EPA Biofuel Proposal on SREs Infuriates Ethanol/Corn Industry

Posted on 10/15/2019 3:14 PM

Today, the Environmental Protection Agency (EPA) issued a supplemental proposal regarding the 2020 Renewable Volume Obligation that once again shocked and infuriated the ethanol/corn sectors. Just over a week ago, EPA Administrator Andrew Wheeler, USDA Secretary Sonny Perdue and President Donald Trump unveiled a biofuel plan proposal meant to provide certainty that the Renewable Fuel Standard (RFS) requirement that 15 billion gallons of renewable fuel be blended into the nation’s fuel would no longer be undercut by small refinery exemptions (SREs).

The initial announcement and related briefings indicated that going forward SREs would be accounted for via a three-year rolling average of actual refinery exemptions granted, ensuring that the legal mandate for a 15-billion-gallon floor would hold. But today's draft proposal recommends, “projecting the volume of gasoline and diesel that will be exempt in 2020 due to small refinery exemptions based on a three-year average of the relief recommended by the Department of Energy (DOE), including where DOE had recommended partial exemptions.”

The Iowa Renewable Fuels Association was quick to point out that EPA “has routinely ignored” these DOE recommendations and has no legal obligation to follow them. In 2018, DOE recommended partial waivers for some refineries that EPA ignored and chose to issue full waivers. 

“Instead of standing by President Trump’s transparent and accountable deal, EPA is proposing to use heretofore secret DOE recommendations that EPA doesn’t have to follow. That means there is no guarantee that RFS exemptions will be accounted for in the RFS,” says Iowa Renewable Fuels Association Executive Director Monte Shaw. He says that just 11 days after Trump’s landmark announcement, EPA’s proposal “reneges on the core principal of the deal.” Shaw continues, “It is unreasonable and counterproductive to expect Iowans to put their faith in EPA to fix the SRE problem when they were the ones who created the crisis in the first place.”

EPA acknowledged that in the past it has granted full exemptions to petitioners where DOE recommended 50% relief, relative to the 2018 compliance year. But the agency pointed out that in earlier years, “we denied petitions and provided no exemption in certain cases where DOE recommended a 50% percent exemption, finding that disproportionate economic hardship existed only where the small refinery experienced both disproportionate impacts and viability impairment.”

Geoff Cooper, President and CEO with the Renewable Fuels Association, says, “the Oct. 4 announcement from EPA was a big step forward, today’s supplemental proposal is a step backward. It falls short of delivering on President Trump’s pledge to restore integrity to the Renewable Fuel Standard and leaves farmers, ethanol producers, and consumers with more questions than answers. … We are concerned that the volume of actual exemptions granted in 2020 could very well exceed the amount of projected exemptions from DOE, putting us right back into the quagmire where the 15-billion-gallon requirement is eroded and undermined. Simply put, this proposal is not what was promised by the administration just over a week ago and fails to answer President Trump’s personal call for a stronger conventional biofuel requirement of more than 15 billion.”

Both groups called for Trump to intervene and get the RFS back on track and in line with his original commitments.

EPA has promised to finalize the measure later this year, following a public hearing on the proposal on Oct. 30, and a 30-day public comment period. Find the rule summary here.

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