An apparent deal brokered by the White House to reform the US biofuel mandate may be in trouble, given critical comments made Tuesday by key biofuel supporter US Senator Chuck Grassley.
Grassley, Republican-Iowa, said the Environmental Protection Agency's liberal granting of waivers to small refineries undermines the commitment President Donald Trump made to the farm states that helped elect him. He said he would call for EPA Administrator Scott Pruitt's resignation if the agency keeps issuing the waivers.
"I'm sick and tired of messing around with this anymore," Grassley told reporters Tuesday. "Trump was elected with an agenda. Pruitt was not elected. It's Pruitt's job to carry out the Trump agenda."
Trump has convened several meetings of lawmakers and industry groups on both sides of the issue, with reports emerging from the latest meeting May 8 that a deal had been reached to approve summertime sales of E15 -- gasoline blended with 15% ethanol -- and allow ethanol exports to qualify for Renewable Identification Numbers.
RINs are tradable credits EPA issued to track production and use of alternative transportation fuels. For corn-based ethanol, one gallon of ethanol yields one RIN.
During Tuesday's call with reporters, Grassley read a quote from Trump's January 2016 stump speech to the Iowa Renewable Fuel Association, when the presidential candidate promised to protect the 15 billion gallon conventional ethanol mandate.
Grassley said EPA's recent waivers to small refiners have shrunk the federal mandate to 13.8 billion gallons. He said that would far outweigh any benefits the ethanol industry receives from the Trump administration approving year-round E15 sales.
"I've supported Pruitt, but if he pushes changes to RFS that permanently cut ethanol by billions of gallons he will have broken Trump promise & he should step down & let someone else do the job of implementing Trump agenda if he refuses," Grassley tweeted later Tuesday.
LeAnn Johnson Koch, director of the Small Refiners Coalition, said Grassley is exaggerating the impact of the waivers on biofuel blending.
"Granting small refinery hardship relief does not result is less ethanol blending for the simple reason that small refineries control very little of the blending, which is why they are hardshipped in the first place," she said. "When the 2017 small refinery hardship waivers were granted and RIN prices dropped, ethanol consumption increased. That's because the parties that control downstream blending are not going to stop blending simply because an upstream small refinery received a hardship exemption."
Senator John Barrasso, Republican-Wyoming, who has several small refineries in his state, said the Clean Air Act requires EPA to give relief to any small refinery "that suffers disproportionate economic hardship" from the RFS.
"Under the Obama administration, EPA ignored this obligation and the courts rebuked the agency for it," he said, referring to a case involving Sinclair Wyoming Refining. "EPA is now following the law and must continue to do so."
EPA has granted 25 hardship waivers to the Renewable Fuel Standard for 2017 compliance out of 30 applications received so far.
The Renewable Fuel Standard allows EPA to grant hardship waivers to the biofuel mandate for plants that process less than 75,000 b/d of crude. It has accelerated its use of the waivers under Pruitt, leading farm-state senators and biofuel groups to accuse him of finding a backdoor way to undermine the biofuel mandate.
Ethanol RINs have plunged 51% since the start of the year amid an ongoing debate in Washington over reforming the biofuel mandate.
S&P Global Platts assessed D6 ethanol RINs for 2018 compliance at 34.5 cents/RIN Monday.
EPA has not named the refineries that applied for or received waivers and, until recently, would not say how many waivers it granted. Some refining companies have disclosed the waivers in quarterly earnings calls.
"We look at it on a facility-by-facility basis and the statute says it's 75,000 barrels or less," Pruitt told a House of Representatives committee last month. "So it's objectively determined in that regard."
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