October 1, 2019 / 3:06 PM / 22 days ago

Trump administration close to finalizing biofuel deal: sources

NEW YORK/WASHINGTON (Reuters) - The Trump administration is close to finalizing a deal that would boost U.S. biofuels consumption and is aiming to get it signed by President Donald Trump on Friday, two sources familiar with the matter said on Tuesday.

FILE PHOTO: The cost per gallon of biofuel is seen at Dogpatch Biofuels in San Francisco, California January 8, 2015. REUTERS/Robert Galbraith

The policy change is intended to assuage anger in U.S. farm country, a key political constituency for Trump, after the administration exempted 31 oil refineries in August from their obligations under the U.S. Renewable Fuel Standard - a law requiring that corn-based ethanol and other biofuels be blended into the nation’s fuel.

Sources said the administration aims to announce the final deal next week and is unlikely to include a price cap for the biofuel blending credits that refiners must earn or purchase to comply with the RFS, a measure the oil industry was seeking as a concession in the biofuel deal.

The White House was not immediately available for comment.

An EPA representative would not comment on the details or timing of a deal but said: “EPA will continue to consult with our federal partners on the best path forward to ensure stability in the Renewable Fuel Standard.”

The deadline to finalize the RFS mandates for 2020 is Nov. 30, giving the EPA two months to draft a plan, release it for public comment and finalize it.

In September, Trump had met with biofuel officials, farm- and oil-state senators and refining executives to hash out the details of a “giant package” related to ethanol that he had promised to farmers after approving the 31 refinery waivers.

Under the RFS, the EPA can exempt small refineries with a capacity of less than 75,000 barrels per day from their biofuel obligations if they can prove that compliance would cause them disproportionate economic hardship.

The Trump administration has vastly expanded the waiver program, giving exemptions to small refineries owned by huge, profitable companies like Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N).

The agriculture industry has said the waivers cut ethanol demand, hurting growers already suffering from lost foreign markets due to the U.S. trade war with China. The oil industry counters that the exemptions protect refining jobs and have no impact on the amount of ethanol used.

The work on the biofuel policy change had run into a brief slowdown after senators from oil states in mid-September asked the administration for the price cap for biofuel credits, four sources familiar with the matter told Reuters.

The agency's proposal to boost biofuels here would calculate a three-year rolling average of total biofuels gallons exempted from the RFS mandate under its Small Refinery Exemption program and use it to boost blending quotas for the coming year, according to previous reporting by Reuters.

That would be in addition to a tentative agreement for a one-time boost to next year’s blending volumes to satisfy a 2016 court decision that the Obama administration had illegally lowered the RFS mandate by 500 million gallons, the sources said.

Reporting by Humeyra Pamuk and Stephanie Kelly; Editing by Richard Valdmanis and Lisa Shumaker

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