Q&A: Good News for Biofuels
With U.S. Senator Chuck Grassley
Q: What action did the Trump administration take to boost biofuels?
A: Federal law requires the U.S. fuel supply to contain a minimum volume of renewable fuel, which helps petroleum fuels burn more cleanly and replaces a petroleum-based substance that was used for that purpose but was found to cause cancer. Nearly two decades ago, I fought to include the Renewable Fuel Standard (RFS) in the Energy Policy Act of 2005 and secured an annual expansion in the 2007 Energy Independence and Security Act. The Environmental Protection Agency (EPA) administers the RFS and sets volume mandates from year to year. Since then, the RFS has served as an instrumental energy policy to help achieve energy independence, diversify the energy supply, boost the rural economy and reduce pollution. Iowa anchors America's renewable energy strategy, today producing the most ethanol and biodiesel in the United States. The renewable energy industry employs tens of thousands of Iowa workers and boosts the price of corn and soybeans for our farmers. In fact, about half of the state's corn harvest goes to ethanol plants. The RFS wins on the merits for our nation's all-of-the-above energy strategy. Remember, the oil industry initially worked with me to create the RFS to help them out of the mess they were in after using a cancer-causing agent. But it has been under attack in recent years. Reduced overall demand for fuel has locked oil state lawmakers, who are seeking more market share, and farm state lawmakers, who are seeking to preserve the demand for renewable fuels, in a battle from opposite ends of a policy tug-of-war. Here's why. The law includes a provision that allows oil refineries to apply for an exemption from the blending requirements based on disproportionate financial hardship. Not surprisingly, the oil industry has sought to exploit the small refinery exemption (SRE) every chance it gets.
The 10th Circuit Court of Appeals issued a decision in January that should have put the case to rest once and for all. It ruled the Environmental Protection Agency (EPA) exceeded its authority by approving most of the waivers it has issued over the years and that only refineries that had secured exemptions continuously since 2010 are eligible.
Most recently, the oil industry tried to secure retroactive waivers as an end-run around the 10th Circuit decision. That would open the door to further abuse of waivers and take away a big market for corn and soybeans and remove hundreds of millions of gallons of clean-burning biofuels from the nation's fuel supply. Since March of this year, the oil industry made 68 requests for retroactive waivers -- also known as gap-year waivers -- that would retroactively exempt refineries from blending obligations they already met. In September, the Trump administration rejected 54 petitions. In the denial, EPA Administrator Andrew Wheeler said, 'These small refineries did not demonstrate then or now that they experienced disproportionate economic hardship from compliance with the RFS program and do not warrant an exemption for those RFS compliance years.' His statement hammers a nail in the coffin on this loophole the oil industry used to circumvent the RFS. Based on this precedent, I expect the EPA will reject 14 waivers that are still pending at the U.S. Department of Energy. That means only two refineries will be eligible for future small refinery exemptions.
Make no mistake. I'll continue my efforts to ensure the law is implemented as Congress intended. Partnering with our Midwestern lawmakers, Sen. Joni Ernst and I will always champion our farmers and biofuels producers and ensure their voices are heard at the White House and the people's house. Throughout the year at my county meetings, I heard from farmers who are struggling to manage low commodity prices and natural disasters. The Trump administration's decision provides a much-needed dose of certainty as the harvest gets underway.
Q: What changes are underway for E-15 at the pump?
A: Last year the Trump administration finalized a rule to allow year-round sales of gasoline blended with 15 percent ethanol. Previous administrations banned the use of higher blend ethanol throughout the busy summer driving season because of a technicality despite being environmentally friendly, removing E-15 as a choice for consumers at the pump. The Trump administration stands by its commitment to biofuels and is continuing to cut regulatory tape, expand consumer choice and help farmers. President Trump recently gave the green light to the states to allow retailers to use their 10-percent ethanol pumps for the 15-percent blend. Previously, federal regulations required a cost-prohibitive investment for retailers to install new fuel storage tanks before they could sell E-15 at the pump. In other welcome news, the U.S. Trade Representative announced Brazil will extend the tariff rate quota for U.S. ethanol sales. The 90-day extension will allow tariff-free access to its markets. The agreement will allow 198 million gallons of ethanol into the country duty-free. Brazil was the largest U.S. ethanol export market last year, purchasing 332 million gallons of U.S.-produced ethanol. As I've repeated many times for many decades, I'll continue championing biofuels every chance I get. Biofuels are good, good, good for America's economy, environment and energy security.