Government officials will convene next week to discuss the administration’s plan of action to resolve the biofuels policy debate, sources tell Agri-Pulse. The meeting comes as biofuels groups grow concerned about reported exemptions being offered to some of the nation’s refiners.
Sources tell Agri-Pulse the meeting will happen Monday, April 9 and be comprised of officials from the White House and a handful of government agencies including the Department of Agriculture and the Environmental Protection Agency. The meeting is expected to involve a push from pro-ethanol officials to send the discussion back to Congress and to stop the use of hardship waivers for 2017 and 2018.
A spokesman for the EPA deferred to the White House. Spokespeople for USDA and the White House did not respond to requests for comment.
The news comes after reports surfaced about EPA granting a hardship waiver to a refiner that exempted three of its facilities from the requirements of the Renewable Fuel Standard. On Tuesday, Reuters reported that EPA exempted three of the 10 refineries owned by Andeavor from the biofuel mandate.
Reuters later reported that waivers were awarded to 25 refineries in 2017, a noted departure from typical exemptions that rarely reach into the double digits.
The reaction to the news among the biofuels community bordered on universal outrage. The primary concern centered around the theory that EPA chief Scott Pruitt could offer the waivers – typically reserved for refineries in danger of suffering “disproportionate economic hardship” – as a way to undercut the Renewable Volume Obligations that set requirements for blending renewable fuels into conventional diesel and gasoline.
On Wednesday, Growth Energy sent a letter to Pruitt calling on him to “immediately cease issuing waivers and pause any waiver applications being considered,” said Emily Skor, the group’s CEO. She said the process needs to be more transparent and “consistent with the goals of the RFS.
“EPA appears to be operating under the cover of night in a secretive process where the agency acts as judge, jury, and executioner to effectively reduce the overall demand for biofuels in this country absent any public discourse,” Skor said.
Another source told Agri-Pulse said the “actual number of gallons waived through small refinery exemptions” exceeds 1 billion gallons. By offering waivers after the RVO is finalized – which, by law, must happen by the end of November every year – “those gallons do not have to be reallocated. (Pruitt) knows that.”
Biofuel supporters worry this tactic would allow Pruitt to finalize an RVO calling for the statutory 15 billion gallons of conventional biofuel – typically satisfied by corn ethanol – while chipping away at blending capacity through hardship exemptions.
Iowa Senator Chuck Grassley reacted to the news by calling for more transparency in the process. Currently, EPA is not releasing information on companies that received a waiver, and Grassley said he plans to address the issue with the administration.
“There are legitimate questions being raised about whether EPA is following the law with these exemptions,” Grassley said in a statement. “I plan on writing to Administrator Pruitt to ask him about these reports. The public deserves transparency about this secret waiver and I expect EPA to be forthcoming.”
While biofuels backers may be upset about the granting of hardship waivers, oil and gas companies have previously argued the agency didn’t use the provision as often as it should. Last year, the 10th Circuit Court of Appeals in Denver ruled, essentially, that the EPA had to loosen its restrictions on hardship waivers after the agency was sued for blocking Sinclair Oil’s requests. Now, those same waivers might be easier to attain.
“To a certain extent, EPA’s hands are tied in relation to the Sinclair decision,” Brendan Williams, vice president of government relations for PBF Energy, told Agri-Pulse. EPA had previously held companies “have to show that you’re not going to make money or go out of business, and the court said ‘no, you can’t interpret hardship that way,'" he added.
Williams said many refineries don’t qualify for the waivers, which are limited to facilities that produce less than 75,000 barrels of oil per day. The “flood of these small waiver requests,” he said, is “more proof that” the system that governs compliance with the RFS “is broken and really needs to be fixed.”
In January, the Renewable Fuels Association wrote EPA to voice concerns about a “lack of transparency” in the exemption process. This week, Bob Dinneen, the group’s president and CEO, said EPA has “initiated a fire sale on RFS demand.” He said no one knows “how far these exemptions go” nor is the public aware of how many waivers have been granted.
“Any claims the RFS is negatively impacting the oil industry are absurd, much less the fifth-largest refiner in the country which posted a profit of nearly $1.5 billion last year,” Dinneen said of Andeavor’s reported waiver. “Suffice it to say we are exploring all our options to return the RFS to what the statute intended and what the President has supported."
An EPA spokesman did not respond to a request for reaction to the concerns of using waivers to work around the RFS.
Pruitt used administrative workarounds to stress the biofuels community before. Last year, the EPA published a Notice of Data Availability that invited comment on “potential options for reductions” in biomass-based diesel, advanced biofuel, and total renewable fuel volumes set by the agency.
That action eventually led to Pruitt sending a letter to lawmakers pledging not to take a number of actions RFS supporters worried would undermine the standard in exchange for a handful of EPA nominees being allowed to move through the Senate Environment and Public Works Committee.
Sara Wyant contributed to this report.
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