U.S. biofuel groups urge EPA to curb oil refinery waivers despite ruling

© Reuters. FILE PHOTO: POET Biorefining plant in Cloverdale, Indiana, U.S. October 29, 2019. REUTERS/Bryan Woolston/File Photo

By Stephanie Kelly

NEW YORK (Reuters) - U.S. biofuel and corn industry groups said on Monday they are urging the Environmental Protection Agency to use restraint in its use of waivers exempting refiners from their biofuel blending obligations after the Supreme Court last week upheld the controversial program.

The pressure comes as the refining industry and its representatives push hard for the opposite, asking that the administration of President Joe Biden ease the industry's compliance costs under the U.S. Renewable Fuel Standard to help it recover from the fallout of the coronavirus pandemic.

The conflicting demands reflect a perennial truth about the nation's biofuel policy: it is a lightning rod of contention between the politically powerful oil and corn industries and tends to place whoever is occupying the White House in an impossible position.

"Our collective focus is now turning to EPA to end these exemptions, which we all believe have been misused in the past," said Matthew Morrison, a partner at Pillsbury Winthrop Shaw Pittman, in a press call with biofuel and corn groups.

Geoff Cooper, president of the Renewable Fuels Association, a leading U.S. biofuel group, said on the call that they are constantly communicating with the EPA to share their thoughts on the issue and those meetings will continue.

Meanwhile, lawmakers in New Jersey and Pennsylvania both passed resolutions last week urging the Biden administration to provide relief to oil refiners by revising their blending obligations, measures supported by oil industry groups.

"With thousands of good-paying, family-sustaining refinery jobs in Pennsylvania and New Jersey on the line, it is encouraging to see continued momentum and growing, bipartisan support for RFS relief and reform," the Fueling American Jobs Coalition of petroleum workers and businesses said.

Under the RFS, refiners must blend billions of gallons of biofuels like corn-based ethanol into their fuel each year, or buy tradable credits, known as RINs, from those that do. Small refiners can request an exemption if they can prove the cost of complying with the mandates would do them financial harm.

Biofuel advocates say the exemptions hurt demand for ethanol, while the oil industry rejects that claim and says the mandates can cost them a fortune.

On Friday the Supreme Court overturned a lower court decision that had called into question the future of the small refinery exemption program, in a major win for the refining industry. Small refiners had secured an increasing number of such waivers under Biden's predecessor Donald Trump.

It is unclear how the Supreme Court's decision will influence the EPA as it considers 50 pending small refinery exemption requests for the 2019 and 2020 compliance years.

The EPA must also propose volume mandates for 2021 and 2022. The 2021 rule is already more than half a year late due to the coronavirus, which slashed U.S. fuel demand due to travel restrictions and lockdowns.