(Reuters) - The U.S. Environmental Protection Agency (EPA) is considering delaying its widely anticipated announcement on Friday on 2019 renewable fuel volumes as it re-examines plans to force larger refineries to make up for gallons exempted at smaller plants, according to two sources familiar with the process.
EPA Administrator Scott Pruitt and Agriculture Secretary Sonny Perdue were set to travel to a farm outside of Kansas City, Missouri, where they were expected to announce a proposal for 2019 renewable fuel requirements on Friday.
The announcement would follow weeks of criticism of Pruitt’s handling of the Renewable Fuel Standard (RFS) program from biofuels supporters who accuse him of trying to undermine the program to help the refining industry.
The RFS, created in 2005, requires fuel companies to use increasing volumes of renewable fuels like ethanol with their petroleum products each year, but the EPA has used its authority to provide waivers to an unusually large number of small refineries releasing them of their obligation.
The EPA and the White House were still hashing out the details of a last-minute plan to appease farmers as part of the annual volumes announcement, the sources said, and the announcement could be postponed if an agreement is not reached.
EPA spokesman Jahan Wilcox did not respond to request for comment. USDA did not respond immediately to request for comment.
The plan under consideration would force large refiners to blend extra volumes to compensate for the hardship waiver exemptions for small refiners. The idea was met with stiff oil industry opposition on Wednesday, sending the price of compliance credits surging.
“This backroom deal would flat out betray consumers, labor and refinery workers in Ohio, Pennsylvania, Texas, Louisiana and dozens of other states that helped elect this president. To say that we would be livid were this deal to move forward would be a gross understatement,” Chet Thompson, head of the American Fuel and Petrochemical Manufacturers, said.
The EPA administers RFS and is permitted under the law to give waivers to refineries under 75,000 barrels-per-day that can prove compliance would cause them financial damage.
Under the RFS, refiners are meant to earn or buy blending credits corresponding with their obligation under the annual volumes mandates and turn them in to the agency. The cost of those credits have been volatile and in recent years have created a burden for refiners amounting to hundreds of millions of dollars.
The EPA is required to set targets for blending volumes by Nov. 30 for the following year, and tends to announce its proposal months in advance of that deadline to gather feedback.
As of Thursday morning, the agency was seen as likely to include a plan on how to reallocate waived volumes into this year’s proposal, according to sources.
One of the sources said the White House - which is trying to appease the rival corn and oil industries - was “blindsided” by the idea, triggering the current re-assessment of the plan.
Prices of renewable fuel credits traded in a range from 29.5-33 cents as the rumors swirled, said traders. They hit 28 cents on Wednesday, jumping by a nickel from the prior session as expectations of a reallocation mounted.
Reporting by Jarrett Renshaw and Chris Prentice in New York; editing by Jeffrey Benkoe, Marguerita Choy and Cynthia Osterman