States ask EPA for nationwide biofuel waiver to help oil refiners weather coronavirus

FILE PHOTO: The U.S. Environmental Protection Agency (EPA) sign is seen on the podium at EPA headquarters in Washington, U.S., July 11, 2018. REUTERS/Ting Shen

(Reuters) – The governors of five U.S. states have asked the Trump administration for a nationwide waiver exempting the oil-refining industry from the nation’s biofuel laws to help it survive a demand meltdown caused by the coronavirus outbreak, according to letters seen by Reuters.

The request places Republican President Donald Trump, who is seeking re-election in November, in a tough spot between the oil and agriculture industries, two important constituencies. They are being particularly hard-hit by the global pandemic as it decimates energy consumption, breaks transport supply chains and makes labor harder to come by.

Under the U.S. Renewable Fuel Standard, oil refiners are required to blend billions of gallons of biofuels like corn-based ethanol into the country’s fuel each year or buy credits from those that do, a policy that helps farmers but which the oil industry says costs it a fortune.

“As our country comes to grips with this national emergency, continuing to implement the current (biofuel requirements) imposes an added obligation that would ‘severely’ harm the sector, and consequently harm the economy of the States and the Nation,” according to one of the letters, signed by the governors of Texas, Wyoming, Utah and Oklahoma and addressed to Environmental Protection Agency Administrator Andrew Wheeler. The letter was dated on Wednesday.

Louisiana also made such a request, according to a separate letter seen by Reuters and addressed April 7.

An EPA official did not immediately respond to a request for comment on the request.

The EPA, which administers the RFS, mandated that oil refiners blend 15 billion gallons of ethanol in the country’s fuel supply in 2020, along with roughly 5 billion more gallons of other types of biofuels.

The governors argued that because the coronavirus pandemic had sharply reduced U.S. demand for gasoline since that mandate was announced, it would be unfeasible for refiners to hit those targets. They pointed out that prices for blending credits had also recently tripled, raising the costs for refiners.

“On behalf of our States, and in light of economic circumstances facing our States and the Nation as a whole, please expedite this request for a waiver of the renewable volume obligation (RVO) under the federal Renewable Fuel Standard,” they wrote in the Wednesday letter.

Reporting by Laura Sanicola in New York; Writing by Richard Valdmanis; Editing by Sandra Maler and Peter Cooney

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