The Trump Administration has temporarily frozen a program meant to exempt small oil refineries in financial distress from the U.S. biofuels law, as it reviews the scoring system used to evaluate applications, two sources familiar with the matter told Reuters.
The review means changes are likely to the program, which has become a major controversy between the rival oil and corn industries since the Environmental Protection Agency (EPA) vastly increased the number of waivers for last year. Small oil refineries can be exempted from the RFS blending standards if they prove that compliance would cause disproportionate hardship. The EPA granted 29 such waivers for the 2017 compliance year, up from 14 in 2015 and 20 in 2016. This has curtailed demand for ethanol blending and created hardships for ethanol producers amid the recent sharp drop in oil prices.
The White House has placed on hold seven applications for the 2017 compliance year, and 15 applications for the 2018. Typically, the EPA waits until the latter half of the year to begin reviewing applications because applicants need to demonstrate financial hardship using hard figures for their facilities.
An EPA official confirmed the review. "I think what DOE needs to do is tighten up their approach and we need to do the same," said the official, who asked not to be named. "I honestly don't know where they'll end up and whether they're going to make any changes at all."
The EPA has rejected requests from the corn lobby to reallocate biofuel volumes waived under its small refinery exemption program into its 2019 mandate, an agency official told Reuters on Tuesday. The official also said the 2019 biofuel mandate figures, due to be released this week, would be largely in line with the agency's June proposal of 19.88 billion gallons, which includes 15 billion gallons of convention biofuels like ethanol.