June 14, 2019 / 4:42 PM / 5 months ago

UPDATE 1-U.S. farm state senators unveil bill to overhaul biofuel waiver program

(Adds Senator Fischer quote, context)

June 14 (Reuters) - Two Midwest senators said on Friday they have introduced a bill to reform the Environmental Protection Agency's opaque biofuel waiver program, which the corn industry says helps oil companies at the expense of farmers here by threatening ethanol demand.

The bill, introduced by Republican Deb Fischer of Nebraska and Democrat Tammy Duckworth of Illinois, would impose a June 1, deadline, for refineries to apply for the waivers that exempt them from blending ethanol into gasoline. That would allow time for the EPA to calculate the volumes waived and apply them to the next year’s blending mandates, the senators said in a statement.

The measure would require the agency to report to lawmakers on the methodology used to decide whether a waiver is granted, and would make other elements of the largely confidential waiver process more transparent.

The bill's introduction comes after reports that the Trump administration's EPA had given waivers to facilities run by majors here like Exxon Mobil Corp and Chevron Corp. The EPA has said it considers only the economics of the refinery requesting a waiver, and not the well being of its owner.

“Farmers across Illinois and throughout the Midwest are hurting and ethanol plants are idling while this administration is abusing the small refinery exemption program to undermine the bipartisan Renewable Fuel Standard,” said Duckworth.

Fischer said the current system effectively reduces the overall volumes of biofuels that the EPA requires refiners to blend in a given year, without providing a mechanism for the refining industry to make up those volumes elsewhere.

“That’s unfair and it hurts our farmers and ethanol producers. This bill would shine a light on what’s been an obscure exemption process and help promote economic growth in rural America,” said Fischer.

Under the U.S. Renewable Fuel Standard (RFS), refiners are required to blend increasing volumes of biofuels into their fuel each year or buy credits from those who do, creating a 15-billion-gallon annual market for ethanol.

But small facilities can apply for an exemption if they prove that compliance with the RFS would be a financial hardship, and the EPA can grant them secretly in a process they say protects confidential business information.

Since U.S. President Donald Trump took office, the administration has vastly expanded its use of the waivers, citing court rulings in 2017 that concluded Obama’s EPA had been too stingy with them, saving oil companies hundreds of millions of dollars.

Waivers save refiners money because they do not need to blend biofuels or buy credits. The biofuel industry meanwhile says they threaten ethanol demand, even though federal data shows blending rates have been relatively stable. (Reporting by Jarrett Renshaw in Philadelphia; Writing by Richard Valdmanis; Editing by Bernadette Baum and Jeffrey Benkoe)

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