New rolling RFS compliance deadlines draw cheers from refiners, jeers from others

Source: By Jasmin Melvin, S&P Global • Posted: Tuesday, February 1, 2022

Refineries with less than 75,000 b/d capacity have more time to satisfy biofuel blending requirements for the 2019 compliance year, and reporting deadlines for 2020, 2021, and 2022 were extended for all parties obligated to comply with the Renewable Fuel Standard program, the US Environmental Protection Agency said.

The Jan. 27 announcement finalizes a Nov. 18 rulemaking spurred by the delay in the promulgation of new RFS standards after the Trump administration left office without proposing renewable volume obligations for 2021, despite statutory obligations to finalize RFS standards by Nov. 30 for the coming year.

Given that work on new standards was ongoing, President Joe Biden’s EPA last year initially extended the compliance period for the 2019 RVO to Nov. 30, 2021, and for the 2020 RVO to Jan. 31, 2022. Through this latest rule, those deadlines were extended further on a rolling basis and future RFS compliance and reporting deadlines will be able to accommodate delays in the promulgation of the annual standards without the need for rulemaking to alter compliance dates.

“The final extensions … will help ensure that obligated parties are positioned to fully comply with their RFS obligations by ensuring that each year’s compliance deadline falls after the standards for the subsequent compliance year are known,” the agency said on its website.

As is the case with most issues pertaining to the RFS program, refiners and biofuel advocates are at odds over this modification to the program’s compliance dates.

Refiners on board

The new rule extends, for small refineries only, the 2019 compliance reporting deadline to the next quarterly reporting deadline after the 2021 RFS standards take effect. Proposed RVOs for 2020 through 2022 are open for comment until Feb. 4, after which it remains unclear how quickly the EPA will act.

All obligated parties will have until the next quarterly reporting deadline after the 2019 compliance reporting deadline for small refineries to comply with the 2020 RFS reporting requirements, and until the next quarterly reporting deadline after the 2020 compliance reporting deadline to comply with the 2021 RFS requirements.

The deadline to comply with the 2022 RVO will be the next quarterly reporting deadline after either the 2023 RFS standards take effect or the 2021 compliance deadline, whichever occurs later, according to the final rule.

As for RVOs for 2023 and beyond, the annual compliance reporting deadlines would also be on a rolling basis premised on the pace at which new RVOs are crafted if circumstances do not allow for a March 31 compliance date.

“This is a common-sense administration decision,” a spokesperson for the refining group American Fuel & Petrochemical Manufacturers said in a Jan. 31 email.

“Refineries need clarity from the administration on these matters to align on their individual strategies for compliance,” which cannot happen while RVOs have not been finalized and questions remain over the fate of economic hardship exemptions requested by small refineries, the spokesperson argued.

AFPM contends that “postponing compliance deadlines has no material impact on biofuel blending” because renewable fuel is mixed with gasoline and diesel in real-time when those fuels are produced and sold throughout the year. “The deadlines are simply the dates by which RIN purchases must be made and proof of those purchases submitted to EPA,” the spokesperson said.

Too much power

But Renewable Fuels Association President and CEO Geoff Cooper asserted that the EPA has given “itself the power to perpetually delay implementation of yearly RFS blending requirements and continually kick the can down the road on compliance deadlines.”

Cooper said the new approach risks exacerbating “the uncertainty and instability around RFS implementation that was created by the past administration,” and was not what Congress intended when it “put certain annual deadlines into the law for RFS implementation.”

Emily Skor, CEO of ethanol trade group Growth Energy, called the delay in compliance deadlines “completely contradictory to efforts to lower rising gas prices and increase the use of cleaner, lower-carbon fuels.

“By continuing to delay compliance deadlines, EPA is creating uncertainty in the marketplace and stunting the blending of biofuel needed to decarbonize transportation as the [RFS] intended,” she said.

Meanwhile, the refining community continues to push back on the proposed increase to blending requirements for 2022 as well as a proposal to deny all 65 outstanding requests for small refinery exemptions.

“By raising the RVO and foreclosing the possibility of hardship relief for small refineries, the EPA will make compliance more difficult, [RIN] credits more expensive, and the financial hardships for small refiners even more extreme,” Senator Shelley Moore Capito, Republican-West Virginia, and 14 other GOP senators said in a Jan. 27 letter sent to EPA Administrator Michael Regan.