Cheers and jeers as EPA shares data on refining waivers

Source: Marc Heller, E&E News reporter • Posted: Monday, September 24, 2018

EPA said yesterday it will publicly share more information about the biofuel-blending exemptions it grants small refiners, setting off a fresh volley of complaints from biofuel critics and advocates.

The agency posted, for the first time, aggregate numbers showing the increase in small refinery exemptions and said it would do so on a regular basis. EPA said it would also post prices for renewable fuel credits, all in an effort to make the program more transparent.

Officials have already acknowledged the increase and provided figures to news outlets, but the numbers on the agency’s website further illustrate the changes in the program since the Obama administration was instructed by a federal court to be less restrictive in granting them. Waivers are granted when refiners demonstrate that compliance would be an economic hardship.

In 2013, EPA denied seven of the 16 petitions it received for small refiner exemptions. It granted eight, and one was withdrawn, the agency said.

By last year, the number of petitions had climbed to 34. EPA granted 29, and five are pending. The agency hasn’t denied a petition since 2015.

All 11 petitions received so far in 2018 are pending, the agency said.

The numbers also reflect the volume of fuel affected by waivers. The Renewable Fuels Association, an ethanol industry group, noted the average volume of gasoline and diesel per exemption climbed from 325 million gallons in the 2013-2015 period to 440 million gallons for 2016 and 2017, suggesting waivers were granted to refiners at the top end of “small.”

The small refinery exemption, spelled out in the renewable fuel standard law, has come under intense scrutiny since the waivers have climbed. An ethanol industry group, Growth Energy, praised the additional disclosures but said more information — such as which refineries received them — should be public information as well.

“The dashboard is a positive step in the right direction towards greater transparency on the excessive granting of small refinery exemptions, but many important questions remain,” said Growth Energy CEO Emily Skor in a statement.

“Who has received these waivers? What is the criteria for the waiver? Are the lost gallons from the waivers going to be reallocated as the law requires?” Skor said. “Beyond American businesses, farmers and rural workers also deserve the full story from EPA.”

Growth Energy and other critics of the waivers say the refineries, for the most part, aren’t struggling economically. In some cases, companies that have been publicly identified as receiving waivers reported large overall profits.

Skor told reporters in a roundtable discussion earlier this week that ethanol advocates are pushing for “partial” waivers that wouldn’t necessarily free a refinery of all its obligations under the RFS. The law, enacted in 2005 and updated in 2007, allows for that, she said, although advocates for small refiners took a different view.

They’re also pushing hard on another issue — year-round sales of higher-ethanol gasoline blends — that President Trump has endorsed. But EPA doesn’t appear to be moving quickly on that, she said.

Critics of the RFS program said that all parties agree with greater transparency but that more fundamental weaknesses are at play.

“It’s good that EPA wants to ensure more transparency in the RINs market,” said Scott Segal, an energy lobbyist at Bracewell LLP, referring to the credits known as renewable identification numbers. Refineries that don’t blend ethanol buy the credits to comply with the RFS.

“However, the kind of market reforms that will make a real and lasting difference in addressing the substantial problems the RINs market faces from speculators won’t be addressed by a website,” Segal said. The market should include limits on the number of contracts, much as commodity markets work, he said.

Segal also took aim at calls to limit small refiner exemptions. They’re necessary, he said, to minimize the risk of broad economic harm from renewable fuel mandates.

“It’s a safety valve of sorts. And failing to honor it is illegal,” Segal said.

A lobbyist who represents small refiners, LeAnn Johnson, said granting “partial” relief to refiners would run afoul of the RFS.

“In the latest political battle over small refinery hardship relief under the renewable fuel standard, the ethanol lobby is again trying to persuade EPA to violate the Clean Air Act,” Johnson said. “Nothing in the statute or the implementing regulations allows EPA to tailor relief and only grant partial exemptions to satisfy the ethanol lobby or for any other purpose.”