Large Refiner Received Agency Pass

Sen. Grassley Presses EPA on Refiner Exemption

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Biofuels groups are pressing for transparency on the Renewable Fuel Standard waivers granted to refiners. (DTN file photo)

OMAHA (DTN) -- U.S. Sen. Charles Grassley, R-Iowa, is pressing U.S. Environmental Protection Agency Administrator Scott Pruitt for answers as to why the agency granted a Renewable Fuel Standard waiver to a large refiner.

Reuters reported Tuesday that Andeavor, one of the country's largest refiners, received an RFS obligation exemption for three of its smaller refineries. The RFS exemption was meant to apply to small refineries producing less than 75,000 barrels a day that demonstrate economic hardship. Andeavor posted $1.5 billion in profits last year, Reuters reported. Reuters reported that two sources informed the news agency of the waiver.

When asked by DTN about the nature of the waivers being granted, an EPA spokesperson said on Wednesday, "This type of waiver contains confidential business information, and the agency has no comment at this time."

On March 22, EPA emailed DTN, stating that the agency was granting exemptions to refiners for 2016 RFS obligations. "To date, we have granted an annual exemption for 14 small refineries for calendar year 2016, and we are still evaluating 2017 petitions. We have not received 2018 petitions," the EPA spokesman stated.

On Wednesday, an EPA source who asked not to be named said the agency has granted about 25 hardship waivers from 2017 RFS obligations.

Grassley said in a statement to DTN on Wednesday that it appeared EPA granted a "secret" waiver.

"If refineries are being allowed to retroactively get out of the renewable volume obligations the EPA assigned them in November, that fundamentally undermines the Renewable Fuel Standard," Grassley said. "It would also amount to a massive government handout to a big corporation that made billions in profits just last year. Giving big corporations like Andeavor a free pass when other companies are required to follow the law of the land isn't just unfair, it may be illegal.

"The executive branch is required to follow the law as passed by Congress. There are legitimate questions being raised about whether EPA is following the law with these exemptions. I plan on writing to Administrator Pruitt to ask him about these reports. The public deserves transparency about this secret waiver and I expect EPA to be forthcoming."

In January, the Renewable Fuels Association called on the EPA to improve transparency, http://bit.ly/….

RFA President and CEO Bob Dinneen wrote in a letter to Pruitt, "Although EPA has indicated that it has evaluated a dozen petitions for exemption for 2016, we are not aware of any instance in which EPA has been willing to disclose any data about the total number of petitions it received and granted for subsequent years, including 2018."

The ripple effects of the agency's actions are being felt in both the renewable fuels industry and in farm country.

The value of renewable identification numbers, or RINs, tumbled to their lowest valuation since mid-September 2015 in active early trade Wednesday, pressured by reports of the exemption waivers.

North Dakota Farmers Union President Mark Watne said in a statement on Wednesday the agency's action was unfortunate in light of low commodity prices and overall decline in farm income.

"Farmers are told to get prices from the marketplace, yet our government is creating a market atmosphere that reduces demand and causes prices to drop," Watne said. "When farmers need this administration the most, we are getting broken promises. We need new demand, a new farm bill and no cuts to crop insurance -- not strategies that further the economic pain to our farm families."

Granting waivers to large refiners such as Andeavor raises questions about the guidelines used by EPA to grant the RFS exemptions. DTN filed a Freedom of Information Act request in January, seeking copies of waiver requests made to the agency between 2012 and 2017. EPA has not responded to DTN's request.

Since last fall, the petroleum industry has aggressively lobbied the Trump administration to relieve the RFS obligations, which require refiners to invest in biofuels or buy renewable identification numbers, or RIN, credits through a trading platform.

Biofuel industry leaders, corn growers, oil refiners and senators have met on several occasions with members of President Donald Trump's administration in search of a solution that would lower the costs to comply with the RFS without hurting the biofuels industry.

Last month, EPA settled with a bankrupt refiner, Philadelphia Energy Solutions, to grant it relief from RFS obligations.

There has been debate about whether a refiner such as PES can recover the costs of RFS compliance, without having the ability to blend fuels and cash in on RIN generation. Larger companies such as Andeavor, however, are able to pass through the costs to consumers because the company operates blending facilities.

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

Follow him on Twitter @toddneeleyDTN

(ES/AG)

Todd Neeley