Will EPA Torpedo RFS Again on Wheeler’s Way Out?

by Jennifer Shike (Farm Journal Ag Web) With just eight days left in EPA Administrator Andrew Wheeler’s term, president and CEO of the Renewable Fuels Association (RFA) Geoff Cooper told AgriTalk’s host Chip Flory on Tuesday that he’s not surprised by reports that EPA may grant some waivers to oil refiners that would exempt them from requirements to blend biofuels into their fuel mix for the 2019 compliance year.

The worst-case scenario right now would be EPA trying to grant all of those exemptions or the lion's share of them, Cooper said. If that happens, the industry expects another 1.5 billion RINs returned to refiners which would flood the RIN market and torpedo prices.

“Despite what you hear from the refiners, that absolutely has an impact on the incentive to blend higher levels of biofuels,” Cooper said. “If you send RIN prices crashing from 80 cents down to 10 cents again, rest assured that has an impact on the movement toward E15. It has an impact on higher blends like E85. When refiners can comply with the RFS by turning in cheap RIN credits instead of blending biofuels, that's what they're going to do.”

Flory said he was surprised to find out the Supreme Court is planning to review the 10th Circuit Court’s decision that said EPA did not have the authority to grant blending waivers to refiners that had not been given exemptions in the previous year.

This process will likely include another round of briefings, oral arguments and prolonging of the issue for at least another six months, Cooper said. READ MORE

Excerpt from Bloomberg: Environmental Protection Agency officials also are considering formally extending deadlines for oil refineries to prove they have complied with renewable fuel quotas for 2019 and 2020, as legal uncertainty surrounds the biofuel program. The policy announcements being contemplated by the administration were described by multiple people familiar with the matter who asked not to be named before a formal announcement.

Compliance is usually required each March for the previous year. The agency also has held off deciding on 32 pending applications from small refineries for waivers from the 2019 quotas, while the 10th Circuit ruling was appealed to the Supreme Court.

Approvals for most of those pending 2019 small-refinery exemptions are set to be announced Thursday, said people familiar with the matter. The waivers would not be granted to refineries directly affected by last year’s 10th Circuit ruling, said the people.

Exemptions could benefit independent refiners such as PBF Energy Inc., CVR Energy Inc., HollyFrontier Corp. and Delek U.S. Energy Inc., Height Capital Markets said in a research note for clients. And ClearView Energy Partners said approved exemptions would likely drive a further decline in the price of renewable identification numbers, the compliance credits refiners use to prove they have fulfilled annual biofuel-blending quotas.

Biofuel advocates were working furiously to head off the move, including with direct appeals to Trump. Nearly two dozen lawmakers urged the Trump administration in a letter Tuesday not to grant the exemptions, warning that waivers would “further devastate America’s rural communities” and be “inappropriate” given the ongoing litigation.

Under the potential delayed Renewable Fuel Standard compliance deadlines, refineries could have until Jan. 31, 2022, to comply with the 2019 quotas and until June 1, 2022 to prove they have fulfilled the 2020 targets.

EPA officials also have weighed formally soliciting comment on new designs for the warning labels used on pumps that dispense a higher-ethanol fuel known as E15. The move has been encouraged by ethanol producers who say the current 3.5-by-3-inch warning sticker unfairly scares off motorists from buying their product.

Biofuel policy may be no less complicated for President-elect Joe Biden, who praised next-generation biofuels on the campaign trail and criticized the surge in exemptions issued by the Trump administration. Current law outlines annual RFS targets through 2022, giving the EPA more discretion to set quotas after that. READ MORE