Government

Battle over biofuels heating up again

Report: Trump to hear options Monday for revising rule

The Philadelphia Energy Solutions oil refinery owned by The Carlyle Group is seen at sunset March 26, 2014. This month, a bankruptcy judge approved a settlement with the Trump administration allowing the refiner to erase millions of dollars worth of credits it was supposed to have submitted to the Environmental Protection Agency. (David M. Parrott/Reuters)
The Philadelphia Energy Solutions oil refinery owned by The Carlyle Group is seen at sunset March 26, 2014. This month, a bankruptcy judge approved a settlement with the Trump administration allowing the refiner to erase millions of dollars worth of credits it was supposed to have submitted to the Environmental Protection Agency. (David M. Parrott/Reuters)
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Despite campaign promises to support corn-based ethanol by upholding the Renewable Fuel Standard, President Donald Trump has waded deeper and deeper into discussions about changing the rule, and will meet Monday with cabinet officials to hear ideas for doing just that.

While the biofuel standard itself hasn’t been changed, farm interests are alarmed that the government has repeatedly chipped away at the main way of enforcing it — requiring refiners to blend in the biofuels themselves or buy credits from those that do.

This month, a bankruptcy judge approved a settlement with the Trump administration allowing the huge Philadelphia Energy Solutions refiner to erase millions of dollars worth of credits it was supposed to have submitted to the Environmental Protection Agency.

And then the EPA allowed one of the nation’s largest refiner companies, Andeavor, to exempt three of its operations from complying with the renewable rule.

At the same time that millions of gallons of fuel are being absolved of complying, U.S. Sen. Ted Cruz, R-Texas, is proposing to cap the cost of the credits — actually called Renewable Identification Number credits, or RINs — at just 10 cents each, a fraction of what they go for on the open market.

Opponents of a cap, including Iowa Republican Sens. Joni Ernst and Chuck Grassley, say that would lead to the death knell for renewables.

“The Renewable Fuel Standard ... if it ain’t broke, don’t fix it.” Grassley said during a news conference Friday in Cedar Rapids. “Without a doubt, if you were going to cap RINs, it would ruin the ethanol industry.”

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The Iowa Renewable Fuels Association on Friday sent a strongly-worded letter urging Grassley and Ernst to communicate directly with Trump that any cap on RINs would be viewed as “nothing less than a declaration of war on rural America and a complete abdication of his repeated promises to protect the RFS.”

The letter is signed by officials with nearly 20 agriculture and energy organizations.

And Grassley continues to raise concern over reports that more than two dozen small refineries had received EPA exemptions to the nation’s biofuels laws for 2017.

While the EPA has the authority to exempt small refineries of under 75,000 barrels per day on a case-by-case basis if they can prove “disproportionate economic hardship” from the costs of compliance, Grassley was critical of a lack of transparency.

Calling it a “backdoor approach to hurt ethanol,” Grassley said he is seeking answers to why the exemptions were granted. Those exemptions include the Andeavor operations.

“We want (EPA Administrator Scott Pruitt) to be responsible and responsive. If he gives a waiver, there ought to be a good reason for giving it and the public ought to know what that reason is,” Grassley said.

What’s more, a draft bill, led by Republican Sen. John Cornyn of Texas, aims to enact a blanket waiver for all small refineries, according to a report from Reuters, which cited four sources familiar with the draft legislation.

Nationwide debate over the Renewable Fuel Standard began in earnest last year when the Pennsylvania refiner blamed the regulation for its financial woes. It later filed for Chapter 11 bankruptcy, though questions remain how much of its problems were due to compliance with the renewable rule or simple mismanagement.

Proponents of the cap have said it could come with a waiver to allow gasoline containing 15 percent ethanol to be sold year-round. Sales of high-ethanol blends are currently restricted in the summer due to concerns over smog.

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Grassley argued that such a waiver would only help the industry and shouldn’t be paired with the RIN cap.

“I think the vapor rule, everybody realizes that would help solve the problem of the RINs, so you don’t have to cap it,” Grassley said.

Last month, Gov. Kim Reynolds, along with governors in Indiana, Kansas, Missouri, Nebraska and South Dakota, sent a letter to Trump urging him to reject the proposed waivers.

“The purpose of the RFS is to grow the demand for biofuels while driving the industry to innovate,” Reynolds said in the letter. “Any effort to undermine the RFS, including putting a cap on RINs, would be devastating for Iowa farmers and Iowa’s economy.”

Citing two sources, Reuters reported that Trump will hold a meeting Monday that will include the EPA’s Pruitt and Agriculture Secretary Sonny Perdue.

Pruitt and Perdue have spent the last several weeks compiling a list of options for Trump to consider on the renewable rule, ranging from more aggressive tactics like capping the price of the credits to deferring the issue to Congress.

In recent weeks, advisers have urged Trump to extricate himself from the issue, instead letting lawmakers tackle it.

But that would only seem certain to draw the ire of farm and biofuel interests.

“Instead of breaking his promise to protect the RFS, President Trump should fulfill his promise (made in Iowa) ‘to end restrictions that keep higher blends of ethanol and biofuel from being sold,’” the Iowa Renewable Fuels Association said in its letter.

l Comments: (319) 398-8309; mitchell.schmidt@thegazette.com

Reuters contributed to this report.

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