RFA forced out of Fuels America over point of obligation battle | TheFencePost.com
The Hagstrom Report

Back to: News

RFA forced out of Fuels America over point of obligation battle

Chaos has reigned in the renewable fuels world in the last two days.

It all started Feb. 27 when Renewable Fuels Association President Bob Dinneen told Politico that President Donald Trump is planning to issue an executive order changing the point of obligation that determines which entities are responsible for meeting the biofuels mandates under the Renewable Fuel Standard. Dinneen said he had received a call from an official saying that the White House was planning to shift the point from oil refiners to gasoline wholesalers.

The shift would benefit Carl Icahn, owner of CVR Refining and a Trump adviser.

Dinneen said he was told that the shift was a done deal and that he told the White House he would support it if the Environmental Protection Agency would allow the use of E15 – gasoline containing 15 percent ethanol – year round.

"I was told the executive order was coming no matter what, so I tried to get what I could for my members," Dinneen told Politico.

Growth Energy, a group that represents ethanol plant builders and operators, immediately denounced both the proposal and Dinneen's decision to cooperate with the White House.

Recommended Stories For You

"If true, this proposal would eviscerate America's progress under the RFS and impose indefensible costs on consumers," Emily Skor, CEO of Growth Energy said. "Neither RFA nor Carl Icahn have the authority to strike a 'deal.' Mr. Icahn does not work for the U.S. government; he owns CVR Refining, which would profit directly from this change. RFA does not represent a majority of the biofuels industry; RFA's largest member is an oil refiner, which would also profit directly from such a change. They're negotiating for the same side – and that is not the side of the ethanol industry or the American farmer."

"This move would be a slap in the face of rural America, its representatives in Congress and the president," Skor continued. "This is precisely the sort of self-serving insider deal the American consumer rejects. The administration must reject any such proposed deal and protect the program that has been working for 11 years to deliver better, cleaner and more affordable choices at the pump.

"In exchange for getting his company an exemption for its responsibility under current law, Mr. Icahn has allegedly promised support for a Reid Vapor Pressure (RVP) waiver from the EPA, a change that already has strong bipartisan support because it is a common sense solution that would increase summer sales of higher ethanol blends," Skor concluded.

MORE OPPOSITION

On Feb. 28, Fuels America, a biofuels coalition, announced it had severed ties with RFA.

"Fuels America represents a diverse coalition, from farmers to scientists, working to protect America's Renewable Fuel Standard and promote the adoption of homegrown biofuels that are good for the U.S. economy, for our nation's energy security, and for the environment," the group said in a statement. "In keeping with our mission, we adamantly oppose any effort to derail the RFS by shifting the point of obligation and exempting certain refiners and fuel importers from their responsibility to deliver cleaner, more affordable biofuel options to consumers."

Fuels America also said that Icahn, "in his conflicted role as owner of CVR Refining and special White House adviser, has sought to mislead biofuel advocates into accepting rewrites to the RFS in exchange for changes to outdated EPA regulations that limit summertime sales of ethanol. Yet, Mr. Icahn has no authority to dictate EPA policy, and a waiver to Reid Vapor Pressure limits would be meaningless if retailers lost the incentive to sell higher biofuel blends, as Icahn proposes.

"Despite our opposition, the Renewable Fuels Association has elected to lend its support to Mr. Icahn's efforts," Fuels America concluded. "Accordingly, RFA's position is no longer aligned with America's biofuel industry, and the Fuels America coalition has resolved to sever ties with the group."

Then White House spokeswoman Kelly Love told Politico, "There isn't an ethanol EO in the works."

Dinneen maintained that the executive order is still pending.

"There is certainly something in the works, but they're not going to confirm it until they are ready to roll with it," Dinneen said in a statement sent to various media outlets.

EXECUTIVE ORDER

In a lengthier statement, Dinneen said, "We received a call from an official with the Trump administration, informing us that a pending executive order would change the point of obligation from refiners to position holders at the terminal – a potentially small increase in the number of obligated parties, but one which would distribute the obligation more equitably. Despite our continued opposition to the move, we were told the executive order was not negotiable.

"Our top priority this year is to ensure consumers have year-round access to E15 (15 percent ethanol), and we would like the Trump administration to help cut through the red tape on this unnecessary regulation," he continued. "Consumers are being denied access to the fuel blend due to EPA's nonsensical disparate treatment of E10 and E15 with regard to volatility regulations, preventing E15 from being sold during the summer. We will continue to do everything we can to ensure consumers have access to the lowest cost, cleanest, highest octane source of fuel in the world, and to ensure a strong RFS is maintained."

Then, Growth Energy issued a statement thanking the White House "for putting a stop to the circulating rumors that an alleged 'deal' had been made to change the Renewable Fuel Standard point of obligation."

"We look forward to a constructive, ongoing dialogue with this administration and lawmakers on Capitol Hill about policies that will continue to uphold what has been the nation's most successful energy policy, reducing oil imports and cutting transportation-related emissions," Skor said.

Finally, a coalition of truck stop operators, convenience stores and independent gasoline marketers said, "This backroom deal would severely undermine the Renewable Fuel Standard and force everyday Americans to shoulder the burdens of higher fuel costs and more expensive goods. A majority of the fuel industry, including most refiners and large sectors of transport as well as renewable fuel producers, are united to keep the compliance requirements where they are today. Making this change would only benefit a handful of companies at the expense of average, hardworking Americans."