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Can EPA's Wheeler deliver on E15?

Holding year-round E15 hostage to RIN reform provisions “counterintuitive at best, and cynical at worst,” RFA said.

Those in the ethanol industry have invested a lot of time in the last two years to push the Trump Administration to relax rules that would allow for higher ethanol blends year-round. Last October that seemed it would finally come true, but the battle is not over yet.

President Trump announced last October that he was directing the EPA to complete a rulemaking to eliminate the “unnecessary and ridiculous” summertime ban on E15 before May 31. However, EPA was also planning to include “RIN reform” measures in the upcoming proposed rule. But with just 133 days remaining before the summertime prohibition on E15 sales begins, EPA is running out of time to propose, seek comment on, and finalize a rule allowing year-round E15 sales.

The Senate Environment & Public Works Committee held a hearing Jan. 16 for Wheeler to be the next EPA administrator after his predecessor Scott Pruitt stepped down earlier this summer.

Wheeler said as of now, he continues to believe that EPA will have its proposal to alter regulations and allow for the increased use of E15 ethanol blends ready ahead of the summer driving season on June 1. He said that does carry a caveat regarding how long the government shutdown continues, as the agency can’t work on it right now.

Ethanol supporters didn’t appreciate Pruitt’s handling of the RFS compromise sought by the oil industry on a RIN (renewable identification number) fix in conjunction with any E15 approval. And it seems it is again back on the agenda for EPA to tackle both.

The Renewable Fuels Association fears the government shutdown threatens to further delay approval of year-round sales of E15, and encouraged EPA to focus strictly on year-round E15 provisions in its forthcoming proposed rule and address RIN reform measures in a separate action. In a letter submitted Thursday to EPA, RFA noted that “bifurcating” the proposal into two separate actions would greatly enhance EPA’s chances of meeting its May 31 deadline.

“Finalizing the year-round E15 rulemaking no later than May 31 will take a Herculean effort,” wrote RFA president and CEO Geoff Cooper. “Therefore, we respectfully request that EPA bifurcate the rulemaking into two separate actions, moving forward immediately on the year-round E15 provisions and considering RIN reform in a subsequent and secondary action.”

The letter notes that, unlike the year-round E15 provisions, there is no deadline by which RIN reform measures must be finalized in order to allow fair and efficient operation of the market. “While we support efforts to bring more transparency to the RIN market, there is no urgency to move forward quickly with RIN reform provisions,” according to the letter. “This is particularly true as the previous uproar from refiners about ‘high RIN costs’ has been reduced to a murmur as RIN prices have collapsed to historic lows.”

The letter noted, “Holding year-round E15 hostage to RIN reform provisions that are ultimately designed to ease RFS compliance for highly profitable oil companies seems counterintuitive at best, and cynical at worst.”

The letter detailed that while they support efforts to bring more transparency to the RIN market, there is no urgency to move forward quickly with RIN reform provisions.

“This is particularly true as the previous uproar from refiners about ‘high RIN costs has been reduced to a murmur as RIN prices have collapsed to historic lows,” the letter said. “Unlike E15, there is no deadline by which RIN reform measures must be finalized in order to allow fair and efficient operation of the market.”

During questioning at Wheeler’s nomination hearing Jan. 16, Sen. Joni Ernst, R-Iowa, said that during 2016 and 2017 RIN prices were near $1, and now are trading at 10 cents or below. With RIN prices so much lower today than two years ago, she asked whether there is a more likely chance that there would be less economic hardship associated for small refineries.

Wheeler responded that RIN prices are only one criteria for determining economic hardship in an analysis conducted by the U.S. Department of Energy. He did assure that he would not give blanket exemptions. “We will be examining each one individually and making sure each one is warranted,” he said.

In questioning, Sen. Mike Rounds, R-S.D., asked about the use of small refinery exemptions under the Renewable Fuel Standard (RFS). Wheeler defended the agency’s actions allowing for a 2.25 billion gal. per year reduction in ethanol use because of three court cases EPA lost during the Obama Administration that he said require EPA to issue the waiver exemptions. He also said if those waivers were accounted for and added on to the total 15 billion gal. levels, it would place an additional burden on refineries and could require even more waivers.

Overall, Wheeler said EPA has tried to increase transparency regarding the waiver approvals. He said he’s also “taking a hard look at overall numbers through our reset program,” including E15 and renewable volume obligations, which are also expected to be published in February.

Cooper expressed disappointment that Wheeler does not look to repair the damage caused by Pruitt’s waiver requests. “America's ethanol producers and farmers continue to suffer as a consequence of former Administrator Pruitt's actions, and we remain hopeful that Mr. Wheeler will use far more restraint and judiciousness as he evaluates the 22 petitions for 2018 small refiner exemptions now before the agency,” he said.

 

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