By Todd Neeley
DTN Staff Reporter
OMAHA (DTN) -- Waivers granted to small refineries in 2016 and 2017 may have prevented about 1.6 billion gallons of biofuels from entering the fuel supply, according to a new analysis of EPA (https://www.epa.gov/…) performed by the Renewable Fuels Association.
The EPA has drawn fire for a seeming lack of transparency on waivers dating back to 2016, including declining to provide details about the companies receiving waivers and the amount of biofuel blending excluded.
The agency granted nearly 40 RFS waivers to so-called small refiners since 2016, including about 25 in 2017 alone. Included in last year's total is a request by Andeavor, which posted a $1.5 billion profit last year. Also, the New York Times reported that oil giants Exxon and Chevron have requested waivers for 2018.
EPA Administrator Scott Pruitt is scheduled to testify Thursday before the House Energy and Commerce Environment Subcommittee in the morning and the House Interior, Environment and Related Agencies Appropriations Subcommittee in the afternoon. Though both hearings are on the EPA's 2019 budget, Pruitt is expected to be grilled on the RFS and other issues.
Though biofuels interest groups and media outlets including DTN have requested additional information about the waivers, the EPA has not responded to Freedom of Information Act requests on the issue.
In a new analysis (http://www.ethanolrfa.org/…) released on Tuesday, the Renewable Fuels Association said EPA's monthly RFS compliance data provides hints as to how much ethanol and other biofuels was not blended in 2016 and 2017.
Oil industry officials have argued the EPA's use of waivers is nothing new, as the agency has granted waivers throughout the history of the program.
According to the RFA's analysis, however, the volume of biofuels gallons affected by EPA waivers issued in 2016 and 2017, was 10 times more by volume than all of the gallons waived from 2013 to 2015.
"Despite numerous requests from industry stakeholders, including RFA, and lawmakers for additional information, EPA has not disclosed the exact number of exemptions granted or the volume of required renewable fuel blending that was effectively erased," the RFA said in a news release on Tuesday.
EPA's data implies small refiner waivers effectively reduced 2017 required renewable fuel volumes by about 1.11 billion gallons, the analysis said. For 2016, exemptions reduced the RFS requirement by 523 million gallons.
When looking at actual annual consumption of gasoline and diesel in 2013 to 2015, the analysis found volumes were close to what was obligated by the RFS and reported by refiners.
"This means RFS blending obligations applied to virtually every gallon of gasoline and diesel fuel produced and consumed in the United States," the analysis said.
"However, something clearly changed in 2016 and 2017. The EPA data show large discrepancies between actual gasoline and diesel consumption and the volumes obligated for renewable fuel blending as reported by obligated parties. The only reasonable explanation for these large discrepancies between actual gasoline/diesel consumption and the volume of gasoline/diesel obligated for renewable fuel blending is the surge in small refiner exemption approvals."
Frank Maisano, senior principal for the policy resolution group at Bracewell LLP, a communications firm for the oil industry based in Washington, D.C., said in an email to DTN the reason why EPA's 2013-2015 consumption data for gasoline and diesel matches RFS-obligated gallons is because the volumes for those years were set retroactively in 2015.
"In retroactively setting the RVO (renewable volume obligation), EPA was able to expressly set the requirement with what had actually occurred, rather than setting it based on projections for the future," he said.
However, the EPA published the 2013 volumes in August 2013 and not in 2015. The final volumes for 2014 and 2015 were published in November 2015. So obligated parties were not required to show RFS compliance for 2013 until March 2016.
When DTN requested additional information about the waivers, EPA said it could not provide the names of the companies and the volumes because proprietary business information was involved.
In a letter (https://www.epw.senate.gov/…) to Pruitt on Tuesday, Sens. John Barrasso, R-Wyo., and Shelley Moore Capito, R-W.V., asked the agency to continue to withhold company details.
"We also expressed deep concern about the attacks on hardship relief and the efforts of some to obtain the confidential business information of small refiners," the letter said. "We urge you again to ensure your staff and contractors do not disclose to any outside parties the confidential and other sensitive information of small refineries that petition for hardship relief."
What has come in question, however, is whether EPA is following the letter of the law in granting waivers to larger, more-profitable companies.
Barrasso and Capito said disclosing business information on waivers "would give entities selling refined producers in the same market as a small refinery a competitive advantage over that refinery. Disclosing this information would also give entities selling RINs (renewable identification numbers) to a small refinery an opportunity to extract a higher price from that refinery."
When it comes to the RFS, Pruitt's EPA has seemingly been at odds with President Donald Trump's public support of biofuels including the expansion of year-round E15 sales. E&E News reported on Wednesday that Pruitt is the subject of an internal White House investigation.
Sen. Charles Grassley, R-Iowa, said during a news conference with agriculture journalists this week that Pruitt's EPA has taken actions mostly favorable to agriculture including rolling back regulations. Grassley said replacing Pruitt may face a stiff challenge from Democrats who have been filibustering Trump nominees.
Bob Dinneen, president and chief executive officer of the Renewable Fuels Association, said he believes Pruitt has been working to undermine the ethanol industry.
"While EPA refuses to publicly confirm the details surrounding the numerous small refiner waivers it has issued, this data speaks for itself, showing the demand destruction that has resulted from Administrator Pruitt's secret small refiner bailouts," Dinneen said in a statement. "These moves are hurting America's biofuel producers, farmers, and ultimately consumers, and they stand in direct opposition to President Trump's commitment to protect the RFS."
Todd Neeley can be reached at firstname.lastname@example.org
Follow him on Twitter @toddneeleyDTN
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