NEW YORK (Reuters) - The U.S. Government Accountability Office (GAO) will review the Trump administration’s use of waivers exempting oil refineries from the nation’s biofuel blending requirements, according to a letter dated Friday, after lawmakers called for an investigation.
The so-called Small Refinery Exemptions are intended to protect refineries in financial distress from the cost of blending ethanol into gasoline, but the U.S. corn lobby and its representatives have accused the administration of overusing them to help oil companies at the expense of farmers.
The GAO, a congressional watchdog unit, accepted the request from lawmakers - including Iowa Representative Abby Finkenauer, Minnesota Representative Collin Peterson and Illinois Representative Rodney Davis - to examine the administration’s handling of the waivers handed out for the 2018 compliance year.
The group in August had asked the GAO in a letter to review the factors that the Trump administration’s Environmental Protection Agency considered in approving the waivers, and to examine the Department of Energy’s process for recommending exemptions to EPA, according to the letter.
“GAO accepts your request,” GAO Managing Director of Congressional Relations Orice Williams Brown wrote to the lawmakers in its response dated Jan. 10. The letter said work will begin “shortly” on the review.
Under the U.S. Renewable Fuel Standard, refineries are required to blend 15 billion gallons of ethanol annually. But the EPA can exempt small facilities that demonstrate compliance would hurt them financially.
The EPA has roughly quadrupled the number of waivers it has been granting to oil refineries since Donald Trump became president. The agency has also routinely waived higher volumes than the DOE has recommended.
The EPA’s decision in August to grant 31 oil refiners exemptions to the rules for the 2018 compliance year prompted the latest wave of outrage from farmers and producers of the corn-based fuel.
The Corn Lobby argues that the exemptions hurt demand for ethanol, while the oil industry disputes that claim and says the blending requirements cost them a fortune.
“Our concerns stem from the economic consequences to our rural communities created by exempting nearly 4 billion gallons of fuel from the RFS, a standard intended to expand the nation’s renewable fuels sector,” the lawmakers’ August letter said.
A recent effort to quell anger in the Farm Belt over the exemptions largely fell flat after the EPA in December announced a finalized rule for 2020 blending requirements that the biofuels industry criticized as inadequate.
Reporting by Stephanie Kelly; editing by Richard Valdmanis and Marguerita Choy
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