels interests, that the administration had decided to appeal the ruling instead of curtailing the waiver program, two sources told Reuters on Thursday.
Senators representing oil states had previously engaged in a major drive this week to steer the administration to appeal the decision ahead of a March 9 deadline. The senators claim the program is essential for keeping refineries that provide tens of thousands of jobs afloat.
The market impact was immediate. The price of the D6 Renewable Identification Number [RIN] credits that corn ethanol qualifies for fell by 15% on March 6. Over the course of Thursday and Friday, ethanol names slid, led by larger independent producers such as Pacific Ethanol (PEIX), Green Plains, Inc. (GPRE), and REX American Resources (REX); only Aemetis (AMTX) and The Andersons (ANDE) outperformed the broader S&P 500 index over the period and, of those two, only the latter avoided a share price
