Tensions within the oil industry over U.S. biofuel policy are intensifying with the latest E15 draft proposal circulating on Capitol Hill.

A group of small and independent refiners, including Delek US and Delta Air Lines’ Monroe Energy, say they oppose a revised plan for legislation that would allow year-round, nationwide sales of higher ethanol blends, known as E15, a blow to farm-state lawmakers hoping a deal can emerge soon after President Donald Trump called on GOP leaders of Congress to deliver an ethanol bill he can sign into law quickly. 

A revised proposal from the Rural Domestic Energy Council, made up of House Republican lawmakers, is aimed at finding a path forward that's acceptable to agriculture groups and big and smaller fossil-fuel refiners.

The main sticking point remains the same as earlier this month. On one side is corn and biofuel groups and the American Petroleum Institute, which represents large refiners. They agree on including in an E15 measure a provision to limit the number of refineries eligible for exemptions from national biofuel-blending requirements under the Renewable Fuel Standard.

But many mid-size and small refiners say such a change is unacceptable and would lead to plant shutdowns and job losses, arguing that the RFS is already “flawed” and too financially burdensome. They claim the powerful API oil lobby seeks to consolidate the oil market by putting rivals out of business, while API argues that the federal process for small refinery exemptions under the RFS isn’t transparent and causes uncertainty and market distortions.

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The most recent attempt at a compromise calls to cap the pool of exempted biofuel credit obligations, known as RINs, at 550 million a year, according to people close to the situation. It’s not just small refiners balking at the proposal. Biofuel groups also view the framework as falling short, people close to the matter told Agri-Pulse.

An earlier E15 proposal from the council, rejected by both smaller refiners and biofuel groups, proposed to limit RINs to 450 million. For context, EPA last year granted exemptions for multiple years that affected more than 3 billion RINs. 

The opposing refiners told the council that API doesn’t represent their “collective voice nor the voice of the refining sector,” according to a letter sent to lawmakers on Thursday and signed by 27 refining facilities representing more than 2 million barrels a day of U.S. domestic refining capacity.

The refiners made a counter proposal, saying they would support E15 legislation that:

  • Continues to authorize EPA to grant small refinery exemptions under the existing framework, with no artificial cap on the amount that may be awarded.
  • Prohibits EPA from increasing annual mandates through the “reallocation” of exempted small refinery volumes and bars EPA from increasing annual mandates through the “reallocation” of exempted small refinery volumes.
  • Limits the annual ethanol mandate to an amount no higher than the actual consumption from the previous year.