Acting EPA Administrator Andrew Wheeler discussed the Renewable Fuel Standard, small refinery hardship waivers, Reid vapor pressure (RVP) relief for E15, and issues related to agency transparency during a Senate hearing Aug. 1.

Wheeler testified before the Senate Committee on Environment and Public Works during its hearing, titled “Examining EPA’s Agenda: Protecting the Environment and Allowing America’s Economy to Grow.”

Sens. Joni Ernst, R-Iowa; Mike Rounds, R-S.D.; Deb Fischer, R-Neb.; and Tammy Duckworth, D-Ill., were among those who questioned Wheeler on the EPA’s administration of the RFS program during the hearing.

When questioned by Ernst, Wheeler confirmed that he does believe the RFS should be implemented in a manner consistent with the original intent of Congress.

Ernst discussed the EPA’s recent retroactive approval of an unprecedented number of small refinery hardship waivers, noting that the agency effectively waived 2.25 billion gallons from refiners’ 2016 and 2017 RFS obligations. For compliance year 2017 along the EPA has already granted 29 small refinery exemptions, totaling 1.45 billion gallons. As a result, she said the implied statutory requirement for corn ethanol was lowered from 15 billion gallons to 13.55 billion gallons. “If those gallons aren’t reallocated somewhere then you are not implementing the RFS in a manner that is consistent with the original intent of Congress, correct?” she asked.

In response, Wheeler said,” Part of the original intent of Congress was also to grant the waivers, and there is not a provision for reallocating that. We are taking a look at that issue, but we’re trying to be much more clear and transparent as we grant any small refinery waivers. As you are aware, we have been sued twice on this for not granting enough, and we’ve lost both times.”

While Wheeler agreed with Ernst that the EPA does need to figure out a reallocation strategy, he also stressed that the agency is confined by the law.

During the hearing Ernst also cited a statement made by President Trump July 26 in which he said his administration is “very close” to implementing a RVP waiver allowing year-round sales of E15. She asked Wheeler to state for the record that they agency has the authority to begin a rulemaking process to provide RVP relief for ethanol blends of E15 and higher.

Wheeler indicated the agency has started that process, but noted that “there are certainly people who believe we don’t have that authority. The legislation that this committee considered last year would have been very clear in giving EPA that authority, but we are looking at that issue.”

Rounds discussed the RFS statute, noting there is nothing in the law that indicated the 15 billion obligation for conventional biofuel would be reduced as a result of the agency granting small refinery hardship waivers.

“As one of the former congressional staffers that helped write that section of the law, I wish we would have spent a little bit more time on some of the details now that I’m helping to implement it,” Wheeler said. He also discussed efforts by the EPA to make the small refinery exemption process more transparent. “We are creating a dashboard where we will publicize all the information about when we grant a waiver and circumstances around the waiver,” he said. “We have to balance that with the confidential business information that will be impacting companies. But, we are working to try to be more transparent on that side of the program and we are looking to see what we can do as far as making up the difference when we have to grant a waiver for the 15 billion gallons. It is not a clear cut. The problem is that the waivers are being requested and granted after the numbers have already been set and we are taking about whether or not we can go back retroactively to change the numbers and change the compliance numbers for the other people in the industry.”

When asked by Rounds if he can commit to trying to expedite approval of an RVP waiver for E15, Wheeler noted the waiver “was part of a broader package of a deal trying to address concerns of the oil refining industry along with concerns of ethanol producers.”

Fischer asked Wheeler about the EPA’s process in quantifying the disproportionate economic hardship that is required as part of the small refinery waiver process. He again discussed the agency’s work towards developing a dashboard to provide information to the public on small refinery hardship waivers, noting the data included in the dashboard will include information on the EPA’s process.

Following the hearing, the American Coalition for Ethanol released a statement thanking Ernst, Rounds Fischer and Duckworth for confronting Wheeler the ethanol demand destruction created by the small refinery exemptions and how the EPA intends to reallocate gallons and make good on Trump’s commitment to year-round sales of E15.

“While we appreciate Acting Administrator Wheeler is looking into how EPA might reallocate the SREs and intends to publicize a ‘dashboard’ to provide more transparency about the circumstances around why refineries receive exemptions from RFS compliance, farmers and biofuel producers are suffering the consequences of demand destruction and collapsed RIN and commodity markets,” said Brian Jennings, CEO of ACE. “We need reallocation sooner rather than later.

“Finally, as I have said many times, actions speak louder than words,” Jennings continued. “The president has promised to allow E15 use year-round on multiple occasions, including the public statement in Iowa last week about being ‘very close’ to making this happen. I am disappointed Acting Administrator Wheeler said ‘some don’t think we have the authority’ to allow E15 use year-round because even former administrator Scott Pruitt admitted EPA has the legal authority when speaking with ACE members in Kansas and South Dakota in June. It is important for Acting Administrator Wheeler to make good on the president’s promises to maintain the RFS as the law of the land and allow E15 year-round.”

A full recording of the hearing can be viewed on the Senate Committee on Environment and Public Works website.