Pruitt promises to protect RFS in face of mounting pressure

Source: Hannah Northey, E&E News reporter • Posted: Friday, October 20, 2017

U.S. EPA Administrator Scott Pruitt last night delivered a string of reassurances to farm state senators that the agency would maintain national biofuel standards — a declaration that came amid a backdrop of press reports of White House interventions and a possible bluff.

Pruitt reassured seven Republican members from Iowa, Nebraska, Kansas and South Dakota that he would not grant petitions seeking to move the “point of obligation” from refiners and importers to blenders. He said he also directed EPA staff “to finalize the decision within 30 days.”

Citing “preliminary analysis,” Pruitt said all the final obligations for the amount of biodiesel to be blended with the nation’s fuel would be “equal to or greater than” amounts the agency proposed this summer.

That decision appears to partially deliver a win for biodiesel boosters but will likely draw criticism for not increasing mandates for biomass-based biodiesel and advanced biofuels.

Pruitt pledged to work with key members of Congress who approached the agency about analyzing the agency’s authority to issue a wavier so fuel with more than 10 percent ethanol could be sold year-round.

He also delivered the industry reassurances that EPA will not “pursue regulations” to modify the treatment of renewable fuel credits, also known as renewable identification numbers, or RINs, for ethanol exports, a move the biodiesel industry cast as a devastating blow to farmers.

The letter, sent to a number of key senators on the Senate Environmental and Public Works Committee, reflects the administration’s intent to ensure President Trump follows through on a campaign trail promise to protect the renewable fuel standard.

It also paves the path for the EPW Committee to move forward on key EPA nominations.

The letter, notably, was sent to Republican Sens. Chuck Grassley and Joni Ernst of Iowa, Pat Roberts of Kansas, Deb Fischer and Ben Sasse of Nebraska, and Mike Rounds and John Thune of South Dakota.

Ernst is a critical vote on the Senate EPW Committee for the nomination of Bill Wehrum to head U.S. EPA’s air office. The vote on his and other nominations was delayed earlier this week over Ernst’s concerns with the fate of the RFS (E&E Daily, Oct. 19).

‘Tactical ploy’

The administration has faced mounting pressure to preserve or boost national biodiesel mandates this past week. Yesterday, almost two dozen House members from the so-called Congressional Biofuels Caucus chimed in to join the chorus of lawmakers opposing any reduction in mandated fuel volumes.

The caucus in a letter to Pruitt made a list of demands and warned against weakening the RFS.

Earlier this week the president and Pruitt reached out to Iowa’s Republican governor. Reports indicate Trump, who campaigns as an RFS defender, put pressure on EPA on the issue.

At the same time, James Lucier, managing director of Capital Alpha Partners LLC, and research associate Tristan Berne told clients in a note yesterday that EPA signaled possible cuts as a “tactical ploy rather than an indication of future policy” to put farm state advocates and biodiesel groups “on the back foot, forcing them to argue for why the mandate should not be cut.”

Lucier and Berne also stated that the administration’s “convoluted politics” could “allow EPA to depress the RIN market without doing serious damage to biofuels producers.”

The duo further notes that following EPA’s request for public comment, “biodiesel RIN prices lost almost 20% of their value. While those prices have recovered somewhat, the move may have provided temporary relief to savvy obligated parties.”

Contention over the RIN market is not new with the Trump administration given the controversial role of billionaire investor Carl Icahn and accusations that he lobbyied the White House for changes in the compliance structure of the RFS (E&E Daily, March 8).

Ultimately, Lucier and Berne suggested EPA would likely hold RFS levels steady, a plan that appears to be materializing.