Biofuel backers blast RFS waivers to oil refineries

The Environmental Protection Agency has exempted several refineries owned by one of the nation’s largest oil refining companies—Andeavor—from compliance with the 2016 Renewable Fuel Standard renewable volume obligations.

According to a Reuters report, April 3, the exemption releases three of Andeavor’s refineries, two in North Dakota and one in Utah, from their 2016 RFS obligations.

So far, the agency has issued waivers from the RFS for 2016 and 2017. A refinery executive told the Houston Chronicle that the EPA “was handing out those exemptions like trick or treat candy.” The Reuters report said EPA exempted 20 refineries from the 2016 RFS and 25 refineries from the 2017 mandate. Previously, only a few waivers had been issued each year. Andeavor earned $1.5 billion in profits last year.

Farm groups and the ethanol industry have expressed outrage over the issue they say creates large profits for refiners while reducing consumption of RFS targets.

National Farmers Union President Roger Johnson sent a letter to EPA Administrator Scott Pruitt, insisting the agency either cease granting the waivers or raise volume obligations to account for a large increase in waivers the agency is handing out.

“The RFS was passed by Congress to spur growth in the American-grown biofuels industry, and, to date, it has reaped significant economic and environmental benefits for rural America,” Johnson said. “EPA’s recent trend of undermining this law on behalf of the oil industry is disturbing, and it flies in the face of the administration’s numerous promises to farmers and rural communities to support the RFS. They must stop these actions and instead work towards expanded use of biofuels in our transportation fuel sector as intended by the RFS law.”

Since 2016, the agency set volumes below their statutory levels to make them “reasonably attainable” to meet for the oil industry, the NFU release said. EPA lowered the obligations and found the new levels would not have significant economic impacts on small oil refiners. The RFS statute allows small refineries an exemption from complying with annual RFS requirements, and an extension of this exemption if the refinery can demonstrate that compliance with the RFS will cause them “disproportionate economic hardship.”

“What’s troubling is the EPA would lower volume obligations, say they are attainable to small refineries, and then grant small refineries waivers when they say the levels are not attainable,” said Johnson.

Johnson said these actions work contrary to the intent of the RFS law by reducing demand for biofuels. According to the U.S. Energy Information Administration, the three “small refineries” owned by Andeavor represent over 2.3 billion gallons of production capacity, resulting in a reduction of the 2016 RFS requirements by almost 200 million ethanol-equivalent gallons. Estimates indicate that the requests that have been submitted could represent a reduction of approximately 1 billion gallons of renewable fuel for 2017.

EPA wrong, industry officials say

Renewable Fuels Association President and CEO Bob Dinneen said in a statement: “EPA has struck again. It appears the agency has initiated a fire sale on RFS demand. Providing a small refiner waiver to a company like Andeavor is laughable and abandons the commitment of President Trump to protect the RFS. This is an outrageous abuse of the statute.

“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. 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,” Dinneen said.

Additionally, in November 2017, nearly two years after EPA finalized the 2016 RVOs, the agency disclosed that it had exempted at least 14 small refiners from the 2016 RFS requirements, amounting to at least 515 million renewable identification numbers being removed from the total 2016 obligation and effectively reducing the RVO. This is clearly intentional demand destruction and a subversive attack on the RFS, Dineen’s statement said.

Growth Energy CEO Emily Skor released a letter to Pruitt, condemning the action, saying, “We ask that EPA immediately cease issuing waivers and pause any waiver applications being considered until the agency conducts a full, transparent public comment process to help assure all stakeholders that the new expansion of small refinery waivers are 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.

“These decisions appear to be timed so they do not require disclosure in the yearly RFS Renewable Volume Obligation rulemaking process, adding further suspicion that the EPA is pressing its thumb on the scale to grow oil industry profits.

“Secret handouts to petroleum giants don’t just undermine the administration’s commitment to the RFS, they represent a very real threat to hard-pressed farmers and biofuel industry workers across the heartland. Every waiver represents a gallon of homegrown biofuel that can’t make its way to consumers, can’t contribute to U.S. energy security and can’t grow the U.S. economy.” 

Corn growers upset

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National Corn Growers Association President Kevin Skunes also sent a letter to Pruitt on behalf of NCGA and its state affiliates saying, “EPA continues to take actions that undermine the RFS and contradict President Trump’s commitments to America’s corn farmers. EPA is clearly overstepping its bounds, and we ask Administrator Pruitt to stop granting these waivers and damaging the RFS behind closed doors.

“EPA reportedly granted exemptions to one of the nation’s largest refiners, Andeavor, which posted net profits of $1.5 billion in 2017. This improper application of the small refinery hardship exemption is yet another example of EPA actions that destroy demand for ethanol and corn.

“EPA reportedly has more than 30 petitions under consideration, and up to 25 waivers may have been handed out in secrecy last year. Granting this number of exemptions would remove a significant amount of renewable fuel gallons from the RFS volume requirement. This would have a direct impact on corn demand and corn prices at a time when net farm income has already decreased more than 50 percent over the past four years. 

“EPA needs to stop granting these waivers and fully weigh the impact of these decisions on rural communities and America’s corn farmers.”

Sen. Chuck Grassley, R-IA, issued a statement, saying, “If the reporting is accurate, it appears EPA granted a secret waiver that is legally reserved for small refiners to one of the largest oil refining companies in the country. If refineries are being allowed to retroactively get out of the renewable volume obligations the EPA assigned them in November that fundamentally undermines the Renewable Fuel Standard. It would also amount to a massive government handout to a big corporation that made billions in profits just last year. Giving big corporations like Andeavor a free pass when other companies are required to follow the law of the land isn’t just unfair, it may be illegal.

“The executive branch is required to follow the law as passed by Congress. There are legitimate questions being raised about whether EPA is following the law with these exemptions. 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.”

Senators express frustration over RFS waivers

Sens. John Thune, R-SD; Joni Ernst, R-IA; Roy Blunt, R-MO; and Deb Fischer, R-NE; and Grassley; on April 9, sent a letter to Trump regarding EPA’s use of secret waivers exempting multibillion dollar oil refining companies from their legal obligations under the Renewable Fuel Standard.

Larry Dreiling can be reached at 785-628-1117 or [email protected].