Does A “Compromise” On The RFS Exist?

Earlier this week, EPA Administrator Scott Pruitt said he would support the sale of E15 throughout the year, if the law allows him to. ( Farm Journal )

Legislators are looking for a compromise on the Renewable Fuel Standard (RFS), but Sen. Chuck Grassley (R-Iowa) doubts one can be found.

“There are some changes [to the RFS] on the table that are trying to find ‘a compromise’ that can help refineries as well as not hurt ethanol,” he told AgriTalk host Chip Flory on Monday. “I have my doubts that such a compromise is out there.”

According to Grassley, the current proposals, which includes capping Renewable Identification Numbers (RINs), are bad for ethanol.

“If they are trying to find middle ground, and find middle ground that doesn’t hurt ethanol, I would support it,” he said. “I’m very pessimistic whether that could be done.”

This discussion began after an oil refinery in Pennsylvania filed for bankruptcy blaming the cost of RINs for their financial woes. According to Jim Wiesemeyer, Pro Farmer’s Washington Policy analyst, the EPA will only require the refinery to meet a portion of its outstanding obligation under the RFS as part of a settlement filed with the Bankruptcy Court in Delaware on Monday.

Grassley says one refinery filing bankruptcy is not a valid reason to “ruin ethanol.”

“We need grassroots to tell the White House not to cap RINs,” he said. “There’s 14 states that produce most of the corn, of which 40% of the corn crop goes into ethanol. We need 28 senators from 14 corn states to be involved in this discussion. There’s more at stake than just Iowa corn.”

Earlier this week, EPA Administrator Scott Pruitt said he would support the sale of E15 throughout the year, if the law allows him to.

"I told the folks in Iowa, if the law allows me to do it I'll sign it tomorrow,” he said. “It doesn't make sense to only be able to sell nine months out of the year."

Last year Pruitt said he would ask staff to investigate whether EPA had the authority to issue a waiver under the Clean Air Act to allow year-round sale of E15 in all states, according to Wiesemeyer.

“Some refining interests have proposed having EPA grant the waiver in exchange for a price cap on the cost of biofuel credits,” he said.

According to Kevin Skunes, president of the National Corn Growers Association, a waiver on the RVP could be a silver bullet. 

“Right now [blenders] have to change their labels and they can’t sell any higher blends than E10 out of a black hose June 15 – September 1 across about two-thirds of the U.S.,” he explained to Chip Flory on AgriTalk. “They are talking about the price of RINs being the problem. More gallons, means more RINs which would naturally drive the cost of RINs down and the market would work just fine.”

Pruitt is also considering putting a limit on who can purchase RINs to keep outside investors from driving up the cost of the certificates.

"There's some things on the trading platform I think should happen no matter what," he said, according to the newspaper. "There seems to be a hoarding of [RINs], which inflates the price of RINs. Some have talked about limiting the participants who buy and sell, so you can get away from some of the speculation that's taking place."

USDA and the EPA are conducting joint research to determine how all of the proposals on the table would impact farmers, the ethanol and oil industries, and the American economy.