Iowa applauds EPA’s decision on ‘Point of Obligation’ for biofuels

The Iowa renewable fuels industry, along with corn and soybean growers, received welcome news last week when the U.S. Environmental Protection Agency denied petitions from petroleum refiners to change the Renewable Fuel Standard rules on who is responsible for blending ethanol with gasoline and biodiesel with diesel fuel.

EPA on Nov. 22 decided to maintain the point of obligation as specified by the RFS. Administrator Scott Pruitt followed through on the promise to a group of Midwest senators that he would deny a petition from oil refiners to change the point of obligation. Valero and other refiners petitioned EPA in 2016 to move the blending responsibility to fuel retailers.

The biofuels industry opposed making the change, saying it would result in a decrease in production, distribution and use of renewable fuels.

IRFA commends EPA

In response to last week’s announcement, Iowa Renewable Fuels Association Executive Director Monte Shaw said:

“We commend the EPA for maintaining the stability of the RFS by officially rejecting any change to the point of obligation. The RFS is working and obligated parties have had 10 years to acclimate their business models to the program. Changing the RFS point of obligation would have only served to reward those who haven’t lifted a finger to help the implementation of the RFS and to punish those who have worked hard to make it the most successful energy policy in U.S. history.”

In its decision, EPA concluded that refiners didn’t show that shifting the responsibility for blending to retailers would improve the effectiveness of the RFS program. “EPA believes that a change in the point of obligation would unnecessarily increase the complexity of the program and undermine the success of the RFS,” the EPA notice of denial said.

Sen. Chuck Grassley of Iowa also believes this is the right policy conclusion, and he is glad to see it is happening. “This decision puts the issue to bed, and giving certainty to the renewable fuels industry is very important,” he says.

Grassley was a vocal opponent of changes in the point-of-obligation rules sought by petroleum refineries. “Keeping the point of obligation where it is now, with refiners and importers, has worked and makes sense,” he says. “Moving the point of obligation from a hand-full of refiners to hundreds or thousands of small fuel retailers would undermine the integrity and viability of this successful program.”

Iowa Gov. Kim Reynolds says keeping the responsibility for blending with refiners ensures stability in the biofuels market. She had told EPA Chief Pruitt this several times in recent months, and he genuinely listened to her concerns, she says.

Ernst says this decision helps protect RFS
Sen. Joni Ernst of Iowa, a member of the U.S. Senate Committee on Agriculture, Nutrition and Forestry and the Senate Committee on Environment and Public Works, made the following statement after EPA reaffirmed administrator Pruitt's previously stated commitment that he will support the spirit and the letter of the RFS: “I'm pleased to see reports that reaffirm EPA administrator Pruitt's previously stated commitment to me and my colleagues, that he will support the spirit and the letter of the RFS as intended by Congress. 

“As I’ve said before,” adds Ernst, “These assurances are a win for Iowans. I’m grateful the Trump Administration is keeping its pledge to rural America to advance the full potential of the RFS, and I’ll continue to work tirelessly to protect and defend the RFS.”

This latest EPA decision is a positive sign for the biofuels industry and for agriculture, but it is only one piece of the puzzle. EPA is expected to announced a decision on volume requirements — the amount of biofuels that must be blended with the nation’s food supply in the coming year — by the end of this month.

In July, EPA proposed volume requirements for cellulosic ethanol, advanced biofuel and total renewable fuel that are lower than the 2017 requirements. Grassley and Ernst and 36 other U.S. senators sent a letter to EPA in October arguing that the 2108 volume rule would be a step back for advanced biofuels, resulting in less renewable fuels being blended than in 2017.”

“The rule unjustifiably flatlines biomass-based biodiesel, reduces advanced biofuels, and reduces the cellulosic ethanol blending target by 25%,” the senators wrote. “EPA arrives at these lower targets by using a new method that’s more reliant on historical data than projected volumes.”

For more information visit the Iowa Renewable Fuels Association at iowaRFA.org.