Josh Roe Policy Update

Well…we AREN’T celebrating!

As you may recall, the article I wrote on EPA’s proposed Renewable Fuel Standard (RFS) Supplemental Rule was titled: “Are we Celebrating?” I purposely dodged that answer because I had a suspicion it was much too early to celebrate!

For a quick refresher, on October 4th the Administration outlined their intent to increase the volume of ethanol mandated by the RFS to 15 billion gallons moving forward by accounting for waived gallons starting in 2020. Many prominent leaders, including NCGA President Kevin Ross, were told point blank that they (EPA) planned to take a 3-year average of the gallons waived from 2016-2018 and add that volume to the 2020 rule.

Here are the waived gallons for those year, with a 3-year average of nearly 1.35 billion gallons

Year EPA Waived Gallons (millions)
2016 790
2017 1,820
2018 1,430
Average 1,346.67

However, to our shock, it was announced that EPA was going to utilize a number generated by the Department of Energy (DOE) to reallocate gallons to determine the 3-year average. As part of the exemption process, DOE evaluates the economic conditions surrounding each application that a refinery makes to eliminate ethanol. The number of gallons that DOE recommends has been 78% smaller than what EPA has granted. In other words, 99% of the time we are pleased with the DOE recommendations, because if EPA had been following them, there would be much less corn demand destruction. However, this is the one case that these numbers do not work in our favor because they are smaller. Here are the DOE recommendations for 2016-2018:

Year DOE Recommended Waived Gallons (millions)
2016 440
2017 1,020
2018 840
Average 766.67
Difference 580

So, basically, we have 580 million reasons not to celebrate! It is worth noting that the Administration, through remarks made by Deputy Secretary of USDA Steve Censky last week and the EPA have doubled down on their efforts to say that they are committed to 15 billion gallons of conventional ethanol within the RFS. In fact, Greg and I were on a conference call with EPA Acting Assistant Administrator of Air and Radiation Anne Idsal on Monday morning and she reaffirmed their commitment to get to 15 billion gallons. Unfortunately, nothing in the proposed rule obligates them to reach 15 billion gallons and they will not commit to limiting exemptions to the DOE recommendation. Therefore, while the EPA is “promising” us they’ll get to 15 billion gallons, we have many reasons (more than 4 billion of them) to not trust them at their word!

So, what are we doing/what can you do? Please answer the call to action in this newsletter and talk to your friends/neighbors to help them understand. I will be expressing our concerns in person next week in Michigan at the EPA hearing over the proposed rule. However, the more comments Kansans can get submitted the better!