Vilsack Signals USDA Will Unveil Biofuel Aid Once EPA Announces RFS Levels

SRE decisions could also come alongside RVO announcement, Vilsack indicates

Comments by USDA Secretary Tom Vilsack suggest the Ag Department is waiting on EPA to publish Renewable Fuels Standard (RFS) levels before releasing more details on the $700 million in Covid-19 aid for biofuel producers, saying he expects EPA will announce 2021 and 2022 biofuel levels “in the very near future.”

     The comments came during a media call Friday (Dec. 3) where Vilsack announced $633 million in climate-smart infrastructure investments for rural communities.  The investments are via grants and loans under programs including Community Facilities Disaster Grants, the Electric Loan Program (ELP), Rural Energy for America Program (REAP), Rural Energy Savings Program (RESP), and Higher Blends Infrastructure Incentive Program (HBIIP).

     While Vilsack was eager to tout the new investments, many questions focused on broader biofuel issues — particularly RFS mandated levels. “I've worked very closely with [EPA] Administrator [Michael] Regan, first and foremost, to reinforce the importance of the EPA providing some stability in the [RFS] program,” Vilsack said when asked what input he had given Regan on biofuel levels. “I fully expect and anticipate in the very near future the EPA will announce those standards and I think what's important is that they will likely also respond to the outstanding waiver requests,” he added, referring to small refinery exemptions (SREs).

     The SRE issue is drawing more attention after a Supreme Court decision this summer scaled back a lower court decision curbing the waivers. EPA recently rejected one SRE for the 2019 compliance year, but another 29 small refinery exemption (SRE) petitions for the 2019 compliance year are listed as pending, with 28 pending for 2020 and three for 2021. Meanwhile, there are five SRE petitions still pending for the 2011-2018 compliance years.

     Vilsack pointed to Regan’s comments on the SRE situation, which indicate that “he is not going to be granting the waivers in quite the same way that the Trump administration granted them, that created — really — instability in the program.”

Covid aid details coming. Once EPA releases its proposal for 2021 and 2022 Renewable Volume Obligations (RVOs) under the RFS — which reports suggest could also include a retroactive RVO reduction for 2020 — Vilsack said he hopes to be able to “provide more details on the distribution of $700 million of assistance and help that we've already identified and earmarked for the biofuel industry.”

     For months, Vilsack has faced questions about the delay in releasing biofuel Covid aid details and his comments appear to back up suspicions by some, including Pro Farmer, that the administration is looking to release them in tandem with EPA biofuel announcements.

     Vilsack detailed the biofuel aid would flow directly to biofuel producers — not farmers — but that the aid would have positive knock-on effects for farmers as those biofuel facilities use their crops as feedstock.

     Separately, Vilsack also again pinned blame for the biofuel aid delays on the interagency review process at the White House Office of Management and Budget (OMB). “We have to essentially negotiate at times with the OMB and that's what we're basically doing. I think we're very, very close to getting that done.” EPA’s proposals for RFS levels have been under review at OMB since Aug. 26.

     Bottom  line: The emphasis on SREs and comments on the potential pairing of RVO and biofuel aid announcements by Vilsack could indicate the Biden administration is looking to temper potential biofuel industry disappointment on rumored lower 2020 and 2021 biofuel RVOs by announcing them alongside favorable moves on SREs and Covid-19 assistance for biofuel producers.

Meanwhile, Vilsack touted other opportunities the administration and Democrats in Congress are working on relative to biofuels, including approximately $1 billion in higher blend biofuel infrastructure funding included in the Build Back Better (BBB) climate and social infrastructure package. He noted Friday’s announcements included another $3 million in higher blend infrastructure investments through HBIIP.

     Other bright spots, Vilsack said, include the administration’s initiative aimed at growing the market for sustainable aviation fuel (SAF), which he predicted could “over time” yield demand for 36 billion gallons of the cleaner fuel.  “This administration is going to invest $4.3 billion in a series of grants and loans to create the [sustainable] aviation fuel industry,” he remarked. “United, American Airlines and other airlines are clamoring for a drop-in aviation fuel that will allow them to comply with international standards as they fly these long-haul flights — and allow them to lower costs.”

     Answering GOP criticism of BBB funding and next farm bill. Vilsack was asked to respond to Republican criticism that the BBB measure — as it stands now — would undermine the next farm bill process by boosting baseline funding levels for conservation programs. “It's hard for me to understand why any Republican or Democrat would be against increased investment in conservation,” he responded. “And, you know, it's unfortunate that there is not any bipartisan support for the [BBB] bill the same way [that] at least a number of Republicans voted for the [bipartisan] infrastructure bill.” Bottom line on the conservation funding in BBB, said Vilsack, is that he has no “reservations or concerns” about it. He added that it will “complement the work that we're going to do with the Climate-Smart Agriculture and Forestry (CSAF) partnership initiative.”

     Other infrastructure funding. Besides the latest round of HBIIP grants, Vilsack discussed the other grant funding across four USDA programs announced Friday. “We are investing $356 million dollars in [REAP], expanding renewable energy systems for farms and small business owners lowering their costs and resulting in energy savings over time, [and] we're investing $32 million in the [RESP] to create more energy efficient businesses and farms — also lowering costs.” The department also announced some $242 million through ELP, and around $195,000 in Community Facilities Disaster Grants.

     BBB would bring even more “significant increases” in funding for those programs, Vilsack added. The measure includes “$10 billion to assist rural co-ops in decarbonizing their energy source” along with $2 billion for REAP and $200 million for RESP, he detailed.

     Looking ahead, Vilsack said to expect more infrastructure investment announcements soon thanks to recent passage of the bipartisan infrastructure framework (BIF) package. “We're looking forward to announcements involving expanded broadband, the opportunity to improve roads, bridges, ports, and inland waterways and create greater resiliency in our forests and working lands.”