Perdue questioned on RFS, waivers, E15 during hearing

By Erin Voegele | April 25, 2018

The Renewable Fuel Standard, Reid vapor pressure (RVP) relief and the U.S. EPA’s misuse of small refiner hardship waivers were among the topics discussed during a Senate hearing held this week.

On April 24, the Senate Committee on Agriculture, Nutrition and Forestry held a hearing on “The State of Rural America.” Agriculture Secretary Sonny Perdue testified at the event.

Several senators, including Sens. Amy Klobuchar, D-Minn.; Joni Ernst, R-Iowa; and Chuck Grassley, R-Iowa, questioned Perdue on matters related to the RFS and E15.

Klobuchar stressed that the EPA has granted small refiner waivers to large refining companies, effectively reducing the 15 billion gallon renewable volume obligation (RVO). She asked Perdue about the USDA’s efforts to gather additional information on those waivers.

Perdue confirmed the USDA has requested information on the waivers. He said he understands approximately 1.12 billion gallons were waived due to those waivers. “Our concern is that is just direct demand destruction,” he said. “The RVO is there statutorily for a reason.”

Perdue also noted that last fall President Donald Trump directed the EPA administrator to leave the RVO for conventional biofuel at 15 billion gallons. Perdue said the USDA is concerned over the waivers and believes they are “adequate compensation for RIN prices, where the administrator could then extend the E15 waiver for all 12 months.” He also said the USDA thinks big oil are using a non-transparent market to hurt their smaller competitors by hording RINs and driving up RIN prices, calling that a factor as big as the blend wall.

Ernst briefly discussed a round-table meeting with Trump a couple of weeks ago in which Trump voiced his support for E15 sales. She also stressed she is very upset with the RFS waivers Pruitt has allowed, stating that “the moves he is making will ultimately kill the RFS.” She asked Perdue what he is specifically doing to help ensure the EPA is not deliberately circumventing the RFS.

In response, Perdue noted that he doesn’t have any statutory power when it comes to implementation of the RFS. “What I do have is the power of persuasion with the administrator and the president.” He noted that he had to dig pretty deep to get the number of gallons that were waived this year. He said it’s important for the USDA to help Trump and his team understand that the instructions he gave Pruitt last fall to maintain the 15 billion gallon RVO for conventional biofuels has essentially been circumvented by the waivers. “We have no legal statutory authority to do anything other than that,” Perdue said.

Ernst also asked Perdue about recent conversations over the E15 waiver.

Perdue said the president will probably make the ultimate call on the E15 wavier, and stressing that is he is encouraging the president to make good on his commitment to implement E15. He also it is important to let the petroleum industry know that the waivers that have already been granted essentially serve as a RIN cap.

Grassley asked Perdue for insight into when an E15 waiver might be put into place. Perdue said he heard the same thing as everyone else in the round-table meeting. “I felt like the president was prepared to move,” he said, noting that some other voices have probably spoken in his ear since that time. “But, I want to encourage him and hope we all can encourage him to move forward on that,” Perdue continued. “I believe that is ultimately the answer over building demand as well as lowering RIN prices.”