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Pruitt resigns, as EPA set to increase ’19 biofuel volumes

WASHINGTON, D.C. — Embattled EPA Administrator Scott Pruitt has called it quits at the EPA; engulfed in more than a dozen scandals during his 17-month tenure, the 50-year-old former attorney general of Oklahoma submitted his resignation to President Trump July 5.

“For the past year, Scott Pruitt had been waging war against the Renewable Fuel Standard (RFS), the biofuels industry and the millions of farmers and rural Americans who helped Donald Trump get elected,” said Renewable Fuels Assoc. President and CEO Bob Dinneen.

“It appears these missteps finally caught up with Mr. Pruitt, who apparently thought that RFS stood for ‘Refinery-First Strategy.’”

Pruitt is under investigation for 13 counts of ethics violations, including reports that he retaliated against aides who questioned him, used federal employees to perform personal errands and made demands for security coverage including a bulletproof vehicle and an expanded 20-person protective detail.

Harsh outcries came from the agriculture community over his decision to grant waivers to oil refineries, especially with the revelation by Reuters that the EPA approved them despite objections from the U.S. Department of Energy (DOE). The investigation found the agency consistently ignored the DOE in its recommendations to reject or limit waivers to oil refiners seeking exemptions from the nation’s biofuel standard.

“The ethanol number isn't worth the paper it's written on so long as Scott Pruitt is granting small-refinery exemptions left and right – even beyond what the Department of Energy recommends,” said Iowa Renewable Fuels Assoc. Executive Director Monte Shaw prior to Pruitt’s resignation.

“With Pruitt in charge of the EPA, the ethanol number in reality is more like 13.5 billion gallons, which is well below what President Trump promised and what it takes to grow demand."

The RFS requires refineries to cover costs of blending corn-based ethanol into gasoline; however, the EPA, after consulting with DOE, may exempt small refineries in cases where compliance presents to them a “disproportionate economic hardship.” These waivers can save refiners tens or even hundreds of millions of dollars a year.

“The criteria used to grant waivers has not changed since previous administrations,” stated an EPA spokesperson via email. “EPA follows a longstanding, objectively determined process where the agency uses a Department of Energy analysis to inform decisions about refiner exemptions/waivers, for refineries that are below the statutory threshold.”

In recent months, Reuters found the EPA consistently granted full waivers in cases where DOE recommended only partial exemptions. In one instance, Pruitt granted full approval when DOE advised an outright rejection. It also found the EPA had nearly tripled its amount of waivers since the last administration.

Under the RFS, refining companies must blend petroleum with biofuel. But those that use fewer than 75,000 barrels of crude oil per day may be granted a temporary exemption if complying with the regulations cause them to "suffer disproportionate economic hardship."

Sen. Chuck Grassley (R-Iowa), chair of the Senate Judiciary Committee, said Pruitt may have been breaking the law in granting waivers, by breaching the Administrative Procedure Act. It covers how regulations are to be disclosed for public examination and subjected to comment before being enacted as a federal rule.

 “As chairman of the Senate Judiciary Committee, I also have concerns that EPA may be ignoring or abusing the Administrative Procedure Act as they continue to grant waivers in secret and refuse to respond to Congressional oversight and public information requests regarding the practice," he said.

"The public’s business ought to be public, and hiding behind bureaucracy and poor excuses isn’t going to work.”

RVO increases

The EPA’s announcement of the Renewable Volume Obligations (RVO) for 2019 also did little to help Pruitt’s cause in the ag community when EPA set a blending standard just 3.1 percent higher than the previous year.

Corn ethanol will remain unchanged at 15 million gallons. The EPA proposed to set the 2020 biodiesel level at 2.43 billion gallons, up from 2.1 billion in 2019, and proposed a cellulosic mandate of 381 million gallons for next year.

“Mr. Pruitt’s failure to follow President Trump’s directive to remove the red tape that restricts E15 from being sold in the summertime likely played a part in his demise, and the straw that broke the camel’s back may have been Mr. Pruitt’s recent proposal for 2019 RFS requirements that failed miserably to repair damages done to our nation’s farmers and biofuel producers,” said Dinneen.

The agency had considered raising the biodiesel number 1.5 billion more to make up for the increase of refinery waivers, but that plan was scrapped after objections from the petroleum industry. The EPA is required by law to reallocate gallons lost to waivers if it grants waivers prior to releasing volumes; however, if it waits until after RVOs are announced, it is not required to reallocate gallons to other obligated parties.

Despite the retraction by the EPA on the amount of the increase in biodiesel, supporters were encouraged after a couple of stale years. “We welcome the administration’s proposal to grow the biodiesel volumes, following two flatlined years,” said Kurt Kovarik, vice president of federal affairs at the National Biodiesel Board.

“This is a positive signal for our industry and we’re pleased the EPA has acknowledged our ability to produce higher volumes. We’ve consistently demonstrated that we can do much more.”

“Today’s proposal ignores the underlying problems of the Renewable Fuel Standard,” disagreed Thomas J. Pyle, president of the American Energy Alliance. “This fundamentally broken Washington-knows-best regulation causes millions of American families and businesses to pay more at the pump.

“Doubling down on the broken and failed RFS by raising the renewable fuel blending requirements will only cause more harm to American consumers. It’s time for Washington to finally repeal the RFS, get government out of the business of picking winners and losers and let the free market move our energy economy forward.”

Pruitt’s top deputy, Andrew Wheeler, is set to become acting administrator pending Senate approval. The Advanced Biofuels Business Council (ABBC) expressed hope the former coal lobbyist will act on Trump’s pledge to support biofuel.

“Scott Pruitt’s decisions on biofuels drove a wedge between President Trump and his backers in the Midwest,” said Brooke Coleman, executive director of the ABBC. “We’re very hopeful this will open a new chapter in the relationship between the EPA and rural communities.

“Andrew Wheeler could very easily come out of the gate strong by acting on the President’s pledge to lift regulations on E15 and halting abuse of refinery waivers. It would earn him a deep and loyal bench of supporters across rural America.”