President Donald Trump urged administration officials and oil-state senators in a White House meeting on Thursday to find a solution to refiners’ gripes about the Renewable Fuel Standard that would satisfy them as well as corn growers.
The senators, who demanded the meeting in October after the administration made a series of commitments to benefit the ethanol industry, said some unspecified solutions were discussed but nothing was settled other than a commitment to ongoing discussions.
“There is a positive win-win solution that can be reached, and today’s meeting made meaningful steps toward advancing that solution,” Sen. Ted Cruz, R-Texas, said after returning to the Capitol.
A source familiar with what transpired at the meeting said there was agreement that the senators would talk to their farm-state colleagues about a mutually agreeable solution and then meet jointly with administration officials. There was no agreement at Thursday’s meeting on “what a solution would entail,” including whether it would require legislative or regulatory action, the source said.
White House spokeswoman Hogan Gidley described the meeting as "productive." Trump "confirmed his commitment to RFS and his support for our farmers and energy workers. He understands there are differing views on this issue, and the administration looks forward to working with all the stakeholders toward a mutually agreeable path forward," she said.
Cruz didn’t respond when asked by Agri-Pulse when he would release his hold on the nomination of Iowa Agriculture Secretary Bill Northey to be an undersecretary at USDA. Cruz initially blocked the nomination to get a White House meeting on the RFS issue.
EPA Administrator Scott Pruitt was joined at the meeting by Agriculture Secretary Sonny Perdue and a number of White House advisers involved in energy and agriculture policy.
At one point, Perdue brought up the Northey nomination and asked when it would be allowed to move forward, said Sen. James Lankford, R-Okla., one of the senators who attended. Lankford deferred questions to Cruz on prospects for a vote on Northey.
The senators are pressing refiners’ complaints that the cost of buying RFS compliance credits, known as RINs, or Renewable Identification Numbers, to comply with the biofuel usage mandates is threatening to drive some refineries out of business.
Lankford said Trump told the senators "we need to find a way to protect both the consumer, the corn farmer and the folks at the refinery."
Another senator who attended the meeting, Bill Cassidy, R-La., said Trump wants “both sides together to find a win-win so that we can say to the farmers, ‘Listen, we’ve got you back,’ but to the people who are employed in the refineries, 'You’re not going to lose your job’. That’s the goal.”
Eleven senators were scheduled to attend, but at least one, Jeff Flake, R-Ariz., did not.
Cruz and Lankford were among nine senators who signed an Oct. 25 letter to Trump that asked for the RFS meeting and warned that if the administration does not “make adjustments or reforms” to the RFS, “it will result in a loss of jobs around the country.”
In November, EPA turned aside a key demand of the refiners and formally rejected a petition to change the “point of obligation” for RFS compliance to blenders. EPA also finalized usage mandates for 2018 that mandates 15 billion gallons of conventional biofuel – typically viewed as corn ethanol – and an additional 500 million more gallons of advanced biofuel over what the agency suggested in a July proposal.
Later Thursday during a hearing before the House Energy and Commerce Committee, Pruitt told Houston-area Democrat Gene Green that the RIN market needed reform. Pruitt declined to commit to keeping biofuel mandates below the blend wall.
"It’s real issue as far as RIN reform. We need to get some accountability in the RIN market. There’s a lot of speculation that goes on with respect to RINs," Pruitt said.
The president and CEO of the Renewable Fuels Association, Bob Dinneen, rejected the idea that RIN costs had threatening to put refiners out of business.
Numerous studies, including EPA’s own analysis, show that “merchant refiners recoup their RIN costs through higher refining margins, while retail gasoline prices are unaffected by RINs,” he said.
“EPA has concluded that refiners are generally able to recover the cost of RINs in the prices they receive for their refined products, and therefore high RIN prices do not cause significant harm to refiners. In light of these findings, EPA does not have the statutory authority to reduce the required renewable fuel volumes for 2018 in an effort to achieve lower RIN prices.,” Dinneen said.
(Updates at 4:30 p.m. with Pruitt testimony before House committee.)