Wheeler: E15, RFS rulemakings could be delayed by shutdown

On Jan. 16, the U.S. Senate Committee on Environment and Public Works held a hearing on the nomination of Andrew Wheeler to serve as EPA administrator. President Trump formally nominated Wheeler for the post Jan. 9. He has held the position of acting EPA administrator since July 9, following Scott Pruitt’s resignation earlier that month.

Committee members questioned Wheeler on a wide range of issues during the hearing, which spanned nearly three hours, including issues related to the Renewable Fuel Standard, small refinery hardship waivers and year-round E15.

During the hearing, Sen. Mike Rounds, R-South Dakota, referenced a statement made by an EPA spokesman last week that indicated the E15 rulemaking is a priority for both Trump and Wheeler and stated the ongoing partial government shutdown will not impede the agency’s ability to keep its June 1 deadline to complete the rule. Rounds asked Wheeler if he believes he can commit to finalizing the EPA’s rule permitting the year-round sale of E15 before the summer driving season starts.

“As of today, yes,” Wheeler said. “But, I do caveat that with we’re unable to work on it right now during the government shutdown.”

Wheeler confirmed the EPA originally planned to issue the E15 proposal in February. Regarding the shutdown, he noted he was able to keep the EPA open for one week longer than the rest of the federal government impacted by the shutdown. He also stressed that it’s not a day-to-day exchange as far as how much longer it will take to complete the proposal once the shutdown ends, but said the rulemaking may be slightly delayed at this point. “We will get it done before the summer driving season, provided [the shutdown ends] in a reasonable time,” he said.

Sen. Ernst, R-Iowa, asked Wheeler if the agency has been able to take any steps to mitigate delays on the E15 rule that might occur due to the shutdown. In response, Wheeler said the agency has not been able to take any such steps with regard to the E15 rule, as the rulemaking is not subject to a court-ordered deadline and is not an emergency. “At this point we can only work on court ordered deadlines, emergencies, or constitutional authorities, such as assisting in my preparation for the confirmation hearing,” he said.

At the start of the hearing, Wheeler confirmed that the EPA currently has approximately 14,000 employees. Approximately 700 of those workers were initially exempt from the furlough. That number has increased to approximately 800 now, but varies on a day-to-day basis. Wheeler also confirmed that none of those 14,000 employees, including those still at work, is being paid.

During the hearing, Wheeler also fielded several questions related to small refinery hardship waivers. Wheeler noted that three court cases on small refinery waivers have been decided to date. Those three cases were instigated during the Obama administration, he added, noting the EPA has lost all three. He also noted that the while the small refinery exemption is included the RFS statute, it has also been encouraged through the appropriations process. “We’ve gotten appropriations language telling us to implement the small refinery program as well,” he said.

Regarding the process behind the small refinery exemption program, Wheeler explained that the waiver petitions are first analyzed by the U.S. DOE. The DOE then send recommendations over to EPA. A technical team in the EPA’s Office of Air and Radiation then reviews information provided by the DOE and sends a recommendation to the assistant administrator in the Office of Air and Radiation, who in turns sends a recommendation to the EPA administrator.

Wheeler also stressed that hardship waivers are based on the refinery itself, not the parent company that owns the refinery. He explained that the hardship exemption program is in place to prevent small refineries, many of which are located in areas where they are the only supplier of gasoline in the region, from being shut down.

Regarding requests made by supporters of the biofuels industry to reallocate renewable volume obligations (RVOs) waived by the small refinery exemption program, Wheeler discussed the possible impacts and problems. There are two competing issues there, he said, noting that if you grant a small refinery exemption, it takes barrels away from the overall RVO. He also explained that if the agency were to increase the RVO based on the volumes waived, it would have a rolling impact where more refineries become eligible for the exemption. “What we have tried to do is provide more transparency,” Wheeler said, noting that the EPA launched a dashboard featuring small refinery exemption data last year and is also taking a hard look at the overall numbers as part of its “reset” rule. The agency originally intended to issue the rulemakings for the RFS reset, E15 and the 2020 RVOs in February.

Sen. Kevin Cramer, R-North Dakota, questioned Wheeler on the RFS post 2022. According to Wheeler, if Congress takes no action before 2022, the future implementation and operation of the RFS will be up to the EPA. But, he said the agency has not, to date, started to think about what it might do with the program post 2022. “I think it is always helpful for Congress to write the legislation that directs the agency to implement the programs,” he said.

The American Coalition for Ethanol thanked several senators, including Ernst, Rounds and Tammy Duckworth, D-Illinois, for questioning Wheeler on the RFS and E15. ““We appreciate that Acting Administrator Wheeler assured the senators that EPA is ‘still on schedule’ for issuing a final rule allowing year-round E15 sales in time for this summer’s driving season, but his caveat of if the government is back up and running in a ‘reasonable length of time’ is no excuse for a delay,” said Brian Jennings, CEO of ACE. “It’s been more than three months since President Trump directed EPA to lift Reid vapor pressure (RVP) restrictions on E15, so why didn’t EPA set rulemaking wheels in motion in November, December, or January? Earlier this week, the president said that ‘we’re ensuring ethanol remains a vital part of America’s energy future with E15,’ so it’s important EPA makes good on the president’s promise. It’s also critical EPA reallocate the SREs. It's insulting to farmers and ethanol producers suffering real economic harm that refiners enjoy record profits and are allowed to keep RINs through the waivers. With collapsed RIN and commodity markets, we need reallocation sooner rather than later.”

The Renewable Fuels Association has also responded to the hearing. “We were encouraged to hear Acting EPA Administrator Wheeler commit to completing the year-round E15 regulatory fix before the summer driving season begins, but we are disappointed that there was no commitment to repair the significant damage to the ethanol industry caused by his predecessor's issuance of RFS compliance bailouts to highly profitable oil refiners,” said Geoff Cooper, president and CEO of the RFA. “America's ethanol producers and farmers continue to suffer as a consequence of former Administrator Pruitt's actions, and we remain hopeful that Mr. Wheeler will use far more restraint and judiciousness as he evaluates the 22 petitions for 2018 small refiner exemptions now before the agency.

"And despite Mr. Wheeler's assurance on the timing of the E15 rule, we remain concerned that the partial shutdown is compressing a timeline that was already very tight,” Cooper continued. “We believe EPA would greatly improve its chances of getting the regulatory fix done before summer if it separated the year-round E15 provisions from so-called 'RIN reform' provisions that are also being considered as part of this rulemaking package." 

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