Pruitt commits to strong RFS, maintaining the point of obligation

By Erin Voegele | October 20, 2017

On Oct. 19, U.S. EPA Administrator Scott Pruitt sent a letter to seven senators indicating the agency is expected to set final 2018 Renewable Fuel Standard blending obligations at or above proposed levels. Pruitt also said the EPA will issue a final rule maintaining the current point of obligation within 30 days. In addition, the letter addresses issues concerning E15 and the treatment of renewable identification numbers (RINs) for biofuel exports. The letter is addressed to Sens. Joni Ernst, R-Iowa; Chuck Grassley, R-Iowa; Pat Roberts, R-Kan.; John Thune, R-S.D.; Deb Fischer, R-Neb.; Mike Rounds, R-S.D.; and Ben Sasse, R-Neb.

Within the letter, Pruitt explains that the first-RFS related issue he encountered as EPA administrator was a pending petition asking the agency to move the RFS point of obligation from refiners to importers and blenders. Pruitt said that after detailed analysis, stakeholder meetings and reviewing more than 18,000 comments, the EPA has determined that granting the petition would not be appropriate. “I have directed my staff to finalize this decision within 30 days,” he wrote.

Pruitt also confirmed that the EPA will meet the statutory Nov. 30 deadline to set the 2018 RFS RVOs. The agency released the proposed rule to set 2018 RVOs and the 2019 RVO for biomass-based diesel in July. That rule proposed to require 19.24 billion gallons of biofuel next year, including up to 15 billion gallons of conventional or corn-based ethanol, and 4.24 billion gallons of advanced biofuel, including at least 238 million gallons of cellulosic biofuel and 2.1 billion gallons of biomass-based diesel. The agency has been criticized for proposing to set cellulosic and advanced biofuel targets for 2018 at levels below those finalized in 2017.

“While the process for determining the final RVO rule is ongoing, it would not be appropriate for the agency to prejudge the outcome of the rulemaking process,” Pruitt wrote. “Nevertheless, preliminary analysis suggests that all of the final RVOs should be set at amounts that are equal to or greater than the proposed amounts, including at least 2.1 billion gallons for biomass-based diesel in 2018 and 2019.”

Regarding E15, Pruitt acknowledges that key members of congress have advocated for the adoption of a nationwide Reid vapor pressure (RVP) waiver for E15 and other midlevel ethanol blends, which would allow the fuels to be sold year-round without disruption. “Since becoming administrator, I have directed EPA to actively explore whether it possesses the legal authority to issue such a waiver,” Pruitt wrote. “The agency would welcome the opportunity to work with congress on this important issue, including issuing definitive analysis of the agency’s authority to issue a nationwide RVP waiver for E15.”

Finally, Pruitt discussed recent reports that the EPA is considering allowing RINs to be attached to exported volumes of biofuels. “The agency has been discussing a range of ideas intended to stabilize RFS compliance costs,” Pruitt wrote. “One of these ideas presented to EPA would involve amending our regulations to modify the treatment of renewable identification numbers (RINs) associated with ethanol exports. EPA has not taken any formal action to propose this idea, nor will EPA pursue regulations.”

“I look forward to continuing to engage in constructive and meaningful dialogue on these and other RFS-related issues. I reiterate my commitment to you and your constituents to act consistent with the text and spirit of the RFS,” Pruitt said. “I take seriously my responsibility to do so in an open and transparent manner that advances the full potential of this program as envisioned by congress, rural America, and the president of the United States.”

In response to the letter, Grassley issued a statement commending Pruitt for following through on Trump’s commitment to biofuels and the RFS. “While this is good news for the industry, it’s also good news for the entire country, which is made stronger by the many jobs, increased energy independence and cleaner air that renewable sources of energy like biofuels provide,” he said. “A strong RFS helps grow domestic energy production and is an important part of an all-of-the-above energy policy.”

“The previous proposal would have gone against President Trump’s support for biofuels and what he said to Iowa and the nation and to me personally,” Grassley continued. “Congress intended and President Trump pledged to support biofuels. I’m glad EPA is showing that it’s committed to the President’s agenda. I’m also glad EPA is backing away from any attempt to change the point of obligation. Doing so would have financially burdened local retailers and other small businesses across the country.”

“I welcome Administrator Pruitt’s willingness to work to make E15 available year-round,” Grassley said. “Unlocking the full potential of every energy source, biofuels included, should be a no-brainer. It would help rural economies and result in even more fuel made in America. I look forward to continuing to work with my colleagues and the Administration to ensure that the nation’s energy policy makes sense and doesn’t put any one sector at a disadvantage.”

The Renewable Fuels Association has also spoken out to commend Pruitt on his statements in the letter. “The U.S. ethanol industry is grateful for Administrator Pruitt's epiphany on the road to the RFS,” said Bob Dinneen, president and CEO of the RFA. “We look forward to working with EPA to preserve and grow the RFS, encourage innovation in the production and marketing of biofuels, and secure common sense reform in the regulations that have kept higher octane ethanol fuels from being sold year round. As for the members of Congress, governors, and others who advocated so strongly for farmers and consumers, we thank you profusely.” 

Growth Energy also applauded Pruitt’s letter. “The commitments outlined in his letter—when finalized—will ensure American biofuels continue to deliver value to consumers nationwide,” said Emily Skor, CEO of Growth Energy. “We thank our senate champions and governors, whose unyielding support helped secure this landmark commitment from the EPA.

“We will continue to work with EPA on all matters regarding biofuel regulations and look forward to the final renewable volume obligations (RVO) with levels equal to or greater than the total levels in the proposed rule, including an increase for cellulosic biofuels,” Skor continued.

The American Coalition for Ethanol noted Pruitt’s actions are the result of strong Senate leadership on RFS issues. “The concessions and promises made by EPA Administrator Pruitt are the direct result of the strong leadership and active intervention of U.S. Senators,” said Brian Jennings, executive vice president of ACE.  “We particularly thank Iowa Senators Chuck Grassley and Joni Ernst for leading the way.  It will be good to put the RFS point-of-obligation issue behind us and we will ramp up our work with bipartisan leaders in Congress and EPA to ensure the RFS works as intended and RVP relief is provided to retailers who want to sell E15 to their customers year-round.”

A full copy of Pruitt’s letter can be downloaded from Grassley’s website.