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Governors' Biofuels Coalition
NEWS UPDATE October 17, 2019

Update, Friday’s Monthly Conference Call Cancelled

Colleagues,

Here’s a brief update to substitute for our cancelled monthly conference call tomorrow.

White House Releases Proposed Biofuel Plan

Last Friday, President Trump directed the EPA and the USDA to take steps to boost ethanol demand damaged by the small refinery waivers.  The President ordered EPA to follow the Renewable Fuel Standard that requires 15 billion gallons of corn-based ethanol be blended into the U.S. fuel supply each year, beginning in 2020.  

The President also directed EPA and USDA to address barriers to the use of E15 and to expand ethanol’s infrastructure. The EPA released its proposed supplemental rule yesterday.  The rule falls far short of what the White House had proposed and has been condemned by the ag community and ethanol producers.

EPA’s supplemental proposal to the Renewable Fuel Standard calls for a credit of no more 770 million gallons annually in expected small-refinery exemptions. That number falls short of the average annual gallons exempted from 2016 to 2018 of around 1.35 billion gallons.  Since 2016, EPA has approved small refinery exemptions totaling over 4.3 billion gallons, a loss that’s not addressed in the proposed rule.

Biofuels producers and farmers were briefed by the White House and EPA that the agency would account for exemptions by using a three-year rolling average of actual refinery exemptions granted. The EPA proposed rule does not do that.

A public hearing on the proposed rule is scheduled for October 30 in Ypsilanti, Michigan. Once the proposed rule is published in the Federal Register, the 30-day public comment period begins.  The final rule is due on November 30. 

We’ll wait and see how the White House responds to the public reaction to the plan before considering a response from Governor Walz and Governor Noem.

Governors’ Letter to President Trump

Earlier this month, Governor Walz and Governor Kristi Noem sent a letter to President Trump thanking him for working with agricultural leaders, biofuel producers, and oil refiners to address the damage done by the small refinery waivers.  The governors clearly asked that EPA account for the 4.3 billion gallons lost to small refinery waivers since 2016 and address the future small refinery exemptions.

The governors also recommended additional steps the Administration could take to grow the nation’s biofuels industry.  The governors also urged the President to use his “… executive authority to restore the nation’s agriculture and biofuels industries…” by taking the following administrative actions that we have repeatedly asked EPA to adopt:

  •  Direct EPA to enforce the Clean Air Act and reduce the aromatics in gasoline, opening new market opportunities for ethanol to replace toxics and give refiners more options to meet octane demand with high octane ethanol. Replacing hazardous aromatics in gasoline with biofuel will reduce carbon emissions and will provide incalculable health benefits, especially for those Americans living in urban areas.
  •  Direct EPA to extend the RVP waiver to higher ethanol blends, including E30.  Efforts to revitalize rural growth must include a waiver for all ethanol blends above E15, including E30. 
  •  Direct EPA to update its lifecycle carbon findings. EPA’s estimate of lifecycle carbon emissions associated with ethanol have not been updated for a decade, thereby permitting the use of obsolete data to distort the public’s perception of biofuels’ environmental benefits.
  •  Direct EPA to approve applications for the production of cellulosic ethanol from corn kernel fiber for D3 RIN credit. Applications seeking D3 RIN approval have been delayed in EPA’s regulatory process, resulting in millions of cellulosic biofuel gallons withheld from the marketplace because of regulatory delay.

The response to the letter was very positive.  The ag community and ethanol producers were especially reassured that the governors have more thoughtful, progressive and expansive policy ideas than those few emerging from Washington.

We had postponed much of our planned work because we were concerned that new ideas from the governors might jeopardized the White House’s biofuel plan.  Even though the proposed plan is out, it’s prudent that we wait until a final rule is published on November 30 before we return to our policy initiatives for 2019.

Vigilance

The petroleum industry’s influence at EPA is apparent in the needless RVP cap that EPA placed on higher ethanol blends in the final E15 rule. That language was missing in the proposed rule. The reason for this irrelevant provision was the petroleum industry’s fear that it could lose more market share to biofuels and wanted another road block to hamper biofuel growth.   

The rule also said that a blender pump dispensing anything other than E15 or E85 is dispensing a fuel that has not been approved, would be regulated as a fuel manufacturer and a refinery, requiring prior approval.  This would effectively make it impossible to use higher blends. 

The investments that states have made in blender pumps would be at risk as retailers might remove blender pumps and go back to conventional pumps.

Unfortunately, this is another issue we’ll need to address because the petroleum lobby will use this rule to challenge the use of higher ethanol blends. The Urban Air Initiative has already begun to address the rule’s provisions for which we will lend our support.

Of course, the most damaging sleight of hand was the petroleum industry’s insertion of generous small refinery exemption language in a budget bill the Congress approved two years ago.  The petroleum lobby then used that language to persuaded district court judges that the EPA had been too conservative in the use of small refinery waivers.  

We all know how that story ended.

Meeting with Kansas Governor Laura Kelly and Other Governors

I had a very good meeting with Governor Kelly and her staff this week in Topeka. Governor Kelly understands all the biofuel-related issues we discussed.  Her experience as a member of the state legislature will be very helpful.  

Governor Kelly will appoint a representative to the Coalition soon.  It’ll be a pleasure working with all our Kansas friends once again.

I’m scheduling meetings with the remaining newly elected governors beginning with Wisconsin Governor Tony Evers in the next week or two, followed by meetings with Illinois Governor J. B. Pritzker, Michigan Governor Gretchen Whitmer, and Ohio Governor Mike DeWine.  

Have a good weekend.

Larry

Note: News clips provided do not necessarily reflect the views of coalition or its member governors.