The Environmental Protection Agency ignored strong recommendations from within the Trump Administration to redistribute Renewable Fuel Standard (RFS) blending obligations lost to small refinery exemptions in the proposed rule for 2020 renewable volume obligations (RVOs), according to documents obtained by the Renewable Fuels Assn. (RFA).
The news comes just weeks after EPA announced an additional 31 waiver approvals. Meanwhile, the number of ethanol plants closing and idling continues to climb as the industry faces reduced domestic demand.
According to the documents, which detail the White House Office of Management & Budget’s interagency review of the 2020 RVO proposal, some reviewers raised serious concerns about EPA’s failure to redistribute exempted biofuel blending volumes to non-exempt parties. Reviewers recommended that EPA include prospective redistribution of waived volumes in the 2020 proposal and also suggested a method for addressing a court order to restore 500 million gal. of blending obligations inappropriately waived in 2016. In the end, EPA ignored these recommendations.
“The revelations in these documents will only exacerbate the outrage and anger in farm country over EPA’s abuse of the small refinery waiver provision,” RFA president and chief executive officer Geoff Cooper said. “The documents clearly show that EPA knowingly ignored strong recommendations from within the Administration to redistribute blending volumes that were exempted via small refinery waivers. EPA also disregarded recommendations to address a court order to restore 500 million gal. of lost blending obligations from 2016.”
Agriculture Secretary Sonny Perdue said he recognizes the negative impact the waivers have on rural communities. On Monday, while visiting a farm in Virginia and hosting a roundtable discussion, Perdue said a “good meeting” was held in the Oval Office on Thursday to discuss how to manage the lost demand. He said Cabinet-level talks are “making progress” in recovering some of the lost demand from the small refinery waivers.
He mentioned that one option could be allowing for E15 fuel in E10 pumps. Consumers likely would choose the E15 variety because it offers a discount of 3-5 cents/gal. and could help substantially increase domestic ethanol demand as well as create up to 2 billion bu. more corn demand.
Continued disregard from EPA
According to comments from one of the interagency reviewers, EPA "put a zero (0) in for projected volume of gasoline for exempt small refineries and projected volume of diesel for exempt small refineries, ensuring your projected totals are not met and all actual outcomes or resulting biofuel requirements are biased to one side, lower. ... We recommend conducting an analysis based on expected conditions at small refineries and the historic issuance of exemptions. This would provide a more accurate estimate of volumes of gasoline and diesel for exempt small refineries.”
Reviewers suggested that EPA include a projection of exempted gasoline and diesel of 12.5 billion gal. in the RVO formula, which would effectively ensure that lost blending volumes are redistributed to non-exempt parties. The suggested projection of 2020 exempted volume is very close to the actual average exempted volume of 12.8 billion gal. of gasoline and diesel fuel during the 2016-18 period.
To ensure that the statutory purpose of the RFS is honored and exempted volumes were reallocated, reviewers recommended that RVO "percentages should be adjusted to incorporate projected gasoline and diesel exempted through small refinery waivers to ensure consistency of your analysis throughout the document.”
In response, EPA essentially blew off the reviewers’ recommendations, RFA noted. The agency curtly responded: “The approach taken in this proposal is consistent with the approach first laid out in 2011 and followed since, and we have not proposed to revisit it. Whether to revisit this issue is a matter already under review at agency leadership levels, and we anticipate discussing it further while this action is under review.”
“The solution to the small refinery waiver problem was right in front of EPA’s face the whole time, yet they chose to snatch defeat from the jaws of victory,” Cooper said. “The only way to begin calming the anxiety and aggravation in rural America is for EPA to immediately announce that it will resolve these issues in the upcoming 2020 RVO final rule. EPA must adopt the prospective reallocation approach recommended during the interagency review process in the 2020 rule as well as include the 500 million gal. remand. Anything short of that will be viewed by farmers and biofuel producers as another sellout to the oil industry and another kick in the teeth to the hardworking families in the heartland.”
Reviewers also scolded EPA for proposing to ignore a D.C. Circuit Court order to restore 500 million gal. of blending requirements illegally waived by EPA in 2016 stated that EPA rejected the court's remand "because you conclude there is no ‘room’ to incorporate it, knowing that the stated RVO will not be achieved because of the issuance, and lack of incorporation of, small refinery waivers.”
EPA’s responded that “this issue and our response to the ... remand are the subject of ongoing discussions.”
White House action sought
In a letter to the White House Aug. 26, Growth Energy and its ethanol member companies told President Donald Trump that EPA’s actions threaten to undo the Administration’s lifting of regulations on year-round use of E15.
“Each time a plant idles production, farmers are notified that biofuel producers can no longer accept grain deliveries, and the impact has been devastating for communities already on the edge,” the letter said.
While oil companies enjoyed their most profitable year since 2013, rural workers and farmers can no longer pay the price for handouts to oil giants like Exxon and Chevron, the letter added.
“Every new exemption is a threat to hundreds of thousands of jobs across the heartland. Make no mistake: The rural manufacturing that keeps our communities strong could soon vanish if unelected bureaucrats at the EPA continue to eliminate the market for biofuels. America would no longer be the world’s top producer and exporter of ethanol.”
The letter to Trump concluded, “American families are looking to the White House for leadership, but the EPA is ravaging the rural economy in your name. Only you can turn it around, and we offer whatever support we can to make it happen.”