By Lynn L. Bergeson
On May 30, 2019, the U.S. Environmental Protection Agency (EPA) released in final the regulatory changes allowing gasoline blended with up to 15 percent ethanol (E15) to take advantage of the 1-psi Reid Vapor Pressure (RVP) waiver that applies to E10 during the summer months. This means that E15 can now be sold year-round in the U.S. without additional RVP control rather than just eight months of the year. EPA also released in final the rulemaking regulatory changes to modify certain elements of the renewable identification number (RIN) compliance system under the Renewable Fuel Standard (RFS) program. Aiming to increase transparency to the market and deter price manipulation, the reforms to RIN markets include a requirement for public disclosure when RIN holdings exceed specified thresholds, and the collection of additional data to improve EPA oversight.
By Lynn L. Bergeson
On April 29, 2019, the National Chicken Council submitted a letter to EPA’s Office of Transportation and Air Quality outlining the potentially negative impact of the changes to the biofuels policy on the poultry industry. In his letter to EPA, Mike Brown, President of the National Chicken Council, reported concern with EPA’s proposal on year-round ethanol-15 (E15) use under the Renewable Fuels Standard (RFS) Program. The National Chicken Council believes that EPA has failed to consider the impact of such volume waivers on the boiler industry, and for poultry and livestock feeders generally. Brown assures EPA that a year-round E15 use waiver “will result in a rapid expansion of corn use under the RFS adding the potential for price and supply volatility in the corn market.” Instead of the aforementioned proposed modifications, the National Chicken Council is suggesting that EPA consider a predictable, transparent off-ramp based on the U.S. Department of Agriculture (USDA) stocks-to-use-ratio in the June World Agricultural Supply and Demand Estimates (WASDE) report. Partial waivers would then be structured for the remainder of the year. The structure of the partial waivers is further detailed in the letter.
By Lynn L. Bergeson
On February 27, 2019, Senators Rand Paul (R-KY) and Chuck Grassley (R-IA) introduced the Fuel Choice and Deregulation Act of 2019 (S. 581). The legislation would remove “burdensome” regulations on domestic energy production. The bill “provides new economic opportunity for Kentucky farmers by allowing fuel producers and automobile manufacturers to innovate and bring new products to market that will lower costs for consumers, increase domestic energy production, and protect the environment,” said Senator Paul. The Fuel Choice and Deregulation Act would remove regulations blocking higher ethanol blends, such as gasoline blended with up to fifteen percent ethanol (E15), from entering the marketplace. It also removes the requirement for EPA certifications on aftermarket vehicle conversions. The bill specifically would reform Reid Vapor Pressure (RVP) requirements by allowing higher blend levels of ethanol to exceed the current 9.0 pounds per square inch (psi) standard, and it prevents EPA from regulating biomass fuel. RVP is a measure of how quickly fuel evaporates into the atmosphere. EPA regulates RVP in conjunction with ozone emissions in the summer months. Congress previously directed EPA to issue a “one pound waiver” for ethanol blends of ten percent, allowing E10 to be sold at 10.0 psi. Last year, President Trump signed an executive order directing EPA to look into the possibility of allowing year-round sales of E15. This bill extends the Congressional waiver to higher blends of ethanol, including E15.
By Lynn L. Bergeson
On May 8, 2018, President Trump met with a group of Republican Senators and told them that he is considering allowing exported ethanol to count toward the volumes mandated by the Renewable Fuel Standard (RFS). During this meeting, Mr. Trump also reiterated support for expanding sales of E15, and withdrew his verbal proposal to cap the price of RINs, which had been widely criticized by the ethanol industry. These announcements came after increasing concern about the future stability of the RFS after the U.S. Environmental Protection Agency (EPA) recently granted over two dozen hardship waivers to small refineries for 2017, a drastic increase from EPA’s prior practice of granting between six to eight hardship waivers annually.
The ethanol industry reacted favorably to some of these proposals, with the Biotechnology Innovation Organization (BIO), a member of the Biobased and Renewable Products Advocacy Group (BRAG®), releasing a statement thanking President Trump for rejecting the RIN cap and for his support of year round sales of E15. Brent Erickson, Executive Vice President of BIO’s Industrial & Environmental Section, stated: “Ensuring that E15 can be sold year round in states and regions where it is already approved will give advanced and cellulosic ethanol more opportunity to compete in the market in coming years. E15 reduces the price of gasoline by 5 to 15 cents per gallon, and it lowers tailpipe and greenhouse gas emissions all year round. . . . BIO and its members continue to oppose unnecessary changes to the Renewable Fuel Standard. EPA has already provided unwarranted waivers to oil refiners that are destroying demand for all biofuels and undercutting industry investments. We thank Senators Grassley and Ernst for standing with us in opposition to the damaging proposal for a cap on RIN prices.” Mr. Trump’s proposal to allow RINs from exported ethanol to count towards mandated volumes under the RFS was greeted with more caution, with Erickson stating: “We remain concerned about the impact counting RINs from exported renewable fuels would have on the development of advanced biofuels and we look forward to working with the Senators to ensure the RFS continues to promote production and use of homegrown biofuels.” Kevin Skunes, President of the National Corn Growers Association, was also distrustful of this proposal, stating: “Offering RIN credits, which are supposed to be derived from a domestic renewable fuel use, for ethanol exports would threaten trade markets and impact corn farmers’ economic livelihoods.”
By Lynn L. Bergeson
On April 30, 2018, 18 pro-ethanol Senators sent a bi-partisan letter to U.S. Environmental Protection Agency (EPA) Administrator Scott Pruitt requesting a “transparent timeline … on the regulatory pathway forward to address the Reid Vapor Pressure (RVP) issue,” “an expected timeline of the rulemaking process to clarify how the agency will make this change to allow higher ethanol blends access to the marketplace” and “immediate clarity to allow higher ethanol blends to be sold in the interim while the outdated regulation is being changed” as related to President Trump’s commitment to allow for 15 percent ethanol blends (E15) to be sold year-round and Pruitt’s statements in an EPA budget hearing in front of the House Energy and Commerce Committee’s Subcommittee on Environment regarding EPA’s issuance of a waiver that would allow year-round sales of gasoline containing 15 percent ethanol.
By Kathleen M. Roberts
On April 13, 2017, the Iowa Renewable Fuels Association (IRFA) released a statement regarding the passage of a bill, HSB 187, by the Iowa House Appropriations Committee that would cut the value of the Iowa biofuels tax credits and complicate the mechanism for receiving the credit. According to the bill, the value of the tax credits would be determined based on annual sales, and the amount of the credits would be capped on an annual, statewide basis. The purpose of the biofuels tax credits was to incentivize consumers to purchase higher blends of ethanol and biodiesel, such as E15, E85, and B11, by offering a tax credit to fuel retailers. IRFA states, however, that the amendments to HSB 187 undercut the entire purpose of the tax credits since fuel retailers cannot pass the price reduction to the consumer if they do not know what the credit is at the time the fuel is sold.
On March 13, 2017, the South Dakota Farmers Union announced that the National Farmers Union had passed a resolution calling for the U.S. Environmental Protection Agency (EPA) to open the market to higher blends of ethanol during its annual meeting in San Diego. The resolution, which was brought forward by the South Dakota Farmers Union delegation, promotes the use of higher blended fuels, such as E30, as a way to expand the retail fuels infrastructure and support the Renewable Fuel Standard (RFS).
In addition to passing the resolution, the National Farmers Union filed legal comments regarding EPA’s overreach in its interpretation of the Clean Air Act (CAA), which limits ethanol content to 15 percent. Doug Sombke, President of South Dakota Farmers Union, called on EPA and all government regulators to reverse statements and policies that unfairly limit the amount of ethanol in fuel and stated that both the state and national organization continue to seek greater market access for higher blended fuels.
On March 7, 2017, the Governors’ Biofuels Coalition sent a letter to President Trump requesting the Administration’s support for changes to various federal policies to strengthen biofuels production and expand markets for ethanol and other biofuels. The letter, which was signed by Nebraska Governor Pete Ricketts and Iowa Governor Terry Branstad, specifically highlights the need for the Trump Administration to change the fuel volatility limitations placed on E15, to update corn ethanol’s lifecycle carbon emissions profile to reflect advances in ethanol production technology, and to update the 2014 motor vehicle emission simulator model to prohibit spurious comparisons of high- and low-ethanol emissions factors. The governors commended Trump on his support of the biofuels industry over the past year and stated that expanding biofuels production is one of the best ways to meet the nation’s energy needs.
On September 13, 2016, governors of seven ethanol producing states wrote to EPA Administrator Gina McCarthy requesting the removal of the Reid Vapor Pressure (RVP) limit on E15. RVP measures gasoline volatility, and E10 receives a one pound-force per square inch (psi) RVP waiver between June 1 and September 15 that is not extended to E15. The letter states "EPA's disparate handling of E10 and E15 with regard to fuel volatility regulation is stifling the widespread adoption of E15 and mid-level ethanol blends." The governors continue to argue that "This inequitable RVP treatment of E10 and E15 has no scientific basis since E15 and higher blends are lower in volatility than E10 when blended with the same base gasoline. We strongly urge you to take immediate action to establish a volatility regime that allows a uniform gasoline blendstock to be suitable for blending both E10 and E15 (and higher blends) year round." The American Coalition for Ethanol and the Iowa Renewable Fuels Association have both spoken out in support of the letter, stating the RVP limit is one of many barriers to ethanol being competitive in the fuel market.