Refiners, former White House official ask EPA to tweak biofuels program

NEW YORK (Reuters) - Independent oil refiners and a former White House official have urged U.S. regulators to tweak the U.S. biofuels program to shift responsibility for complying from refiners to fuel blenders, according to public comments on a government proposal for renewable fuel use.

Delta Airlines’ Monroe Energy LLC, Carlyle Group’s Philadelphia Energy Solutions, Valero Energy Corp and Ronald E. Minsk, who recently served as a special assistant President Barack Obama, are among those pressing the U.S. Environmental Protection Agency (EPA) to make the change.

It is not a new position for the merchant refiners, but it represents fresh pressure on EPA to reconsider a key, if esoteric, part of the RFS that they say could have broader impacts on renewable fuel use.

The arguments center on which companies should be obligated to show use of biofuels under the Renewable Fuel Standard (RFS) program that requires oil companies to blend renewable fuels with gasoline and diesel.

Refiners are currently “obligated parties” under RFS, required to blend biofuels or to buy compliance credits from companies that have done so. Not all oil refiners have blending capacity.

Changing what Carlyle Group’s Philadelphia Energy Solutions and Delta Airlines’ Monroe Energy LLC term a “misguided” rule could boost mixing of biofuels and ultimately mean lower prices at the pump, the groups said.

Typically, the RFS debate centers around the battle between Big Corn and Big Oil over how much corn-based ethanol the U.S. fuel pool can absorb. This represents a fracture within the petroleum industry.

Higher ethanol blends like E85 and E15, which have 85 percent and 15 percent ethanol respectively, have been slow to gain traction at the pump.

This is increasingly a key part of the debate over the controversial program, and it remains unclear how whether more consumers would choose higher blends if more gas stations offered them.

Minsk, whose purview at the White House included RFS until he left earlier this year, said that blenders have little incentive to blend greater volumes because they are not responsible to show compliance.

It is “a significant factor inhibiting greater amounts of E85, and perhaps biodiesel, from reaching the market,” he said.

Valero, the country’s largest refiner and third-largest ethanol producer, said the change would promote both availability and lower retail prices.

The comments were filed in response to a May proposal for renewable fuel volume requirements.

EPA is reviewing thousands of comments on the proposal and plans to finalize it by Nov. 30.