Iowa Gov. Kim Reynolds and the state’s two U.S. senators, Chuck Grassley and Joni Ernst, on Nov. 7 submitted official comments to the U.S. Environmental Protection Agency regarding the Renewable Fuel Standard. They are calling on the agency to finalize an RFS rule so that it provides certainty for biofuels and reflects the deal Iowa officials struck with President Donald Trump on Sept. 12.

The comments are in response to EPA’s proposed rule intended to restore integrity to the RFS that has been lost as a result of EPA granting small refinery exemptions (SREs) to petroleum refiners the past several years.

“We applaud Gov. Reynolds and Sens. Grassley and Ernst for helping lead the fight to repair the RFS,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association. “When the EPA proposal came out, IRFA was proud to stand alongside the Iowa Corn Growers Association, Iowa Soybean Association and Iowa Biodiesel Board to condemn the proposed rule as falling short.

“It falls short of fixing the SRE problem and short of adhering to what President Trump had promised our elected officials. Today, Iowa’s elected leaders are saying loudly and clearly EPA must adopt a real-world fix. Agriculture is suffering right now, and EPA has the ability to help by providing certainty for the RFS. EPA needs to make it right.”

Demand for corn, soybeans reduced

In her comments, Reynolds said: “The Renewable Fuels Standard that is intended to protect an important market for corn and soybeans is being undercut by the same government that promised to defend it… This proposed supplemental rule has created even more uncertainty in the market.”

Grassley wrote: “The way the rule was written and put out for public comment does not deliver on the same understanding I had leaving the Oval office… we discussed a very specific proposal to consider the three-year rolling average of actual exemptions granted by EPA including the specific numbers.”

Ernst stated: “EPA’s Supplemental Notice clearly and directly provides the agency with continued flexibility to waive more gallons than it reallocates. … Given EPA’s implementation of the RFS for the last three years; however, we are rightfully low on trust. … It is time again for the EPA to get this policy right, respect the president’s intent, and uphold the law as it was written.”

“Rural America is uniting with its elected officials to demand that EPA fix the RFS rule,” Shaw said.

A week ago, a broad coalition of 60 ag and biofuels groups sent a letter to the White House calling on Trump to fix the flawed proposal from EPA regarding how the waived gallons are reallocated among the other petroleum refiners. EPA’s proposal for fixing the RFS rule “fails in its mission to reinvigorate farm economies and reopen the ethanol and biodiesel plants across America’s heartland that have shut down or reduced production significantly due to reduced demand for the renewable fuel.”

The full text of the letter and a list of signers is available online.

Before supporting Trump’s Oct. 4 RFS deal aimed at accounting for the demand destruction caused by RFS exemptions granted to refineries, biofuels industry leaders were briefed by the White House and EPA. They were told EPA would account for SREs using a three-year rolling average of actual refinery exemptions granted. Eleven days later, EPA announced a proposal to use a three-year rolling average of U.S. Department of Energy recommendations for SREs, which EPA has routinely ignored and is under no legal obligation to follow. 

EPA’s proposal creates uncertainty

As one of several Iowans testifying at a recent EPA public hearing on the proposed new rule, Shaw challenged the lack of certainty EPA’s proposal creates, especially pertaining to the granting of SREs for the 2019 compliance year, which is not addressed in this rule. Shaw said EPA’s proposal gives the DOE incentive to “aim low” and recommend a small number of SREs for 2019 and EPA to “shoot high” by granting a large number of SREs. That would ensure a small number goes into the three-year rolling average for estimating future SREs, while a huge number of renewable identification numbers goes into the carryover RIN piggybank for refiners to use in the future in lieu of actual biofuel gallons.

“EPA is asking farmers to trust that EPA will follow DOE recommendations in 2020,” Shaw said. “But this proposal gives EPA the opportunity in 2019 to destroy additional demand and to dig an SRE hole so deep that 15 billion gallons will never be 15 billion gallons in the future. EPA should immediately declare their intended approach to 2019 SREs."

He added, “Furthermore, the SRE process remains locked in a black box as DOE recommendations are secret. Today, I call on the EPA to add DOE recommendations to the SRE dashboard on the EPA website.”

Shaw concluded by calling on EPA to stick to the deal announced on Oct. 4. “There is still time for EPA to correct this. It is time for EPA to make it right and stick to President Trump's deal.”