EPA Pressed on Pending Waiver Requests

Source: By Todd Neeley, DTN Staff Reporter • Posted: Wednesday, June 10, 2020

Refiners Have Asked for Small-Refinery Exemptions for Previous Years

 The EPA has declined requests to share information as to the number of new small-refinery exemption requests from previous compliance years. Agriculture and biofuel groups are pressing EPA Administrator Andrew Wheeler to reject such requests. (DTN file photo by Nick Scalise)
The EPA has declined requests to share information as to the number of new small-refinery exemption requests from previous compliance years. Agriculture and biofuel groups are pressing EPA Administrator Andrew Wheeler to reject such requests. (DTN file photo by Nick Scalise)

OMAHA (DTN) — Biofuel and agriculture groups want to know what EPA intends to do with a number of new applications filed by refining interests, asking for small-refinery exemptions for previous compliance years.

So far, the agency has declined to share even the number of those filings made. DTN has a pending Freedom of Information Act request for that information.

The U.S. Court of Appeals for the 10th Circuit in Denver ruled back in January the agency illegally granted exemptions to three small refineries. In that case, the court said the refiners were not eligible for exemptions because they had not previously received them.

Biofuel and agriculture interest groups have alleged EPA now is considering granting small-refinery exemptions for previous years, which could potentially allow refining companies to continue receiving exemptions legally.

EPA Administrator Andrew Wheeler was pressed for answers on the program in a letter on Tuesday from Growth Energy, the National Biodiesel Board, the Renewable Fuels Association, the National Corn Growers Association, the American Farm Bureau Federation, the American Soybean Association, the National Farmers Union, the American Coalition for Ethanol and Fuels America.

“These ‘gap filings’ appear to be little more than the latest in a string of oil industry tactics designed to subvert the law and sidestep a court order to uphold the RFS,” the groups said in the letter.

“The biofuels industry has been hit especially hard by the sharp decline in fuel demand across the country, as residents follow local, state and federal guidance to practice social distancing and minimize travel. Over 100 biofuel plants fully idled or cut production, with ripple effects negatively impacting agricultural commodity prices, farmers, and the food supply chain.

“EPA inaction on court orders and prolonged SRE uncertainty continue to stifle investment in American biofuels and destabilize agricultural markets. Backfilling SREs to circumvent a court decision would exacerbate market uncertainty at a time when rural communities already face unprecedented economic challenges.”

Wheeler testified before a U.S. Senate committee on May 20, 2020, indicating the agency had received requests for previous years.

“On the same day, U.S. Department of Energy Under Secretary Mark Menezes confirmed that EPA is ‘sending over’ past-year petitions for DOE review,” the letter said.

“Mr. Menezes described the petitions as ‘gap filings’ intended to reconstitute after-the-fact a continuous string of exemptions for select oil companies ‘to be consistent with the 10th Circuit decision.’ This attempt to circumvent the courts and the RFS should be rejected out of hand.”

On May 27, DTN asked EPA for the number of gap filings received. A spokesperson for the agency directed DTN to the EPA dashboard. The dashboard, however, does not list the number of new requests made for previous compliance years. When pressed further, the spokesperson responded, “We have nothing further to share at this time.”

The biofuel and agriculture groups said in the letter the agency needs to make public the number of gap filings on its public dashboard, https://www.epa.gov/….

Currently, EPA has received 27 small-refinery exemption requests for 2019 and one for 2020. What hasn’t been made publicly available is the number of new requests from years previous to 2019.

“A year ago, you stated EPA had ‘changed tack’ by ‘putting (EPA) information out in real-time on the small-refinery waivers program and being more upfront about what we’re doing and why we’re doing it,'” the letter said.

“EPA’s intent in creating the RFS dashboard was to ensure ‘refineries and other interested parties receive the same RIN market information at the same time.’ However, the dashboard does not disclose any SRE ‘gap filings.’ Without further clarification, EPA appears to be reverting to a secretive pattern in the management of RFS refinery-waiver petitions.”

Based on agency numbers, just seven small refineries qualified for small-refinery exemptions.

On Jan. 24, the court ruled EPA didn’t have the authority to issue small-refinery exemption extensions to three companies that were not originally granted waivers in 2017 and 2018.

The court also found EPA “abused its discretion” by not explaining its conclusion that a small refinery could suffer disproportionate economic hardship while also maintaining refiners passed on RFS compliance costs to consumers at the pump.

Congress allowed EPA to extend some small-refinery exemptions temporarily.

From 2007 through 2010, 59 small refineries received waivers. The U.S. Department of Energy then examined the 59 waivers and determined that 24 of them could be extended for another two years.

In 2011 and 2012, the number of exemptions was whittled down to eight, then down to seven in 2015. Then from 2016 to 2018, the agency granted 85 exemptions.

Todd Neeley can be reached at todd.neeley@dtn.com