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US EPA looks to again extend RFS compliance, reporting deadlines for refineries

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US EPA looks to again extend RFS compliance, reporting deadlines for refineries

Highlights

Proposal reflects delay in setting 2021, 2022 blending levels

Pitches new future compliance deadlines to accommodate delays

Biofuel advocates argue plan adds to market uncertainty, instability

The US Environmental Protection Agency has proposed extending compliance deadlines for its Renewable Fuel Standard program as new biofuel blending requirements for 2021 and 2022 have still yet to be finalized.

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The proposal was met Nov. 18 with harsh criticism from biofuel advocates who are demanding that the agency advance overdue rulemakings to provide certainty as to the amount of renewable fuel that must be blended with gasoline and diesel.

Renewable volume obligations were last finalized in December 2019 for the 2020 compliance year. The Trump administration left office without proposing an RVO for 2021, and President Joe Biden's EPA has yet to put forth that standard nor one for 2022, despite statutory obligations to finalize RFS standards by Nov. 30 for the coming year.

The EPA earlier this year extended compliance deadlines for the 2019 RVO to Nov. 30 of this year and for the 2020 RVO to Jan. 31, 2022.

Now, the agency seeks to further extend those deadlines as well as change future RFS compliance and reporting deadlines to accommodate delays in the promulgation of the annual standards without the need for a rulemaking to alter compliance dates.

The EPA acknowledged in its notice of proposed rulemaking that the requested changes were "due to continued delay in the promulgation of the 2021 RFS standards and uncertainty around EPA's small refinery exemption policy."

Kicking the can

"This is simply a gift to refiners who have ignored the RFS obligations for more than a year and a half and are demanding the administration bail them out," Kurt Kovarik, vice president of federal affairs for the National Biodiesel Board, said. "EPA needs to finalize RFS rules now."

Renewable Fuels Association CEO Geoff Cooper asserted: "There's no good reason for EPA to kick the can down the road again, which only adds uncertainty and instability to the marketplace. We had hoped things would be different under this administration, but EPA continues to miss its deadlines and create confusion in the marketplace."

Emily Skor, CEO of the ethanol group Growth Energy, offered that despite rising gasoline prices, the Biden administration is giving "in to the loud voices of the oil industry without considering their detrimental impact on rural America."

Refiners have pushed back on assertions that soaring prices at the pump would be made worse by delays in setting and complying with RFS standards. Rather, they have pointed to the rally in ethanol prices that has the renewable fuel outpricing wholesale gasoline.

As ethanol availability across the US remains thin, S&P Global Platts assessed November New York Harbor ethanol barges at $4.09/gal Nov. 17, the highest level for the front-month product since 2014.

By comparison, New York Harbor wholesale gasoline spot prices were at $2.40/gal Nov. 17, while retail regular gasoline prices averaged $3.41/gal for the day, according to the Energy Information Administration.

The refining group American Fuel & Petrochemical Manufacturers called EPA's proposal a commonsense decision.

"We all know RIN scarcity is real and clarity about future obligations is needed in order for facilities to align around their individual compliance strategies," an AFPM spokesperson said in an email. "Before claiming that the sky is falling, it's important to remember that compliance deadlines are simply the date by which RIN purchases must be made and proof of those purchases submitted to EPA. Biofuel blending takes place in real time as gasoline and diesel are produced and sold throughout the year."

The Fueling American Jobs Coalition welcomed the short-term reprieve from what they called the "unsustainable regulatory burden" of the RFS, but said the extensions failed to "provide the predictability and relief ... independent refiners need to remain financially viable in the long-term."

The coalition called on the White House and EPA to rein in the RIN market and find a way to support both the renewable fuel and the independent refining sectors.

Disparate treatment

The latest proposal would further extend the 2019 compliance reporting deadline, for small refineries only, to the next quarterly reporting deadline that is at least 60 days after the finalized 2021 RVO is published in the Federal Register.

All obligated parties would have until the next quarterly reporting deadline after the 2019 compliance reporting deadline for small refineries to comply with the 2020 RFS reporting requirements, and until the next quarterly reporting deadline after the 2020 compliance reporting deadline to comply with the 2021 RFS requirements.

Iowa Renewable Fuels Association Executive Director Monte Shaw worried that the disparate treatment of extensions for the 2019 and 2020 compliance years could support rumors that the agency "is preparing to take the unprecedented and illegal step of reopening the finalized 2020 RFS rule in order to reduce the volumes and destroy biofuel demand."

Recent case law has required the EPA to rethink its SRE policy. Shaw contended that if the agency were only delaying the deadlines to address pending SREs, then the extension for 2020 should have also only applied to small refineries.

The EPA will hold a virtual hearing Dec. 3 for stakeholders to express their thoughts on the new deadlines, and comments on the proposal are due Jan. 3.