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Biofuel groups testify at EPA hearing on year-round E15

Concerns expressed about RIN proposal and EPA’s continued abuse of small refinery exemption.

At an Environmental Protection Agency hearing March 28 in Ypsilanti, Mich., ethanol groups offered their support for the E15 year-round proposal and urged quick action by the agency. Farmers, retailers and ethanol producers voiced support of this proposal, pressing EPA to finalize the rule before the June 1 deadline. However, many expressed concerns about the continued abuse of small refinery exemptions and the renewable identification number (RIN) reform proposal from EPA.

In remarks to EPA officials, Renewable Fuels Assn. (RFA) president and chief executive officer Geoff Cooper said, “We strongly support EPA’s proposal allowing E15 to take advantage of the 1 psi Reid vapor pressure (RVP) waiver that currently applies to E10 during the summer months. … Extending the 1 psi RVP waiver to E15 during the summer volatility control season will open the marketplace to a fuel that provides consumers higher-octane, lower-cost and reduced tailpipe emissions. We firmly endorse EPA’s proposal to interpret section 211(h)(4) of the Clean Air Act as being applicable to ethanol blends containing at least 10% ethanol, including E15, and we believe EPA’s justification for this interpretation is well supported by the statutory text and congressional intent.”

In addition, Cooper testified on the RIN reform portion of the proposal, saying, “RFA generally opposes any changes that would reduce RFS [Renewable Fuel Standard] compliance flexibility, diminish liquidity in the RIN market, give certain parties in the marketplace unfairly advantaged positions, add unnecessary complexity, increase administrative burdens or impugn the RIN market’s ability to incentivize expansion of renewable fuel consumption. RFA does not believe any of the four main options proposed represent an improvement or enhancement of the current RIN program.”

Iowa Renewable Fuels Assn. (IRFA) executive director Monte Shaw agreed with the concerns over the RIN proposal, noting IRFA’s objection to a provision in the rule that would jeopardize retailers’ financial incentive to offer biofuels by putting a time limit on how long they could hold onto RINs -- the credits obligated parties must turn in to EPA to prove compliance with the RFS. Obligated parties can receive RINs by blending biofuels or purchasing them from those who do blend biofuels, like retailers.

“This proposal puts a gun to the head of Iowa’s retailers, forcing them to sell 100% of their RINs each quarter while allowing refiners to only retire 80% of their obligation each quarter, with additional flexibility to push off that compliance into future quarters,” he said. “The obvious result ... is that RINs will become essentially worthless as obligated parties calmly wait for the clock to tick down on retailers. This proposal creates a market barrier to the expansion of E15 as big or bigger than the RVP regulatory barrier that EPA proposes to remove.”

IRFA also opposes a provision that would make it illegal for ethanol plants to create E85 by blending ethanol with natural gasoline because of concerns that the final product would not meet EPA fuel specifications.

“Refiners can use natural gasoline to create a BOB [blendstock for oxygenate blending] that is eventually blended into E15,” Shaw said. “There is a regulatory program appropriate to large refiners to ensure the final blend meets specs. Ethanol plants should also be allowed to use natural gasoline to create E85 that is eventually blended into E15. A regulatory program can be instituted appropriate for blender pumps that will ensure the final E15 blend meets all specs.”

Shaw called on EPA to issue a supplemental notice requesting public comments specifically on this issue. 

“We feel strongly that these provisions are a change in policy and regulation,” he said. “We think the Administrative Procedures Act does apply and public comments should be taken.”

Growth Energy CEO Emily Skor said allowing E15 sales year-round would be the shot in the arm rural America needs.

“Eliminating this barrier promises to unlock an estimated 1.3 billion gal. of new annual ethanol demand. Over time, that added demand could grow to 7 billion gal., lending an economic lifeline to rural families. ... Across the heartland, more than 200 biofuels plants support their communities, and these plants are under incredible strain. Many have already shut their doors or idled production in recent months. The recent flooding across the Midwest has only exacerbated these tough times, not to mention the 2.6 billion gal. lost to small refinery exemptions."

Iowa Gov. Kim Reynolds spent a significant amount of her testimony calling attention to the questionable actions by EPA in approving small refinery exemptions.

“Moreover, we have seen alarming press reports that lawsuits challenging these exemptions have unearthed facts that the [U.S. Department of Energy’s] analysis and recommendations to deny at least half of the exemption requests were ignored by the EPA,” Reynolds said. “In fact, to date, not a single small refinery exemption has been denied during the entire Trump Administration. As refiners enjoy record profits, Iowa farmers are hurting, ethanol plants have been shuttered, U.S. ethanol use has declined. … I realize that most of these exemptions were granted under the previous EPA administrator, so I ask Administrator [Andrew] Wheeler to chart a new course.”

Brooke Coleman, executive director of the Advanced Biofuels Business Council, said the industry cannot afford another deluge of small refinery exemptions again this year. “As noted in the rule, waivers further balloon our RIN carryover stock and depress RIN prices, and the retroactive nature of these waivers adds insult to injury, as it puts innovators on their heels against tremendous regulatory uncertainty.”

TAGS: Policy
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