EPA holds RFS hearing in Michigan to discuss proposed 2019 renewable volume obligations.

Jacqui Fatka, Policy editor

July 18, 2018

6 Min Read
Biofuel supporters call for EPA course correction
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Amid Scott Pruitt's departure as administrator at the Environmental Protection Agency, biofuel interests are ramping up their calls for a course correction at the agency as it looks to set upcoming blending levels.

EPA held its annual hearing on ethanol targets in Ypsilanti, Mich., on Wednesday and heard testimony from many supporters of biofuels on the need for the new EPA leadership to proceed with following the intent of Congress as well as the President.

The EPA field hearing is part of the public comment process surrounding the recently released 2019 renewable volume obligation (RVO), which calls for 19.88 billion gal. of renewable fuels. Of that total, 4.88 billion gal. are advanced biofuels, including 381 million gal. of cellulosic biofuel. That leaves, on paper, a 15 billion gal. requirement for conventional renewable fuels like corn-based ethanol.

Renewable Fuels Assn. (RFA) vice president of government affairs Samantha Slater said EPA’s 2019 RVO rule is an opportunity to correct the extensive damage done to demand for ethanol and America’s farmers by Pruitt’s EPA.

“On the surface, the proposed rule raises the total 2019 RVO by 3% over the 2018 requirement and maintains a 15 billion gal. requirement for conventional biofuels like corn ethanol, but due to EPA’s failure to stem the tide of small refinery waivers, its refusal to reallocate lost blending volumes and its brazen repudiation of binding court decisions, the proposed rule is superficial and toothless," Slater testified, adding that it undermines President Donald Trump’s commitment to the Renewable Fuel Standard (RFS).

Related:EPA administrator Pruitt resigns

RFA noted that EPA recently approved 2.25 billion ethanol-equivalent gallons in “illegal waivers” to oil refiners, and the agency has provided no commitment that it will change its approach to granting these exemptions, Slater explained. "Thus, the proposal means nothing until EPA reallocates those lost gallons and sets forth a more transparent and rational process that assures small refinery waivers are not abused or granted unnecessarily," she testified.

Brooke Coleman, executive director of the Advanced Biofuels Business Council, agreed that the RVO targets proposed by EPA seem promising, but they are meaningless unless the agency reverses the demand destruction caused by handouts to refiners.

“Placing a check on that abuse and upholding the strong targets promised by President Trump will unfreeze investments in the advanced biofuels, like cellulosic ethanol made from agricultural residues and waste. These fuels are delivering new revenue streams to rural America and protecting the climate, but that leadership has been under threat due to regulatory uncertainty,” Coleman said.

Related:EPA proposes 3% bump in RFS blending mandate

In her testimony, Slater urged to EPA to adjust the 2019 RVO percentages to effectively reallocate projected small refiner exemptions, address the court-ordered remand and include a plan for restoring the 500 million gal. missing from the 2016 RVO. She also asked that EPA lay out a plan for reallocating the renewable fuel blending volumes lost to small refiner exemptions in the 2016, 2017 and 2018 compliance years.

During testimony before EPA, Iowa Renewable Fuels Assn. managing director Lucy Norton emphasized that the final RFS must reflect the law. “Today, our message is simple: 15 billion gal. must mean 15 billion gal.,” Norton said. “That is what the law says. Yet, the moment the ink dries on this rule in the Federal Register, retroactive and questionable small refinery exemptions, if not addressed, will slash the RFS categories to meaningless levels. The exemptions are a cancer that eats into each and every RFS category. Quite frankly, the rampant use of small refinery exemptions is a cancer that is eating into the credibility of the EPA.”

Biofuel leaders also urged the agency to act on the President’s pledge to lift outdated restrictions on the summertime sale of higher ethanol fuel blends, specifically E15, a fuel blend containing 15% ethanol. In its proposed rule, the agency declined to accept comments on the controversial waiver program or Reid vapor pressure restrictions on E15, but advocates are hopeful that the new EPA leader is ready to reopen an honest dialogue with rural America. Advocates also launched a web portal at FuelsAmerica.Org/Action-Center, where supporters are invited to make their voice heard during EPA’s public comment period, which closes on Aug. 17.

Biodiesel levels

The National Biodiesel Board (NBB) and its members asked EPA to set the 2020 biomass-based diesel volume at 2.8 billion gal. based on the agency’s own analysis in the proposed rule showing that such a volume is achievable next year.

NBB chief executive officer Donnell Rehagen testified, “To provide the certainty that the biodiesel industry needs, EPA should raise the 2020 volume for biomass-based diesel to at least 2.8 billion gal. That number better aligns with the goals that Congress set for the RFS program, and it will better fulfill the promise of the RFS program.”

Kent Engelbrecht, Archer Daniels Midland biodiesel trade manager and NBB board chairman, stated, “There are many positive elements in this proposal for which we applaud EPA, but these are rendered meaningless unless EPA accounts for waived gallons to make sure the RVOs are real numbers.”

EPA has estimated that the small refinery hardship exemptions it retroactively granted to refiners reduced the 2016 and 2017 RVOs by a combined 2.25 billion renewable identification numbers. NBB estimated that the 2016 and 2017 exemptions reduced demand for biodiesel by more than 300 million gal., and since every 100 million gal. of increased biodiesel production supports some 3,200 jobs, NBB estimated that the small refinery hardship exemptions puts 9,600 jobs in jeopardy.

Tom Brooks, general manager of Western Dubuque Biodiesel and chair of the Iowa Biodiesel Board, noted that the 300 million gal. loss of biodiesel demand happens to equal Iowa’s total 2017 production almost exactly. “The impact of these exemptions is like wiping out a year’s worth of production in the nation’s top biodiesel-producing state,” he said.

Restoring faith in EPA

Farm leaders and renewable energy innovators urged acting EPA Administrator Andrew Wheeler to quickly reverse the damage done under Pruitt's watch.

Norton said EPA went "rogue" for the second year in a row with a “demand-destroying proposal” at the 11th hour before the proposed RVO rule went public.

“The EPA going rogue makes a mockery of the interagency process and highlights how the EPA, under its former leadership, was out of step with the Trump Administration and President Trump himself,” she said. “Restore the integrity of the RFS and, by doing so, the trust of rural America in this agency and in this Administration.”

Growth Energy CEO Emily Skor suggested that “Wheeler should not pass up this opportunity to restore the bonds of trust between the EPA and supporters, farmers and biofuel producers across the heartland. By enforcing a strong RFS, he can immediately unleash a new wave of growth in rural America and drive investments in America’s clean energy leadership. With fuel prices spiking, there could not be a better time to drive competition from American-made biofuels.”

Kyle Gilley, senior vice president of external affairs and communications at POET, said EPA’s past mismanagement of the RFS has placed a needless strain on workers, farmers and rural families, who are already bearing the burden of rising trade barriers. “President Trump and U.S. Department of Agriculture Secretary Sonny Perdue have promised their full support to rural communities, and now Acting Administrator Wheeler must deliver on that promise by restoring real competition at the fuel pump,” Gilley said.

About the Author(s)

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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