Pruitt Takes a Bow in Iowa

EPA Chief Touts Optimism, RFS Rules and Different Regulatory Philosophy Under Trump

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Iowa farmer, livestock producer and American Coalition for Ethanol member Bill Couser (right), presents EPA Administrator Scott Pruitt with a plaque showing the stages of ethanol production during at an event near Nevada, Iowa, on Friday. (DTN photo by Chris Clayton)

NEVADA, Iowa (DTN) -- With a largely friendly crowd of central Iowa farmers and agribusiness types, EPA Administrator Scott Pruitt on Friday highlighted his agency's recent work on biofuels and Clean Water Act regulations while pointing to general overall American optimism under Donald Trump's presidency.

"I really think my fundamental job is to bless the president as he makes decisions, to help inform him in the decisions in the areas in which I lead. Help him make good, informed decisions, and he is," Pruitt said.

Pruitt pointed to higher consumer confidence, gross domestic product increases and the stock market as signs the country is more optimistic under Trump. "The optimism is palpable," Pruitt said. "As I spend time in various states, folks are genuinely excited about what is going on."

In a large farm shop with ethanol and biodiesel posters adorning the walls, Pruitt touted his two biofuels announcements in recent weeks. He noted EPA had struggled under the Obama administration to meet the Nov. 30 deadline for the Renewable Fuel Standard volume obligations, but EPA hit the deadline this year.

"I made a commitment during the confirmation process that Congress has told the EPA to get those volume obligations by Nov. 30, and we're going to do it," Pruitt said. "As we began the discussion internal to the agency, there wasn't much optimism."

Pruitt then said the RFS cap for corn-based ethanol is 15 billion gallons authorized under the statute. But Pruitt touted the ethanol export volumes happening now.

"We're exporting about 1 billion gallons of ethanol every year, at least, and I'm hearing that Mexico is looking at adopting a statute similar to what we have domestically that will encourage further exports of ethanol," Pruitt said. "I think that's exciting."

Pruitt also said the other announcement that didn't draw as much attention was the decision to deny several petitions to shift the point of obligation in the RFS from refiners to retails.

"That was something that, as we looked at that, we wanted to provide clarity in the market, and that was very important to do," Pruitt said to applause. "That, along with the volume obligations being done on time, will provide a lot of certainty."

The RFS decisions came after major concerns over the summer by the biofuels industry that the Trump administration would reverse course on biofuels at the behest of the oil industry. Instead, Pruitt was able to tell the Iowa crowd that one of his missions at EPA is to ensure regulatory certainty to industries and states.

"When an agency doesn't do its job under the statute, and it doesn't do it for years, you don't know how to allocate capital and you don't know how to make decisions," Pruitt said.

In a practice that has become standard for Pruitt, he met privately over lunch with some Republican Iowa officeholders and a small number of farmers and ranchers. Pruitt then held a brief public event that lasted under 30 minutes in which he responded to some questions from his host, Bill Couser. But the EPA administrator did not take any questions from the audience or meet with press afterward.

Several people in the audience wanted to ask Pruitt about the RFS decision on biodiesel volume, which has flatlined biodiesel blend obligations at 2.1 billion gallons. The biodiesel industry complained that is 500 million gallons below the industry's capacity.

Still, Couser did ask Pruitt about 15% ethanol blends and the Reid Vapor Pressure rule that prevents E15 from being used in large parts of the country in the summer. The ethanol industry has a long-standing petition with EPA to grant the same waiver for E15 that EPA granted decades ago for E10. Pruitt said EPA is continuing to look at the law.

"The RVP issue, it practically doesn't make any sense to sell fuel at certain times of the year and not be able sell it at other times of the year," Pruitt said. "What I shared with the people at lunch, is what we have to do is assess whether the statute allows us to grant the waiver nationally all throughout the year. We can do it regionally, and we have."

Pruitt noted Sen. Deb Fischer, R-Neb., has introduced legislation to allow E15 sales year-round.

Monte Shaw, executive director of the Iowa Renewable Fuels Association, said afterward that the ethanol industry "feels strongly" that EPA already has the authority to grant the waiver. He noted EPA would likely get sued over the decision from biofuel critics, "But they get sued for everything they do anyway, so why worry about that?" Shaw said.

But Shaw said the RVP is just an artificial market barrier. Allowing E15 sales year-round "would be a really, really meaningful action the administration could take to help drive commodity prices up and help create market competition," Shaw said. "They talk about the free market and letting products compete; well, let us compete."

Pruitt also emphasized the importance of working with the states on both air quality and water quality. He noted every state faces different circumstances, and EPA's role is to work with states on outcomes. "And that just simply has not happened for a number of years."

Looking at the controversial Clean Water Act rule defining waters of the U.S., Pruitt said the 2015 rule was so broad that dry creek beds, ephemeral streams and drainage ditches could be regulated. He talked about a conversation with an Army Corps of Engineers staffer who pointed to a drainage ditch and called it a waters of the U.S.

"That shows you how far we have come," Pruitt said. "There's no way Congress intended, in the early 1970s, to include those types of water bodies, if you want to call them that, as waters of the United States."

Withdrawing the 2015 WOTUS rule doesn't mean EPA is deregulating, Pruitt said. EPA will provide a substitute rule "that is consistent with the text" of the Clean Water Act. The new definition is going to come in 2018, he said.

"It's going to provide the clarity that you need and is going to be closely aligned with the intent of Congress, which, as Bill (Couser) indicated, tracks those navigability features that we know are important for interstate commerce and what traditional streams equal," Pruitt said.

Pruitt said the country needs to define "true environmentalism" because the country has a broad array of natural resources that some people want to lock away. "I don't buy that. I think we as a country have an obligation to feed the world and power the world," he said. "And to whom much is given, much is required. When you have natural resources like we do, you should use them to the benefit of who? Our neighbors, our country and the world, and do so with stewardship principles in mind."

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Chris Clayton