Pressure is growing for US Congress to address problems with quotas under the Renewable Fuel Standard. Two recent events—a federal bankruptcy court’s approving quota relief under Philadelphia Energy Solutions’ bankruptcy reorganization and the US Environmental Protection Agency’s granting hardship waivers for three small Andeavor refineries in North Dakota and Utah—emphasized that changes are needed soon.
American Petroleum Institute and American Fuel & Petrochemical Manufacturers officials weren’t surprised. “From our perspective, the RFS is in need of a legislative overhaul. Each of these cases demonstrates the program is systemically broken,” API Downstream and Industry Group Operations Director Frank J. Macchiarola told OGJ on Apr. 10.
“I certainly believe there is more momentum to RFS reform that I, who has been an optimist, have seen,” AFPM Pres. Chet Thompson noted in a separate phone interview. “There are conversations happening at the White House, up to the president himself. EPA has been issuing hardship waivers—we hear 25 have been granted. And members of the Senate and House are discussing the situation more now.”
Supporters of the quotas have spoken up. Five Republican senators from Great Plains states asked President Donald Trump on Apr. 9 to call on EPA to stop issuing waivers that they claim “is striking a severe blow to farmers and biofuel stakeholders in our states.” The Renewable Fuel Association filed an Apr. 5 request under the Freedom of Information Act for details about “the recent issuance of [RFS] compliance exemptions to dozens of oil refineries.”
Federal lawmakers who support changing or repealing the RFS also are at work. Macchiarola and Thompson mentioned new efforts by Reps. Bill Flores (R-Tex.), Greg Walden (R-Ore.), and John M. Shimkus (R-Ill.). And Sen. John Cornyn (R-Tex.) reportedly is preparing legislation that might exempt refineries with 75,000 b/d or less throughput capacity from meeting renewable fuel quotas.
‘Old-fashioned legislating’
“I’d pay attention to what Sen. Cornyn doing, which I’d describe as old-fashioned legislating, listening to marketers and biofuel people as well as refiners to build support for a bill,” Thompson said.
“We have said that the RFS totally needs to change. Our top priority is a complete sunset of the program by 2022,” Macchiarola said. “Anything that did a blanket exemption for all small refiners would create a competitive disadvantage for others. We think every refinery should be exempt and the program sunset.”
Thompson told OGJ, “The point is that the RFS is putting tremendous pressure on merchant refineries. Certainly, it contributed to PES going into bankruptcy. I hope the policymakers are seeing this. I don’t think EPA would be granting waivers unless it believes that hardship is out there.”
