Chuck Grassley

United States Senator from Iowa

Instagram

Flickr

Twitter

Facebook

Northey USDA Confirmation Further Delayed by Cruz Objection

Feb 07, 2018

WASHINGTON – Sen. Chuck Grassley of Iowa today sought unanimous consent from his Senate colleagues to confirm Secretary Bill Northey to serve as Under Secretary of Agriculture for Farm and Foreign Agricultural Services at the U.S. Department of Agriculture.

President Donald Trump’s nomination of Northey, the current Iowa Secretary of Agriculture, to serve in this important post has been kept from a vote in the Senate since October 2017 due to an objection from Sen. Ted Cruz of Texas. Senate approval of the Northey nomination is the last step toward Northey assuming the USDA position.

The Senate Agriculture Committee voted unanimously in October 2017 to send the nomination to the full Senate. Grassley has worked to clear the objection of Cruz, saying that it was based on an issue that Northey will not be involved with at USDA, and that putting an outstanding leader like Northey in place is vitally important to American agriculture during debate this year on a new farm bill.

Barring objection to Grassley’s request for unanimous consent, Northey would have been confirmed to serve at USDA. Cruz objected, further delaying Northey’s confirmation.

Grassley spoke on the Senate floor about the issue and was joined by Senate Agriculture Committee colleagues Sen. Debbie Stabenow of Michigan, the Ranking Member of the Senate Agriculture Committee, Sen. Joni Ernst of Iowa and Sen. Amy Klobuchar of Minnesota.

Earlier today, Grassley spoke with Iowa reporters about the Northey hold and the RFS. Audio of that call can be found here. Grassley released an internal analysis earlier this week, which corroborates numerous independent studies regarding the RFS and the PES bankruptcy, showing no link between the success of refineries and RIN costs.

While Grassley has suggested multiple ways to lower RIN costs, including increased market transparency to reduce speculation and making E15 available year-round, independent analyses do not support the claim that the PES bankruptcy was due to the RFS. The EPA in November 2017 found, “After reviewing the available data, 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.”

Grassley delivered the following speech.

Prepared Statement by Senator Chuck Grassley of Iowa

Nomination of Iowa Secretary of Agriculture Bill Northey

February 7, 2018

VIDEO

It is unfortunate that there is an objection to advancing President Trump’s nomination of Iowa Secretary of Agriculture Bill Northey to be an undersecretary at the Department of Agriculture, all because of unrelated concerns over the Renewable Fuel Standard, which is a law passed by Congress and administered by EPA.

I’m very disappointed that a highly qualified and honorable man like Bill Northey is being held up for an issue unrelated to his position. Secretary Northey enjoyed unanimous support from the Senate Agriculture Committee and has the support of numerous agriculture groups from around the country.

There is a manufactured and baseless rumor that the RFS has caused an oil refinery in Pennsylvania to file for bankruptcy.

This example has been cited repeatedly as a justification for forcing RFS supporters to agree to sudden and drastic changes in how the RFS was designed.

I have been trying to work in good faith with the senator from Texas and have offered several options that would result in lower prices for RINs, the compliance credits for the RFS.

However, I keep being told I need to accept his proposal for a guaranteed cap on RIN prices in the short term to save PES.

Unfortunately for those who are spreading the rumor that the problems at PES are due to high RIN prices, the facts don’t add up very well for them.

My staff and other analysts have read the SEC filings and the bankruptcy filing of the refinery in question and come to the conclusion that PES cannot pin its problems on the RFS.

The number one problem PES has faced is the result of the export ban being lifted which cost it access to cheaper feedstocks.

The second biggest problem it has is that a pipeline opened which diverted rail shipments of Bakken crude away from the East Coast.

We keep being told that the refinery is facing hardship because it cannot afford to buy enough RINs to comply with the RFS.

If that is the case, why did PES sell off a significant quantity of RINs just last fall?

That is quite odd considering the company needs to turn them in later this month for compliance with the RFS. Some have said it is executing a market short on RINs, which is dependent on some sort of federal action that will suddenly drive down the cost of RINs.

I would point out that shorting the RIN market is something Carl Ichan is reportedly being investigated for by federal prosecutors. I hope PES is not trying to follow that same playbook. I certainly want nothing to do with that kind of chicanery.

Finally, PES could have avoided needing to buy any RINs at all if it had just invested in blending infrastructure years ago like many of its fellow merchant refiners did.

In fact, PES is partly owned by Sunoco, which owns blending infrastructure. 

We also know PES has an arrangement whereby it supplies ethanol, with RINs attached, to Sunoco for blending with its gasoline. Other independent refiners with similar arrangements have an agreement to return the RINs to the refiner once they are detached.

The RFS was created to bring cleaner burning, renewable fuels to consumers. The RIN system was developed as a flexible system that allows obligated parties to choose between investing in blending infrastructure or buying RINs for RFS compliance. PES made the decision to buy RINs.

That hasn’t worked out very well for PES apparently but that was the bet it made. A cheaper option for RFS compliance exists, and PES chose to pursue other investments instead.

None of this has anything to do with President Trump’s choice to oversee farm programs at USDA.

Bill Northey should be confirmed by this body. He has overwhelming bipartisan support. Taking a nominee hostage to try and force an ill-conceived policy change is only going to cause more problems for this body in the future.

-30-