Washington Insider: Ethanol and Methane Fight

Source: By DTN's Washington Insider • Posted: Friday, May 5, 2017

Bloomberg is reporting this week that an Interior Department rule requiring energy companies to curb emissions of methane from wells and pipelines on public land is a problem for them and they want it overturned.

Now, although Senate Republican leaders say they are close to getting the 51 votes they need to overturn that regulation under expedited repeal procedures under the Congressional Review Act, time is running out and the deadline is only about a week away—and the campaign is on the verge of capsizing.

Four Midwest Republicans, including Senators Chuck Grassley, R-Iowa, and John Thune, R-S.D., told Senate leaders the price for their votes for the methane measure is a change in ethanol policy that allows higher blends of ethanol. That proposal was pushed for inclusion in the $1.1 trillion omnibus spending bill set to advance this week, but ended up being eliminated, Bloomberg says.

Ethanol advocates are still pushing for EPA or Congress to waive rules that restrict gasoline blends containing more than 10% ethanol from sales in summer months. Such a waiver already applies to gasoline containing 10% ethanol, but not higher ethanol blends — effectively barring the sale of 15% ethanol from June 1 until September 15 in some areas when smog is a problem.

The issue is a high priority for biofuel producers such as POET LLC and industry trade groups, including the Renewable Fuels Association and the Growth Energy coalition of supporters. Advocates of the change have asked EPA Administrator Scott Pruitt to unilaterally issue a waiver and advanced legislation to make the shift. Including it in the must-pass government spending bill would ensure it makes it through Congress and is signed into law.

Still, the regulatory repeal of the methane regulation may not be dead yet in spite of its exclusion from the FY 2017 omnibus spending bill. Ethanol supporters are now asking Republican leaders for a commitment to put the ethanol provision on a must-pass bill later, Bloomberg says, although it is not clear Republican leaders will accept this offer because some oil companies oppose the change because it could translate to greater demand for ethanol, a competitor.

“Refiners are unlikely willing to trade the waiver for repealing the methane regulation” said Stephen Brown, vice president and counsel at refiner Tesoro Corp. “This last-minute attempt at hostage-taking by a collection of corn-state senators is an unfortunate gambit that jeopardizes months of work by Senate Republican leadership to change the methane rule.”

Republican leaders had been working for weeks to gather the votes for a separate resolution voiding the methane rule using the Congressional Review Act. The deadline for using the act to repeal rules issued under Obama is projected to be May 11. Senator John Barrasso, a Republican from Wyoming who sponsored the measure, vowed to pass it next week, telling Bloomberg that the underlying methane regulation is “unnecessary” and “expensive.”

Although the House easily passed the methane rule repeal in February, Senate Republican leaders have struggled to piece together a 51-vote majority for the measure, amid expected opposition votes from Republicans Susan Collins of Maine and Lindsey Graham of South Carolina. Two potential Democratic supporters — Heidi Heitkamp of North Dakota and Joe Manchin of West Virginia — also are undecided, according to their representatives.

Senator Cory Gardner, R-Colo., told Bloomberg that his vote remains in play as he hears from environmental supporters of the methane limits and industry supporters of rolling them back. He is reluctant to do anything that might jeopardize Colorado’s own methane limits, he said.

Senator Rob Portman, R-Ohio, has also been skeptical of the effort. “I’m still working with the Department of Interior, and we are going to come up with a solution that helps reduce methane flaring and venting,” Portman said in an interview. “I want to be sure there is the ability to put together something reasonable.”

The Interior Department methane rule, which applies only on public land, aims to discourage the practice of venting and flaring natural gas at oil wells. The regulation blocks companies from venting gas except in emergencies, phases down the amount of flaring that is allowed, and forces the businesses to detect and repair gas leaks.

So, we will see how this fight works out. The issue is important to environmental groups who are working hard to maintain their visibility and it is seen as important to long-time ethanol advocates like Senator Grassley who has seen opposition to renewable fuel mandates grow both within and outside agriculture. Thus, it is a fight producers should watch closely as it develops, Washington Insider says.