Governors' Biofuels Coalition

The Trump administration has roiled allies in the oil sector after bending a knee to Corn Belt senators and backing off biodiesel reforms.

Facing mounting pressure on Capitol Hill from farm state Republicans, U.S. EPA Administrator Scott Pruitt last night vowed not to weaken the renewable fuel standard or change the so-called point of obligation (E&E Daily, Oct. 20).

In doing so, the administration bucked a request from politically savvy refiners that don’t have a large footprint in the biodiesel industry like Valero Energy Corp., as well as HollyFrontier Corp., Delta Air Lines’ Monroe Energy, New Jersey-based PBF Energy and more than a dozen other small companies.

While Pruitt in a letter to Republican senators stressed “the rule of law,” the refining sector cast the administration’s move as a questionable bow to political pressure from Midwestern lawmakers who “overreacted” to much-needed yet small reforms of the RFS.

“Their overreaction included everything from holds on confirmations to even more personal threats launched at the White House and EPA,” said one industry source who asked to remain anonymous.

“These Midwestern politicians are long on loud complaints but can never be found when it is time to roll up their sleeves and develop compromise solutions.”

High-ranking Republican senators from Iowa, Nebraska, Kansas and South Dakota this week have made a full-court press to head off any reductions under the RFS.

Sen. Chuck Grassley of Iowa at one point phoned President Trump and scored a meeting with Pruitt, who later made a personal, reassuring phone call to Iowa’s Republican governor on the matter.

EPA’s move to reassure biofuel boosters, who warned any reductions would devastate farmers and critical Trump voters, appeared to focus on ensuring the president kept his campaign trail promise to safeguard the RFS.

But critics today warned the move, which took groups like the American Fuel & Petrochemical Manufacturers by surprise, could backfire.

“It is astonishing to see a letter from Administrator Pruitt that was written before the [notice of data availability] comment period closed that appears to make concessions and final determinations to appease a few senators at the expense of American families and workers,” AFPM President and CEO Chet Thompson said in a statement.

A top White House adviser to Trump, Mike Catanzaro, once lobbied for AFPM at K Street shop CGCN Group and was granted a waiver earlier this year to work on broad policy issues, including the renewable fuel standard (Greenwire, June 1).

Valero in a statement accused the senators of intervening in the regulatory process, calling it “bullying opposition” to maintain the status quo and protect “windfall profits associated with unregulated trading of renewable identification numbers” while putting manufacturing jobs at risk.

One industry source who asked to remain anonymous said the administration’s step away from reforms is especially troubling for refiners across the U.S. that don’t have large-scale biofuel blending facilities or sufficient renewable fuel credits.

Those companies must buy the credits, for which the price is skyrocketing, forcing layoffs at one Philadelphia-based company (Greenwire, Oct. 5).

Pointing to Iowa Republican Sen. Joni Ernst’s threat of holding up a Trump EPA nominee and Grassley’s ability to hold up judicial picks as chairman of the Senate Judiciary Committee, the source said, “That’s as much a case of blackmail as you’re going to get.”

The source also questioned whether Pruitt had violated the Administrative Procedure Act by predetermining the outcome of a rule in his late-night letter. EPA has not responded to a request for comment.

Pruitt in the letter vowed EPA would meet its statutory deadline of issuing a final renewable volume obligation by Nov. 30, and said it would not be “appropriate” for the agency to prejudge the outcome of an ongoing rulemaking process.

“Nevertheless,” Pruitt wrote, “preliminary analysis suggests that all of the final RVOs should be set at amounts that are equal to or greater than the proposed amounts, including at least 2.1 billion gallons for biomass-based diesel in 2018 and 2019.”

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