Trump administration expected to release SRE deal

By Erin Voegele | September 16, 2019

The Trump Administration is expected to update an existing proposed Renewable Fuel Standard rulemaking this week to increase proposed 2020 renewable volume obligations (RVOs), a move designed to quell outrage from the ag and biofuel communities over the administration’s treatment of small refinery exemptions (SREs).

The U.S. EPA issued its latest round of SRE approvals Aug. 9, granting 31 of 38 SREs that were then pending for compliance year 2018. Two additional SREs for compliance year 2018 have since be filed. The 31 SRE petitions exempted 13.42 billion gallons of gasoline and diesel from having to meet RFS RVOs, accounting for 1.43 billion RINs, or nearly 7.5 percent of the 2018 blending requirements finalized by the agency nearly two years ago.

The volume of SREs granted has exploded during the Trump administration, with 85 SREs approved to date for compliance years 2016-2018, equating to approximately 4.04 billion renewable identification numbers (RINs). In comparison, the Obama-era EPA approved only 23 SREs for compliance years 2013-2015, accounting for a combined 690 million RINs.

The agriculture and biofuel communities, already impacted by the ongoing trade war and difficult weather conditions, have slammed the administration for its treatment of SREs and resulting demand destruction for biofuels. Biofuel trade groups and federal lawmakers representing the Midwest have made countless appeals to Trump and the EPA urging the administration to reallocate waived volumes and restore lost demand for biofuels.

In response to that outrage, Trump on Aug. 19 met with Agriculture Secretary Sonny Perdue, U.S. EPA Administer Andrew Wheeler, Energy Secretary Rick Perry, U.S. Ambassador to China Terry Branstad and others discuss ways to boost the ethanol industry. A leaked memo from Perdue dated Aug. 20 in reference to that meeting outlined several actions federal officials were considering in response to backlash over the recent approval of 31 SREs. Those options included rescinding a portion of the recently approved SREs; expeditiously taking steps to allow E10 pumps to be approved for E15; taking steps to encourage and facilitate greater use of flex fuel vehicles; fixing “major problems” in the proposed RFS reset rule, which is currently under review by the White House Office of Management and Budget; and prospectively redistributing gallons associated with projected SREs in annual RVO rulemakings beginning with the 2020 RFS standards.

Roughly a week later, on Aug. 29, Trump issued a tweet suggesting his administration is working on a “giant package” to boost demand for ethanol. 

Trump confirmed Sept. 12 that he had hosted another “big meeting on ethanol” earlier that day. “We had a great meeting with Chuck Grassley, Join Ernst, Mike Rounds,” he said to reporters before boarding Marine One, according to the White House. That meeting also included Iowa Gov. Kim Reynolds and Sen. John Thune, R-S.D. “I think we had a great meeting on ethanol, for the farmers,” Trump continued. “I think we had—our meeting was a great meeting. Let’s see what happens. But there’s been nobody better to farmers than Donald Trump, that I can tell you. I think we made a lot of progress on ethanol…”

Reynold confirmed the meeting in an Sept. 12 tweet. “Appreciated the opportunity to meet with [Trump] at the White House today to discuss the importance of ethanol to rural America!” she wrote. “We know how important this industry is to our hard working farmers and I will never stop fighting for it.”

Sen. Chuck Grassley, R-Iowa, also addressed the meeting in a tweet. “Met ystrday w Pres Trump at White House w Sen Ernst Gov Reynolds + other Midwest senators ethanol/biodiesel are hurting in Iowa EPA need to follow the law of 15B gallons Farmers are counting on [Trump],” he wrote on Sept. 13.

“Just finished a productive meeting with [Trump} about the #RFS. Iowans’ voices are being heard and process is being made,” Sen. Join Ernst, R-Iowa, tweeted Sept. 12.

Information obtained by Biomass Magazine on Sept. 14 indicates the proposal currently expected to be approved and released by the administration would boost the proposed 2020 RVO from its current 20.04 billion gallons to 22.386 billion gallons. The increase would include a 500 million gallon boost for D5 advanced biofuel, a 500 million gallon boost for conventional biofuel and an SRE adjustment of approximately 1.346 billion gallons. The deal would also increase the 2021 RVO for biomass-based diesel by 250 million gallons. It appears the 500 million gallon boost for conventional biofuels would also be carried through 2021, with a 2021 SRE adjustment of 1.583 billion gallons.

The EPA is expected to issue a supplemental proposal to its 2020 RFS rulemaking to incorporate those changes. That rulemaking, which includes 2020 RFS RVOs and the 2021 RVO for biomass-based diesel was released in July. A public comment period on the proposal closed Aug. 30. Under statute, the EPA is required to finalize the rulemaking by Nov. 30. Those familiar with the supplemental proposal have indicated the EPA plans to meet that deadline.