The renewable fuel industry may be taking a deep breath and relaxing a bit after a letter from EPA Administrator Scott Pruitt was sent to leaders in the Senate concerned about several issues.

The letter, which was sent to several senators identified as 'ethanol champions' by at least one renewable fuel group, outlines the agency's perspective on several issues. He confirms several actions that have been raised as issues by those senators.

The senators receiving the letter include - Sen. Joni Ernst, R-Iowa; Sen. Chuck Grassley, R-Iowa; Sen. Pat Roberts, R-Kan.; Sen. John Thune, R-S.D.; Sen. Deb Fischer; R, Neb.; Sen. Mike Rounds, R-S.D.; and Ben Sasse, R-Neb. - all supporters of the Renewable Fuel Standard.

In the letter, Pruitt noted that he is working through a number of renewable fuel issues including the point of obligation, the predictability of the RFS requirement, questions over Reid Vapor Pressure for E15 fuel use, and potentially stabilizing compliance costs.

Pruitt told the senators that his office will not change the point of obligation from refiners and importers to blenders after what he explained were "numerous meetings with many stakeholders, and review of over 18,000 comments received." He said the agency has determined the change would not be appropriate and the decision will be finalized within 30 days.

He noted that the Renewable Volume Obligation - which sets the amount of renewable fuel that must be used each year, the proposed amount is 19.24 billion gallons to be blended into the fuel supply. While he said determining the final RVO is ongoing at it would not be appropriate to prejudge the outcome of the rulemaking process, a "preliminary analysis suggests that all of the final RVOs should be set at amounts that are equal to or greater than the proposed amounts."

As for the Reid Vapor Pressure issue, there are those in Congress that want a nationwide waiver of the standard so that E15 blends of fuel can be used throughout the year without disruption. He told the senators that he is investigating whether the agency has the authority to issue such a waiver and would welcome the opportunity to work with Congress on the issue.

And finally, there is talk of stabilizing compliance costs, which Pruitt explained may involve amending regulations to modify the treatment of Renewable Identification Numbers associated with exports. As of now he says the agency has taken no action on the matter, and will not pursue regulations on the issue.

Industry reaction

Trade group Growth Energy said the letter is a step in the right direction. In its statement, the group said it applauds Pruitt's pledge to "Senate biofuels champions to uphold the president's continuous support of the RFS and faithfully administer the law passed by Congress."

The group noted that the commitments in the letter, when finalized, "will ensure American biofuels continue to deliver the value to consumers nationwide."

The Iowa Renewable Fuels Association also issued a statement from Monte Shaw, executive director, who applauded the work of the recipients of the letter for their work and President Trump for his commitment to rural America.

Shaw, however, noted that "simply not making further cuts to proposed levels that were already too low is not enough. To live up to the letter and spirit of the RFS in the final rule, the EPA must increase levels for biodiesel and cellulosic ethanol from what was proposed in July." The July proposal puts the RVO total at 19.24 billion gallons with 4.24 billion coming from advanced biofuels including cellulosic ethanol.

And he noted that the group urges EPA to "affirm its authority to grant E15 volatility parity. This one step would do more to ease RFS compliance and lower the price of RINs than anything else."

The U.S. Grains Council is optimistic there will be a positive outcome. 

“We are encouraged by EPA Administrator Scott Pruitt’s comments this week that the Administration does not intend to pursue changes to RINs regulations and ethanol exports," said USGC President and CEO Tom Sleight. "The Administration’s approach of keeping RINs and ethanol export policies separate is a positive outcome for our ongoing efforts to expand U.S. ethanol exports globally.”

Source: EPA, Growth Energy, Iowa Renewable Fuels Association, U.S. Grains Council