UPDATE 2-U.S. EPA Mulls Ways to Stabilize Biofuel Costs for Refiners, with Waiver Program at Risk

March 05, 2020

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by Stephanie Kelly (Reuters) The U.S. Environmental Protection Agency said on Wednesday it is mulling new measures to help oil refiners cope with the cost of complying with the nation’s biofuel policy, as the agency faces a sweeping legal challenge to a waiver program worth a fortune to the industry.

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The announcement would hopefully “quell” the market for biofuel blending credits, called RINs, he (EPA Administrator Andrew Wheeler) said.

“We’re looking for other avenues to provide stability in the program and make sure we don’t have fluctuations in the RIN market,” Wheeler said.

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The court said the EPA had overstepped its authority to grant waivers in the past for HollyFrontier’s Woods Cross and Cheyenne refineries and CVR Energy’s Wynnewood refinery because the refineries had not received exemptions the previous year. The court said the RFS requires that any exemption granted to a refinery after 2010 must take the form of an extension.

The bulk of waivers granted to oil refineries by the EPA in recent years do not meet that standard. According to EPA data, the agency granted seven biofuel waivers in 2015. That number rose to 35 in 2017 – meaning 28 waivers were given without having been given in a previous year.

The EPA’s options now include complying with the court decision only in the states covered by the 10th Circuit, complying with the ruling nationally, or appealing the court decision.

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A letter from the group (of Senators) to Wheeler, dated Tuesday, urges that any retrenchment in the waiver program should be balanced by a reduction in blending volume requirements for 2020, and measures to stabilize RIN credit prices.

Inhofe, Cruz, Toomey and West Virginia’s Shelley Moore Capito, all Republican senators, also introduced an amendment on Tuesday to a Senate energy bill that would put a cap on the price of RIN credits at 10 cents per gallon, according to the amendment. READ MORE

U.S. EPA to slash biofuel waiver program, mulls other measures to help refiners: sources (Reuters)

WHEELER BLAMES SRE RULING FOR RIN MARKET SPIKE (Brownfield Ag News)

USDA Chief Promises to Get Biofuels Back on Track Following a PR blunder, but still. (Modern Farmer)

Focus Continues on RFS Waiver (DTN Progressive Farmer)

US EPA to issue biofuel mandate proposal soon to quell RINs market: Wheeler (S&P Global Platts)

Corn growers, ethanol producers urging EPA to ‘follow the law’ on small refinery exemptions; Health officials brief state legislators on coronavirus (WisBusiness)

Storm brewing in DC (again) over oil refinery waivers (again) as Trump Administration flip-flops (again) (Biofuels Digest)

U.S. biofuel credits slump on expectation EPA will appeal refinery waiver ruling (Reuters)

Trump admin wants more time on refinery ruling (E&E News)

EPA SEEKS MORE TIME ON SRE RULING (Politico's Morning Energy)

Ethanol Blog: DOJ Asks Court For Extension on RFS Small-Refinery Exemptions Case (DTN Progressive Farmer)

TRUMP ADMINISTRATION GIVEN 2 MORE WEEKS TO DECIDE ON SRE APPEAL (Brownfield Ag News; includes AUDIO)

Court extends deadline to challenge SRE ruling until March 24 (Ethanol Producer Magazine)

Biofuels advocates again calling on President Trump to uphold RFS (Iowa AgriBusiness Radio Network; includes AUDIO)

Biofuel groups urge Trump not to challenge court’s SRE ruling (Ethanol Producer Magazine)

Major U.S. oil lobbies split over biofuel waiver debate (Reuters)

United States: EPA Renewable Fuel Shift May Increase Cost Of Compliance (DLA Piper/Mondaq)

The Trump administration reverses course and sides with refiners on small refinery exemptions (Seeking Alpha)

Biofuel industry worried by EPA decision to appeal RFS (Feedstuffs)

Republicans lukewarm on oil industry rescue (E&E News)

LETTER: EPA must enforce Renewable Fuel Standard (Columbus Journal)

Major U.S. oil lobbies split over biofuel waiver debate (Reuters)

Excerpt from DTN Progressive Farmer: Nine Republican senators sent a letter to EPA Tuesday calling on the agency follow through with their finalized the 2020 biofuel and 2021 biodiesel standards, which included EPA agreeing to adjust the Renewable Volume Obligations to account for 770 million gallons of SREs, even though they viewed that action is “imprudent and misguided.”

Meanwhile, staunch biofuel backer Sen. Chuck Grassley, R-Iowa, told reporters Tuesday that there were discussions going on within the administration on the matter. He said he has urged the administration to “follow the law” and the court ruling and to not appeal that decision. Further, he called on the administration to give it “nationwide application.”

In addition, 16 House members – including Senate Majority Leader Kevin McCarthy, R-Calif., and House Republican Conference Chair Liz Cheney, R-Wyo., – called on EPA to reconsider the court decision. Specifically, they called on EPA to “seek and extension and request an en banc hearing” so the full court can reconsider the matter. They also called on EPA to issue guidance that makes clear the ruling is not to be applied outside the 10th Circuit and that pending SREs for the 2019 compliance year within the 10th Circuit should be deferred and other SREs should be “rendered as soon as possible.”

EPA Administrator Andrew Wheeler told members of a House Appropriations subcommittee Wednesday that he hoped to issue EPA’s response “shortly” but did not say what that decision will be. “We are still working on that with our attorneys at EPA as well as the attorneys at the Department of Justice,” he said. “The decision has to be made by next week, so we will be announcing something shortly.” He also expressed a hope that the announcement would “quell” the RIN market. READ MORE

Excerpt from Biofuels Digest: What has been described as a “misinformation campaign spearheaded by Senator Ted Cruz” is seeking to overturn a unanimous court decision that would halt the Environmental Protection Agency’s abuse of Small Refinery Exemptions (SREs) under the Renewable Fuel Standard.

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The following joint statement was issued by the National Corn Growers Association, the Renewable Fuels Association, the American Soybean Association, the National Farmers Union, Growth Energy, the American Coalition for Ethanol, the National Biodiesel Board, the Iowa Renewable Fuels Association, and Fuels America.

“The president needs to understand that Ted Cruz doesn’t care about this administration or families across the heartland who are counting on the White House to keep its promises. Just days ago, thousands of farmers rallied behind Secretary Perdue, who expressed his confidence that we had finally reached the end of a long and painful fight against EPA demand destruction. Tearing open that wound, against the advice of rural champions and the president’s own advisors, would be viewed as a stunning betrayal of America’s rural workers and farmers. We cannot stress enough how important this decision is to the future of the rural economy and to President Trump’s relationship with leaders and voters across the heartland. Ted Cruz comes back year after year with the same lies about refinery profits, disproven over and over by economists, the EPA, and even by Big Oil. We urge the president to stand up now against this misguided effort to torpedo the rural recovery.”

BIO VP for Industrial and Environmental section, Stephanie Batchelor, added:

“It’s very unfortunate to hear the administration has chosen to go in this direction,They are doubling down on policies that have already been determined illegal and will be reaffirmed by the courts. This delay will only increase the pain biofuel producers and farmers are already feeling; further undermining innovation and investment in sustainable fuels.”

The Iowa Corn Growers Association chimed in.

“If EPA appeals this case, the EPA is not doing their job or following their mission to protect human and environmental health. Instead the EPA is involved in politics and their decision not to follow the Court’s direction to implement the RFS law as intended and allow oil companies to abuse the use of RFS waivers. The abuse will allow less renewable fuels that are proven to have benefits to human health and our environment,” says ICGA President Jim Greif and farmer from Monticello, Iowa. “Ethanol is a renewable fuel that is clean burning and homegrown. In addition, the RFS provides market access for corn farmers and the ethanol industry to provide just ten and up to fifteen percent of the fuel supply in the U.S. To say we are frustrated and disappointed is an understatement. As we prepare for spring planting and a new growing season, we need market assurances and access rather than the continued fight we are faced with and having to defend the law and Court’s decision to follow the RFS.”

The Bottom Line

The appeal is going to have to be taken up by the US Supreme Court, since this was a 10th Circuit Court of Appeal decision, and 1.1 percent of all cases are granted a writ of certiorati by the Supreme Court. And, these are in cases where there is judicial controversy — such as disagreements between rwo federal judicial circuits.

It takes four justices to bring the Supreme Court into the picture — to some extent, we might see this as a delaying tactic by the Trump Administration, since the ruling does not appear to be particularly, as the phrase goes, “cert worthy”. READ MORE

Excerpt from Reuters: After the court decision, prices for renewable fuel credits skyrocketed, at one point gaining around 250%.

White House economic adviser Larry Kudlow recently informed Senator Chuck Grassley of Iowa, a vocal supporter of biofuels interests, that the administration had decided to appeal the ruling instead of curtailing the waiver program, two sources told Reuters on Thursday.

Senators representing oil states had previously engaged in a major drive this week to steer the administration to appeal the decision ahead of a March 9 deadline. The senators claim the program is essential for keeping refineries that provide tens of thousands of jobs afloat.

The news is a blow to farmers and biofuels advocates, who claim the exemptions hurt demand for corn-based ethanol. The oil industry rebuts that claim.

“The evidence is clear, the RFS will not be protected by the Trump administration no matter how many times he looks my friends and neighbors in the eye and makes a promise,” U.S. Representative Abby Finkenauer, an Iowa Democrat, said in a statement on Friday. READ MORE

Excerpt from Politico's Morning Energy: EPA SEEKS MORE TIME ON SRE RULING: The Trump administration wants two more weeks to decide next steps after a federal court ruling in January that would significantly restrict EPA's authority to exempt small refiners from biofuel blending requirements, Pro's Alex Guillén reports. In a late-night filing on Friday, the Justice Department asked the court for an additional 15 days, until March 24, to file a petition. DOJ argues that the three-judge panel's ruling from January is "complex and addresses many jurisdictional, statutory, and fact-specific issues."

The request follows reports President Donald Trumpis reversing course to appeal the court decision after an intervention by Attorney General Bill Barr and lobbying by oil-state senators. EPA is expected to seek an en banc rehearing before the full U.S. Court of Appeals for the 10th Circuit in Denver, a reversal from the previous expectation that it would ap ply the ruling nationwide and drastically cut the number of exemptions it issued. READ MORE