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EPA grants retroactive biofuel waiver to refiners

Grassley, Ernst call on agency to stop undermining fuel rule

EPA Administrator Scott Pruitt testifies before a Senate Appropriations Interior, Environment, and Related Agencies Subcommittee hearing on the proposed budget estimates and justification for FY2019 for the Environmental Protection Agency on Capitol Hill in Washington, U.S., May 16, 2018. REUTERS/Al Drago
EPA Administrator Scott Pruitt testifies before a Senate Appropriations Interior, Environment, and Related Agencies Subcommittee hearing on the proposed budget estimates and justification for FY2019 for the Environmental Protection Agency on Capitol Hill in Washington, U.S., May 16, 2018. REUTERS/Al Drago

The U.S. Environmental Protection Agency has awarded tens of millions of dollars worth of biofuel blending credits for this year to refiners HollyFrontier and Sinclair Oil after they argued the agency wrongly denied them waivers from the nation’s biofuels law since 2014, according to two sources and public filings.

The release of the Renewable Identification Numbers, or RINs, marks the first reported instance of the EPA issuing tradable credits from previous years into the present market. It is likely to add fuel to an already fiery dispute between Big Oil and Big Corn over the future of America’s biofuel policy by opening the door to similar challenges from other refiners.

Indeed, Iowa’s senior senator, Chuck Grassley, warned earlier this moth that if EPA chief Scott Pruit continues granting waivers that he’d join those calling for the embattled Pruitt to resign.

Thursday, Iowa’s other senator, Joni Ernst, expressed frustration over the new waivers.

“Administrator Pruitt needs to understand that his actions to continue to grant waivers, now retroactively, to oil refineries is undermining the Renewable Fuel Standard — a program that Administrator Pruitt told Congress he was committed to upholding,” she said in a statement. She said Pruitt was “undermining” the fuel law.

The Renewable Fuel Standard requires refiners to blend specific volumes of biofuels like corn-based ethanol into the fuel supply each year and prove compliance by acquiring RINs that can be earned or purchased.

The law has helped farmers by creating a 15-billion-gallon market for ethanol, but refining companies complain it costs them a fortune.

At issue is the EPA’s responsibility to release small refineries from the rule if they can prove complying would cause them “disproportionate economic hardship.”

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The agency has historically been closed-fisted with the exemptions, but has awarded an unusually high number under the administration of President Donald Trump. It now appears to be taking measures to compensate for denials made by the agency during the administration of President Barack Obama.

The EPA decided to give HollyFrontier nearly $34 million worth of credits for this year to reverse a denial for a waiver for one of its Wyoming plants dating to 2015 and undisclosed millions more to Sinclair for two of its facilities in the same state for 2014 and 2015, according to the filings and sources, who asked not to be named.

Both companies had challenged EPA’s denials in a federal appellate court in Colorado in 2016.

That court in August 2017 ruled EPA had erred in denying Sinclair’s applications for exemptions. The HollyFrontier case had been put on hold during the Sinclair proceedings and was remanded to EPA at the agency’s request, according to filings and sources.

EPA spokesman Jahan Wilcox did not respond to multiple requests for comment.

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