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Email Shows Perdue Pressing Trump for Biofuels Policy Changes

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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U.S. Secretary of Agriculture Sonny Perdue outlined a number of possible biofuels policy actions he'd like President Donald Trump's administration to take in response to a recent rash of small-refinery waivers. (DTN photo by Chris Clayton)

U.S. Secretary of Agriculture Sonny Perdue may have been taking a lot of heat from agriculture interests following the EPA's issuance of 31 additional small-refinery waivers for 2018.

But an email from Perdue to President Donald Trump obtained by DTN, shows Perdue went to bat for agriculture interests during a recent biofuels meeting with EPA Administrator Andrew Wheeler and other cabinet members this week.

Bloomberg News reported a number of possible changes may be coming to the administration's biofuels policy, after an outpouring of anger from ethanol and agriculture circles about the latest waivers.

There were no official announcements from EPA or the USDA as of late Friday afternoon.

In the email from Perdue to Trump on Tuesday following the Monday meeting, Perdue provided a list of possible actions to help what is a struggling biofuels industry. Both ethanol and biodiesel producers across the country have been cutting production and shuttering plants.

Perdue said in the email that four of five possible actions were "agreed upon" during a call following a meeting at the White House between Perdue, Wheeler, U.S. Energy Secretary Rick Perry and U.S. Ambassador to China Terry Branstad, the former governor of Iowa.

It includes a list of possible biofuels-policy changes including rescinding small-refinery waivers awarded to "big" companies. Perdue said in the email it could include rescinding seven or eight waivers.

Bloomberg reported on Friday that the administration has decided to leave the 31 waivers in place, in exchange for ramping up Renewable Fuel Standard volumes in 2021 to account for biofuels gallons not blended as a result of waivers.

Since 2016, EPA waivers have totaled 4.03 billion gallons of ethanol-equivalent gallons including several hundred million gallons of biodiesel.

According to the email, another action would be to reallocate waived gallons on a prospective basis beginning with the final 2020 volumes and in future years. Perdue made the case for EPA setting volumes higher based on projected gallons to be waived going forward.

In addition, Perdue's suggestions include EPA taking expedited steps to allow E10 pumps to be approved to dispense E15. Also, the secretary wants EPA to take actions to facilitate the expansion of flexible-fuel vehicles.

Also, the EPA sent to the White House Office of Management and Budget a proposed reset of the RFS. Perdue said in the email he wants EPA to work with USDA to fix "major problems" in the reset rule that is "negative toward biofuels."

Perdue told Trump he wants to explore with EPA and the DOE programs that would assist in infrastructure build-out to allow E15 to be sold at more stations across the country.

Perdue closed the email by telling Trump he had personal regrets about not calling the president when he learned that EPA was going forward with the latest round of small-refinery waivers.

"By taking decisive action now on the actions outlined above, I believe we can regain support among farmers and the biofuel industry," Perdue said in the email.

Refining interests have been working to prevent USDA's involvement with the RFS,…

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8/26/2019 | 10:55 AM CDT
As a member of the Board of Directors of a farmer owned petroleum refinery I have a different point of view. Our refinery blends as much ethanol as we possibly can. As a matter of simple economics. Ethanol is cheaper than gasoline. Any gasoline that we sell without blending is 84 octane c-bob and is unfit for engine fuel until it is blended with ethanol. E10 gasoline cannot be transported by River barge or underground pipeline due to its affinity for water. Therefore any gasoline, we sell that doesn't go through one of our truck loading racks cannot be blended with ethanol. The small refinery exemption, SRE, is part of the renewable fuels standard,RFS. In 2016. Compliance with the RFS cost our refinery 353 percent of our profit. A United States appellate court ruled that compliance with the RFS need not threaten the existence of a small refinery before and exemption was allowed. Furthermore, examination of the government's own information provided by the energy information Association,EIA shows the average ethanol content of gasoline in the United States the past two years to be 10.2 percent. 4.04 billion gallons of additional ethanol would have had to be consumed by E85 vehicles or exported. That 10 percent blend wall is real. Sales of E15 will help. We believe gasoline standards should be changed to promote regular gasoline with a 95 octane level. This will create additional demand for ethanol while helping maintain demand for liquid fuels as Café standards force auto manufacturers to look at electric vehicles. When the RFS was first adopted in 2005 and revised in 2007 overall fuel demand was expected to continue to rise. As Café standards pushed mileage standards higher and higher overall gasoline demand has plateaued. Honestly, how are you supposed to put more and more ethanol into the same gasoline with E10 as the limit?