The renewable fuels industry has been on a roller coast for several months now and the financial stress is widespread throughout the sector.
In response to a challenge brought against the EPA by the Renewable Fuels Association, National Corn, the American Coalition for Ethanol, and the National Farmers Union, 10th circuit federal court ruled in early January that the EPA didn’t have the authority to issue small refinery exemptions from the renewable fuels standard (RFS) for three refineries. The court determined that hardship extensions were intended to help the industry transition to meeting the RFS blending requirements. If a refinery didn’t qualify for a hardship exemption in prior years, it shouldn’t qualify for an extension of an exemption that was not previously granted.
As background, the Trump administration’s EPA granted 85 small refinery ‘hardship’ exemptions between 2016 and 2018 totaling more than 4 billion gallons of demand that was lost. For 2015, the number of extensions approved by EPA was down to 7. Most of the exemptions that were granted in 2016-18 had either not previously received a hardship waiver or their temporary or ‘transitional’ exemptions had lapsed.
Refiners insisted that the ruling be appealed. In late February, thirteen oil state Senators asked President Trump to appeal the 10th circuit decision suggesting that if the ruling stands it would put, ‘a dozen small refiners under severe financial strain and thousands of jobs at risk.’
On March 24th, the Trump administration decided not to appeal the 10th circuit ruling and indicated that they may apply the ruling nationwide. This was a big win for the renewable fuels industry despite continuing efforts by refiners to continue with their appeal. Still, Trump administration officials indicated that they would look for other ways to help blunt the financial impact of the decision.
In the midst of all of this the oil and ethanol industry were beginning to feel the oil price war between the Saudis and Russians. Add to that the impacts of the novel coronavirus and all parties were pleading for federal assistance and relief.
The ethanol industry insists that the 10th circuit ruling be applied to the 25 pending petitions before the EPA for 2019. The industry also points to a 2017 U.S. District court ruling that ordered the EPA to restore 500 million gallons of inappropriately waived 2016 blending requirements and a 2020 EPA rule whereby EPA must account for exempted volumes to make sure RFS requirements are met.
On May 1st farm and renewable fuel groups asked the EPA to oppose the American Petroleum Institute’s petition to request reconsideration of the 2020 final rule on the RFS. The API letter wants the final rule to eliminate any measure to ‘reallocate’ demand destruction related to the small refinery, hardship waivers. They pointed out that the EPA has yet to officially confirm that the 10th circuit decision would be applied nationwide.
In late May, renewable fuel advocates became alarmed when they learned that small refineries were petitioning the EPA for exemptions for previous compliance years for which they had not timely applied. Presumably, the goal is to retroactively request waivers and make them eligible for continued waivers in line with the 10th circuit ruling. Importantly, the EPA informed members of the Senate Environment and Public Works committee that they were sending the DOE those requests despite the fact that they were not appearing anywhere on the EPA’s RFS dashboard (that would normally list all waiver applications).
In a letter to the EPA, Renewable Fuels Association President Geoff Cooper wrote that requests SRE exemptions from prior years is “no more than a thinly veiled attempt to circumvent” the 10th circuit court decision. “This end-run strategy was explicitly acknowledged by Under Secretary Menezes who described the prior year exemption petitions as ‘gap fillings’ intended to establish, without regard to merit, a continuous string of exemptions ‘to be consistent with the 10th Circuit decision.’”
After weeks of delay, on June 18th the EPA finally posted 52 petitions for retroactive waivers on their dashboard. The waivers are for compliance years 2011 through 2018. The oil industry is split on whether the EPA should approve the waivers. A refiners industry organization insists that the EPA wrongly denied waivers in the past to justify retroactive relief. The American Petroleum Institute (API), on the other hand, will not support granting prior year waivers. Instead, the API suggests the requests are evidence of a broken RFS that should be repealed.
In a statement released by Growth Energy, CEO Emily Skor stated, “EPA’s dashboard confirms that the refiners hope to rewrite history, just to bypass the 10th Circuit Court and push more biofuels out of the marketplace.”
Adding more uncertainty by consideration of these ‘gap filling’ exemptions would add insult to injury. More than 70% of ethanol plants have either shut down or substantially reduced production due reduced demand for driving fuels. Offering up more waivers (or a string of prior year waivers) would make the situation much worse for the entire corn milling industry.
Sources: Farm Progress; Progressive Farmer; American Coalition for Ethanol, Reuters
SAVE THE DATE: GGC Annual Meeting Set for THURSDAY, MARCH 25TH
/in NewsGolden Growers Cooperative will hold its Annual Members Meeting on Thursday, March 25th. The meeting is tentatively planned for the Doubletree Conference Center, 825 E Beaton Drive, West Fargo, ND. However, the Board of Directors may decide to hold the meeting virtually if it appears that the coronavirus pandemic remains a risk to our members.
Members will have the opportunity to elect Directors to serve on the Golden Growers Board. Current directors up for re-election are:
Directors Gary ‘Butch’ Jirak (C District); Les Nesvig (S District); and Bruce Speich (S District) will reach their term limit and due to the change in Bylaws approved at the 2019 Annual Meeting, their director positions will not be filled and the total number of Directors will be reduced to nine. We offer our sincere appreciation for Butch, Les, and Bruce’s wisdom and dedication to our cooperative.
Any member in good standing is eligible to be nominated to the Board in the district where the member is registered. If you are interested in serving on the Board or want more information about district elections, visit our website at www.goldengrowers.com or contact us at 701-281-0468 or scotts@goldengrowers.com.
Anticipate a Direct Deposit Enrollment Letter in Mid-December
/in NewsThe Golden Growers Board had an extensive discussion about the value of Direct Deposit for members (assurance of accurate and timely receipt of distributions) and the cooperative (lower administrative costs). At the conclusion of that discussion, the Board approved a change in policy intended to gradually move all members to participate in Direct Deposit.
Changes are as follows:
Direct Deposit was first utilized in October of 2017 with 250 members participating (16%). Over the past three years, we have had steady growth in participation with 1,111 members enrolled (73%) for the October payment. Participants have been pleased with the timely, seamless, and secure process for receipt of distributions. They also receive a mailed letter explaining the payment for their records.
Non-participating members will receive a letter in mid-December explaining the change in policy and encouraging participation prior to January Method A payment and the February distribution.
2021 Annual Delivery Agreement (Pool Election) Deadline is December 10th.
/in NewsOn October 5th, Golden Growers mailed the ‘Annual Pool Election’ letter offering members the opportunity to change their delivery method for the coming year. Only members who intend to change their delivery need to respond.
Once delivery methods are set, GGC is not able to change a member’s delivery obligation for the year. Therefore, if you plan to change from Method A (physical delivery) to Method B (GGC acts as your Agent) or visa versa, complete the Annual Delivery Agreement (ADA) printed on the back page of your October 5th letter and return it to the Golden Growers office no later than December 10th.
Note: If you have misplaced your Annual Election Letter and intend to change delivery methods, contact the Golden Growers Office for a replacement letter. (701-281-0468 or scotts@goldengrowers.com)
A REMINDER: Method A Pool Participants have Delivery Choices
Provisions in the 2018 Grain Services agreement with Cargill allowed more options for Method A deliveries that may affect your annual delivery decision.
Key revisions to our Grain Services Agreement include:
We believe these changes allow Method A Pool participants more flexibility and provide for a more efficient process for the Cooperative.
2021 Pool Election Decision
/in NewsEach year, Members have the opportunity to change their method of delivery by submitting a revised Annual Delivery Agreement (ADA). This is your only opportunity to change your method of delivery for the coming year.
You should have already received your Annual Delivery Election letter with the ADA form on the back page. If you intend to change your delivery method, return the form no later than December 10th.
Only members intending to change their delivery method need to respond. Members who deliver directly to the plant through the Method A pool have a $0.07/bushel advantage over members participating in the Method B pool. In 2020, 27% of bushels were delivered by members directly to the plant.
GGC Board Approves Distribution of $0.13/Unit
/in NewsOn September 17th, the Golden Growers Board of Directors approved a distribution of $2,013,762 to members of record as of October 1, 2020. This distribution retires the remaining portion of 2018 allocated income and a portion of 2019 allocated income. In combination with the February and June distributions, a total of $6,196,692 has been issued to members in 2020.
As previously mentioned, the GGC Board believes it is important to build a reserve during the course of this new lease for several reasons that include likely capital expenditures at the plant, and the potential for Cargill to exercise its option to purchase 50% interest in ProGold. This distribution authorized by the Board will result in a remaining equity credit balance for 2019 of $4,144,807 or $0.27/unit. (Note: This balance does not constitute an outstanding obligation for GGC.)
Moving to Direct Deposit for all Members
/in NewsThe Golden Growers Board had an extensive discussion about the value of Direct Deposit for members (assurance of accurate and timely receipt of distributions) and the cooperative (lower administrative costs). At the conclusion of that discussion, the Board approved a change in policy intended to gradually move all members to participate in Direct Deposit. Changes are as follows: 1) The reprint fee, for members not enrolling at the time of request, increases from $25 to $50 as of January 1, 2021; 2) Starting January 1, 2022, GGC will charge an administrative fee of $75 for non-participating members; and 3) GGC will require full participation in Direct Deposit as of January 1, 2023.
Direct Deposit was first utilized in October of 2017 with 250 members participating (16%). Over the past three years, we have had steady growth in participation with 1,111 members enrolled (73%) for the October payment. Participants have been pleased with the timely, seamless, and secure process for receipt of distributions. They also receive a mailed letter explaining the payment for their records.
Golden Growers will be mailing an enrollment letter to non-participating members in December explaining the change in policy and encouraging participation prior to January Method A payment and the February distribution.
Cybersecurity – Protecting Yourself When Online
/in NewsAs we become more and more connected through the regular use of the internet and email, it is easy to become complacent on the risk associated with online activities. There are a few reasonble steps to reduce (not eliminate) your risk.
Passwords: Passwords should not be simple and used for multiple accounts. Make them more complex with a use of numbers and letters with a mix of small and large caps and symbols is useful. Maintain a list of logins and passwords using a password management program (Keeper, LastPass, etc.) or an encrypted spreadsheet.
Two-Step Authentication: Most email, banking, credit card, and social media accounts allow you to ‘opt in’ to two factor authentication (2FA). This is an extra step to log in for the first time on a new device (computer, phone, etc.) that requires a code to be texted to your phone, or emailed to a separate email account before you can access the information. While it can be a bit frustrating, it is much better than finding out that someone obtained access to your bank or credit card account and made a series of purchases.
Lock Your Phone/Computer: All phones and computers allow you to require a password, finger print, etc. to access the device. Without setting up this rather simple level of protection, anyone who, even momentarily, has possession of the device also has access to all of the information on it.
Install antivirus and anti-malware: Antivirus or anti-malware software will help you avoid inadvertently downloading programs that install programs that destroy or access all of your private data. Many good options are available like Norton 360, McAfee, AVG, Malwarebytes, ESET.
Don’t just click that link: Hackers are notorious for sending emails that are disguised as being sent from a legitimate source. Be suspicisous about any email that asks you to click a link or provide login information for an account. Check the UNDERLYING EMAIL ADDRESS to see if it makes sense. (i.e. You won’t receive an invoice for AT&T from an email address like ‘billsatt@yahoo.com’.) The same goes for links in mysterious text messages – don’t click the link.
Avoid use of public WiFi: Publicly available WiFi is notorious for hackers capturing online activity, passwords, etc. If you must, however, use a virtual private network (VPN) service that encrypts your activity while connected to public or hotel internet service. VPN services are fee based, but not necessarily expensive. Options to consider: ExpressVPN; NordVPN; Surfshark; etc.
Trump tells his EPA to deny Retroactive Waivers – Considers payments to Refiners.
/in NewsUnder election year pressure (especially in Iowa), President Trump ordered EPA to deny retroactive waiver requests intended to sidestep a 10th circuit court ruling. The circuit court ruled that waiver requests could only be approved if a refiner had continuously received them. The Trump Administration quadrupled the number of RFS exemptions since taking office.
While the biofuel industry welcomed the move, refiners complained that this action would cause significant economic harm. A day after reports that retroactive waivers would be denied (not official word as of yet), new reports surfaced that the Administration was contemplating at least $300 million in payments to refiners using funds from USDA’s Commodity Credit Corporation (CCC). Ag Secretary Purdue has since indicated that the USDA has no intention of using CCC for a refiner relief program.
Ethanol Under Stress
/in NewsThe renewable fuels industry has been on a roller coast for several months now and the financial stress is widespread throughout the sector.
In response to a challenge brought against the EPA by the Renewable Fuels Association, National Corn, the American Coalition for Ethanol, and the National Farmers Union, 10th circuit federal court ruled in early January that the EPA didn’t have the authority to issue small refinery exemptions from the renewable fuels standard (RFS) for three refineries. The court determined that hardship extensions were intended to help the industry transition to meeting the RFS blending requirements. If a refinery didn’t qualify for a hardship exemption in prior years, it shouldn’t qualify for an extension of an exemption that was not previously granted.
As background, the Trump administration’s EPA granted 85 small refinery ‘hardship’ exemptions between 2016 and 2018 totaling more than 4 billion gallons of demand that was lost. For 2015, the number of extensions approved by EPA was down to 7. Most of the exemptions that were granted in 2016-18 had either not previously received a hardship waiver or their temporary or ‘transitional’ exemptions had lapsed.
Refiners insisted that the ruling be appealed. In late February, thirteen oil state Senators asked President Trump to appeal the 10th circuit decision suggesting that if the ruling stands it would put, ‘a dozen small refiners under severe financial strain and thousands of jobs at risk.’
On March 24th, the Trump administration decided not to appeal the 10th circuit ruling and indicated that they may apply the ruling nationwide. This was a big win for the renewable fuels industry despite continuing efforts by refiners to continue with their appeal. Still, Trump administration officials indicated that they would look for other ways to help blunt the financial impact of the decision.
In the midst of all of this the oil and ethanol industry were beginning to feel the oil price war between the Saudis and Russians. Add to that the impacts of the novel coronavirus and all parties were pleading for federal assistance and relief.
The ethanol industry insists that the 10th circuit ruling be applied to the 25 pending petitions before the EPA for 2019. The industry also points to a 2017 U.S. District court ruling that ordered the EPA to restore 500 million gallons of inappropriately waived 2016 blending requirements and a 2020 EPA rule whereby EPA must account for exempted volumes to make sure RFS requirements are met.
On May 1st farm and renewable fuel groups asked the EPA to oppose the American Petroleum Institute’s petition to request reconsideration of the 2020 final rule on the RFS. The API letter wants the final rule to eliminate any measure to ‘reallocate’ demand destruction related to the small refinery, hardship waivers. They pointed out that the EPA has yet to officially confirm that the 10th circuit decision would be applied nationwide.
In late May, renewable fuel advocates became alarmed when they learned that small refineries were petitioning the EPA for exemptions for previous compliance years for which they had not timely applied. Presumably, the goal is to retroactively request waivers and make them eligible for continued waivers in line with the 10th circuit ruling. Importantly, the EPA informed members of the Senate Environment and Public Works committee that they were sending the DOE those requests despite the fact that they were not appearing anywhere on the EPA’s RFS dashboard (that would normally list all waiver applications).
In a letter to the EPA, Renewable Fuels Association President Geoff Cooper wrote that requests SRE exemptions from prior years is “no more than a thinly veiled attempt to circumvent” the 10th circuit court decision. “This end-run strategy was explicitly acknowledged by Under Secretary Menezes who described the prior year exemption petitions as ‘gap fillings’ intended to establish, without regard to merit, a continuous string of exemptions ‘to be consistent with the 10th Circuit decision.’”
After weeks of delay, on June 18th the EPA finally posted 52 petitions for retroactive waivers on their dashboard. The waivers are for compliance years 2011 through 2018. The oil industry is split on whether the EPA should approve the waivers. A refiners industry organization insists that the EPA wrongly denied waivers in the past to justify retroactive relief. The American Petroleum Institute (API), on the other hand, will not support granting prior year waivers. Instead, the API suggests the requests are evidence of a broken RFS that should be repealed.
In a statement released by Growth Energy, CEO Emily Skor stated, “EPA’s dashboard confirms that the refiners hope to rewrite history, just to bypass the 10th Circuit Court and push more biofuels out of the marketplace.”
Adding more uncertainty by consideration of these ‘gap filling’ exemptions would add insult to injury. More than 70% of ethanol plants have either shut down or substantially reduced production due reduced demand for driving fuels. Offering up more waivers (or a string of prior year waivers) would make the situation much worse for the entire corn milling industry.
Sources: Farm Progress; Progressive Farmer; American Coalition for Ethanol, Reuters
GGC Board Approves Distribution of $0.13/Unit
/in NewsOn June 15th, the Golden Growers Board of Directors approved a $0.13/Unit distribution of $2,013,762 to members of record as of June 1, 2020.
A $0.13/Unit distribution is a penny lower than what the Golden Growers Board had been distributing more recently.
It has been the GGC Board’s goal to level out distributions through the current ProGold lease. They estimated capital expenses, the timing of payment for capital projects, and declining lease payments. Now that estimates have been replaced with updated financial information, it appears they may fall short of their projected reserve balance at the end of the lease period. Therefore, the GGC Board decided to make an adjustment in member distributions to avoid more significant adjustments in the future. Future distributions may be adjusted up or down as we receive more accurate financial information.
This distribution will retire a portion of remaining 2018 allocated income. With this distribution, the remaining equity credit balance of $6,158,568 or $0.40/bushel. This balance is useful in determining per Unit basis levels and does not constitute an outstanding obligation for GGC.
Golden Growers has issued payments to members totaling $193,918,145 or 211.7% of the original investment in the ProGold plant.