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Iowa’s Grassley Vows to Fight for RFS
The Renewable Fuels Standard (RFS) is on the news docket again, following comments last week by Environmental Protection Agency Administrator Scott Pruitt.
Pruitt said the recent bankruptcy of Philadelphia Energy Solutions (PES), the largest oil refiner on the East Coast, is cause for overhaul of the nation’s biofuel policy.
The company blames the cost of complying with the RFS, which requires refiners to blend 15 billion gallons of ethanol into the nation’s fuel each year. Specifically, PES and Pruitt blame the program’s requirement that refiners earn or purchase biofuel blending credits called Renewable Identification Numbers, or RINs, to prove to the EPA that they are meeting their obligations. PES owes the EPA about $185 million worth of RINs, and it is unclear how that debt will be settled in its bankruptcy proceeding.
But Iowa Senator Charles Grassley, in his weekly Capitol Hill Report this past Monday, said RINs are only part of the problem. “The refineries can’t blame ethanol for all their problems. They’ve had help from the government, the city of Philadelphia, and the state of Pennsylvania over the years just to stay in business.” Biofuels advocates say other refiners have been able to pass along RIN costs to consumers.
A memo outlining the results of research conducted by Grassley’s energy policy staff on the issue and also released this week says: “The publicly available evidence points to the fact that PES finds itself in financial difficulty due primarily to changes in its available feedstocks and other management decisions. It does face a problem of having to acquire RINs to meet the looming RFS compliance deadline, but that is due in large measure to its reported decision last fall to sell off the RINs it had acquired, presumably in hopes of being able to buy them back at lower cost before the compliance deadline. Moreover, if PES had taken the sensible approach of other merchant refiners and invested in ethanol blending infrastructure or partnered with a blender, it appears it would have no need to purchase RINs at all.”
Overhauling the RFS would require an act of Congress, and Grassley doesn’t see that happening.
“Pruitt went down a road intending to hurt ethanol and help the refineries,” said Grassley. “We hope he doesn’t go down that road again. If he does, the Midwest congressional delegation will put up a fight.”
Grassley added President Trump is committed to the RFS and said so following Pruitt’s comments. “His opinion is sort of ‘all of the above’ when it comes to energy. He supports ethanol, clean coal, nuclear. He’s for conservation and both fossil fuels and alternative energy. Biofuels are responsible for thousands of jobs across the country. There’s no reason biofuels and other renewables can’t exist alongside conventional fuels. I’m thankful President Trump continues to support biofuels and rural America. The president should be applauded for his ongoing commitment to the RFS, which makes our air cleaner, energy cheaper, and country stronger with more domestic energy production.”
Grassley has said it is worth exploring ways to lower RIN prices without undermining the integrity of the RFS, and he would like to see the EPA make the RIN market more transparent.
Immigration and Infrastructure
Grassley also commented on the president’s immigration and infrastructure plans outlined in his State of the Union speech.
Plans are to increase the number of workers allowed in the U.S. However, Grassley said there is red tape to overcome. “Unskilled workers and ag workers are covered under different segments of the law,” said Grassley. “The goal is to get all departments working together to try to make it more efficient.”
There are an estimated 1 million to 22.7 million farmworkers in the U.S., including migrant, seasonal, year-round, and guest program workers, according to the USDA-ERS. Some are managed by immigration law, some by the Labor Department.
Farmers in need of seasonal help have cited cases where costs reach $1,000 per worker for transportation and red tape to get them from foreign countries to their fields.
Grassley also said he sees help on the horizon for rural America’s infrastructure problems, from roads and bridges to broadband and major transportation waterways.
The president’s plan calls for $1.5 trillion in infrastructure improvements over 10 years, primarily by cutting regulatory burdens to speed approval for new projects and leveraging government funding to tap private-sector dollars. The plan further outlines $200 billion in new federal funding including $100 billion in cost-sharing payments for state and local projects and $50 billion dedicated for rural projects.
“I don’t know as the proposed infrastructure improvements will benefit ag more than others,” said Grassley. “It’s needed and we’ll all benefit.”