U.S. Ethanol Groups Bristle as EPA Frees Refiners from Biofuels Law

April 05, 2018

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by Jarrett Renshaw and Chris Prentice (Reuters) The U.S. Environmental Protection Agency has approved the request of 25 small refineries to be exempted from the nation’s biofuels laws, an agency source said on Wednesday, marking a big increase from previous years and triggering an outcry from farm groups worried the move will hurt ethanol demand.

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In the past, the EPA has issued between six and eight waivers from the RFS per year to small refining operations of less than 75,000 barrels per day that can demonstrate they are struggling financially to comply, according to a former official familiar with the waiver program under past administrations.

This time that number has ballooned. READ MORE

NEW WAIVERS (Politico's Morning Energy)

Flood of EPA waivers give refiners way around ethanol mandate (Houston Chronicle)

EPA waiving biofuel quotas spurs rebuke (Bloomberg/Standard Examiner)

EPA's free pass for refiners could land it in court (Washington Examiner)

RFA President Says Granting RFS Waivers To Refiners Is Outrageous (WNAX)

Biofuel groups condemn EPA’s decision to award waiver to Andeavor (Ethanol Producer Magazine)

EPA exempts 25 refiners from US biofuel mandate, but holds back key details (Platts)

Large Refiner Received Agency Pass-- Sen. Grassley Presses EPA on Refiner Exemption (DTN The Progressive Farmer)

White House to host another RFS meeting as hardship waiver makes waves (Agri-Pulse)

RFA criticizes EPA for excusing Andeavor refineries from RFS quota (Oil & Gas Journal)

EPA grants 25 small refiner exemptions to RFA: Update2 (Argus Media)

Trump's EPA grants giant oil refiner 'hardship waiver' from biofuel regulation (Washington Examiner)

RINs drop to three-year lows following EPA waiver news (Platts)

RFA FOIA Request Demands Answers on EPA Small Refiner Bailout (Renewable Fuels Association)

Ethanol Report on EPA Small Refinery Waivers (Energy.AgWired.com AUDIO)

Group Presses EPA for Information -- Waivers to Refiners May Hurt Ethanol, Corn (DTN The Progressive Farmer)

Ethanol Lobby Group Blasts EPA Chief Over Backdoor Refiner Deals (Reeves Business Review)

Times are tough on the farm and politics aren’t helping (Farm Forum)

US Midwest, farm belt in crisis as US-China trade war, Corn-Oilco RFS war escalate (Biofuels Digest)

Excerpt from Houston Chronicle: "Anyone with a brain submitted an application," the executive said. "The EPA was handing out those exemptions like trick or treat candy." READ MORE

Excerpt from Politico's Morning Energy: EPA waived 25 small refineries from complying with the federal biofuel mandate last year, an agency spokeswoman told Pro’s Eric Wolff. The agency wouldn’t say which companies received the RFS waivers, but noted the criteria involved was not different from previous administrations. EIA data find there are 57 refineries that have a capacity under 75,000 barrels of crude a day – making them eligible for a potential waiver. Read more.

API not into the whole waiver thing: The American Petroleum Institute, which represents half of U.S. refining capacity along with the vertically integrated oil majors, told EPA in February it wants the agency to avoid use of the waivers, according to a copy of the letter obtained by ME. “As the size of a refinery alone does not determine operational competitiveness in the marketplace, it is not appropriate for EPA to grant small refiner exemptions to the RFS program,” API said in a letter to Assistant Administrator for Air Bill Wehrum. READ MORE

Excerpt from Washington Examiner: "All options" typically includes considering lawsuits and court action, which the ethanol industry isn't shy in doing when it thinks the EPA is falling short of its legal obligations under the RFS.

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Even a more glaring hint at legal action came from the rest of (CEO and president of the Renewable Fuels Association, Bob) Dinneen's statement detailing the shortcomings in EPA's legal interpretation of its authority to give refiners, especially very large ones, exemptions under the program's "hardship waiver" clause for small refineries.

The waiver is meant for refiners that produce less than 75,000 barrels per day of fuel and “may only be granted if EPA determines, based on supporting evidence in the petition, that compliance with Renewable Fuel Standard obligations will impose disproportionate economic hardship on the refinery in the year for which the exemption is requested,” Dinneen pointed out, citing EPA's own interpretation of the law.

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"To date, EPA has still not disclosed which refiners received exemptions from 2016 or 2017," Dinneen said. "No one really knows how far these exemptions go, or how many total companies have received these waivers."

Skor (Emily Skor, president and CEO of Growth Energy) was more to the point in her letter, asking Pruitt to cease and desist from issuing, or even considering, any new waiver applications until it opens the process to public scrutiny and comment. That would help "to help assure all stakeholders that the new expansion of small refinery waivers are consistent with the goals of the RFS," Skor wrote.

Skor also wants Pruitt to hand over information on the number of refineries that have applied for this waiver since the RFS' rules were finalized eight years ago. She also wants the EPA's plan on how it will make up for the lost ethanol gallons blended in gasoline because of the exemptions.

And she wants assurances from Pruitt the the timing of the exemptions "is not intended to shroud the process in secrecy and prevent stakeholders from commenting about lost gallons through the annual RFS rulemaking process." READ MORE

Excerpt from DTN The Progressive Farmer: On March 22, EPA emailed DTN, stating that the agency was granting exemptions to refiners for 2016 RFS obligations. "To date, we have granted an annual exemption for 14 small refineries for calendar year 2016, and we are still evaluating 2017 petitions. We have not received 2018 petitions," the EPA spokesman stated.

On Wednesday, an EPA source who asked not to be named said the agency has granted about 25 hardship waivers from 2017 RFS obligations.

(Iowa Senator Chuck) Grassley said in a statement to DTN on Wednesday that it appeared EPA granted a "secret" waiver.

"If refineries are being allowed to retroactively get out of the renewable volume obligations the EPA assigned them in November, that fundamentally undermines the Renewable Fuel Standard," Grassley said. "It would also amount to a massive government handout to a big corporation that made billions in profits just last year. Giving big corporations like Andeavor a free pass when other companies are required to follow the law of the land isn't just unfair, it may be illegal. READ MORE

Excerpt from Agri-Pulse: Government officials will convene next week to discuss the administration’s plan of action to resolve the biofuels policy debate, sources tell Agri-Pulse. The meeting comes as biofuels groups grow concerned about reported exemptions being offered to some of the nation’s refiners.

Sources tell Agri-Pulse the meeting will happen Monday, April 9 and be comprised of officials from the White House and a handful of government agencies including the Department of Agriculture and the Environmental Protection Agency. The meeting is expected to involve a push from pro-ethanol officials to send the discussion back to Congress and to stop the use of hardship waivers for 2017 and 2018.

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While biofuels backers may be upset about the granting of hardship waivers, oil and gas companies have previously argued the agency didn’t use the provision as often as it should. Last year, the 10^th Circuit Court of Appeals in Denver ruled, essentially, that the EPA had to loosen its restrictions on hardship waivers after the agency was sued for blocking Sinclair Oil’s requests. Now, those same waivers might be easier to attain.

“To a certain extent, EPA’s hands are tied in relation to the Sinclair decision,” Brendan Williams, vice president of government relations for PBF Energy, told Agri-Pulse. EPA had previously held companies “have to show that you’re not going to make money or go out of business, and the court said ‘no, you can’t interpret hardship that way,'" he added. READ MORE