Federal Agencies Disagree on Accounting for Small-Refinery Waivers in 2019

Source: By Todd Neeley, DTN/Progressive Farmer • Posted: Tuesday, August 28, 2018

OMAHA (DTN) — EPA has made clear it is not considering public comments on small-refinery waivers and how they affect the Renewable Fuel Standard. But a USDA memorandum sent to EPA on Aug. 15 disputes the EPA’s claim the waivers are beyond the scope of the latest RFS volumes proposal.

What’s more, USDA’s Office of the Chief Economist raised concerns about the EPA electing not to account for small-refinery waivers in the latest RFS blend volumes proposal for 2019.

Publicly, EPA has touted the latest RFS proposed blending volumes for 2019 as proof the agency continues to promote the expansion of biofuels production, all while detailing the number of gallons waived. In addition, the EPA stated in its proposal that there are zero requested waivers for 2019 volumes.

The public-comment period for the 2019 blend volumes ended on Aug. 17. EPA’s proposed blend volumes do not factor in the roughly 2.25 billion gallons of biofuels waived in 2016 and 2017. Many commenters suggested EPA could come up with an estimate of potential small-refinery exemptions based on the waiver volumes granted for 2016-17. Instead, EPA factored in zero waiver volumes for 2019.

In a memo to the EPA, USDA’s Office of Chief Economist said EPA should factor in an estimate of waived gallons in 2019 when finalizing the blend volumes for 2019.

“The USDA agrees with points in the docket, which suggest that the current methodology in projecting zero small-refinery waivers and volumes in the preliminary rule is inappropriate and results in an analytical inconsistency,” the USDA memo says.

USDA added that, without such a waiver estimate, the 2019 proposal “significantly reduces the transparency of EPA operations and increases the uncertainty for market participants. Further, the USDA supports corrective suggestions for using a realistic projection of waived small-refinery volumes of gasoline and diesel production in the docket concerning these points.”