Texas Gov. Abbott Claims RFS Mandate Hurts State

Source: By Todd Neeley, DTN/Progressive Farmer • Posted: Wednesday, December 6, 2017

Texas Gov. Greg Abbott has asked the U.S. Environmental Protection Agency to waive the Renewable Fuel Standard for his state. (DTN file photo)

Texas Gov. Greg Abbott has asked the U.S. Environmental Protection Agency to waive the Renewable Fuel Standard for his state. (DTN file photo)

OMAHA (DTN) — Texas Gov. Greg Abbott has become the second governor to ask the U.S. Environmental Protection Agency for a waiver from the Renewable Fuel Standard. Abbott asked EPA Administrator Scott Pruitt on Friday to cap the amount of ethanol in the Texas gasoline pool at 9.7%.

In November, Pennsylvania Gov. Tom Wolfe asked for a similar waiver. Both governors claimed in letters to Pruitt that refiners and the economy in general are being hurt by costs to comply with the RFS. The agency can grant waivers to the law if petitioners prove it causes severe economic harm.

“Current implementation of this dated federal mandate severely impacts Texas’ otherwise strong economy and jeopardizes the employment of hundreds of thousands of Texans,” Abbott said in a letter to Pruitt. “It should come as no surprise that RFS is of major importance to Texans and Texas industry.”

Texas has 29 refineries that produce more than 5.1 million barrels of oil daily, or about one-third of the capacity in the United States. The state leads the country in crude oil production and refining. The state’s oil and gas sector employs 315,000 people, generating state tax revenue.

“This revenue goes toward funding Texas schools, Medicaid and children’s health insurance programs, child protective services, infrastructure and first responders such as police and firefighters,” Abbott said in the letter. “Texas has the largest concentration of jobs in the refining industry worldwide, so it goes without saying that the economy of the oil and gas sector is absolutely critical to the economy of the Lone Star State.”

In particular, Abbott argues, refiners are being hurt by the costs to comply with the RFS through the volatile prices of renewable identification numbers, or RINs.

“The escalating and unjustified RIN prices are creating a severe economic hardship for refiners, small retailers, consumers, skilled labor and others,” he wrote. “In recent years, RIN, which are mere pieces of paper created to demonstrate compliance with RFS, have escalated in price to over $1.40 per gallon of ethanol equivalent and are traded on a dark market subject to manipulation and even fraud. RIN were originally assumed to be a no-cost or low-cost measurement of compliance, yet now industry finds itself spending billions of dollars on these credits annually.

“These dollars are not taxes, but massive wealth transfers from the petroleum refining sector to blenders and traders. Texas companies directly suffer from spike RIN prices.”


In an interview with DTN in 2016, Scott Irwin, Laurence J. Norton chair of agricultural marketing for University of Illinois at Urbana-Champaign, said that although the oil industry laments RIN prices as hurting their bottom line, the reality is those companies typically pass along the higher costs to consumers.