No Immediate Change to Biofuel Compliance Structure: White House

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By Brian Dabbs

Some biofuel producers are breathing a sigh of relief Feb. 28 after the White House disavowed reports of a new executive order designed to shift the renewable fuel standard compliance burden from refiners and importers to downstream terminal operators.

“There is no ethanol [executive order] in the works,” White House spokeswoman Kelly Love told Bloomberg BNA. A leading biofuel producer, POET, LLC Chairman Jeff Broin, also told Bloomberg BNA the White House doesn’t intend to move forward with the plan.

But speculation over the plan continues to gin up controversy. Biofuel supporters blasted the Renewable Fuels Association (RFA) Feb. 28 for its alleged role in proposing an executive order package coordinated with Carl Icahn, the billionaire refinery operator who serves as President Donald Trump’s informal regulatory adviser, and Valero Energy Corp. representatives.

RFA President Bob Dinneen said in a statement the White House aimed to shift the biofuel mandate compliance party to terminal operators, which store, ship and often blend biofuel with petroleum. Dinneen, however, said he opposes the switch.

‘Non-Negotiable’?

“Despite our continued opposition to the move, we were told the executive order was not negotiable,” Dinneen said in a statement early Feb. 28. Biofuel producers said a change in the compliance structure would increase the number of obligated parties, and therefore render regulation more difficult.

And following the Trump administration’s denial, Dinneen insisted the White House is considering action. “There is certainly something in the works, but they’re not going to confirm it until they are ready to roll with it,” he said, according to a statement delivered from his office.

Icahn has regularly denounced the current compliance framework, saying it allows speculation in the compliance credit market and poses a significant threat to refiner profits. The Trump ally owns a majority stake in CVR Energy Inc., which purchases biofuel credits, known as Renewable Identification Numbers, to comply with the biofuel mandate. Valero also complies with the mandate using credit purchases.

The deal would have relieved Icahn, Valero and others from having to comply.

The RFS program, which was made law in 2005 and expanded in 2007, sets annually increasing biofuel quotas. The goal of the program was to decrease hydrocarbon emissions and reduce dependence on foreign oil. Nearly all transportation gasoline in the U.S. now contains 10 percent ethanol.

Biofuel Outcry

Reports of an emerging deal sparked a loud outcry.

The Fuels America coalition, comprised of the Iowa Renewable Fuel Association, the National Farmers Union and other biofuel supporters, distanced itself from Dinneen’s association Feb. 28.

“Despite our opposition, the Renewable Fuels Association has elected to lend its support to Mr. Icahn’s efforts. Accordingly, RFA’s position is no longer aligned with America’s biofuel industry and the Fuels America coalition has resolved to sever ties with the group,” the group said in a statement.

Meanwhile, Broin issued a scathing statement on the apparent plan late Feb. 27, and he backed up that criticism in an interview with Bloomberg BNA. “This was really a backroom deal apparently between Carl Icahn and Bob Dinneen. It seems to me that it’s to help Mr. Icahn and the oil members of the RFA,” Broin said Feb. 28, adding that the White House directly denied the reports.

Valero joined the Renewable Fuels Association last November. In a statement, the company said it would welcome any efforts by the Trump administration “to negotiate an acceptable compromise.”

“Changing the RFS point of obligation is critical to protecting fuel manufacturing jobs, small-business retailers, energy security and U.S. consumers,” Valero said.

To contact the reporter on this story: Brian Dabbs in Washington at bdabbs@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

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