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Andrew Wheeler Must Reverse Damage to American Heartland

  • Tuesday, 24 July 2018 11:56

The Hill

July 24, 2018


The newly minted acting administrator of the Environmental Protection Agency (EPA), Andrew Wheeler, is a seasoned regulator who knows the issues and the playing field. I hope that means he will not repeat the mistakes of his predecessor, who squandered a nearly limitless reserve of goodwill among the president’s supporters in the heartland.

The EPA is charged with administering the Renewable Fuel Standard (RFS), which passed Congress in 2005. The RFS requires that oil refineries open the fuel market to competition from renewable fuels, including corn-based ethanol, which are now blended into nearly all gasoline. The idea was to guarantee a modest but certain market for renewables so that the industry could not be crushed by foreign oil. It was designed to reduce American dependence on foreign oil, while at the same time lowering prices at the pump and reviving manufacturing and jobs in the heartland.

The RFS has been a resounding success. Renewables have replaced 10 percent of motor fuel across the nation. There are more than 200 ethanol plants around the country, creating hundreds of thousands of jobs. Since ethanol costs about $1.40 per gallon, it is reducing the price of automobile fuel. Almost every consumer in America buys an ethanol blend when filling the tank, often without knowing it. Conventional ethanol gets no federal subsidies or tax breaks. It is more than capable of competing on its own, provided that domestic oil companies cannot refuse to sell it and the foreign oil cartel cannot manipulate the price in an attempt to destroy the renewables market.

For these reasons, President Trump strongly supported the RFS during the campaign and has supported it ever since. But this was not the case with Scott Pruitt. Under his leadership, the EPA attempted to reduce the volumetric standard for renewables. That was reversed by the White House. The EPA then attempted to count exported ethanol toward the standard, even though the RFS is designed to encourage domestic production. That was also squelched by the White House. All the while, the EPA was covertly handing out dozens of “hardship” waivers to oil refineries, which ended up reducing the standard by billions of gallons.

With gasoline more than $2.80 per gallon, the refineries are making record profits. From what hardship did they need to be rescued? It is the farm economy, right in the middle of Trump country, which is suffering. Farm income is at the lowest in 12 years, and that was before the tariffs being imposed on agricultural commodities by other countries.

Agriculture is one of the few American sectors which has consistently produced a trade surplus. It will continue to be the target of retaliatory tariffs as other countries, and especially China, attempt to retaliate against the United States. The RFS could be a powerful defensive tool in the Trump administration’s trade arsenal, replacing lost exports while also relieving the pressure of high oil prices on consumers. But the EPA has to faithfully implement it, and the opposite was true under Pruitt. No wonder he was so coldly received on his tour of farm areas this summer. His reception would have been even worse but for the civility of those in the communities his decisions had betrayed.

Now it is up to Wheeler to reverse the damage. Going forward, the EPA needs to be transparent in administering the RFS. Wheeler should consult with supporters of the RFS, including Agriculture Secretary Sonny Perdue and Senators Chuck Grassley (R-Iowa) and Joni Ernst (R-Iowa). There should be no more gimmicks, strained interpretations, covert waivers, or search for loopholes to undermine the law in favor of refiners. The EPA has no obligation to undermine American energy security while destroying hundreds of thousands of jobs and cannibalizing the market for more than 200 biofuel manufacturing centers across the Midwest.

As a first step, Wheeler can lift seasonal regulations that limit sales of higher ethanol blends during the summer months. Pruitt promised a fix in 2017, and the president called the restriction “unnecessary” and “ridiculous” this year. Trump was right. Motorists in 30 states already enjoy saving five to 10 cents per gallon on a higher-octane blend that supports local farmers. Why not give them that same choice all year?

Along with reversing demand destruction caused by waivers and upholding a strong RFS, this will earn Wheeler a loyal bench of supporters across rural America. These folks rallied around the president in 2016, and they will again, so long as our regulators in Washington stand up for his agenda. All the EPA has to do is enforce the law.

Jim Talent, a former Republican senator and representative from Missouri, championed the creation of the Renewable Fuel Standard in 2005. He is co-chairman of Americans for Energy Security and Innovation, a member of the U.S.-China Economic and Security Review Commission, and a senior fellow at the American Enterprise Institute and the Bipartisan Policy Center.

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