Iowa Senators and 29 others from other states no longer believe that EPA Scott Pruitt’s word is any good. After meeting with Joni Ernst, she said “Administrator Pruitt again claimed today that he will not do anything to undermine the program, however we have heard that before. We need to see it now (meaning that he was a liar).” Chuck Grassley commented that, “I’ve made it clear that EPA’s latest proposal under the RFS would break the President’s and administrator Pruitt’s commitment on the issue.”
Again, for those that don’t know what Pruitt attempted to do, he was going to roll back the biodiesel volumetric target already set for next year. He was also going to assign Renewable Identification Numbers (RINS) to ethanol going to export to significantly increase the number of RINS available to lower their price so they could be bought so the refiners did not have to blend biofuel. That, of course, was the opposite of what the RFS was intended to accomplish. You can’t do much more damage to the RFS rolling it back other than to repeal it. Pruitt earned my moniker of SOB (saboteur of biofuel).
Donald Trump assured the biofuels industry that he was strongly pro-ethanol during the campaign and after. He said that he was grateful for their support. The industry was alarmed and under no illusions however, when the president nominated Scott Pruitt as EPA administrator who had a history of being very anti-biofuel/RFS with interests aligned as Oklahoma Attorney General with the big energy companies. He was recommended to the President for the job by Carl Icahn who was very transparent in his desire that the RFS be changed or eliminated and thought that Pruitt was the guy to get it done. This was literally putting the fox in charge of the RFS chicken house.
Scott Pruitt had to be confirmed as administrator by the Senate and when he was being interviewed by Senators, including Grassley and Ernst, he professed that he would support the RFS as Trump had promised. They believed him and voted to confirm him. That is why it came as a shock to some to see him roll out plans to undermine the RFS just as he had promised the Senators that he would not do. The President’s input was nowhere to be seen. There was a total disconnect between Trump’s professed support for ethanol and Pruitt’s attempt to roll it back.
Why would one of Trump’s subordinates take action directly opposite of what the president was saying he wanted done? That is what was happening and pro-ethanol forces marshaled a strong political backlash led by Chuck Grassley who minced no words that he had been lied to by Pruitt and what Pruitt was attempting to do would make a liar out of the president too. Senator Join Ernst has come a long way on ethanol from when she first campaigned when her position on the RFS was tenable. She did a great job supporting the RFS through this challenge.
The bottom line is that while we have heard that the White House was telling Pruitt to back down on his plans to roll back the RFS we have still not seen any official tweet or direct statement from the President. He has had other controversy going on but until he gives the word himself it is not fully official. That is the way it works with this president. He has often contradicted his officials, including the Secretary of State saying only his word goes. His spokesman Sarah Huckabee added fuel to the fire when she claimed that the administration “had not made any assurances” on the RFS. I don’t know what planet she has been on.
Grassley has said that this is not over. To go to the extent that Pruitt did to lie about this even if rebuffed on this action, he will not stop coming after the RFS. What we want out of this is an E-15 vapor waiver. We want room for ethanol demand to grow. E-10 currently has such a waiver allowing summer use. It is one of those regulations that is stupid so requires a waiver. Why does Trump want to keep this one while bragging about all the regulations that he has done away with? An E-15 waiver is a technicality but one that has held up year around use of E-15. The oil industry doesn’t want to allow summer consumer access to E-15 so Pruitt pretends not to have the regulatory authority to grant the waiver.
Pruitt has now promised the Senators that he would actively pursue whether he has the legal authority to issue the E-15 vapor waiver. After having been lied to their face about the RFS by Pruitt, his currency for credibility is pretty much bankrupt
Let’s get something clear. . . we didn’t win anything in the recent battle with EPA administrator Scott Pruitt except a stay of execution of the RFS. Pruitt is going to continue coming after the RFS in any way he can get his boss to let him. There will not be any more biofuel produced because of Pruitt’s concessions than what was supposed to be produced under the rules. It was just that we will not produce less because of rule changes that he proposed.
We won nothing except we get to keep what we were supposed to have. That is not a great victory. There was no Trump Tweet calling off Pruitt. The fact that Pruitt was allowed to propose the rollback of the RFS requiring the political backlash to protect the RFS suggests the President has not impressed his purported support for the RFS on Pruitt. As long as Pruitt is there the RFS is at risk.
David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.
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