Ethanol Blog

Refiners: Restrict USDA Access to Small-Refinery Waivers Information

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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An attorney for refining interests tells EPA Administrator Andrew Wheeler the agency should not share confidential business information with USDA officials. (DTN file photo)

Small-refinery interests continue to fight USDA's inclusion in an ongoing review of EPA's small-refinery exemptions practice in the Renewable Fuel Standard program.

On Monday, a lawyer representing refining interests wrote a letter to EPA Administrator Andrew Wheeler expressing concern about the agency's plan to share what refiners say is confidential business information with USDA officials.

President Donald Trump has ordered the EPA and USDA to review the waivers program, following his visit to an ethanol plant in Council Bluffs, Iowa, recently.

"We strongly oppose EPA sharing the small refineries’ petitions or supplemental information with the United States Department of Agriculture (USDA) because (1) small refineries submitted the information under claims of confidentiality with the understanding that only EPA and DOE would have access to it, and (2) the USDA has no reason to access small refineries’ CBI because it has no legal authority or role with respect to the petitions," Perkins Coie attorney LeAnn Johnson Koch writes.

Republican senators from oil-producing states have been pressing Trump to keep U.S. Secretary of Agriculture Sonny Perdue out of EPA's decision-making on small-refinery waivers, https://www.dtnpf.com/….

Since 2016, the EPA has granted waivers totaling more than 2.61 billion ethanol-equivalent gallons, given to refiners that produce 75,000 or less barrels per day.

In the letter to Wheeler, Koch said refiners are concerned USDA officials would share confidential business information about small refiners with people outside of the agency.

"USDA's ties to farmers create a significant risk that small-refinery CBI released to the USDA will be shared beyond the agency," she writes.

"Secretary of Agriculture Sonny Perdue has made clear his commitment to farmers by expressing his position that farmers should have greater access to small-refinery exemption information. And, before taking his current role, Deputy Secretary of Agriculture Stephen Censky served as chief executive officer of the American Soybean Association for 21 years, an organization opposed to small-refinery exemptions.

"The USDA seeks the small refineries’ CBI in order to assert influence over EPA's final decisions and thereby reduce the number of small refinery petitions granted by EPA. This interference is improper as a matter of law."

INADEQUATE DOMESTIC SUPPLY

While EPA's small-refinery waivers to the RFS have garnered the near-exclusive attention of the biofuels industry in the past year or more, perhaps equally as intriguing is the agency's decision to not make adjustments to the RFS as a result of a 2017 federal appeals court decision.

The U.S. Court of Appeals for the District of Columbia Circuit on July 28, 2017, https://www.dtnpf.com/…, ruled the EPA erred in how it interpreted an "inadequate domestic supply" waiver provision in the RFS on 2016 volumes and was required by the court to review the final volumes for 2014 to 2016.

Biofuels groups last week cried foul when the EPA's latest renewable volume obligations proposal did not include the re-institution of about 500 million gallons of conventional ethanol lost from the RFS as a result of the agency decision. In fact, the agency said its response to the court decision is to change nothing in the 2016 volumes.

Scott Irwin, Laurence J. Norton Chair of Agricultural Marketing and professor in the department of agricultural and consumer economics at the University of Illinois at Urbana-Champaign, said in a series of tweets on Tuesday the agency appears to be making another "inadequate domestic supply" argument in its latest proposal.

In its latest proposal the EPA said, "Second, we also considered imposing an additional obligation as a supplement to the 2020 standards and allowing compliance with 2019 and 2020 RINs. Under this approach, there would likely be sufficient RINs to comply with an additional 500-million-gallon standard. However, as we believe there are very limited opportunities to use biofuels beyond the volumes we are proposing for 2020, we believe that this is unlikely to incent significant new biofuel."

The key phrase is, "very limited opportunities to use biofuels beyond the volumes we are proposing for 2020..."

Irwin said in a series of tweets: "This is an astonishing and dumbfounding statement to make on several levels. Let's take the first part, 'limited opportunities to use biofuels.' This strikes me as just a recycled version of the 'inadequate domestic supply' argument that Judge Kavanaugh already struck down.

"Judge Kavanaugh made it abundantly clear that constraints on demand (use) are not sufficient reason in and of itself for waiving RFS mandates. The reason is that Congress intended the RFS to be a 'market-forcing policy' that creates 'demand pressure.'"

Kavanaugh wrote that, "We hold that the 'inadequate domestic supply' provision authorizes EPA to consider supply side factors affecting the volume of renewable fuel that is available to refiners, blenders and importers to meet the statutory volume requirements.

"It does not allow EPA to consider the volume of renewable fuel that is available to ultimate consumers or the demand-side constraints that affect the consumption of renewable fuel by consumers."

In a nutshell, the RFS is in place to expand markets for biofuels.

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

Follow me on Twitter @toddneeleyDTN

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