EPA chief Scott Pruitt touts Trump administration actions, updates ethanol dispute

Source: By Joseph Morton, Omaha World Herald • Posted: Tuesday, March 13, 2018

WASHINGTON — Environmental Protection Agency chief Scott Pruitt said Monday that he and President Donald Trump remain committed to robust federal ethanol mandates, but he also emphasized the need to address ongoing volatility in the marketplace.

“You don’t want that kind of uncertainty out there,” Pruitt said.

At issue is the Renewable Fuel Standard, which requires a certain amount of ethanol and biodiesel to be blended into the nation’s fuel supply each year, a requirement the EPA enforces through the use of certificates known as RINs, which refineries either earn or purchase.

Refineries have complained that they are getting hurt by RIN price spikes caused by Wall Street speculation and have pushed to cap those prices. The ethanol industry and Corn Belt lawmakers fiercely oppose such a move, saying it would undermine innovation and growth in the biofuels sector.

Pruitt said his agency would administer the Renewable Fuel Standard by following both the letter of the law and the spirit behind it, but he noted that the RIN system was originally created as an accounting mechanism to track compliance.

“It’s turned into something different than that over the years,” he said.

Pruitt’s comments came during a question-and-answer session with reporters in his Washington headquarters. He touted EPA actions during the Trump administration’s first year and particularly his travels to different parts of the country, including a stop in Nebraska during which he met with Republican Gov. Pete Ricketts and others.

Pruitt said the agency has made progress in providing regulatory certainty and ended the approach of making policy through court settlements that didn’t allow for the same kind of transparency as the traditional rule-making process.

He cited the EPA’s rollback of the so-called Waters of the U.S. rule, which many farmers worried would saddle them with excessive compliance costs. And he highlighted EPA efforts to work through the long list of Superfund sites across the country, including Omaha’s.

As for the RFS, he said that the administration has kept volume requirements of ethanol high but that the issues surrounding RIN prices are not easily addressed.

“The president has a commitment to RFS and the farming and ranching community across this country, but he doesn’t want refineries shut down either,” Pruitt said.

Ethanol supporters question how much effect RIN prices have on refiners and say allowing E15 to be sold year-round would help ease the situation.

Pruitt supports year-round sale of E15 but said it’s not a policy matter so much as a legal question. He said he’s directed his aides to explore what is permissible under the law.

“I told the folks in Iowa if the law allows me to do it I’ll sign it tomorrow,” Pruitt said. “Because I think it doesn’t make a lot of sense to only be able to sell nine months out of the year. You ought to be able to sell 12 months out of the year.”

Pruitt talked about other potential approaches to addressing RIN prices that would stop short of a cap, such as enhancing transparency in the marketplace.

There’s evidence some are “hoarding” RINs in ways that drive up their price, he said, and he cited proposals to limit those who can buy and sell the certificates.

Pruitt said he’s looking for some kind of solution that will work for both sides, but he repeatedly stressed the importance of tackling those price fluctuations.

“We have to get more stability in the valuation of RINs,” he said. “It has to occur.”

Renewable Fuels Association President and CEO Bob Dinneen later released a statement saying the group was “encouraged” by Pruitt’s comments about E15.

Dinneen said the EPA has the legal authority to allow year-round E15 sales, urged the agency to take action soon and agreed that RIN hoarding is distorting the market.

“We would be receptive to any proposals bringing more transparency and liquidity to the RIN market,” Dinneen said. “Fundamentally, we believe that any effort to address RIN costs should be through demand expansion.”