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EPA Ignored Calls To Cut Biofuel Quota Waivers

The Energy Protection Agency consistently ignored calls from the Energy Department to stop issuing—or lat least curb—waivers sought by refiners under biofuels regulation, Reuters reports, citing sources with knowledge of the matter.

The so-called hardship waiver is granted to smaller refiners who lack the resources to cover the costs of blending their fuels with corn-derived ethanol as stipulated in the Renewable Fuel Standard. These costs could reach up to hundreds of millions of dollars annually.

Earlier this week, media reported that French Total had considered asking the EPA for a hardship waiver, but the company’s lawyers responded with “No. Our refinery is too big.”

Yet, EPA’s boss Scott Pruitt has become the target of criticism for granting hardship waivers to more than two dozen refiners, apparently not all small ones, with capacity of under 75,000 bpd, as required under the waiver rules. Andeavor was one of those granted a waiver, although even larger companies applied for one, including Exxon and Chevron.

According to the Reuters sources, the EPA also granted full waivers to companies that the Energy Department had recommended only partial relief for. At least once, two of the sources said, the EPA granted a full waiver despite the Energy Department’s recommendation to reject the application.

The EPA is currently the target of a lawsuit filed by three corn ethanol lobby groups and the National Farmers Union. The allegations are for abuse of authority with the issuance of three RFS waivers without publishing notices of the decisions to do so, as required by law.

Related: The Bullish Truth Of OPEC’s Agreement

“EPA is trying to undermine the RFS program under the cover of night,” Renewable Fuels Standard president Bob Dineen told media following the announcement of the lawsuit in late May. “And there’s a reason it has been done in secret—it’s because EPA is acting in contravention of the statute and its own regulations, methodically destroying the demand for renewable fuel.”

The Reuters report comes on the heels of an EPA announcement that it will increase the overall biofuel mandate for 2019 by 3.1 percent to 19.88 billion gallons. Of this, 15 billion gallons will be corn- and soy-derived ethanol as per regulations.

By Irina Slav for Oilprice.com

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