EPA denies 'gap year' biofuel blending waivers

The US Environmental Protection Agency (EPA) today denied dozens of refinery requests to waive past biofuel blending obligations, a move that could sharply limit the future use of exemptions that have repeatedly reduced US fuel mandates.

EPA denied 68 applications filed this year for exemptions of Renewable Fuel Standard requirements from 2011 to 2018. The 17 small refineries in 14 states seeking the exemptions provided no new information that would merit approvals of waivers inviting difficult legal and financial questions and anger agribusiness voters ahead of the November presidential election.

"This decision follows President Trump's promise to promote domestic biofuel production, support our nation's farmer, and in turn strengthen our energy independence," EPA administrator Andrew Wheeler said in a statement.

EPA's denial means that no more than three US refineries remain eligible for future waivers based on federal appellate court criteria set in a January decision. US independent refiner HollyFrontier appealed that decision to the US Supreme Court earlier this month.

RFS requires refineries, importers and certain other companies to each year ensure minimum volumes of renewables blend into the gasoline and diesel they add to the US transportation fuel supply. Obligated parties acquire credits called renewable identification numbers (RINs) representing each ethanol-equivalent gallon of renewable fuel physically blended into the supply.

The law includes an exemption for refineries processing fewer than 75,000 b/d of crude a year and able to persuade EPA that the obligations create a financial hardship. These exemptions surged under President Trump, waiving requirements for dozens of smaller refineries from prior obligations. Because the US historically did not shift these obligations to other obligated parties, the waivers freed up billions of RINs for other, larger refineries to purchase for their own obligations instead of increasing physical blending.

Refineries this year asked EPA to waive past obligations to meet an appellate court's criteria that obligated parties must have received exemptions continuously to be eligible for future waivers. EPA referred to the applications as "gap-filling petitions."

By Elliott Blackburn