November 27, 2018 / 6:28 PM / 10 months ago

UPDATE 1-EPA will not reallocate waived biofuel volumes to 2019 mandate -official

(Adds comments from EPA official, background, details)

By Humeyra Pamuk

WASHINGTON, Nov 27 (Reuters) - The U.S. Environmental Protection Agency (EPA) has rejected requests from the corn lobby to reallocate biofuel volumes waived under its small refinery exemption program into its 2019 mandate, an agency official told Reuters on Tuesday.

The official also said the 2019 biofuel mandate figures, due to be released this week, would be largely in line with the agency’s June proposal of 19.88 billion gallons, which includes 15 billion gallons of convention biofuels like ethanol.

The powerful corn lobby and top officials in the U.S. Department of Agriculture have complained for months that the Trump administration’s expansion of the EPA refinery waiver program threatens demand for crucial farm products like ethanol.

Under the U.S. Renewable Fuel Standard, oil refiners must blend increasing amounts of biofuels into their fuel each year or purchase blending credits from those that do. Small refineries can be exempted from the RFS if they prove that complying would cause them financial strain.

“It is an issue of timing,” said the EPA official, who declined to be named due to the sensitivity of the issue.

“The primary reason why we’re not reallocating in this rule is because we have no idea what the volume of SREs (Small Refinery Exemptions) will be for calendar 2019 and we won’t know that late 2019, early 2020. All we could do is guess, and we don’t do regulations by guessing here.”

The refinery waiver program is among the most controversial issues dividing the U.S. corn lobby and the oil industry.

Since President Donald Trump’s election, the EPA has vastly expanded the number of waivers it has handed out to small refineries in a bid to reduce the refining industry’s regulatory compliance costs. The move has infuriated another key Trump constituency, the Farmbelt, which argues the program erodes demand for biofuels.

Under pressure, the EPA earlier this year began studying a potential overhaul in which biofuels blending obligations eliminated under the waiver program would be reallocated, possibly in the following year, to other facilities, to ensure there was no net loss in overall blending volumes.

“We would like to make everybody happy. It is not often the case we can,” the EPA official said.

The EPA is set to formally announce its 2019 biofuels mandate volumes by Nov. 30. (Reporting by Humeyra Pamuk Editing by Bill Berkrot, Richard Valdmanis and David Gregorio)

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