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NEW YORK May 12 In 2013, Delta Air Lines and The Carlyle Group joined the refining industry in lobbying to lower federal mandates on how much ethanol and other biofuels have to be blended into U.S. fuel supplies.
A surge in the price in renewable identification numbers (RINs), credits used to track the production and blending of ethanol and other biofuels into motor fuel, saddled their investments in ageing Philadelphia-area refineries with hundreds of millions of dollars of additional costs.
Supporters of corn-based ethanol and other biofuels are now fighting back as the Environmental Protection Agency weighs a final decision on whether to slash biofuel quotas from 18.15 billion to 15.21 billion gallons in 2014.
Below is a 2013 timeline of Carlyle and Delta's efforts to reach out to the White House by working with U.S. lawmakers, union leaders and state officials, to help ease the blending rules.
January - The EPA proposes to raise ethanol blending quotas for 2013 to 13.8 billion gallons, or about 10 percent of U.S. gasoline demand. With mandates scheduled to rise again to 14.4 billion in 2014, the move triggers fears that refiners may run short of RINs needed to show compliance with the rising quotas.
March 11 - The price of ethanol RINs hits a high of $1.05, up from about a nickel at the end of December 2012. The surge captures the attention of White House policymakers.
March 12 - Executives from Carlyle and its Philadelphia refinery meet with White House economic adviser Ronald Minsk, White House visitor logs show. March 25 - Rep. Patrick Meehan, whose district includes the refinery purchased by Delta Air Lines, hand-delivers a letter at a White House event to Gene Sperling, the top White House economic adviser at the time, asking for the administration's help in taming RIN prices.
April 17 - Two dozen representatives of other U.S. oil refiners and their lobbyists attend a meeting at the White House with Heather Zichal, President Obama's top energy and climate change adviser at the time, visitor logs show.
June 17 - Meehan sponsors an amendment to the Farm Bill that would provide relief to refineries like those owned by Delta and Carlyle. The amendment, crafted with the help of Delta, was never acted upon by the House.
June 26 - A dozen refining industry representatives, including executives from PBF Energy and Phillips 66, attend a meeting at the White House with Sperling, visitor logs show. July 18 - RINs hit an all-time high of $1.45 each. The same day, Delta meets with officials at the Office of Management and Budget (OMB), the rulemaking arm of the White House, to discuss the biofuel blending rules.
July 22 - David Marchick, a Carlyle executive who had worked with the White House and Philadelphia Congressman Robert Brady on the 2012 rescue of the refineries in Brady's district, contacted the Congressman's office to seek his help in taming RIN costs. July - Brady called Vice President Joe Biden and reminded him of the work the White House did in 2012 to rescue the Philadelphia refineries and expressed concern that the rising RIN costs could undo their efforts. Brady said in an interview that he also called EPA Administrator Gina McCarthy to discuss the issue. July 23 - Jim Savage, the head of the union representing more than 600 workers at Carlyle's refinery, sent a letter to Sperling urging the EPA to send a "clear signal" that it will tame the RIN market. Gary Beevers, the union's international head, sends a similar letter to Sperling. July 24 - Carlyle, Delta, Savage and other refining and labor leaders attend an OMB meeting to explain the threat RINs pose to their businesses and jobs.
July 24 - Reps. Brady and Meehan send a letter to EPA Administrator Gina McCarthy urging her to "send a clear signal" that it will reduce ethanol mandates and tame RIN prices. Pennsylvania Governor Tom Corbett and Delaware Governor Jack Markell also send a letter to McCarthy, likewise asking for a "clear market signal." Summer 2013 - A handout titled "The Looming Energy Crisis" prepared by Delta and other refiners and obtained by Reuters warns that "thousands of jobs" are at risk through refinery closures if high RIN prices persist. August 6 - The EPA finalizes its 2013 biofuel blending quotas, leaving unchanged the 13.8 billion gallons it proposed in January for corn ethanol but surprising the market by saying that it will use "flexibilities" in the law to lower quotas in its 2014 rules. RIN prices drop from $1.04 to 78 cents. August 6 - Janet McCabe, acting assistant administrator for the EPA's Office of Air and Radiation, sends reply to Rep. Brady's July 24 letter, agreeing that compliance with the mandates will become "significantly more difficult" in 2014. She makes clear that the agency will "propose adjustments" to the blending rules by setting blending quotas that are "reasonably attainable." August 6 - Philadelphia Energy Solutions, the Carlyle-owned refinery, issues a press release thanking Govs. Corbett and Markell, Reps. Brady and Meehan, union leaders Mr. Savage and Beevers, among others, for their "vigorous, bipartisan advocacy on an issue that was negatively affecting the industry." The press release also praises the EPA for "signaling" it will reduce the mandates.
August 13 - Carlyle and Delta executives meet with White House economic adviser Ronald Minsk, visitor logs show. Carlyle also meets with Janet McCabe, the EPA official who had corresponded with Brady on the RIN issue, an email shows.
October 10 - A leaked draft of the EPA's 2014 blending proposal is publicized by Reuters and other news organizations. The draft showed the EPA was considering lowering the corn ethanol portion of the biofuel mandates to about 13 billion gallons, versus 14.4 billion required by law. RINs fell in price by almost half, trading as low as 23 cents each on October 11, the day after the Reuters report. Late October - Biofuel and farm groups step up their lobbying, sending nearly three times as many meeting participants to the OMB as refiners and their allies, a Reuters review of OMB meeting records shows.
November 1, 2013 - EPA Administrator McCarthy responds to Gov. Corbett's letter. She points to her agency's August 6 statement that the EPA will adjust the blending quotas and said, "We believe that this statement provides the clear market signal that you requested and that regulated parties have been seeking."
November 15 - The EPA releases its proposed 2014 blending quotas, proposing for the first time to reduce corn ethanol blending volumes, from 14.4 billion gallons required by law to about 13 billion. The agency justifies the cut using a waiver authority granted to it by Congress in the 2007 law governing the renewable fuel blending program. RINs trade at 22 cents. As of May 2014, the blending credits are trading higher, in the 40-cent range.
(Reporting By Cezary Podkul; Editing by Alden Bentley)
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