Biofuel Lobby Sues EPA Over Renewable Fuel Standard Exemptions

Source: By Michael McGrady, Inside Sources • Posted: Thursday, August 22, 2019

The U.S. Environmental Protection Agency (EPA) is facing a legal challenge from a coalition of biofuel and agriculture industry groups regarding the agency’s proposal for reduced renewable fuel volumes.

According to a press release from the coalition, the organizations filed a petition in the U.S. Court of Appeals for the District of Columbia Circuit to lift a stay on a 2018 legal challenge asking the judicial systems to protect the biofuel industry from EPA regulatory abuse.

“Thirteen months have passed since the filing of the petition, without even a proposed substantive response from EPA,” the motion states, which was filed with court authorities at the end of July. “Meanwhile, the agency has shown through various actions that it is not genuinely considering the Coalition’s administrative petition and has in effect denied it.”

The Renewable Fuels Association (RFA), American Coalition for Ethanol, Growth Energy, National Biodiesel Board, National Corn Growers Association, Biotechnology Industry Organization, and National Farmers Union filed a joint petition in 2018.

The same coalition asked the EPA at the time to stop the liberal use of something called small refinery exemptions (SREs). When the Renewable Fuel Standards (RFS) entered into law in 2005, the regulation offered a method of calculating annual percentage obligation for renewable fuels to be blended in traditional transportation fuels. This was a measure meant to support the biofuel industry, producers of corn ethanol, and prevent large refineries and oil companies from dominating the biofuel market.

Small refinery exemptions were issued to outfits that cannot financially handle the requirements of blends and the other rules under the RFS. However, the coalition alleges that the EPA’s use of the small refinery exemptions pathway retroactively is “arbitrary and capricious.” The courts in 2018 ordered a stay on the initial petition. However, this new legal petition seeks to lift this stay.

“[The] SRE program negatively affects a broad range of stakeholders,” says RFA president and CEO Geoff Cooper in an email to InsideSources. “Our coalition reflects the fact that SREs hurt not just ethanol producers, but also biodiesel producers, the farmers who supply our feedstock, and the consumers who pay more at the pump when biofuel consumption is constrained.

“The motivation is simple: We want EPA to follow the law — and the law is clear that any biofuel blending volume that is exempted for small refiners needs to be redistributed to non-exempt refiners.”

EPA administrator Andrew Wheeler has since defended SRE waivers, according to Reuters. In a behind-closed-doors meeting with members of the U.S. Senate representing corn ethanol-producing states, Wheeler is said to have justified the exemptions as a means to balance out the market.

However, the RFS policy has become a significant point of contention among the corn and oil industries. According to this same report, the EPA has quadrupled the issuance of waivers saving millions for the oil industry and costing farmers, biofuel refiners, and the corn industry.

Growth Energy’s Emily Skor, the group’s CEO, wrote in a commentary piece for the Madison, Wisconsin, Capital Times arguing that the EPA has done nothing but offer handouts to the oil industry, but to no other players, during the Trump administration’s tenure.

“For rural families, it’s hard to imagine a worse time to come under attack by Washington bureaucrats,” Skor wrote. “Farm income has been spiraling downward, exports are down, and flooding has demolished hopes for the next harvest in many communities.”

She additionally noted that U.S. Secretary of Agriculture Sonny Perdue and upper leadership have questioned why the SREs are supposedly abused and how firms like ExxonMobil could receive a retroactive exemption as a “small refinery.”

“We know the president is listening, and clearly, it’s time for the White House to demand the EPA end its corrosive policies,” Skor concluded.