EPA Backs off RFS Changes

OMAHA (DTN) -- In a single letter written to senators from the Midwest on Thursday, U.S. Environmental Protection Agency Administrator Scott Pruitt put to bed concerns in rural America that the agency would be making changes to the Renewable Fuel Standard that could be harmful to agriculture and biofuels.

The EPA will not be further reducing RFS volumes, has no plans to attach renewable identification numbers, or RINs, to exported biofuels gallons, is preparing within 30 days to reject a petition to change the point of obligation, and continues to explore its legal options to expanding year-round E15 sales.

Pruitt reiterated the administration's support for the RFS in a letter to the seven senators who met with the administrator earlier this week, including Republican Sens. Charles Grassley and Joni Ernst, Iowa; Republicans Ben Sasse and Deb Fischer, Nebraska; Pat Roberts, R-Kan.; and Republicans John Thune and Mike Rounds, South Dakota.

"I look forward to continuing to engage in constructive and meaningful dialogue on these and other RFS-related issues," Pruitt said in the letter.

"I reiterate my commitment to you and your constituents to act consistent with the text and spirit of the RFS. I take seriously my responsibility to do so in an open and transparent manner that advances the full potential of this program as envisioned by Congress, rural America and the president of the United States."

The EPA had announced in a notice a proposal to further reduce the renewable volume blend requirements for advanced biofuels, biomass-based diesel volumes for 2018 and 2019, and the total renewable fuel volumes in the RFS.

Pruitt said in the letter that the agency would not make further reductions and will announce the final volumes on time by Nov. 30.

"While the process for determining the final RVO rule is ongoing, it would not be appropriate for the agency to prejudge the outcome of the rulemaking process," he said.

"Nevertheless, preliminary analysis suggests that all of the final RVOs should be set at amounts that are equal to or greater than the proposed amounts, including at least 2.1 billion gallons for biomass-based diesel in 2018 and 2019."

On July 21, 2017, EPA issued a proposed rule that would require 19.24 billion gallons of biofuel to be blended into the nation's fuel supply. Of the 19.24 billion gallons, 15 billion gallons would be met through the blending of corn-based ethanol and the remaining 4.24 billion gallons would be met by blending a combination of advanced biofuels, at least 238 million gallons of cellulosic biofuel, and at least 2.1 billion gallons of biomass-based diesel.

EPA also had been reportedly considering a proposal from Valero Energy to leave renewable identification numbers, or RINs, attached to U.S. ethanol gallons produced in the U.S. and exported. Currently, the credits are removed from exported gallons. The biofuels industry was concerned that doing so would flood the market with RINs and harm domestic biofuel producers.

"Finally, the agency has been discussing a range of ideas intended to stabilize RFS compliance costs," Pruitt wrote in the letter.

"One of these ideas presented to EPA would involve amending our regulations to modify the treatment of Renewable Identification Numbers associated with ethanol exports. EPA has not taken any formal action to propose this idea, nor will EPA pursue regulations."

POINT OF OBLIGATION

One of the first RFS issues Pruitt faced after becoming administrator was an oil industry petition to change the point of obligation in the RFS from refiners and importers to blenders. Pruitt indicated in the letter the agency will reject the petition.

Back in February, it was reported that President Donald Trump was considering an executive order to change the point of obligation, at the behest of billionaire energy investor Carl Icahn, an adviser to the president and a vocal critic of the RFS. Icahn has since left that role and the president did no such thing, http://bit.ly/….

"After detailed analysis, numerous meetings with many stakeholders, and review of the over 18,000 comments received, the record demonstrates that granting that petition would not be appropriate. I have directed my staff to finalize this decision within 30 days," Pruitt said.

In addition, Pruitt told the senators the agency continues to explore whether a waiver can be granted to allow E15 sales year-round.

"Key members of Congress have advocated for a nationwide Reid Vapor Pressure waiver for E15, and other midlevel ethanol blends, so that E15 may be sold throughout the entire year without disruption," Pruitt said.

"Since becoming administrator, I have directed EPA to actively explore whether it possesses the legal authority to issue such a waiver. The agency would welcome the opportunity to work with Congress on this important issue, including issuing definitive analysis on the agency's authority to issue a nationwide RVP waiver for E15."

Ernst said in a statement Thursday night that Pruitt's comments were important.

"These assurances are a clear win for Iowans," she said. "Echoing the president's commitment to advancing the full potential of the RFS to benefit rural America is welcome at a time when our family farms are struggling with commodity prices that are below the cost of production."

Renewable Fuels Association President and CEO Bob Dinneen said the decision opens the door for growing the biofuels industry.

"The U.S. ethanol industry is grateful for Administrator Pruitt's epiphany on the road to the RFS," he said in a statement.

"We look forward to working with EPA to preserve and grow the RFS, encourage innovation in the production and marketing of biofuels, and secure common sense reform in the regulations that have kept higher octane ethanol fuels from being sold year round. As for the members of Congress, governors, and others who advocated so strongly for farmers and consumers, we thank you profusely."

Read the Pruitt letter here: http://bit.ly/….

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

Follow him on Twitter @toddneeleyDTN

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