RFS Wrangling Continues

GOP Senators Ask for Small-Refiner Waiver Suspension

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Since 2016 the U.S. Environmental Protection Agency has granted an estimated 40 Renewable Fuel Standard waivers to refiners. (DTN/The Progressive Farmer file photo)

OMAHA (DTN) -- Details have yet to emerge from a planned meeting at the White House on Monday between President Donald Trump and members of his cabinet regarding possible changes to the Renewable Fuel Standard.

The meeting reportedly was scheduled for 2:45 p.m. Eastern Daylight Time and was to involve Trump, U.S. Environmental Protection Agency Administrator Scott Pruitt and others, during which they were to discuss ideas for making changes to the RFS.

Sen. Ted Cruz and refining industry interests have suggested capping the price of renewable identification numbers, or RINs, at 10 or 20 cents, as a way to control RFS compliance costs for refiners. In exchange, ethanol industry interests have been pushing for EPA to approve year-round sales of E15.

In the meantime, prior to the cabinet meeting, five Republican U.S. senators asked Trump on Monday to suspend RFS small-refiner waivers.

The EPA is under fire for granting nearly 40 RFS waivers to so-called small refiners since 2016, including about 25 in 2017 alone.

The letter from Sens. Charles Grassley and Joni Ernst, Iowa; Deb Fischer, Neb.; John Thune, S.D.; and Roy Blunt, Mo., was also sent to Pruitt. In the letter, the lawmakers reminded Trump about his support for the ethanol industry.

"On March 15, 2018, we wrote you to relay our strong opposition to placing a waiver cap on renewable identification numbers and reiterate constructive solutions to lower the cost of RINs in a way that truly represents the cooperative deal you are seeking," the senators said in the letter.

"However, as we await the opportunity to meet with you to continue this dialogue, we must alert you to ongoing Environmental Protection Agency (EPA) action that is concurrently undermining your commitment of a 15-billion-gallon RFS," the senators said in the letter. "The EPA is using its small refiner economic 'hardship' waiver authority in an unprecedented manner to benefit some of the largest refiners in the nation, including Andeavor, which posted a profit of approximately $1.5 billion last year. The application of such waivers appears to be incongruent with the EPA's own definition, which states that 'the exemption may be granted only if EPA determines, based on supporting evidence provided in the petition, that compliance with RFS obligations will impose disproportionate economic hardship on the refinery in the year for which exemption is requested.'

The senators said the waivers "effectively reduced" the amount of corn-based ethanol required for blending from a statutory 15 billion gallons down to 13.8 billion gallons in 2016.

"If this trend continues, demand for corn could drop by hundreds of millions of bushels, with some modeling equating such displacement to slashing corn prices as much as 50 to 70 cents per bushel, which would mean a nearly $100 per acre loss for farmers," the senators wrote.

"Notwithstanding the underlying uncertainty regarding the RFS, already suppressed commodity prices, and China's threatened tariffs, the EPA's liberal use of hardship waivers is striking a severe blow to farmers and biofuel stakeholders in our states and across the Midwest. We therefore urge you to call on the EPA to cease all RFS waiver action until the agency's administration of the RFS can proceed in a more transparent and impartial manner. We are concerned that any continued action will further undermine the RFS and violate the good-faith discussions you have fostered toward a true win-win solution."

On Monday morning, the hashtag #RFSWorks was trending on Twitter, as ethanol interest groups, ethanol plant owners and operators, farmers and others were flooding Twitter with tweets urging Trump to stand by his commitment to the RFS.

Claremont, Minnesota-based A1-Corn Clean Fuel, an ethanol cooperative, tweeted: "In other @EPAScottPruitt related bad news, EPA grants 'hardship waivers' for companies that made $1.5B last year, while leaving farmers suffering from true economic hardship behind. RVP relief for E15 & higher blends is a real solution @realDonaldTrump #RFSworks"

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

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(AG)

Todd Neeley