EPA poised to scrap biofuel trading curbs

Bloomberg

The Environmental Protection Agency is poised to jettison proposed trading rest- rictions on a $5.2 billion market for biofuel compliance credits in a coming rule, casting aside changes sought by independent refiners complaining of hoarding and wild price swings.
The EPA’s shift comes as the agency races to meet a May 31 rulemaking deadline amid pressure from large oil companies and fuel distributors that oppose the market overhaul. It was described by people familiar with the internal deliberations who asked not to be identified before a formal announcement.
The EPA had been considering numerous possible restrictions to the holding and trading of renewable identification numbers, or RINs — the credits refiners use to prove they have fulfilled annual biofuel-blending quotas. But in a final rule set to be issued on Friday, the EPA is set to make only a handful of modest changes, mostly aim-ed at boosting transparency.
The RINs modifications are bundled together in the same regulation as a measure that would allow sales of gasoline containing as much as 15 percent ethanol during the summer, which is meant to fulfill a promise President Donald Trump made to rural voters and corn farmers last fall. The EPA is racing to finalise the rule before June 1, when air pollution requirements kick in to block sales of that E15 gasoline in areas where smog is a problem.
Although the EPA is backing off aggressive reforms as part of that rule, agency officials will continue to evaluate other market changes that Trump ordered them to consider to prevent price manipulation. Future reforms would come on a different timetable and probably through separate rulemaking, said a person familiar with the effort who asked not to be named describing private deliberations.
In an emailed statement, the EPA stressed it was not abandoning market reforms. “EPA is not watering down or ‘jettisoning’ the reforms considered in its proposal,” the agency said. “EPA’s final acti-on, which will be signed by the summer driving season, is co-nsistent with the president’s direction last year and will help increase transparency and prevent price manipulation in the RIN market.”
The time crunch on the E15 regulation factored into EPA deliberations, making it harder to finalise complex changes to the RIN market, like the possible reforms the EPA outlined in March. The agency’s initial proposal wo-uld have imposed position li-mits meant to stamp out ho- arding, forced most traders to sell credits quarterly, and lar-gely limited trading to fuel exporters, importers and refin- ers. The EPA also envisioned more aggressive monitoring of the RIN market, including obtaining details about contract terms and disclosing traders with outsize positions.
Now, as the agency rushes to finalise the E15 rule, it is discarding the more aggressive, immediate changes in favor of modest, transparency-focussed tweaks. The EPA is expected to preserve a disclosure requirement that would reveal details about companies that hold large positions — both more than 3 percent of the credits needed nationwide in any given year and more than needed to satisfy 130 percent of their individual quotas.