By Todd Neeley
DTN Staff Reporter
OMAHA (DTN) -- With a proposed rule to account for small-refinery exemptions in the Renewable Fuel Standard now in the EPA's hands, Sen. Charles Grassley, R-Iowa, told agriculture journalists on Tuesday he's hopeful the agency will improve the proposal.
A public comment period for the supplemental rule closed on Nov. 29, and the agency is on track to finalize the rule by the end of the year.
The Trump administration has approved 85 exemptions since 2016, and agriculture and biofuel interests are unsatisfied with an EPA proposal to account for waivers. The industries contend the proposal does not include what was agreed to in a Sept. 12 White House meeting involving Midwestern lawmakers.
"Two weeks ago this afternoon, I and another senator were in the Oval Office, talking to the president about this very thing," Grassley said.
Grassley said that, during the recent meeting in the Oval Office, the president invited in economic adviser Larry Kudlow and contacted by phone EPA Administrator Andrew Wheeler, telling them the RFS proposal to guarantee 15 billion gallons of corn ethanol is maintained.
"I tried to make clear to Wheeler something very simple," Grassley said. "He tells us that we're going to get to 15 billion gallons. But the regulations really bring so much uncertainty to that, that even if his intentions is 100% correct and his heart's in the right place, farmers don't believe it.
"Not because of just Wheeler, but because of the history of EPA being a voice for big oil on the RFS. So, bottom line, I sat through two administrations now we've been putting up with this. So even if your heart's in the right place, your regulation has to show that."
Much has been made about President Donald Trump's administration's handling of the RFS and how it might affect the upcoming presidential election.
When asked about possible Trump political ramifications of EPA's actions on the RFS, Grassley said farmers should consider overall administration policies favorable to agriculture.
"I would say there's a price to be paid but not as great as it would have been 10 or 15 years ago," Grassley said.
"And it would be offset a considerable degree if the economy stays at about the same as it is. And then you've got to remember what he's done for agriculture in addition to what might or might not be the end product of the RFS. On the other hand, I'm very positive about what the president feels about the 15 billion gallons because I heard him say it Sept. 12 when we left the Oval Office with an agreement. And I heard him say it two weeks ago today when two of us senators were discussing it with him in the Oval Office. I heard him tell Wheeler it's gotta be 15 billion gallons."
The EPA proposal under development is said to differ from the Sept. 12 agreement, in that EPA proposed accounting for waived gallons based on a U.S. Department of Energy estimate for 2016 to 2018 and not actual gallons waived.
"The president is working very hard to correct this rule," Grassley said.
EPA COMMENT PERIOD CLOSED
The EPA missed the Nov. 30 statutory deadline to finalize the 2020 RFS volumes, as it now considers thousands of public comments submitted on the supplemental proposal to address small-refinery exemptions.
In comments to EPA, Little Sioux Corn Processors, a company that operates a 165-million-gallon ethanol plant in Marcus, Iowa, said there is concern the agency proposal allows for the EPA to require less than 15 billion gallons of ethanol.
"The proposal means nothing until EPA reallocates those lost gallons and sets forth a more transparent and rational process that assures small-refinery exemptions are not abused or granted unnecessarily," the company said.
"Widespread exemptions from the RFS have resulted in significantly lower RIN prices, reduced corn and ethanol demand, avoided legal obligations for highly profitable businesses, and provided windfall profits for certain oil refiners."
The North Dakota Ethanol Producers Association outlined in its comments how the small-refinery exemptions have affected biofuels and agriculture in the state.
"Farmers rely on ethanol production to consume up to half of the country's corn," the group said. "They lose a vital market when plants are shut down or production is restricted. As the agriculture and ethanol economics continue to deteriorate, farmer owners and rural investors are not only losing the near-term return in their businesses, but they are witnessing the long-term investment value decline. The ethanol industry of North Dakota urges EPA to fully implement the Energy Independence and Security Act's commitment to advanced biofuels and to enable market access for all biofuels."
The American Soybean Association said in comments to EPA the latest proposal is harming the potential growth of biodiesel.
"The proposal put forth by EPA ignores the biodiesel industry's capacity for growth, fails to account for the small-refinery exemptions, and directly defies a court ruling that EPA unlawfully waived 500 million gallons," the ASA said.
"The proposal sets the 2021 requirement for biomass-based biodiesel volumes at 2.43 billion gallons, which represents no growth over the 2020 levels. With U.S. soybean farmers shut out of China due to the trade war, we have record carryout of U.S. soybeans. Utilizing the crush capacity and oil utilization domestically would be a win for U.S. soybean farmers and suffering rural communities."
Read comments to EPA here: https://www.regulations.gov/….
Todd Neeley can be reached at email@example.com
Follow him on Twitter @toddneeleyDTN
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