IRFA’s Monte Shaw Says E15 RVP Rule “Long Overdue” at Today’s EPA Hearing
March 29, 2019
Shaw expresses appreciation for action on E15, concern about other rule provisions
Contact: Cassidy Walter
JOHNSTON, IOWA – Today at the EPA hearing on the recently-released E15 RVP draft rule, Iowa Renewable Fuels Association (IRFA) Executive Director Monte Shaw emphasized the industry’s appreciation to President Donald Trump and EPA for moving forward with a “long overdue” E15 RVP fix.
Shaw specifically expressed appreciation for the strong legal justification EPA included in the draft rule, that E15 qualifies for the same one-pound RVP waiver E10 receives because E15 contains more than 10 percent ethanol and is substantially similar to E10.
“As someone old enough to have been taught about Venn diagrams in school, I can assure all present today that E15 contains 10 percent ethanol…and a little more,” Shaw said.
Shaw also spoke on two provisions in the draft rule that could stunt the growth of the biofuels industry. First is a provision that would make it illegal for ethanol plants to create E85 by blending ethanol with natural gasoline because of concerns that the final product would not meet EPA fuel specifications.
“Refiners can use natural gasoline to create a BOB (blendstock for oxygenate blending) that is eventually blended into E15,” Shaw said. “There is a regulatory program appropriate to large refiners to ensure the final blend meets specs. Ethanol plants should also be allowed to use natural gasoline to create E85 that is eventually blended into E15. A regulatory program can be instituted appropriate for blender pumps that will ensure the final E15 blend meets all specs…”
Shaw called for EPA to issue a supplemental notice to call for public comments specifically on this issue.
“We feel strongly that these provisions are a change in policy and regulation,” he said. “We think the Administrative Procedures Act does apply and public comments should be taken.”
Lastly Shaw declared IRFA’s objection to a provision in the rule that would jeopardize retailers’ financial incentive to offer biofuels by putting a time limit on how long they could hold onto Renewable Identification Numbers (RINs), the credits obligated parties must turn into EPA to prove compliance with the Renewable Fuel Standard (RFS). Obligated parties can receive RINs by blending biofuels or purchasing them from those who do blend biofuels, like retailers.
“This proposal puts a gun to the head of Iowa’s retailers, forcing them to sell 100 percent of their RINs each quarter, while allowing refiners to only retire 80 percent of their obligation each quarter, with additional flexibility to push off that compliance into future quarters,” he said. “The obvious result to any first-year econ student is that RINs will become essentially worthless as obligated parties calmly wait for the clock to tick down on retailers. This proposal creates a market barrier to the expansion of E15 as big or bigger than the RVP regulatory barrier that EPA proposes to remove.”
He also emphasized this RIN reform provision appears unnecessary considering EPA’s own analysis concludes the RIN market is not being manipulated.
“If you adopt RIN procedures that eviscerate the value of RINs, as this proposal does, then you have eviscerated the incentive to expand the use of renewable fuels, which is the main purpose of the RFS,” Shaw said. “With no actual market manipulation to address, this proposal wreaks of a backdoor attempt to simply rip the heart out of the RFS. It must not stand.”
Shaw concluded by urging that this rule be finalized by the June 1st deadline to avoid any interruptions in E15 sales.
“I do want to end by commending the EPA for including a solid and defensible plan for granting year-round E15 sales that, if adopted, would be a boost to the RFS, fuel consumers, renewable fuels producers, farmers, and rural America,” Shaw said.
To view Shaw’s full testimony, click here.
The Iowa Renewable Fuels Association represents the state’s liquid renewable fuels industry and works to foster its growth. Iowa is the nation’s leader in renewable fuels production with 43 ethanol refineries capable of producing over 4.5 billion gallons annually – including 34 million gallons of annual cellulosic ethanol production capacity – and 11 biodiesel facilities with the capacity to produce nearly 400 million gallons annually. For more information, visit the Iowa Renewable Fuels Association website at: www.IowaRFA.org.