NEW YORK (Reuters) – U.S. Environmental Protection Agency Administrator Andrew Wheeler said on Thursday the agency has not decided how it will respond to a federal court decision addressing exemptions to U.S. biofuel blending laws.

FILE PHOTO: U.S. Environmental Protection Agency Administrator Andrew Wheeler looks on during a ceremony to sign the memorandum of understanding on cooperation in urban sustainability with Brazil’s Environment Minister Ricardo Salles (not pictured) in Brasilia, Brazil January 30, 2020. REUTERS/Adriano Machado

His comments came a day after a Bloomberg News report said the administration had decided to pare the number of exemptions granted to small refineries from U.S. biofuel blending laws in response to the court decision.

In late January the U.S. Court of Appeals for the 10th Circuit said the EPA must reconsider some exemptions it previously gave to oil refineries. The EPA has been seeking White House guidance on how the court decision affects the small refinery waiver program.

“We want to make sure that we comply with the 10th circuit opinion,” Wheeler said during a House Committee on Energy and Commerce hearing on Thursday, adding the agency has not yet made a final determination.

Wheeler met with officials from refiners including HollyFrontier, CVR Energy and Sinclair on Wednesday to discuss biofuel policy, two sources familiar with the matter said.

The group discussed how EPA’s response to the court decision could affect biofuel blending requirements for 2020, which were announced in December, one of the sources said.

That rule included a plan raising biofuel volumes some refineries must blend in 2020 based on U.S. Energy Department recommendations for volumes.

The U.S. Renewable Fuel Standard (RFS) requires oil refineries to blend billions of gallons of biofuels such as ethanol into the nation’s fuel pool, or buy credits known as RINs from those that do. The EPA can waive refiners’ obligations if they prove compliance would cause them financial distress.

The Trump administration has angered the biofuels industry in recent years by roughly quadrupling the number of exemptions it grants to refiners. The biofuel industry claims exemptions hurt demand for corn-based ethanol, but the oil industry disputes that claim and says the blending obligations are too expensive.

According to the court decision, the EPA overstepped its authority to grant waivers in the past for HollyFrontier’s Woods Cross and Cheyenne refineries and CVR Energy’s Wynnewood refinery because the refineries had not received exemptions the previous year.

The court said the RFS wording requires that any exemption granted to a small refinery after 2010 must take the form of an “extension.”

According to EPA data, the agency granted seven biofuel waivers in 2015. That number rose to 35 in 2017 – meaning 28 waivers were given without having been given in a previous year.

A group of U.S. senators, including Oklahoma’s James Inhofe, Texas’s Ted Cruz and Pennsylvania’s Pat Toomey, sent a letter to President Donald Trump on Thursday calling for the administration to appeal the court decision.

“If allowed to stand, the decision will put a dozen small refineries in the Tenth Circuit under severe financial strain and thousands of jobs at risk. If applied nationally, it will jeopardize nearly all small refineries,” the letter said.

Biofuel advocates have called for the ruling to be applied nationally, beyond the 10th circuit, which would significantly limit the number of exemptions EPA grants.

According to the letter from the senators, just two small refineries might be eligible for hardship relief if the decision is applied nationally.

Reporting by Stephanie Kelly; Editing by David Gregorio



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