U.S. EPA considers delaying Friday biofuel announcement

(Reuters) - The U.S. Environmental Protection Agency (EPA) is considering delaying an announcement expected on Friday on 2019 renewable fuel volumes as it re-examines plans to force larger refineries to make up for gallons exempted at smaller plants, according to two sources familiar with the process.

EPA Administrator Scott Pruitt and Agriculture Secretary Sonny Perdue are traveling to a farm outside of Kansas City, Missouri, on Friday, where they were initially slated to announce the 2019 renewable fuel volumes.

The EPA and the White House were still hashing out the details of a last minute plan to appease farmers, sources said, and the announcement could be postponed if an agreement is not reached.

The plan to force large refiners to blend extra volumes to compensate for the hardship waiver exemptions for small refiners was met with stiff oil industry opposition on Wednesday, sending the price of compliance credits surging.

“This backroom deal would flat out betray consumers, labor and refinery workers in Ohio, Pennsylvania, Texas, Louisiana and dozens of other states that helped elect this president. To say that we would be livid were this deal to move forward would be a gross understatement," Chet Thompson, head of the American Fuel and Petrochemical Manufacturers, said.

The EPA administers the U.S. Renewable Fuel Standard (RFS), a 2005 law that requires refiners to blend biofuels like ethanol into the fuel pool or buy compliance credits from those who do. The agency is required to set targets for blending volumes by Nov. 30 for the following year.

Refineries with a capacity of less than 75,000 barrels per day can qualify for RFS hardship waivers, and under Pruitt, the EPA has roughly tripled the amount of exemptions compared with the previous administration.

As of Thursday morning, the agency was seen as likely to include a plan on how to reallocate the waived volumes into this year's proposal, according to sources. The mechanics of the proposal were unknown, the sources said.

Pruitt and the EPA have been criticized by the biofuels industry and its supporters on Capitol Hill over its handling of the waiver program.

Prices of renewable fuel credits eased to 29.5 cents apiece after touching 32 cents earlier in the day in anticipation of the reallocation, said traders. The credits were 28 cents on Wednesday. (Reporting by Jarrett Renshaw and Chris Prentice in New York Editing by Jeffrey Benkoe and Marguerita Choy)

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