Cruz, Others Get Set for Meeting Thursday With Trump, Others on RFS

Posted on 12/06/2017 10:59 AM

Unclear if Cruz will lift hold on Northey to become a USDA undersecretary

A flurry of activity is underway before a White House confab Thursday over the future of corn ethanol, RINs and the Renewable Fuel Standard (RFS).

Sen. Ted Cruz (R-Texas) will confer with Trump and members of his Cabinet to discuss his administration’s decision not to pull back on volume requirements of the RFS, and not agreeing to approval other proposals pushed recently, involving RINs and point of obligation for the volume mandates. Of note, increased U.S. ethanol production could translate into a higher mark for conventional ethanol under the RFS than the current 15-billion-gallon level, according to Environmental Protection Agency (EPA) Administrator Scott Pruitt. Pruitt said in a Dec.1 interview with KCCI TV in Des Moines that the agency sets the mandate targets “as objectively as possible.” When the export of ethanol is put into the mix, Pruitt said he was “encouraged” that the industry could “break the cap.” Should that happen, Pruitt said, “We can reset that number and go above the cap.”

Some reports note that an oil industry representative will be at the meeting, although that has not been confirmed by the White House. Besides EPA's Prutt, USDA Secretary Sonny Perdue and high-level White House advisers, the session will also include Energy Secretary Rick Perry, EPA Administrator Scott Pruitt and National Economic Council Director Gary Cohn.

Background. Cruz led a group of senators in sending a letter to Trump urging a meeting when EPA made clear it was scrapping proposed reductions in the RFS’ annual targets that refiners are required to abide by. Link to letter.

Independent refiners' major complaint is the cost of complying with the RFS, saying they have forced or would force them to lay off workers if they are not provided some kind of relief in meeting the standard. Refiners must either purchase the biofuels to blend with their gasoline or diesel fuel, or buy credits (RINs) to show their compliance — credits some refiners say are too expensive and threaten to push some them out of business.

Meanwhile, the American Enterprise Institute issued a report today ahead of the White House meeting listing the shortcomings of the RFS; the group is holding a briefing ahead of the meeting. “The main potential benefits to society from the Renewable Fuel Standard (RFS) stemmed from potential reductions in greenhouse gas emissions due to increased biofuel and decreased fossil fuel use. The policy has failed to deliver these benefits,” according to the report’s summary. Link to summary of report; link to full report.

Cruz earlier placed a hold on Bill Northey, a Trump nominee to be a USDA undersecretary, over the administration's support for the Renewable Fuel Standard, and the farm-state lawmakers who pressured EPA to back down from potential changes to the regulations for biofuels.

Sen. Chuck Grassley (R-Iowa) expects Trump will continue to support ethanol, even though the president is meeting with RFS opponents. Grassley said Tuesday he's not concerned about Trump's meeting so long as "the president keeps doing what he's told the voters of Iowa, me and Sen. (Joni) Ernst so many times — that he supports ethanol." Grassley dismissed the idea that Trump could strike a deal weakening his commitment to the RFS in exchange for Cruz releasing his hold on Iowa Ag Secretary Bill Northey's confirmation to a key USDA post. "Mr. Northey wouldn't want to be confirmed if the president was going to compromise his views on ethanol — if that was the trade-off," Grassley said.

Grassley is not going to be in the meeting. "I doubt they'd want me around," Grassley said.

A spokesman Tuesday that Northey has no interest in anything that would weaken the renewable fuel mandate. "He's a strong supporter of the RFS," said Dustin Vande Hoef.

Grassley said Congress would need to take legislative action to make changes to the biofuels mandate.

Meanwhile, Texas Gov. Greg Abbott petitioned the EPA on Friday for a waiver from meeting the federal mandate, saying it detrimentally impacted the state's refineries.


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