Biofuel groups condemn EPA’s decision to award waiver to Andeavor

By Erin Voegele | April 04, 2018

Supporters of the biofuels industry are speaking out in response to reports that the U.S. EPA has awarded small refinery waivers under the Renewable Fuel Standard to large refiners.

On April 3, Reuters reported that EPA provided waivers for 2016 renewable volume obligations (RVOs) to three of the 10 refineries owned by Andeavor, one of the nation’s largest oil refining companies. News reports were updated April 4 to note that the agency granted 25 small oil refineries hardship waivers under the RFS last year.

Sen. Chuck Grassley, R-Iowa, said the EPA’s actions are fundamentally undermining the RFS. “If the reporting is accurate, it appears EPA granted a secret waiver that is legally reserved for small refiners to one of the largest oil refining companies in the country,” Grassley said. “If refineries are being allowed to retroactively get out of the renewable volume obligations the EPA assigned them in November, that fundamentally undermines the Renewable Fuel Standard. It would also amount to a massive government handout to a big corporation that made billions in profits just last year. Giving big corporations like Andeavor a free pass when other companies are required to follow the law of the land isn’t just unfair, it may be illegal. The executive branch is required to follow the law as passed by Congress. There are legitimate questions being raised about whether EPA is following the law with these exemptions. I plan on writing to Administrator Pruitt to ask him about these reports. The public deserves transparency about this secret waiver and I expect EPA to be forthcoming.”

The American Coalition for Ethanol said EPA’s actions are inviting litigation. “The law allows a small refiner (producing less than 75,000 barrels per day) to seek an exemption from the annual blending obligation if it can prove the RFS is causing ‘disproportionate economic hardship’ on its operations,” said Brian Jennings, CEO of ACE. “On what planet does Andeavor’s 2017 net profit of $1.5 billion constitute ‘disproportionate economic hardship’ for a “small refiner”? Refiners are reporting billion-dollar profits today while farmers are facing their fifth year of prices at or below the cost of production. Net farm income is dropping to levels not seen since the last economic disaster in rural America in the early 2000s which prompted Congress to enact the RFS in the first place. EPA’s recent waivers reduce demand for ethanol making economic conditions worse in rural America and breaking promises President Trump has made to protect the RFS.

“Since EPA refuses to disclose which refiners get these RFS exemptions, it blurs the transparency of the RIN market giving an advantage to refiners receiving waivers,” Jennings continued. “With nearly 30 small refiner exemptions pending, it appears EPA’s priority is not to fix the outdated Reid vapor pressure restriction on the year-round use of E15 but rather to unravel the RFS for refiners.

“When the Obama Administration unlawfully took the RFS off-track, we were forced to sue,” Jennings said. “As the U.S. Court of Appeals for the D.C. Circuit ruled in Americans for Clean Energy et al. v. EPA, the ‘intent of the RFS’s increasing requirements are designed to force the market to create ways to produce and use greater and greater volumes of renewable fuel each year.’ Waiving RFS obligations based on ethanol use thresholds violate the intent of the RFS and invite litigation.”

Growth Energy sent a letter to EPA Administrator Scott Pruitt on April 4 condemning the decision to award the waiver to Andeavor’s refineries and demanding a moratorium on waivers.

“We ask that EPA immediately cease issuing waivers and pause any waiver applications being considered until the agency conducts a full, transparent public comment process to help assure all stakeholders that the new expansion of small refinery waivers are consistent with the goals of the RFS,” said Emily Skor, CEO of Growth Energy.

“EPA appears to be operating under the cover of night in a secretive process where the agency acts as judge, jury, and executioner to effectively reduce the overall demand for biofuels in this country absent any public discourse,” Skor continued.

“These decisions appear to be timed so they do not require disclosure in the yearly RFS Renewable Volume Obligation (RVO) rulemaking process, adding further suspicion that the EPA is pressing its thumb on the scale to grow oil industry profits.

“Secret handouts to petroleum giants don’t just undermine the administration’s commitment to the RFS, they represent a very real threat to hard-pressed farmers and biofuel industry workers across the heartland,” Skor said. “Every waiver represents a gallon of homegrown biofuel that can’t make its way to consumers, can’t contribute to U.S. energy security, and can’t grow the U.S. economy. The public deserves to know exactly to which companies Mr. Pruitt is awarding millions of dollars in handouts behind closed doors.”

The Renewable Fuels Association called the waivers an “outrageous abuse of the statute.”

“EPA has struck again. It appears the agency has initiated a fire sale on RFS demand,” said Bob Dinneen, president and CEO of the RFA. “Providing a small refiner waiver to a company like Andeavor is laughable and abandons the commitment of President Trump to protect the RFS. This is an outrageous abuse of the statute.”

“This is yet one more action in a series of disturbing moves made after the final RVOs were issued,” Dinneen continued. “These latest actions have been under the cover of darkness, with no transparency whatsoever. To date, EPA has still not disclosed which refiners received exemptions from 2016 or 2017 RFS obligations. No one really knows how far these exemptions go, or how many total companies have received these waivers.

“Any claims the RFS is negatively impacting the oil industry are absurd, much less the fifth-largest refiner in the country which posted a profit of nearly $1.5 billion last year,” Dinneen added. “Suffice it to say we are exploring all our options to return the RFS to what the statute intended and what the President has supported.”