Governors' Biofuels Coalition

President Trump came down on the side of farmers yesterday by scuttling a proposal to revamp parts of the renewable fuel standard, Sen. Chuck Grassley said today.

The Iowa Republican, the Senate’s leading advocate for ethanol mandates, told E&E News that Trump decided signing off on a deal to make exported ethanol eligible for renewable fuel credits would hurt farmers — a position in line with ethanol industry groups.

“The president wanted to know how it would help ethanol and was told it wouldn’t be a positive for ethanol,” Grassley said. “As far as we know, that’s the end of it.”

Grassley said he was told of Trump’s decision when an expected White House announcement on RFS changes didn’t materialize yesterday.

The RFS arrangement would have allowed year-round sales of fuel that’s 15 percent ethanol — a top industry priority — while allowing exported ethanol to count toward renewable fuel credits, also called renewable identification numbers, or RINs.

Petroleum industry groups say applying RINs to exports would lower their costs, giving relief to refiners that have been saddled with high RIN prices. Refiners that don’t blend ethanol buy the credits instead as a way to show compliance with the renewable fuel standard.

Trump referenced the scuttled idea at an unrelated bill signing today.

“Joni Ernst. Where’s Joni?” Trump said, referring to Iowa’s junior senator, according to a White House transcript. “I did you a good favor for the farmers yesterday. We love the farmers. I’m glad it worked out.”

A petroleum industry source told E&E News earlier that reports of the deal’s demise are exaggerated and that the industry believes it may resurface.

The administration has been trying to balance the complaints of petroleum refiners against Trump’s stated support for corn farmers, both during the 2016 election and since he took office. Also at play is EPA Administrator Scott Pruitt’s well-known support for oil interests, generally and in his home state of Oklahoma.

Industry sources say the administration’s deliberations boil down to Pruitt and Agriculture Secretary Sonny Perdue coming down on opposite sides of the RFS debate — and officials searching for middle ground.

Grassley, who has previously said he would call for Pruitt’s resignation if the administrator endorsed a policy that hurts ethanol producers, today accused him of misleading senators into thinking he’d support ethanol.

Pruitt gave that impression in meetings with Republican senators before he was confirmed, Grassley said.

“I know he’s had meetings with Democratic senators saying he’s pro-ethanol,” Grassley said. “But all the actions are contrary. He’s hoodwinked all of us who believed him.”

Grassley said he’s continuing to push for year-round sales of E15, which EPA restricts in the summer because of ozone-related air pollution regulations. And he called on the administration to stop granting RFS waivers to refiners that demonstrate that the requirements are a financial hardship; the agency has said it’s required to do so by law.

In practice, the waivers have reduced ethanol volumes to 13 billion gallons annually, instead of the 15 billion gallons mandated by the RFS.

Declining prices for RINs in recent months — possibly in response to the debate over the RFS — may take away some of the momentum for the issue. But low prices will prove temporary, a refining industry source said.

Stakeholders looking for a solution from Congress may be disappointed, the refining source added.

“The RFS is politically a ‘loser’ issue in that whoever touches it is more likely to suffer than be enhanced,” the source said. “From the perspective of GOP leadership in either chamber, it divides Republicans far more than it unites them, and that is the last thing they want to do five months out from the midterms.”

How the administration will proceed on E15 remains to be seen, although EPA has said it’s exploring formal rulemaking.

Congressional opponents of the RFS said today that EPA can’t expand E15 sales without legislation.

“Previously, EPA has publicly concluded that it does not have the statutory authority to issue such a waiver, and the reported decision to reverse this conclusion appears to be driven by political considerations, rather than scientific or legal analysis,” Sen. Tom Udall (D-N.M.) and Rep. Peter Welch (D-Vt.) said in a letter to Pruitt.

 

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