EPA Reportedly Reviews RFS Fuel Waivers

OMAHA (DTN) -- The EPA reportedly is set to freeze its small refinery waiver program in the Renewable Fuel Standard, pending a review.

Reuters reported on Wednesday the agency program that granted 48 such waivers in 2016 and 2017, totaling some 2.25 billion gallons of biofuels not blended in gasoline, currently is frozen and under review by EPA and the U.S. Department of Energy, citing unnamed sources.

In the proposed 2019 Renewable Fuel Standard, volumes set for finalizing on Friday, the agency did not account for the lost volumes from waivers.

Refining interests have maintained EPA had no other choice but to grant waivers because of previous court rulings. So far in 2018, the agency has not approved any of the 15 waiver requests it received.

"EPA continues to implement with the Renewable Fuel Standard consistent with the law, including the statutory requirements laid out in the small refinery exemption program," EPA spokesman Michael Abboud told DTN in an email.

Biofuels interests groups began to raise questions about the program in the past year, after reports surfaced that waivers were granted to large refining companies reporting billions of dollars in profits.

Growth Energy Chief Executive Officer Emily Skor said in a statement to DTN if the report is true, her group is hopeful such a review leads to changes.

"If it's true, we welcome the acting administrator taking a serious look at re-evaluating how exemptions are issued," she said. "We hope that the outcome of this re-evaluation is more sunshine on a secretive process that has done great amounts of damage to biofuel demand, and that if there are targets set, the targets are met and lost gallons are reallocated and accounted for."

The Fueling American Jobs Coalition, which consists of a number of refining companies, said in a statement to DTN it does not believe the report.

"A report this morning in Reuters attributes to unnamed sources at the U.S. Environmental Protection Agency the notion that small refiners exemptions are on hold pending methodological review," the coalition said.

"As is often the case with interviews based on unnamed sources, the report is clearly in error as it is inconsistent with the unambiguous reading of the Clean Air Act and applicable case law. Sometimes the nuances of the law can be lost in the rush to publish. In short, we attribute this recent report on SRE status to a misunderstanding of the law and policy objectives served by the program. There is no such thing as a hold on SREs."

The coalition said small refiner exemptions are an "emergency action designed to stave off the impacts of inequitable treatment arising from the program's implementation."

Several refiners have decried the high costs of complying with the RFS as reason for waiver requests. Primarily, they point to the price of Renewable Identification Numbers, or RINs, as a reason for the financial distress they face in complying.

However, RINs prices have fallen dramatically in the past year, from more than $1 to a dime or less recently -- making claims of economic hardship more difficult to prove.

The coalition said the federal agencies lack the authority to freeze the waiver program.

"Since each SRE is an individual consideration of conditions, any uniform delay or freeze would be plainly illegal," the coalition said. "Multiple courts have ruled that even attempts by EPA to insert too high a bar to granting SREs is not consistent with the underlying law and policy of the Clean Air Act."

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

Follow him on Twitter @toddneeleyDTN

(BAS/CZ)

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