Senators cry foul over EPA waivers

Source: Marc Heller, E&E News reporter • Posted: Tuesday, April 10, 2018

Senate supporters of federal biofuel mandates urged President Trump yesterday to block U.S. EPA from waiving requirements for refiners, after the agency confirmed it has allowed more such waivers than usual in recent months.

The lawmakers — Sens. John Thune (R-S.D.), Chuck Grassley (R-Iowa), Joni Ernst (R-Iowa), Deb Fischer (R-Neb.) and Roy Blunt (R-Mo.) — said the administration should halt the waivers until EPA adopts a more “transparent and impartial” approach to the renewable fuel standard.

The senators wrote to Trump and sent a copy to EPA Administrator Scott Pruitt. The missive came as the president, Pruitt and Agriculture Secretary Sonny Perdue were set to meet to continue discussions around the program.

“The EPA is using its small refiner economic ‘hardship’ waiver in an unprecedented manner to benefit some of the largest refiners in the nation, including Andeavor, which posted a profit of approximately $1.5 billion last year,” the senators wrote.

At issue is EPA’s approval of around 25 waivers of fuel-blending requirements in 2017, plus three for Andeavor — formerly Tesoro Corp. — this year.

Refiners say the program has become too expensive with rising costs of renewable fuel credits, called renewable identification numbers, although those prices have tailed off this year.

Current rules limit waivers to small refineries, and the Andeavor plants met that definition. But biofuel advocates say the company’s profitability runs counter to the idea that waivers should help refineries facing economic hardship.

In addition, the agency doesn’t publicly identify recipients of waivers, for business privacy reasons, although the agency did confirm a news report that it granted about 25 in total. Reuters reported that that’s significantly more than EPA would typically grant in a year (Greenwire, April 4).

Waivers granted for 2016 biofuel volume requirements effectively reduced the amount of renewable fuel from a mandated 15 billion gallons to 13.8 billion gallons, the senators said.

If the trend continues, they said, demand for corn could fall by hundreds of millions of bushels and cost farmers more than $100 per acre as prices drop. The Agriculture Department has said farm incomes were already likely to fall this year.

The letter represents another salvo in a monthslong letter-writing campaign by proponents and opponents of the ethanol mandate. Pruitt has said he’s sympathetic to refiners’ complaints about RIN costs, but Trump has also said he supports the RFS and farmers.

Petroleum industry sources say the senators’ argument doesn’t hold up, as falling RIN prices haven’t led to any decline in biofuel blending.

“The letter also shows a disturbing tendency among these senators to insist on sacrificing every bit of refining capacity so important for job creation and energy security,” said Scott Segal, an industry attorney at Bracewell LLP. “Following their lead would run square in the face of concrete promises the administration has made on regulatory reform.”

Also yesterday, Deputy Agriculture Secretary Steve Censky told reporters that USDA and Trump continue to back the mandate.

“The president has said he supports the RFS, and so do we,” Censky said at the annual meeting of the North American Agricultural Journalists.

Prices for RINs have fallen about 60 percent since last fall, Censky said. Given that decline, he said, “we think that it would be a tough time to be taking action to do something that would be negative on the renewable fuel standard.”