WASHINGTON – The U.S. Environmental Protection Agency (EPA) has improperly handled the administration of the Renewable Fuel Standard (RFS) by lowering total volume requirements and granting “hardship waivers” to large corporations, according to National Farmers Union (NFU).
NFU President Roger Johnson sent a letter to EPA Administrator Scott Pruitt today, insisting the agency either cease granting the waivers or raise volume obligations to account for a large increase in waivers the agency is handing out.
“The RFS was passed by Congress to spur growth in the American-grown biofuels industry, and, to date, it has reaped significant economic and environmental benefits for rural America,” said Johnson. “EPA’s recent trend of undermining this law on behalf of the oil industry is disturbing, and it flies in the face of the Administration’s numerous promises to farmers and rural communities to support the RFS. They must stop these actions and instead work towards expanded use of biofuels in our transportation fuel sector as intended by the RFS law.”
NFU’s criticism stems from recent reports that the EPA, who sets RFS volume obligations and ensures compliance with the law, has allowed major oil refiners to skirt the law. Reuters reportedtoday that EPA granted 25 exemptions to oil refineries in 2017, roughly three to four times the amount that previous administrations granted on a yearly basis. In fact, three “hardship waivers” were given to refineries owned by Andeavor, a corporation who took in $1.5 billion in profits last year.
Johnson noted it is EPA’s responsibility to ensure transportation fuel sold in the U.S. includes a certain amount of renewable fuel. Congress set these volume obligations and gave EPA limited authority to reduce the amount. Since 2016, the agency set volumes below their statutory levels in order to make them “reasonably attainable” to meet for the oil industry. Importantly, said Johnson, EPA lowered the obligations and found the new levels would not have significant economic impacts on small oil refiners.
The RFS statute allows small refineries an exemption from complying with annual RFS requirements, and an extension of this exemption if the refinery can demonstrate that compliance with the RFS will cause them “disproportionate economic hardship.”
“What’s troubling is the EPA would lower volume obligations, say they are attainable to small refineries, and then grant small refineries waivers when they say the levels are not attainable,” said Johnson.
Johnson said these actions work contrary to the intent of the RFS law by reducing demand for biofuels. In fact, according to the U.S. Energy Information Administration (EIA), the three “small refineries” owned by Andeavor represent over 2.3 billion gallons of production capacity, resulting in a reduction of the 2016 RFS requirements by almost 200 million ethanol-equivalent gallons. Estimates indicate that the requests that have been submitted could represent a reduction of approximately 1 billion gallons of renewable fuel for 2017.
Johnson also took issue with the agency’s lack of transparency. The RFS statute requires public notice and comment for waivers under the statute, but EPA is granting these exemptions (and therefore waivers) without any public input. “This Administration has provided little, if any, information on small refinery exemptions, which is causing speculation and market disruptions that they have indicated need to be addressed,” he said.
“Exempting refiners from RFS compliance essentially waives away demand for corn at a time when family farmers need to significantly cut into corn oversupply. And it is certainly contrary to the intent of the RFS,” said Johnson. “NFU asks that EPA cease granting these waivers or act to adjust for these additional waivers and comply with its obligations under the statute. EPA should also adjust its process in the future to ensure that these exemptions do not reduce the applicable volumes required under the RFS.”