The U.S. EPA announced on Jan. 15 it will open a 30-day comment period on several petitions it has received asking the agency to waive Renewable Fuel Standard blending requirements for 2019 and 2020.
The agency has published four letters it has received to date asking for such waivers. The petitions argue that recent events warrant EPA exercising its general waiver authority on the basis of severe economic harm.
EPA is seeking comments on whether the petitioners has satisfied the criteria for granting a waiver that EPA previously set forth and/or whether EPA should modify those criteria as requested by the petitions; whether the petitioners have demonstrated severe economic harm to a state, region or the U.S.; whether petitioners have demonstrated a sufficient casual nexus between the RFS volume requirements and such harm; whether the petitioners have accurately assessed the impacts of a waiver on other directly and indirectly affected persons and how such impacts should affect EPA’s decision on the petitions; whether EPA may target relief to certain refineries under the general waiver authority; and whether EPA should exercise the general waiver authority in response to any of the petitions.
The agency also noted that it has received a letter from the National Wildlife Federation suggesting relief could be granted on the basis of severe economic harm. The EPA is also soliciting comment on the issues raised by that letter and whether the evidence presented in the letter would support a waiver on the basis of severe economic harm.
The American Coalition for Ethanol has spoken out condemn the RFS waiver requests. “The statute is clear; to secure a general waiver of the RFS, a petitioner must provide evidence to EPA that implementation of the RFS itself is the cause of severe economic harm, not outside factors such as COVID-19,” said Brian Jennings, CEO of the ACE. “In fact, the waiver requests from refiners and oil-state Governors complain about the economic fallout of the coronavirus pandemic but fail to admit the fact that ethanol producers also experienced a collapse in demand due to COVID-19. By choosing to seek comment on the RFS waivers instead of denying them outright, EPA is creating uncertainty about RFS blend levels and downward pressure on RIN prices, which in turn, will reduce incentives to blend E15 and E85 and increase gas prices for consumers.”
The Renewable Fuels Association also slammed the waiver requests. “This is nothing more than one last desperate attempt by the refiners to undermine the RFS and protect their chokehold on the nation’s fuel markets,” said Geoff Cooper, president and CEO of the RFA. “But it cannot succeed because EPA has no authority to waive RFS volumes unless the petitioners show that the RFS itself is the cause of the ‘severe economic harm’ to a state, region, or the nation. Such a showing would be impossible, especially because the renewable fuel blending requirements have already adjusted lower in tandem with COVID-related changes in gasoline and diesel consumption. In reality, the general waiver requests submitted to EPA come nowhere close to satisfying the well-defined statutory criteria and requirements established for requesting a waiver.
“The parties requesting these waivers admit that the problems facing refiners today are driven by COVID-19 and a volatile crude oil market, not the RFS,” Cooper continued. “These same factors are impacting the ethanol industry as well, and to an even greater extent: at the height of the COVID-19 lockdowns, nearly half of the nation’s ethanol production capacity was idled as a result of falling gasoline demand. The ethanol industry has already lost $4 billion in revenue due to the pandemic, and producers continue to struggle from COVID-related market disruptions as 2021 begins. A general waiver at this point would only serve to close more ethanol plants and kill more jobs across rural America.
“The governors and refiners asking for a waiver also apparently have forgotten about the record supply of banked compliance credits (RINs) available to refiners,” Cooper added. “COVID-19 is exactly the sort of market disruption that EPA had in mind when it developed the RIN credit trading market mechanism.”
Growth Energy expressed confidence that the incoming Biden administration will reject the waiver requests. “Given President-elect Biden’s commitments on the campaign trail, we‘re confident his incoming team will uphold the integrity of the RFS and reject these oil-backed waiver requests before rural recovery is derailed,” said Emily Skor, CEO of Growth Energy. “We’ve seen the courts reject this kind of abuse before and urge the incoming administration to ensure refiners meet their blending obligations.”
A notice seeking public comments on the waiver requests is scheduled to be published in the Federal Register on Jan. 19. A prepublication version of the notice and the four waiver request letters can be downloaded from the EPA website.