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New US EPA chief defends small refinery waivers to biofuel mandate

Highlights

Andrew Wheeler, the new acting administrator of the Environmental Protection Agency, appears poised to continue granting small refineries waivers to the US biofuel mandate at the same pace as his predecessor, a policy that caused Renewable Identification Number prices to fall sharply earlier this year.

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Wheeler defended the waivers Wednesday during his first appearance before Congress since taking the helm at EPA. He said the agency plans to make the waiver process more transparent, but he did not commit to reallocating the waived volumes to larger, non-exempt refiners.

"We've been sued twice for not granting enough [waivers], and we've lost twice," Wheeler said, referring to two appeals court cases that vacated waiver denials by the Obama administration.

Wheeler said new appropriations language from Congress also reminds the agency to grant waivers to the Renewable Fuel Standard for plants that process less than 75,000 b/d of crude.

"One area we are trying to do is provide more transparency around the decisions that we're making on the small refinery exemptions," he said. "I think that will clear up a lot of the concerns around the issue."

Republican Senators Joni Ernst of Iowa and Mike Rounds of South Dakota pressed Wheeler to reallocate the waived volumes so that overall biofuel blending meets the annual RFS obligation, currently at 15 billion gallons of conventional ethanol.

Ernst said the waivers have erased 2.25 billion gallons from refiners' blending obligations for 2016 and 2017, destroyed ethanol demand and hurt farmers despite a pledge by then-presidential candidate Donald Trump to protect the biofuel mandate.

Rounds said the law allows EPA to waive individual refiners' obligations, but those waivers don't absolve the refining industry from meeting the overall 15 billion-gallon requirement.

"You've taken care of the small refineries," Rounds said. "What about the small farmers?"

Ethanol credits have plunged 70% since the start of the year, in part because former EPA Administrator Scott Pruitt expanded the use of hardship waivers to small refineries. White House talks to reform the Renewable Fuel Standard, which have been put on indefinite hold, also pushed RINs lower.

S&P Global Platts assessed D6 ethanol Renewable Identification Numbers for 2018 compliance at 21 cents/RIN Tuesday.

RINs are tradable credits issued by EPA to track production and use of alternative transportation fuels. For corn-based ethanol, one gallon of ethanol yields one RIN.

-- Meghan Gordon, meghan.gordon@spglobal.com

-- Edited by Maurice Geller, maurice.geller@spglobal.com