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Secretary Perdue Testifies on RFS at Committee Hearing

 

The Trump Administration has used its waiver authority under the RFS to exempt several small refiners from their renewable volume obligations (RVOs) which in turn has dampened ethanol RIN values. EPA has the authority to grant exemptions from the program to refineries with a capacity under 75,000 barrels per day if the company can demonstrate financial hardship. Twenty-five exemptions have already been granted this year with possibly more to come.

Last week, Agriculture Secretary Sonny Perdue testified before the Senate Agriculture Committee. At the hearing, Secretary Perdue was asked about waivers granted to smaller refineries for the Renewable Fuel Standard (RFS). Sen. Joni Ernst (R-IA) questioned Perdue on these waivers saying, “EPA has granted about 25 small refinery hardship waivers. Some of these refineries are neither small nor facing hardships. So, these waivers, to me, are unacceptable. And last week, and again today, you agreed that these waivers, like the one Andeavor received, constitute demand destruction for biofuels. So, what will you do specifically to ensure that the EPA is not deliberately circumventing the RFS?” In response, Secretary Perdue stated that they “had to dig pretty deeply to get the number of gallons that had been waived this year, and with the President and his team let them understand how the instructions that he was given last fall over maintaining the RVO obligation at 15 billion gallons has essentially been circumvented by the waivers.” Perdue also stated that he understands approximately 1.12 billion gallons were waived due to the waivers.

Additionally, Sen. Ernst asked Secretary Perdue if he had spoken with EPA Administrator Scott Pruitt regarding the year-round E15 RVP waiver. Perdue responded saying that he had spoken with Administrator Pruitt and stated that “these waivers have been the antidote to RIN prices in what [Pruitt] has already done, so that I would encourage him, and have actually exhorted him to do the E15 waiver, as I have the President.”

On April 9, five Senators fired off a letter to the EPA Administration urging the EPA to halt the exemptions because it undermined the intent of the RFS. The letter stated, “The granting of waivers for 2016 RVOs have effectively reduced the 2016 requirement of 15 billion gallons to 13.8 billion gallons.” Click here to read the letter.

Additionally, two weeks ago, 13 Midwestern senators called on EPA Administrator Scott Pruitt to stop granting small refiners exemptions from their RFS obligations, stating that the waivers could severely hurt the market for biofuels for years to come. In addition, the Senators called for transparency in the waiver process and told EPA to notify Congress in two weeks with the list of refineries that have been granted waivers, the reasons for granting the waivers, and to commit to granting waivers only during the annual RVO rulemaking process. Click here to read the letter.
 

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