Ethanol Blog

LINCOLN, Neb. (DTN) -- Agriculture and fuel interests asked EPA Administrator Michael Regan to reject a petition by CVR Energy to change the biofuels credit trading program in the Renewable Fuel Standard, in a letter to the EPA on Tuesday.

Back in December, David L. Lamp, the president and CEO of Coffeyville Resources Refining and Marketing LLC and Wynnewood Refining Company LLC, asked EPA to conduct a rulemaking to change the way the renewable identification numbers, or RINs, program is implemented.

Lamp told the agency it had "unlawfully" created a RIN-trading program that has led to "gross market manipulation" that causes RIN prices to skyrocket "from pennies at the outset of the program to more than $2 in 2022."

The two petitioning companies are owned by energy giant CVR Energy.

Lamp said EPA was required by the Clean Air Act to develop a credit program for which RINs could be generated only by obligated parties that produced more RINs than they needed and could then transfer RINs to other obligated parties.

In a letter to Regan on Tuesday, a coalition of ag and fuel industry groups asked the agency to reject the CVR petition for a number of reasons.

"First, the petitioners' request is untimely, as the rules targeted by the petition were issued more than a decade ago," the letter said.

"No new circumstances have arisen that would give rise to EPA reviewing these regulations, and EPA has taken no actions to reopen the rulemaking process on its own."

The letter is signed by the National Farmers Union, Renewable Fuels Association, National Association of Convenience Stores, Society of Independent Gasoline Marketers of America (SIGMA) and the National Association of Truck Stop Owners (NATSO).

"The petitioners' desired structure of the RIN market (i.e., where only obligated parties who have over-complied with their volume obligations could generate RINs and only obligated parties could buy and sell RINs) is contrary to the RFS's policy objectives, untenable in practice, and legally unmoored from any objective reading of the enabling statute," the letter said.

In addition, the groups said recent court rulings regarding eligibility for small-refinery exemptions in the RFS have "nothing to do with the structure of the RIN market, and therefore provide no basis for revisiting EPA's long-standing regulatory framework for generating and transferring RINs under the RFS."

The groups said restructuring the RINs market would raise fuel prices by eliminating fuel retailers' ability to use RINs to "lower their costs of goods sold, as they do today."

The current RIN market that has been in place for about 14 years "has worked effectively and efficiently" to facilitate compliance with annual renewable volume obligations, the letter said.

"Limiting the number of entities who can own RINs as petitioners request would result in a wide gap between bids and offers for RINs," the letter said.

"The market clearing (equilibrium) price will be much higher or lower than it would be in a more liquid, efficient marketplace. RIN markets would be far more volatile, with highly concentrated market power in the hands of just a few market participants. It would make it impossible to hedge, particularly for small hedgers and non-integrated hedgers. This would hurt every market participant, including consumers, in the form of higher prices at the pump."

CVR Energy has a history of seeking changes to the RFS. The petition filed in December 2023 asked the EPA to prohibit many businesses from possessing and trading RINs.

Lamp wrote in the December petition that in previous rulemakings the agency committed to revisiting RINs regulations if the market was not operating as intended.

"EPA's promulgation of regulations, directly at odds with the express direction of the Clean Air Act, has irreparably harmed merchant and small refineries like CRRM and WRC," he said in the December letter.

"The companies are captive buyers in an illegal RIN market where RINs trade at hundreds of times their production cost for the benefit of market speculators, criminals, large retail chain owners and RIN large vertically integrated refiners (who, it should come as no surprise, vehemently oppose any changes to the RIN market's current structure)."

Read more on DTN:

"Refiners Petition EPA for RINs Changes," https://www.dtnpf.com/…

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

Follow him on X, formerly known as Twitter, @DTNeeley

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