Trump Seeks Middle Ground in Ethanol Feud Between Oil, Corn

(Bloomberg) -- President Donald Trump’s Environmental Protection Agency is taking a step to boost transparency for the country’s ethanol mandate, a move that could draw rare mutual applause from both farmers and oil refiners.

On Thursday, the EPA unveiled a website that tracks prices for Renewable Identification Numbers, or RINs -- the credits oil refiners need to show compliance with the biofuel law. It also released data on so-called small refinery exemptions, the waivers that the EPA grants if a company shows that its obligations under the mandate threaten economic harm. Bloomberg News reported earlier that the move was in the works.

Trump Seeks Middle Ground in Ethanol Feud Between Oil, Corn

The EPA disclosed the information as part of a new push to boost transparency around the Renewable Fuel Standard and its opaque credit-trading system for tracking refinery compliance with annual biofuel blending quotas.

“Increasing transparency will improve implementation of the RFS and provide stakeholders and the regulated community the certainty and clarity they need to make important business and compliance decisions,” EPA Acting Administrator Andrew Wheeler said in a statement.

The effort also seeks to mollify critics of the refinery waivers, including some oil companies that have complained that critical information has been kept secret. Ethanol producers have also raised concerns over whether the agency is too freely handing out the exemptions.

Exemption Rules

Under federal law, the EPA can exempt small refineries that use no more than 75,000 barrels of crude per day from the annual biofuel quotas if they face a “disproportionate economic hardship.” Federal courts have faulted the EPA for wrongly rejecting refinery waiver requests, partly prompting the agency’s more liberal recent approach to approvals.

The waivers have stoked criticism from ethanol producers and backers in Congress, who have asked the EPA to halt approvals and release more information about the companies that have received them.

“Additional transparency in the RFS program is welcome, but it comes very late and doesn’t solve the problems EPA has recently created,” said Kurt Kovarik, vice president of federal affairs with the National Biodiesel Board.

Renewable-fuel advocates said the newly disclosed data validate their arguments that the refinery waivers are undercutting biofuel blending quotas -- and harming demand. Oil-industry proponents have countered that ethanol production and use is unaffected by the waivers, especially those issued retroactively.

Both factions have been placing pressure on Trump. In a Sept. 12 letter, the National Corn Growers Association, the Renewable Fuels Association and the National Farmers Union, among others and other groups asked the president to take measures to boost demand, arguing refinery waivers have undercut it.

Two days later, Representative Lou Barletta, a Republican from refining-heavy Pennsylvania, and other lawmakers, wrote to Trump asking him to not take the measures to boost ethanol demand and to maintain the policy governing the waivers, citing refinery jobs.

Refining advocates said the EPA’s new transparency initiative shouldn’t take the place of a broader overhaul of the RFS.

“The kind of market reforms that will make a real and lasting difference in addressing the substantial problems the RINs market faces from speculators won’t be addressed by a website,” said Scott Segal, a lobbyist with Bracewell LLP who works for refiners. The “EPA must address the role of the speculator directly, by using position limits of the very sort that are commonplace in the agricultural commodities markets.” 

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