(Adds oil industry comment, paragraph 9)
By Jarrett Renshaw and Stephanie Kelly
Sept 24 (Reuters) - The U.S. Environmental Protection Agency granted some refineries full waivers from the nation’s biofuels regulation for the 2018 compliance year, even though the Department of Energy had recommended partial exemptions for those facilities, according to an EPA memo seen by Reuters.
The decision is likely to upset the powerful U.S. corn lobby, which has said the Trump administration’s move in August to grant 31 full exemptions to refineries - freeing them from their at-times costly obligation to use biofuels like corn-based ethanol - hurts farmers already suffering from the U.S. trade war with China.
The issue shows how President Donald Trump has struggled to simultaneously please the corn and oil industries, key political constituencies leading into next year’s presidential election that have routinely clashed over the future of the nation’s biofuels policy.
According to the memo, dated Aug. 9, the EPA granted “full exemptions for those 2018 small refinery petitions where DOE recommended 50% relief.”
The memo, signed by Anne Idsal, EPA’s acting assistant administrator for the Office of Air and Radiation, did not specify how many refineries were involved.
Trump’s EPA has disregarded DOE advice on waivers in the past, according to Reuters reporting, marking a break from the Obama administration’s EPA, which had often either adopted energy department recommendations or, when it did not, ruled against exempting oil refiners.
An EPA official did not immediately comment.
Agency officials and oil industry representatives have defended the EPA’s expanded use of waivers under the Trump administration, saying they protect refining jobs and that there is no evidence they have any impact on demand for ethanol.
“Small refinery exemptions are a critical lifeline for small refineries across the U.S.,” said a spokesman for the American Fuel and Petrochemical Manufacturers refining group.
But biofuel industry representatives called the memo evidence the agency is biased in favor of the oil industry.
“Granting favors to refiners that aren’t really facing an economic hardship is just one of the multiple problems with EPA’s handling of small refinery exemptions,” said Kurt Kovarik, vice president of federal affairs for the National Biodiesel Board, on the sidelines of an industry event.
“The memo clearly shows that EPA continues to disregard the recommendations of DOE,” Geoff Cooper, head of the Renewable Fuels Association industry group, said in an email.
Under the U.S. Renewable Fuel Standard, oil refineries are required to blend biofuels like corn-based ethanol into their fuel or purchase credits from those that do, a law intended to help farmers and cut U.S. dependence on foreign oil but which refiners say costs them a fortune.
The RFS, however, allows the EPA to grant waivers from the regulation to small refining facilities of 75,000 barrels per day or less, if they can prove that compliance would cause them disproportionate economic hardship.
Under the process, the DOE assesses the applications and provides recommendations to the EPA, which then makes a final decision.
While the EPA publishes the number of waiver applicants and recipients each year, it keeps their identities secret, arguing the information is business-sensitive.
Since Trump took office, the EPA has vastly expanded its use of the exemptions, and has provided waivers to small facilities owned by billionaire investor Carl Icahn and by oil majors like Exxon Mobil Corp and Chevron Corp, according to Reuters reporting.
Under pressure over the most recent round of 31 waivers, Trump last month promised a “giant package” to farmers to boost the market for ethanol. That plan has yet to be released. (Reporting by Jarrett Renshaw in Philadelphia and Stephanie Kelly in New York Writing by Richard Valdmanis Editing by Marguerita Choy and Matthew Lewis)