Hearing takes up controversial refinery exemption tomorrow

Source: By Marc Heller, E&E News reporter • Posted: Monday, October 28, 2019

A House subcommittee will dive into the highly charged debate over exemptions some small refineries enjoy from biofuel blending requirements — an issue that could have political ramifications in ethanol-producing states.

The Energy and Commerce Subcommittee on Environment and Climate Change will examine the small refinery exemptions, which are part of the federal renewable fuel standard. Rep. Paul Tonko (D-N.Y.) is the chairman.

With the title “Protecting the RFS: The Trump Administration’s Abuse of Secret Waivers,” the hearing draws from complaints by biofuel advocates that EPA has overstepped by granting the vast majority of exemptions sought by small refineries during the Trump administration.

The agency recently agreed to 31 of 36 petitions for such exemptions, sparking outcry from biofuel groups and lawmakers supportive of the biofuel industry.

Among the complaints is that EPA’s decisionmaking process isn’t transparent, allowing refineries to bypass the requirements and undercut demand for the fuel, largely made from corn grown in Iowa and other Midwest states.

The agency discloses numbers of exemptions, but it doesn’t say which refineries received them, nor does it describe in detail how decisions were reached — a process broadly spelled out in the Clean Air Act.

On the other side are petroleum interests that say the biofuel mandate is too costly for many small refineries, as well as labor unions representing refinery workers guarding against potential job losses at those plants.

In addition, some environmental groups say the RFS has fed a conversion of grassland and other wildlife habitat to cornfields that require applications of pesticides and other farm chemicals.

“A hearing dedicated only to the dust-up over [small refinery exemptions] is a distraction from the broader fact that the RFS needs serious reform,” said David DeGennaro, climate and biofuel policy specialist at the National Wildlife Federation.

“There are numerous other avenues for oversight that demand attention, not least of which is the vast environmental damage the program has wrought.”

Pro-biofuel lawmakers continue to press the administration to scale back exemptions and to ensure that any volumes “lost” are restored, such as by increasing the requirement for nonexempt refineries. A recent proposal by EPA to tweak the program falls short of that goal, they’ve said.

Sen. Joni Ernst (R-Iowa) told The Des Moines Register and other Iowa news outlets last week that she’ll call for EPA Administrator Andrew Wheeler’s resignation if EPA doesn’t uphold the 15-billion-gallon minimum annual requirement for conventional biofuel.

In the middle are lawmakers such as Rep. John Shimkus (R-Ill.), the panel’s ranking member, who are crafting legislation that they say will maintain demand for ethanol by establishing a national octane standard while relaxing the mandate for certain volumes of biofuel to be blended into the fuel supply.

Shimkus may not be in Congress long enough to see that happen; he recently announced he won’t be running for reelection next year.

For those on the ballot — including President Trump — the biofuel debate is a potential minefield. Swing states such as Pennsylvania have petroleum refining interests but also a heavy emphasis on agriculture. In Midwestern states such as Iowa, the ethanol industry carries political weight. In Texas, though, policies that don’t favor oil don’t play well with voters.

Biofuel groups said the latest round of exemptions was particularly mysterious. Citing only “bare-bones” reasoning, the groups said in a joint news release, the agency didn’t explain whether any of the refineries were eligible for extensions of their waivers, nor did officials describe the “disproportionate economic hardship” required for them.

The groups petitioned the U.S. Court of Appeals for the District of Columbia Circuit to review the granting of the exemptions.

Critics of the RFS say there’s no evidence that small refinery exemptions sacrifice overall demand for biofuels. If the administration sticks with a proposal to make up for the exemptions by “reallocating” volumes among other refineries, those supplies are likely to come from imports, refiners have said.

Those groups, including the American Petroleum Institute and the International Brotherhood of Boilermakers, have asked EPA to reduce its proposed biofuel volumes for 2020 and leave the exemptions alone.

Increasing biofuel volumes “will only result in skyrocketing compliance costs, putting American jobs at risk — jobs hard working Americans, like the Boilermakers, depend on to put food on the table and take care of their families,” the union’s international president, Newton Jones, said in an Aug. 19 letter to Trump.

Schedule: The hearing is Tuesday, Oct. 29, at 10:30 a.m. in 2123 Rayburn.

Witnesses: TBA