RFS Policy Change Negotiations Ongoing

Sen. Grassley: 'Very Much Involved' in Negotiations With White House

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Negotiations reportedly are ongoing between the White House, some lawmakers and others regarding the president's proposed biofuels policy change. (Courtesy photo)

OMAHA (DTN) -- President Donald Trump has touted an impending biofuels policy announcement in response to concern in the countryside about small-refinery exemptions, but such an announcement appears to be on hold for the moment after details of a plan were leaked to the media last week.

Trump issued the following tweet on Aug. 29: "The Farmers are going to be so happy when they see what we are doing for Ethanol, not even including the E-15, year around, which is already done. It will be a giant package, get ready! At the same time I was able to save the small refineries from certain closing. Great for all!"

A Renewable Fuel Standard deal, which the president was apparently referring to in his tweet, had not been reached as of Tuesday, and there may be additional meetings at the White House in the coming days, an industry source familiar with the situation told DTN.

When asked by reporters where the EPA stands on changes to the RFS, EPA Administrator Andrew Wheeler said Tuesday EPA "Has not made any decisions to change anything going forward on ethanol or RFS."

During his weekly press conference with agriculture journalists on Tuesday, Sen. Charles Grassley, R-Iowa, said negotiations are ongoing on a deal of some kind.

"The negotiations are still going on, and [Sen. Joni] Ernst [R-Iowa] and I are very much involved in pushing to get reallocation of every waived gallon," Grassley said.

Since 2016, the Trump EPA has granted 85 small-refinery exemptions totaling more than 4 billion ethanol-equivalent gallons. Those gallons have not been reallocated.

Trump reportedly had intended to announce a biofuels plan this week. But pushback from the biofuels industry in response to details of the proposal leaked to the media apparently prompted the administration to shelve the plan.

According to an ethanol industry source, Trump's proposal was to include adding gallons to the 2020 renewable volume obligation in the Renewable Fuel Standard to include 500 million gallons for conventional biofuels based on a court remand on 2016 volumes. The plan also called for adding 500 million gallons to the 2020 advanced biofuels category.

The industry has been calling on Trump to reallocate biofuel gallons exempted to larger refiners. However, the industry source told DTN there is no proposed reallocation offered in the original Trump proposal.

Instead, the proposal reportedly calls for projecting gallons lost to small-refinery exemptions in the future. However, this would not include reallocation of retroactive exemptions.

The proposal was to include other steps taken to increase sales of E15 and E85, although the details are sketchy at this point.

In addition, the proposal was to make changes to a proposed rule to reset the RFS volumes for 2021 and 2022. EPA reportedly is using an outdated greenhouse gas emissions analysis that would not be favorable to corn ethanol.

"I don't know where they are, and I thought it would be done now, but it's not done now and I compliment Sen. Ernst for working so hard on it," Grassley said.

"What I don't understand is there is a lot of other Republican senators. Just think where corn's grown in South Dakota, Montana, Indiana, Ohio -- it seems to always be Iowa on ethanol. I wish we would have all these other states involved as well. This shouldn't be something that Grassley and Ernst have to carry all the water for the corn growers."

Grassley said he has "read the law" in the past couple of weeks, and EPA is required to reallocate exempted gallons to other obligated parties to the RFS.

"All of these things point to something happened when [former EPA Administrator Scott] Pruitt got into the head of the EPA and big oil had a big arm running the EPA, and then they start granting all these waivers," Grassley said.

"In other words, just follow the law. The president ran on a platform of being for ethanol, and he ought to be for ethanol and he is for ethanol, but he's got people in EPA that are listening to big oil more than they're listening to what the law says."

During a hearing on a clean energy economy before the Small Business Committee in the U.S. House of Representatives on Tuesday, the general manager of a biodiesel plant in Iowa said the instability in federal biofuels policy has been difficult on rural communities.

Thomas R. Brooks, general manager of Western Dubuque Biodiesel LLC, said his Farley, Iowa, plant employs 24 workers and hires 28 contract truck drivers, with a combined payroll of $3.7 million.

"It's ironic that EPA has shown such concern for the economic hardships facing small petroleum refineries," he said. "The small-refinery exemptions the agency is granting to every refiner that asks are simply shifting the hardship to even smaller biodiesel producers -- small businesses like mine."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

(BAS/AG)

Todd Neeley