Biofuel, Ag Sectors Keep Up Pressure on EPA Over SRE Reallocation Plan

Source: By Patrick Newkumet, OPIS • Posted: Monday, December 16, 2019

U.S. agricultural and biofuel groups were buoyed by progress in Congress this week on a new trade deal with Canada and Mexico, but continued to maintain pressure on EPA to issue a final 2020 Renewable Volume Obligation (RVO) that will include the small refinery waiver reallocation plan they believed was agreed upon in an early October meeting with the White House.

EPA has been under attack since it released a draft supplement RVO in mid-October that proposed a plan to redistribute among non-exempt obligated parties volumes lost through small refinery exemptions (SREs) that agriculture and biofuel officials critics said fall short of what’s needed to restore the renewable fuel industry’s health.

With EPA expected to release the final 2020 blending targets by Dec. 20, both sectors are amping up the pressure to persuade the agency to adopt the deal they believe they reached with the White House. Under the plan, EPA would redistribute waived volumes each year based on a three-year rolling average of prior SREs. The agency’s proposal would base the reallocated volumes on a three-year average of the SRE recommendations submitted to the agency by the U.S. Department of Energy, a formula the groups believe would restore roughly half of the volumes actually waived.

In a Wednesday call with reporters, the National Corn Growers Association (NCGA) welcomed the apparent agreement in Congress to approve the United States-Mexico-Canada Agreement (USMCA) trade deal, while reiterating pleas for the EPA to address what they believe is the destruction of biofuel demand caused by SREs.

NCGA Kevin Ross, flanked by representatives from numerous state corn associations, called the USMCA advancement the “best news we could receive going into the Christmas season.” While he noted that passage of USMCA will be a positive step forward due to Mexico’s status as the largest export market for U.S. corn, Ross said the lack of a trade deal with China continues to bring “uncertainty and anxiety to America’s farmers.”

Jim Grief, president of the Iowa Corn Growers Association, said he is concerned that EPA’s final rule will not be based on actual SRE volumes. “We are calling on President Trump to make it right. President Trump, please stick to the deal that was made Oct. 4 with biofuels leaders because farmers need access to reliable markets created by the RFS,” Grief said.

“It is well known that farmers are outraged the EPA did not implement the details that were presented and outlined by the president to uphold” the Renewable Fuel Standard (RFS).

On Thursday, biofuels coalition Fuels America sent out a grassroots petition for signatures on a letter to Trump detailing their dissatisfaction with EPA’s handling of the supplemental rule. The letter, which will be sent out Friday, criticizes the EPA while asking that the president wield his executive power to reinstate the prior agreement.

“It’s clear to us that only your direct intervention can stop the EPA from sabotaging this important rule, and we are counting on you to fully restore the markets that have been taken away from American farmers and biofuel producers,” Fuels America wrote in the letter signed “American farmers, biofuel workers and community advocates.”

Also on Wednesday, Iowa U.S. House Democratic Reps. Abby Finkenauer, Dave Loebsack and Cindy Axne wrote to administration officials saying the agency will fail to uphold the integrity of the RFS should the final rule not ensure 15 billion gal of conventional ethanol are blended annually.

The letter, addressed to EPA Administrator Andrew Wheeler and Office of Management and Budget (OMB) Director Russell Vought, echoes concerns shared by other Midwest lawmakers over the “explosion” of SREs issued in recent years.

The representatives said the 85 SREs issued since early 2018 have removed 4 billion gal of ethanol from the domestic fuel supply — causing three ethanol facilities to close, 14 to idle and affecting nearly 3,000 jobs.

“Similarly, 10 biodiesel facilities have closed, negatively affecting hundreds more American workers. Several of these facilities are in our home state of Iowa, and we strongly agree with our constituents that enough is enough,” the three said in their letter.

In addition, Sen. Chuck Grassley, R-Iowa, told reporters on Tuesday that he has been assured by the OMB that the final rule will reflect the blending levels agreed by the administration and biofuels industry representatives, according to a Reuters report.