Trump cabinet jockeys over ethanol plan

Source: By John Siciliano and Josh Siegel, Washington Examiner • Posted: Monday, March 4, 2019

TRUMP CABINET JOCKEYS OVER ETHANOL PLAN: President Trump’s big plan to appease farmers by boosting the amount of ethanol sold nationwide encountered turbulence this week, as members of his own Cabinet sparred over whether it would come out on time or stall midstream.

The jockeying started Wednesday, when Agriculture Secretary Sonny Perdue told the House Agriculture Committee that he doesn’t see the Environmental Protection Agency issuing the proposal by June 1, when it was promised.

The key piece of the plan is relaxing EPA regulations to allow for 15-percent ethanol fuels to be sold year-round and nationwide by Memorial Day, the beginning of the summer driving season. EPA chief Andrew Wheeler has been prodded daily by members of Congress, farmers and industry to meet the deadline. Sen. Ted Cruz, R-Texas, for instance, pressured Wheeler in February by asking him to answer a laundry list of questions about how the plan would help oil refiners.

EPA immediately came out with a statement after Perdue spoke that said it would be issuing the E15 regulations “expeditiously” in March, with the goal of having it enacted into law by the summer driving season.

But it didn’t stop there. Then-acting EPA administrator Wheeler journeyed to the Department of Agriculture to refute Perdue’s statement in person. He told a conference of the National Association of State Departments of Agriculture, meeting at USDA, to “ignore reports we’re going to miss the summer driving season.”

Later, Perdue tweeted a photo of the two shaking hands, saying he was pleased to hear Wheeler would move expeditiously to approve the E15 rule before the summer driving season.

Speculation over why Perdue ventured onto EPA’s turf: Some industry lobbyists believe Perdue was trying to build a fire under EPA to get the rule out by making the comments. They speculate that he had been under pressure by the ethanol industry to ensure the E15 plan comes through this year.

Although USDA is not the primary regulator when it comes to ethanol, it serves in an advisory capacity to EPA. EPA runs the nation’s only Renewable Fuel Standard, which requires refiners to blend an increasing amount of ethanol and other fuels into the gasoline and diesel supply.

Many pro-ethanol groups complained after Perdue’s statements that the president’s plan should have been done a year ago, and that it was part of the promise that Trump made to ethanol producers during his campaign.

Trump, in his last visit to Iowa ahead of the midterm elections, said he would be giving them what they wanted on E15 very soon.

But there could be legal hurdles for Trump’s plan: Industry consultants and congressional aides say the EPA faces major legal hurdles in implementing the plan that have slowed it down.

The specifics of the EPA regulations would call for the agency to waive the Reid vapor pressure fuel volatility regulations that currently ban E15 from being used after Memorial Day, restricting its sale during summer.

However, many argue that the Reid vapor rules must be changed by Congress, and not by regulatory fiat.

Other reasons for the delay: The ethanol industry argues that a separate component of Trump’s ethanol plan, meant to help the oil industry and refiners, is slowing the rulemaking process.

This separate part of the plan would enact reforms for the ethanol credit trading market to help reduce the cost for refiners, who must comply with EPA’s ethanol mandate by purchasing the credits.

Ethanol credits have experienced high volatility in the prevailing years, forcing refiners to pay hundreds of millions of dollars per year in order to comply with the federal Renewable Fuel Standard. The refinery industry has complained that it has forced some companies into bankruptcy.

Easier to just get rid of the EPA ethanol program altogether: “The Renewable Fuel Mandate is one of the worst programs ever created by Congress,” Tom Pyle, president of the free-market American Energy Alliance, and Trump’s former energy transition chief, told John.

“The Trump proposal doesn’t make this bad program any better,” he added. “Getting to E15 has long been sought by the corn lobby but has gotten nowhere because the EPA has historically insisted that they don’t have the authority to grant the [Reid vapor pressure] waiver” for it to be sold year-round.

He called the Trump plan “pure politics” and pandering to the corn lobby. Pyle predicts Trump’s plan “will surely be thrown out in the courts.”