Senators, governors advocate for strong biomass-based diesel RVOs

By Erin Voegele | October 17, 2017

Several senators and governors are taking action to urge the Trump administration to ensure strong 2018 and 2019 renewable blending obligations (RVOs) are set under the Renewable Fuel Standard.

On Oct. 16, a group of four Midwestern governors sent a letter to President Trump asking him to honor his repeated commitments to support rural America and the RFS. On the same day, a bipartisan group of 33 senators sent a letter to U.S. EPA Administrator Scott Pruitt, asking the agency to abandon its effort to undermine U.S. biodiesel production. 

In their letter to Trump, the governors express concern over where the EPA’s proposed implementation of RFS policy is heading, and concern over how renewable fuel producers, farmers and the rural economy will be impacted.

The governors said the EPA has taken unprecedented action and sent signals that it is moving towards a policy that diverges from Trump’s previously stated commitments to the RFS and rural America.

“Two weeks ago, the EPA requested comment on whether it should further reduce the total, advanced and biomass-based diesel volumes beyond the recently proposed (and ill-advised) cuts to the 2018-19 RFS volumes. The EPA also signaled its intent to waive the biomass-based diesel volume for 2018 that it set almost a year ago. That indicates a willingness to upend a decision producers and other stakeholders have already relied upon to make investments, contractual commitments, and create jobs,” said the governors in the letter. “These proposed actions threaten the livelihood of tens of thousands of American farmers and workers who rely on biofuels to support their livelihood. Indeed, every 500 million gallons of increased biodiesel production supports roughly 16,000 good-paying jobs in rural America.”

The governors explain that the EPA has justified its action by indicating it should focus on domestic production when setting RVOs. However, imported volumes, while not counted when setting RVOs, could still be able to be used to comply RVOs. The letter calls EPA’s approach a significant departure from what has been done before, and a change—that if implemented—“will necessarily lead to the reduction of U.S. production and the loss of thousands of jobs in rural America.” This is because foreign subsidies and other factors often make imports cheaper than U.S.-produced biodiesel. As a result, foreign imports wills stay steady while domestic production falls. “In other words, by focusing on imports, the EPA will actually increase their prominence as a percentage of the industry,” said the governors in the letter. “That’s exactly backwards.”

“The stated purpose of the RFS is to grow demand for biofuels—to push the industry to innovate. Far from pushing the industry, the EPA’s proposals take us backwards,” the governors continued. “Cutting the biomass-based diesel volume set a year ago is not only unnecessary, it’s highly disruptive, unprecedented and potentially catastrophic. In fact, the proposal alone has already driven commodity prices down, costing our farmers precious earnings and our communities critically needed revenue.”

Within the letter, the governors also criticize reports that the EPA is considering allowing renewable identification numbers (RINs) from exported gallons of U.S. biofuel to be used by obligated parties to meet RVOs.

“The practical impact of this proposal would be to set up a cannibalistic, zero-sum scenario that in effect would be no different than simply cutting the 15 billion gallon convention RFS level by the amount of ethanol exported,” said the governors in the letter. “In effect, for every gallon exported there would be one less gallon used domestically. This is not the recipe for US energy dominance. What the EPA is reportedly considering would devastate the renewable fuels industry, increase the cost of fuel for consumers, remove the incentive to offer higher blends like E15, and gut the RFS for all practical purposes.”

The letter is signed by Iowa Gov. Kim Reynolds, Kansas Gov. Sam Brownback, Missouri Gov. Eric Greitens, and South Dakota Gov. Dennis Daugaard.

A group of 33 senators, led by Sens. Heidi Heitkamp, D-N.D.; Roy Blunt, R-MO.; Patty Murray, D-Wash.; and Chuck Grassley, R-Iowa, sent a similar letter to Pruitt.

In their letter, the senators said the EPA’s proposed RVOs “do not meet actual biodiesel production capacity in the United States, and could have a negative impact on jobs and economies in rural communities across the nation.” The senators are urging the EPA to increase the RVOs set in the final rule.

Within the letter, the senators said that EPA’s proposed RVOs do not reflect existing potential for the biodiesel and renewable diesel industries in the U.S. and could cause near-term job losses and discourage investment in capacity and new fuel development. The senators also stress that reducing volumes, especially RVOs that were previously finalized, is disruptive, unprecedented and very troubling.

“We have made great progress through the RFS in diversifying our nation’s fuel supply while creating and sustaining jobs, strengthening local economies, generating tax revenues, and improving energy security,” the senators continued. “We urge you to support higher RVOs for biomass-based diesel and advanced biofuels in the final rule to encourage additional development and use of this fuel.”

In addition to Heitkamp, Blunt, Murray and Grassley, the letter is signed by Sens. Tammy Baldwin, D-Wis.; Joni K. Ernst, R-Iowa; Richard Blumenthal, D-Conn.; Deb Fischer. R-Neb.; Sherrod Brown, D-Ohio; John Hoeven, R-N.D.; Maria Cantwell, D-Wash.; Jerry Moran, R-Kan.; Susan M. Collins, R-Maine; Joe Donnelly, D-Ind.; Pat Roberts, R-Kan.; Tammy Duckworth, D-Ill.; John Thune, R-S.D.; Richard J. Durbin, D-Ill.; Dianne Feinstein, D-Calif.; Al Franken, D-Minn.; Martin Heinrich, D-N.M.; Mazie K. Hirono, D-Hawaii; Angus S. King, Jr., I-Maine; Amy Klobuchar, D-Minn.; Claire McCaskill, D-Mo.; Christopher S. Murphy, D-Conn.; Gary C. Peters, D-Mich.; Jack Reed, D-R.I.; Bernard Sanders, I-Vt.; Jeanne Shaheen, D-N.H.; Debbie Stabenow, D-Mich.; Sheldon Whitehouse, D-R.I.; and Ron Wyden, D-Ore.        

A full copy of the governors letter can be downloaded from Reynolds’ website. A full copy of the senators’ letter is available on Grassley’s website.