Republican governors express concern to Trump over EPA actions

Four Republican governors sent a letter to President Trump Oct. 16 with concerns on the recently proposed changes to America’s Renewable Fuel Standard, urging the president to keep his promises to rural America to support the RFS.

“The renewable fuels industry in our states—and others—is poised to grow if the EPA sends positive and consistent market signals through increases in the required volumes,” the governors write. “That will enhance America’s energy security, value-added agriculture and rural economic prosperity. We urge you to continue to fulfill your promises, to continue your support for all biofuels under the RFS and to continue to put America first.”

The U.S. EPA released a request for additional comments on reducing previously finalized volumes required by the RFS program and on using waiver authorities to further reduce biodiesel volumes. The National Biodiesel Board has serious concerns with EPA’s recent actions and coordinated closely with these governors to communicate their concerns to the administration. Specifically, the latest proposed cuts to the RFS volumes threaten jobs in rural America, negatively affect the companies who have invested to comply with the law and undermine the energy security goals of the RFS program.

“NBB appreciates the principled stand these governors have taken,” said Doug Whitehead, chief operating officer at NBB. “They are right to remind the president that millions of citizens from their states are ardent supporters of his, and he made explicit promises to farmers to protect biofuels investments and the Renewable Fuel Standard. President Trump knows that a strong, growing RFS is needed to uphold his promises and to stave off a recession in rural America.”

In the letter, the governors called on EPA Administrator Scott Pruitt to support the job creation and agricultural benefits that higher volumes of biofuels provide: “[T]he proposed volumes … could cause near-term job losses and discourage investment in capacity and new fuel development.”

Led by Iowa Gov. Kim Reynolds, three other governors signed onto the letter, including Dennis Daugaard of South Dakota, Eric Greitens of Missouri and Sam Brownback of Kansas.

Made from an increasingly diverse mix of resources such as recycled cooking oil, soybean oil and animal fats, biodiesel is a renewable, clean-burning diesel replacement that can be used in existing diesel engines without modification. It is the nation’s first domestically produced, commercially available advanced biofuel. Biodiesel supports roughly 64,000 jobs across the U.S.

The National Biodiesel Board is the U.S. trade association representing the biodiesel and renewable diesel industries, including producers, feedstock suppliers and fuel distributors.

The full text of the letter is available below and online as a PDF here.

October 16, 2017

The President

The White House

1600 Pennsylvania Ave., NW

Washington, DC 20500

Dear Mr. President:

We appreciate your repeated commitments to support rural America. We, and millions of our citizens, were drawn to your passionate support of the Renewable Fuel Standard (RFS) and to your explicit promises to our farmers that you would support investments in fuels like biodiesel and ethanol through the RFS.

We write to you now, though, because we are concerned—concerned about where the EPA’s proposed implementation of RFS policy is heading, and concerned about what that will do to our renewable fuel producers, farmers and rural economy.

Since his appointment, Administrator Scott Pruitt has been willing to engage us on issues that are important to our states. We are thankful for that, and we appreciate his willingness to listen. Recently, though, the EPA has taken unprecedented action and sent signals that it is moving towards a policy that diverges from your commitment to the RFS and rural America.

Two weeks ago, the EPA requested comment on whether it should further reduce the total, advanced and biomass-based diesel volumes beyond the recently proposed (and ill-advised) cuts to the 2018-19 RFS volumes. The EPA also signaled its intent to waive the biomass-based diesel volume for 2018 that it set almost a year ago. That indicates a willingness to upend a decision producers and other stakeholders have already relied upon to make investments, contractual commitments, and create jobs.

These proposed actions threaten the livelihood of tens of thousands of American farmers and workers who rely on biofuels to support their livelihood. Indeed, every 500 million gallons of increased biodiesel production supports roughly 16,000 good-paying jobs in rural America. 

To justify the reduction in the RFS biodiesel volumes, the EPA focuses largely on imports. The theory, as the EPA explains it, is that when setting the RFS volume, the EPA should focus on the amount of domestic production and thus set the RFS volume blindly to what is imported into the US. 

That is a significant departure from what’s been done before (even under the Obama Administration) and if it takes effect, it will necessarily lead to the reduction of US production and the loss of thousands of jobs in rural America. That’s because these imported volumes—while not counting when setting the RFS volume—will still be part of the RFS program, meaning that they will still generate RINS. And because foreign subsidies and other factors often make these imports cheaper than U.S.-produced biodiesel, foreign imports will stay steady while domestic production falls. In other words, by focusing on imports, the EPA will actually increase their prominence as a percentage of the industry. That’s exactly backwards.

The EPA also seems concerned that the Department of Commerce might finalize duties on imports from two countries—Argentina and Indonesia—meaning that the illegal dumping will finally stop. While we hope that happens (the final decision is still pending) that is not a cause for reducing the RFS volume. Last year, domestic biomass-based diesel production and imports from other countries exceeded what the EPA is proposing for 2019 and what it has set for 2018. And we already know that at least 200 million gallons of new domestic production capacity will be coming on-line in the next year. So there’s nothing to worry about in terms of domestic production capacity. It will be there; we promise you that, Mr. President.

The stated purpose of the RFS is to grow demand for biofuels—to push the industry to innovate. Far from pushing the industry, the EPA’s proposals take us backwards. Cutting the biomass-based diesel volume set a year ago is not only unnecessary, it’s highly disruptive, unprecedented and potentially catastrophic. In fact, the proposal alone has already driven commodity prices down, costing our farmers precious earnings and our communities critically needed revenue.

Lastly, news outlets have reported that EPA is considering allowing RINs from exported gallons of U.S. biofuel to be used to satisfy an obligated party’s RFS requirement. The letter of the law requires the renewable fuel be used in the United States, and the spirit of the law is to expand consumer access to and use of renewable fuels in our country, as well as to strengthen our energy security. Finally, by incenting ethanol exports, the proposal runs counter to US trade commitments and could spark a trade war with Canada and other trading partners.

The practical impact of this proposal would be to set up a cannibalistic, zero-sum scenario that in effect would be no different than simply cutting the 15 billion gallon convention RFS level by the amount of ethanol exported. In effect, for every gallon exported there would be one less gallon used domestically. This is not the recipe for US energy dominance. What the EPA is reportedly considering would devastate the renewable fuels industry, increase the cost of fuel for consumers, remove the incentive to offer higher blends like E15, and gut the RFS for all practical purposes.

Mr. President, the Renewable Fuel Standard revitalized our rural communities, bringing jobs and hope. The RFS was instrumental in helping major parts of rural America survive the 2008 recession. This program increased commodity values, personal earnings, local and state tax revenues, and economic activities in small towns across the heartland. It is an incredibly successful program that has boosted the agricultural economies in our states.

The renewable fuels industry in our states—and others—is poised to grow if the EPA sends positive and consistent market signals through increases in the required volumes. That will enhance America’s energy security, value-added agriculture, and rural economic prosperity. We urge you to continue to fulfill your promises, to continue your support for all biofuels under the RFS, and to continue to put America first.

We look forward to our continuing work with you to Make America Great Again.

Sincerely,

Governor Kim Reynolds of Iowa

Governor Dennis Daugaard of South Dakota

Governor Eric Greitens of Missouri and

Governor Sam Brownback of Kansas