Methane Rule Repeal Hits Snag in Senate Over Ethanol

A top oil industry priority on Capitol Hill may fall victim to an unrelated dispute over ethanol.

At stake is an Interior Department rule forcing energy companies to curb emissions of methane escaping from wells and pipelines on public land. Senate Republican leaders say they are close to getting the 51 votes they need to overturn that Obama-era regulation using expedited repeal procedures under the Congressional Review Act.

But now, with a deadline about a week away, that campaign is on the verge of capsizing. 

Four Midwest Republicans, including Senators Chuck Grassley of Iowa and John Thune of South Dakota, told Senate leaders the price for their votes for the methane measure is a change in ethanol policy, according to people familiar with the talks who spoke anonymously about the negotiations. The lawmakers demanded the measure — which would free up use of higher blends of ethanol — be included in the $1.1 trillion omnibus spending bill set to advance this week. Spokesmen for Grassley and Thune did not return emailed requests for comment.

It wasn’t.

Ethanol advocates want the Environmental Protection Agency or Congress to waive rules that restrict gasoline blends containing more than 10 percent ethanol from sales in summer months. Such a waiver already applies to gasoline containing 10 percent ethanol, but not higher ethanol blends — effectively barring their sale from June 1 until September 15 in some areas when smog is a problem.

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The issue is a top priority for biofuel producers such as POET LLC, and industry trade groups, including the Renewable Fuels Association and the Growth Energy coalition of supporters. Advocates of the change have asked EPA Administrator Scott Pruitt to unilaterally issue a waiver and advanced legislation to make the shift. Including it in the must-pass government spending bill would ensure it makes it through Congress and is signed into law.

Still, the regulatory repeal may not be dead yet: Ethanol supporters are now asking Republican leaders for a commitment to put the ethanol provision on a must-pass bill later, according to one person familiar with the discussions. It’s not clear Republican leaders would accept this offer. Some oil companies oppose the change because it could translate to greater demand for ethanol, a competitor.

“Refiners are unlikely willing to trade the waiver for passing the CRA on methane,” said Stephen Brown, vice president and counsel at refiner Tesoro Corp. “This last-minute attempt at hostage-taking by a collection of corn-state senators is an unfortunate gambit that jeopardizes months of work by Senate Republican leadership to pass the CRA.”

Vote Predicted

Republican leaders had been working for weeks to gather the votes for a separate resolution voiding the methane rule using the Congressional Review Act. The deadline for using the act to repeal rules issued under Obama is projected to be May 11.

Senator John Barrasso, a Republican from Wyoming who sponsored the measure, vowed to pass it next week, telling Bloomberg BNA that the underlying methane regulation is “unnecessary” and “expensive.”

Although the House easily passed the methane rule repeal in February, Senate Republican leaders have struggled to piece together a 51-vote majority for the measure, amid expected no votes from Republicans Susan Collins of Maine and Lindsey Graham of South Carolina. Two potential Democratic supporters — Heidi Heitkamp of North Dakota and Joe Manchin of West Virginia — also are undecided, according to their representatives.

At least two other Republicans say they are undecided, as well.

Other Skeptics

Colorado Senator Cory Gardner told Bloomberg BNA that his vote remains in play as he hears from environmental supporters of the methane limits and industry supporters of rolling them back. He is reluctant to do anything that might jeopardize Colorado’s own methane limits, he said.

Ohio’s Rob Portman has also been skeptical of the effort.

“I’m still working with the Department of Interior, and we are going to come up with a solution that helps reduce methane flaring and venting,” Portman said in an interview. “I want to be sure there is the ability to put together something reasonable.”

The Interior Department methane rule, which applies only on public land, aims to discourage the practice of venting and flaring natural gas at oil wells. The regulation blocks companies from venting gas except in emergencies, phases down the amount of flaring that is allowed, and forces the businesses to detect and repair gas leaks.

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