EPA’s final rule on biofuel blending quotas for 2020 (2021 for biodiesel) will stick to the original proposal for addressing small refinery waivers, according to sources familiar with the matter cited by both Bloomberg and Reuters. The White House reportedly told the Iowa Corn Growers Association it would use a three-year average of non-binding Department of Energy (DOE) recommendations on hardship waivers for small refineries rather than actual volumes waived in reallocating waived gallons.
Those initial recommendations from October angered the corn and ethanol sector, because EPA typically waives more blending volume than the DOE recommends. Therefore, industry stakeholders are concerned that ethanol blending will fall short of the 15 billion-gallon mandate under the Renewable Fuel Standard. Because DOE recommendations are non-binding, there is no guarantee reallocated gallons would hold ethanol blending above mandated levels.
Agriculture Secretary Sonny Perdue’s has commented “once you understand the EPA proposal... you'll be fine.” Today’s reports do not signal that is the case, but his comments also leave us wondering if there is more to the proposal than what’s being signaled today. Adding to that idea, Iowa Senator Chuck Grassley (R-Iowa) has also indicated he was convinced blending would hold above 15 billion gallons.
The farm sector has said time and time again the industry needs certainty that corn-based ethanol blending will hold above 15 billion gallons. If the final rule does not provide that certainty (and the original October proposal would not) this could have major political implications for President Donald Trump, especially in the key state of Iowa.
The final rule is expected to be released Thursday or Friday, missing its Nov. 30 deadline.