GOP, farm leaders enthused about RFS announcement, but Dems, market cautious

Source: By The Hagstrom Report • Posted: Tuesday, October 8, 2019

Republicans, including Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and farm leaders expressed enthusiasm Friday about the Trump administration’s announcement that it will ensure that more than 15 billion gallons of conventional ethanol will be blended into the nation’s fuel supply.

But Democrats said it was too little, too late, the market was cautious, and the oil industry denounced the decision.

In a joint news release, Environmental Protection Agency Administrator Andrew Wheeler and Agriculture Secretary Sonny Perdue said that President Donald Trump had successfully negotiated an agreement on the Renewable Fuel Standard.

Wheeler and Perdue said that under the agreement, “the following actions will be undertaken by EPA and USDA:”

▪ “In a forthcoming supplemental notice building off the recently proposed 2020 Renewable Volume Standards and the Biomass-Based Diesel Volume for 2021, EPA will propose and request public comment on expanding biofuel requirements beginning in 2020.

▪ “EPA will seek comment on actions to ensure that more than 15 billion gallons of conventional ethanol be blended into the nation’s fuel supply beginning in 2020, and that the volume obligation for biomass-based diesel is met. This will include accounting for relief expected to be provided for small refineries.

▪ “EPA intends to take final action on this front later this year. In the most recent compliance year, EPA granted 31 small refinery exemptions.

▪ “Building on the president’s earlier decision to allow year-round sales of E15, EPA will initiate a rulemaking process to streamline labeling and remove other barriers to the sale of E15.

▪ “EPA will continue to evaluate options for RIN market transparency and reform.

▪ “USDA will seek opportunities through the budget process to consider infrastructure projects to facilitate higher biofuel blends.

▪ “The administration will continue to work to address ethanol and biodiesel trade issues.”

AgriCensus, a London-based price reporting agency, noted that EPA said it will ensure “the volume obligation for biomass-based diesel is met,” but the online publication added, “While that meets a key demand from the biofuel sector, who have argued that the overuse of a small refiners’ exemption scheme has slashed billions of gallons of biofuel demand from the Renewable Fuel Standard, it stops well short of restoring the volumes that have been lost.”

AgriCensus also noted, “It was left to an EPA official to explain separately that the new mandates would be calculated from an average volume lost to waivers over the last three years.”

The EPA-USDA news release also included a series of statements from Republican elected officials.

Grassley, who has been a critic of the administration’s attempts to please both the oil industry and farmers, said, “President Trump listened to the concerns of farmers and biofuels producers and delivered on their behalf… The solution outlined by President Trump, Administrator Wheeler and Secretary Perdue is exactly how the RFS is meant to function according to the law as written by Congress.”

But House Agriculture Committee Chairman Collin Peterson, D-Minn., said in a news release, “Next week the president is expected to be in Minnesota and I look forward to hearing details about how his EPA will get back to the 15 billion gallons that are promised in law and address the 4 billion gallons lost in waivers that have already been granted. Until we have answers to those questions today’s announcement is just another IOU to struggling farmers and shuttered biofuel plants.”

Peterson noted he is a co-chair of the Congressional Biofuels Caucus, a bipartisan group which advocates for homegrown renewable fuel policies that boost farmer incomes and reduce dependence on foreign oil.

He is also the sponsor of the Renewable Fuel Standard Integrity Act of 2019, a bill which provides certainty to the biofuels industry by setting an annual deadline for small refinery exemption applications and bringing transparency to the process.

Rep. David Loebsack, D-Iowa, said in a release, “Let’s be clear. Our farmers and rural communities, who depend on a robust RFS, should never have been in this situation in the first place.”

“The administration’s abuse of the Small Refinery Exemption program has destroyed billions of gallons of biofuel demand and led to the closure or idling of nearly 30 ethanol and biodiesel plants,” Loebsack said.

“The law is clear, SREs were meant to help small, financially struggling refineries, not large refineries that are making billions in profits. The president and EPA have seen the damage done to our farmers and biofuel producers, and it is long overdue that the administration take steps to help offset the devastating impact of these exemptions, which have slashed demand for corn-based ethanol and soybean-based biodiesel.

“While this proposed deal would prospectively account for gallons anticipated to be lost to SREs and help clear regulatory hurdles for the adoption of E15, it fails to recover the 4 billion gallons already lost to SREs from the past three years. Additionally, it does nothing to increase transparency around the refiners who are receiving these waivers or the process by which EPA is determining which refineries qualify.

“I will be closely watching the implementation of this deal to ensure the administration follows through on its promise to our farmers and biofuel producers, and will continue fighting to uphold the integrity of the RFS. It is past time our farmers and biofuel producers have the certainty they need to help provide our nation with clean, renewable fuel.”

The American Soybean Association, the National Corn Growers Association, Growth Energy, the Renewable Fuels Association, the National Biodiesel Board, and Fuels America issued a joint statement.

“We thank President Trump for today’s announcement, which shows that the voices of farm families and biofuel producers are being heard in Washington,” the groups said.

“Efforts to restore hope for rural communities cannot come soon enough, and we will continue to work closely on that process with our elected champions and this White House until a plan is finalized and gallons start flowing again. The EPA must uphold the president’s commitment to restore demand, based on a three-year average of all the exempted gallons, beginning with the 2020 biofuel standards.”

Zippy Duvall, president of the Republican-leaning American Farm Bureau Federation said, “Farm Bureau is pleased the administration is returning integrity to the Renewable Fuel Standard while ensuring the policy will continue to provide economic opportunities in rural America.”

“Today’s actions put us on a path toward greater ethanol use in nearly all vehicles now on the road and recognize the loss in demand caused by small refinery waivers. Today’s proposal will also encourage increased biofuel infrastructure through the federal budget process.”

Roger Johnson, president of the Democratic-leaning National Farmers Union, said that his members are “relieved that the administration intends to expand the market for biofuels in the coming years,” but that he is concerned “it will not go far enough to compensate for all of the economic losses incurred by farmers and rural Americans.”

“Family farmers have been waiting many months for this announcement,” Johnson said. “In the meantime, they have continued to lose millions of dollars of hard-earned income, upwards of 30 biofuels plants have halted production, and hundreds of rural Americans have lost their jobs.

“The damage inflicted on rural communities by these waivers cannot be emphasized enough. While this plan will make important progress in making the biofuels industry whole, we worry that it may be too little, too late.

“We should have been taking several steps forward to expand the market for homegrown biofuels over the past several years, but instead we’ve taken many steps backwards. Though this plan will hopefully return the market back to where it was at the beginning of 2016, it won’t move us forward to where we would have been today, if it weren’t for the waivers.

“In order to bring biofuels to where they ought to be, NFU encourages this administration to not only reallocate the lost waivers, but to also substantially increase the amount of biofuels in our transportation sector and to find new opportunities for the use of higher level blends of ethanol like E30.”

American Petroleum Institute President and CEO Mike Sommers and American Fuel & Petrochemical Manufacturers President and CEO Chet Thompson issued a statement.

“We are deeply concerned about the administration’s decision to, once again, play politics with our fuel system by increasing an already onerous biofuel mandate, placing greater strain on the U.S. manufacturers he promised to protect and threatening higher costs for consumers,” they said.

“The misguided reallocation of volumes punishes companies working to comply with the RFS and is an empty attempt to force more E15 into the fuel supply — a fuel nearly 70% of vehicles on the road were not designed to use.

“This rushed policy announcement is equivalent to changing the rules in the middle of the game and is a loser for the American consumer. If this arbitrary policy was conceived to help farmers, it provides no immediate relief — instead it only further distorts the fuels market. It is by no means a win-win.

“We will vigorously challenge this new policy in the weeks to come and continue advocating for Congress to reform the RFS.”