White House review of waiver plan for biofuel pits refiners against farmers

The White House is reviewing an important rule that could change the balance between oil refiners, farmers and the Renewable Fuel Standard. It will determine how to redistribute large volumes of biofuel blend obligations that have been recently exempted.

The result, which is expected in the next few weeks, will determine what happens to billions of gallons U.S. demand for ethanol and biodiesel. This demand is vital for farmers who provide the corn and soy beans to produce biofuels but expensive to oil refiners who ensure that the biofuels mix into the nation's gasoline supplies.

The goal of biofuel mandates was to reduce greenhouse gas emissions, and decrease reliance on fossil-fuels. However, the Trump administration has prioritized increased oil and gas production over this climate goal. The Environmental Protection Agency has cleared the backlog of over 170 waiver requests from small refineries dating back to 2016. These applications were for exemptions from the obligation to mix biofuels in accordance with the RFS law, which is the nation's biofuel legislation.

More than 140 grants were made, in whole or part.

This action has opened the door for a new supplement rule that will determine whether and how the larger refiners are forced to compensate the exempted gallon, which is a measure biofuel producers had long sought to ensure annual blending quotas remained whole.

Public records indicate that the EPA sent the draft rule to White House last Thursday.

The proposal addresses redistribution of exempted volume from 2023 onwards, the EPA confirmed Thursday without providing any further details.

According to two people who were briefed about the proposal and spoke on condition of anonymity, because the discussions weren't public, it includes a preferred choice as well as alternative options that will be also weighed during the evaluation.

Even though it publicly supported the idea, the fact that the administration is exploring other options may indicate that they are not fully committed to the complete reallocation exempted volume.

Sources said that the White House will expedite its review by making the proposal public two weeks before the 30-day period for public comments.

The White House didn't immediately respond to an inquiry for comment.

CRITICAL MOMENT

Refiners say that forcing refineries to compensate for the gallons exempted is necessary to prevent crop markets from shrinking.

Both parties have tried to find a solution that will satisfy the political interests of powerful agricultural states while avoiding alienating oil-producing areas.

Devin Mogler is the CEO of the National Oilseed Processors Association. He said: "This is a crucial moment, and EPA has the chance to keep the promise made by the President to fight for U.S. Farmers and increase domestic fuel production."

Chet Thompson, CEO, American Fuel & Petrochemical Manufacturers, a trade group that represents refiners such as Phillips 66 and Marathon Petroleum, said the administration had already proposed a massive rise in biofuel quotas next year. "Re-allocation" would add billions to Americans' already huge RFS bill for the next year and year after. Reporting by Jarrett Renshaw Editing Rod Nickel

(source: Reuters)