Ethanol Blog

Sen. James Inhofe, R-Oklahoma, has offered an amendment to an energy bill to cap the price of Renewable Identification Numbers, or RINs, at 10 cents, as time is running out on the EPA to make a decision on possible changes to the small-refinery exemptions program.

There are about 160 amendments offered to legislation (S. 2657) sponsored by Sen. Lisa Murkowski, R-Alaska, aimed at advancing research on geothermal energy.

So far, the Senate had not voted on any amendments as of Thursday morning. Signing on to the Inhofe amendment are Sens. Ted Cruz, R-Texas; Sen. Pat Toomey, R-Pennsylvania; and Shelley Moore Capito, R-West Virginia.

On Jan. 24, 2020, a federal court ruled EPA didn't have the authority to issue small-refinery exemption extensions to three companies that were not granted waivers originally. The ruling could affect how the agency implements the program.

In a ruling handed down by the U.S. Court of Appeals for the 10th Circuit in Denver, the court also found EPA "abused its discretion" by not explaining its conclusion that a small refinery could suffer disproportionate economic hardship while also maintaining refiners passed on RFS compliance costs to consumers at the pump.

The Inhofe amendment states, "It is the sense of Congress that the administrator of the Environmental Protection Agency has the existing authority under the Clean Air Act to issue waiver credits to reduce the burden on obligated parties under the renewable fuel program."

It would require the EPA administrator to "make available for sale to obligated parties" conventional biofuel credits at 10 cents per gallon. In addition, it says the EPA "shall ensure that the credits made available for sale under that clause are available at any time; and shall not limit the number of conventional biofuel credits made available in any calendar year."

Inhofe's amendment would require revenue from the sale of conventional biofuels credits to be appropriated to the Highway Trust Fund.

EPA defines small refiners as those producing 75,000 barrels or less per day. Small refiners have successfully petitioned the agency for exemptions by arguing the costs to purchase renewable identification numbers, or RINs, are too much to handle financially.

A recent Reuters report citing unnamed sources indicates the EPA has until March 9 to respond to the 10th Circuit decision and may significantly reduce the number of exemptions granted. In addition, the agency reportedly is considering capping RINs prices at 10 cents.

EPA has taken heat on how it defines "hardship" when it granted waivers. The ethanol industry and others have maintained the waivers were not designed for oil companies that report billions of dollars in profits.

The 10th Circuit remanded back to EPA waivers issued to refiners in Wynnewood, Oklahoma; Cheyenne, Wyoming; and Woods Cross, Utah. The Cheyenne and Woods Cross petitions were from 2017, while the Wynnewood petition was in 2018.

Congress provided a temporary exemption for small refiners that could extend beyond 2010, based on a U.S. Department of Energy study or EPA determination of disproportionate economic hardship on a case-by-case basis.

The EPA granted 85 small-refinery exemptions between 2016 and 2018, totaling more than 4 billion ethanol-equivalent gallons not blended with petroleum. The agency currently has 23 exemption requests pending for the 2019 compliance period.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow me on Twitter @toddneeleyDTN

(CZ)

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