EPA Mulls Nationwide Biofuel Waiver for Oil Refiners

The Trump administration is considering requests from the oil refining industry and its backers for a sweeping nationwide waiver to exempt them from their obligations to blend biofuels, a measure they argue would help them weather the economic impact of the coronavirus pandemic.

U.S. President Donald Trump’s Environmental Protection Agency (EPA) is requesting comment on the potential general waiver for the 2019 and 2020 compliance years and also is proposing a new rule that would remove or alter the labeling for retail gasoline that contains higher ethanol blends, according to notices to be published to the Federal Register on Tuesday.

The proposal for a general waiver could open the door to a contentious debate between the oil and biofuel industries just as Trump leaves the White House.

It is unclear whether the next EPA under President-elect Joe Biden, who takes the oath of office next Wednesday, similarly would consider the requests for a general waiver, as the comment period on the requests ends after Trump will have already left office. Both the EPA and Biden’s transition team did not respond to requests for comment by the time of publication.

While the waiver would save the refining industry money at a time of low fuel demand, biofuels advocates harshly oppose the idea, arguing it risks hurting farmers by undermining demand for products like corn-based ethanol.

In its notice, the EPA said that it had received requests for a general waiver from both refineries and from the governors of several states hosting them.

“These petitions argue that recent events warrant EPA exercising its general waiver authority on the basis of severe economic harm,” it said.

Biofuel groups criticized EPA’s decision to consider the petitions.

“It cannot succeed because EPA has no authority to waive RFS (Renewable Fuel Standard) volumes unless the petitioners show that the RFS itself is the cause of the ‘severe economic harm’ to a state, region, or the nation,” said Renewable Fuels Association President Geoff Cooper.

The biofuel industry, however, supports a labeling change for high ethanol blends of gasoline because it believes current labels that warn of potential engine complications from ethanol can discourage consumption.

Oil industry groups vowed to challenge that proposal.

“We are deeply concerned about the administration’s reckless proposal to deprive consumers of basic information concerning their engine’s compatibility with fuels they purchase,” said a statement from groups including the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers.

Under U.S. law, refiners have to blend billions of gallons of biofuels into their fuel mix or buy tradable credits from those that do. Those credits traded on Friday at 84 cents each, down from 90 cents each the previous session, traders said.

Earlier this week, the EPA signaled it would not act on a slew of pending individual waiver requests submitted by refining facilities because of pending litigation.

In the same document, the agency said it was also proposing to further extend the deadlines for oil refiners to prove compliance with the RFS for both the 2019 and 2020 years.

The EPA’s moves this week follow a year of suppressed demand and weak margins for oil refiners and ethanol producers because of the coronavirus pandemic.

(Reporting by Stephanie Kelly; Editing by Steve Orlofsky, Paul Simao, Marguerita Choy and Jonathan Oatis)