OMAHA (DTN) -- In the latest episode of the continuing Renewable Fuel Standard soap opera, another White House meeting reportedly is scheduled for Monday regarding potential changes to the law.
Brian Jennings, CEO of the American Coalition for Ethanol, told DTN on Friday that a meeting has been scheduled, but it was unclear who would be in attendance or what would be on the agenda. The meeting would be the latest in a series of similar meetings dealing with the RFS. Other White House meetings on the RFS have been attended by various members of President Donald Trump's administration, members of Congress, and ethanol and oil industry representatives.
On Friday, the Iowa Renewable Fuels Association (IFRA) again sounded the alarm about the potential for RFS changes.
In particular, Sen. Ted Cruz, R-Texas, and other oil interests have pressed for a 10-cent cap on the price of renewable identification numbers, or RINs, as a way to control RFS compliance costs for refiners. Ethanol interests in turn have pushed for year-round sales of E15 if the agency decides to cap RIN prices. Studies have shown capping RINs likely would harm demand for biofuels.
In a letter to Iowa Republican Sens. Charles Grassley and Joni Ernst on Friday, 18 IRFA members pressed the senators to stand up to any proposed changes to the law that may come from the Monday meeting.
In particular, the IRFA expressed concern about U.S. Environmental Protection Agency Administrator Scott Pruitt's approach to the RFS.
"In light of this meeting, first, we urge you to reach out directly to President Trump to make clear that any administration action to waive or cap RINs will be viewed as nothing less than a declaration of war on rural America and a complete abdication of his repeated promises to protect the RFS," the letter said.
"It would undoubtedly lead to a legal challenge and unnecessary hardship for those who invested to make the RFS a success in both the biofuels and petroleum industries. While recent EPA actions have already caused RIN prices to fall by two-thirds, providing obligated parties with a multi-billion-dollar windfall, nothing has been done to boost biofuel sales -- like allowing year-round E15 sales. Additional demand destruction is completely unwarranted."
The IRFA said Pruitt has indicated the agency has authority to expand E15 availability.
Grassley said in a statement to DTN on Friday that the "win-win" solution to assuage both sides would be to allow year-round E15 sales.
"Low commodity prices are squeezing farmers' bottom lines," he said. "An escalating trade dispute with China and the threat of NAFTA withdrawal spell trouble for U.S. agriculture. EPA is chipping away at the Renewable Fuel Standard by issuing secret 'hardship' waivers to oil refining corporations making billions of dollars in profits. A waiver or cap on RIN prices would fundamentally undermine the Renewable Fuel Standard and deal a massive blow to rural America. The good news is, President Trump has the opportunity to achieve a 'win-win' victory for refiners and biofuels workers by directing EPA to allow year-round E15, which would both lower RIN prices and help struggling farmers."
Following a March 1 meeting at the White House, a source with knowledge of the meeting told DTN that Trump acknowledged that allowing E15 sales year-round would help reduce the price of RINs.
"Despite this pledge, Pruitt has not done his job, even though the EPA has obviously concluded it has the authority to fix E15," the group said. "Pruitt has urged the president to support a bad deal whereby the Cruz RIN waiver scheme would be approved in return for the E15 fix. One would assume that Pruitt would not urge the president to support such a deal if the EPA could not follow through on E15."
The scheduled meeting follows what was a difficult week for ethanol interests.
The EPA is under fire for granting nearly 40 RFS waivers to so-called small refiners since 2016, including about 25 in 2017 alone.
This week, the nation's fifth-largest refiner, Andeavor, received an RFS obligation exemption for three of its smaller refineries, according to Reuters. The RFS exemption was meant to apply to small refineries producing less than 75,000 barrels a day that demonstrate economic hardship. Andeavor posted $1.5 billion in profits last year, Reuters reported.
When asked by DTN this week about the nature of the waivers being granted, an EPA spokesperson said on Wednesday, "This type of waiver contains confidential business information, and the agency has no comment at this time."
On March 22, EPA emailed DTN, stating that the agency was granting exemptions to refiners for 2016 RFS obligations. "To date, we have granted an annual exemption for 14 small refineries for calendar year 2016, and we are still evaluating 2017 petitions. We have not received 2018 petitions," the EPA spokesman stated.
On Wednesday, an EPA source who asked not to be named said the agency has granted about 25 hardship waivers from 2017 RFS obligations.
In addition, a federal court approved a settlement to relieve Philadelphia Energy Solutions (PES) from most of its RFS obligations that it says led to financial difficulties.
PES is allowed to retire 138 million RINs for its pre-effective date obligation of more than 500 RINs. In addition, PES reportedly sold roughly 40 million RINs in the fall of 2017, even as the March 2018 Renewable Volume Obligations (RVO) compliance deadline approached.
On Friday morning, the National Corn Growers Association began applying pressure to Pruitt on social media for the recent uptick in waivers.
"@EPAScottPruitt - When will you stop being in Big Oil's back pocket? Do what's right for the environment, consumers and American farmers. #RFSWorks," NCGA tweeted.
Todd Neeley can be reached at firstname.lastname@example.org
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