March 20, 2019 / 9:27 PM / a month ago

UPDATE 2-EPA likely to grant partial waivers from US biofuel laws for 2018 -sources

(Adds details on program expansion)

By Jarrett Renshaw

NEW YORK, March 20 (Reuters) - The U.S. Environmental Protection Agency is likely to issue partial waivers to some of the 39 small refineries seeking relief from the nation’s biofuel laws for 2018, in an unusual option to balance the competing interests of oil and corn producers, two sources briefed on the matter said on Wednesday.

The agency typically either approves or denies a waiver request in full, and has only granted one partial exemption since the start of the U.S. Renewable Fuel Standard program more than a decade ago, Reuters has previously reported.

The EPA is set to decide on its pending 2018 exemption applications by the end of March, the compliance-year deadline under the RFS.

The sources, who asked not to be named, said the EPA’s decisions would include approvals for partial waivers, but they could not provide numbers.

EPA spokesman Michael Abboud declined to comment, saying only that it would continue to follow the letter of the law.

“EPA continues to implement the Renewable Fuel Standard program, including Small Refinery Exemptions, in accordance with the Clean Air Act, taking into consideration additional direction from Congress, recommendations from Department of Energy, and relevant court decisions,” he said.

The RFS requires refiners to blend certain volumes of biofuels like ethanol each year or purchase blending credits from those that do. But small facilities with a capacity of less than 75,000 barrels per day that can prove compliance would cause them significant financial strain can seek exemptions.

The EPA, under former Administrator Scott Pruitt, had drawn the ire of Midwest farmers when it expanded the waiver program. The number of small refinery exemptions granted went from seven in 2015 to at least 34 in 2017, EPA data show.

Some of the exemptions went to facilities owned by billion-dollar oil companies like Chevron Corp and Exxon Mobil Corp, and the expansion of the program drove down the price of compliance credits.

Biofuels advocates said Pruitt’s actions had threatened to undermine ethanol demand as farmers were already struggling with low commodity prices.

Under the exemption process, the Department of Energy analyzes requests and makes a recommendation to the EPA on whether to grant full or partial exemptions, or deny it. In the previous round of approvals, the EPA had granted full exemptions to all refineries for which DOE had recommended just partial relief, Reuters previously reported. (Reporting by Jarrett Renshaw; editing by Richard Chang)

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