U.S. EPA receives recommendations on retroactive biofuel waivers

NEW YORK (Reuters) – The U.S. Department of Energy has recommended that some of the oil refiners that applied for retroactive exemptions from the nation’s biofuel blending law be granted partial relief, two sources familiar with the matter said on Tuesday.

The move could help bring those refining companies into compliance with a court ruling earlier this year that requires waivers granted since 2010 to take the form of an extension – the latest twist in a long-running battle between the refining and biofuel industries over the program.

At present there are 58 pending requests from refiners for waivers covering the years 2011 through 2018, according to government data. The sources said the DOE recommended to the U.S. Environmental Protection Agency, which has final say on the waivers, that “a number” of those requests be partially granted. The sources, who requested anonymity in order to speak candidly, could not immediately provide further details.

“EPA has received initial feedback from the Department of Energy on certain petitions for small refinery exemptions for past compliance years under the Renewable Fuel Standards Program,” EPA spokesperson Molly Block said. “Our staff is reviewing.”

DOE did not immediately respond to requests for comment.

Under the U.S. Renewable Fuel Standard (RFS), oil refiners must blend billions of gallons of biofuels into their fuel, or buy credits from those that do. Small refiners that prove the rules would financially harm them can apply for exemptions.

In January, the Denver-based 10th U.S. Circuit Court of Appeals ruled that waivers granted to small refineries after 2010 had to take the form of an “extension.” Most recipients of waivers in recent years have not continuously received them.

Biofuel advocates say blending waivers hurt demand for corn-based ethanol. The oil industry disputes that, and says blending requirements are too expensive.

The EPA has 90 days to act once it receives a petition, according to EPA guidelines.

Senators Chuck Grassley and Joni Ernst, both from Iowa, the top ethanol-producing state, sent a letter to DOE on Tuesday asking for further details on the recommendations and expressing opposition to the waivers.

The senators had earlier in the day voted against the confirmation of Mark Menezes as Deputy Secretary of Energy as a protest, but failed to block his confirmation.

“We could not in good faith support Mr. Menezes at this time,” Grassley and Ernst said in a statement.

Reporting by Stephanie Kelly in New York; Editing by David Gregorio and Matthew Lewis

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