Once again, the Renewable Fuel Standard (RFS) is popping up in headlines—this time
because of a little known waiver available to small refiners: a waiver that—no pun
intended—is certainly making “waves.”
Barely a quarter in to this calendar year, there has been a significant increase in the
number of refiners seeking waivers from the volume obligations set forth by the RFS.
This waiver is available to small refiners—those with a refinery capacity of less than
75,000 gallons per day—if they can demonstrate that compliance would create undue
financial hardship. Fair or not, the Trump Administration is also “making waves” by
issuing these waivers despite the fact that the power to grant exemption has been
available to the EPA for years. More refiners are requesting the waiver and more
refiners are being approved—25 so far this year—which more than doubles the number
issued in calendar year 2017.
This waiver upswing is an indication of how well the industry is taking to the ever-
increasing volume requirements under the RFS. Increasing resistance by refiners to the
burden of renewable fuels has created, however, tension with the corn and ethanol
lobby who decry the waivers as an undermining of the RFS entirely. The waivers for the
2016 Renewable Volume Obligations effectively reduced the volume requirements by
1.2 billion gallons—from 15 billion to 13.8 billion. Meanwhile, the refiners are putting
pressure on the EPA, maintaining that the requirements are costing them billions upon
billions of dollars which, for some refineries, has created financial hardships.
San Antonio based refinery, Andeavor, for instance, has already been granted three
waivers to ten of its smallest refineries. Andeavor is one of the nation’s largest
refineries with net profits totaling 1.5 billion dollars last year alone. These waivers,
however, were not for the whole of Andeavor, but only for its three smallest refineries –
all of which have a capacity under the 70,000-barrel- a-day limit. Still, those in
opposition have painted it as a gross misuse of the waiver option.
One group in opposition is the Renewable Fuels Association. Its President and CEO,
Bob Dinneen, has called the waiver an “outrageous abuse of the statute” which
obviously speaks to his very ardent disapproval. Further, Kevin Skunes, President of
the National Corn Growers Association, has stated that the EPA needs to consider the
impact on rural communities and corn farmers as well—not exactly a glowing
endorsement either.
It is no secret that the petroleum industry is fighting against the ever-increasing
demands of the RFS—preferring instead to cater to the demands of its customers. The
RFS is an interference in the exchange between producers and consumers. Corn
farmers seemingly want refiners to be forced to buy their product while refiners just want
their customers to be free to buy what they want. Free enterprise, anyone? And with
the EPA caught in the crosshairs of the debate, it seems they are leaning more
pointedly in the direction of favoring the refiners.
It remains to be seen how many refiners will be granted waivers. Requirements for
coming years are already being lowered and more waivers are being granted. All that
to be said, it seems that it is not too farfetched to say that we may be witnessing the
demise of the Renewable Fuels Standard altogether. Time will tell. Stay tuned…