Ethanol groups challenge RFS waivers

Source: Amanda Reilly, E&E News reporter • Posted: Friday, June 1, 2018

A coalition of ethanol groups has joined the legal assault against EPA waivers that exempt refiners from annual renewable fuel requirements.

The organizations filed a petition in the 10th U.S. Circuit Court of Appeals seeking review of the agency’s decision to grant three such waivers for refineries in Oklahoma, Wyoming and Utah.

The groups allege that EPA failed to disclose any information about its decision to grant the waivers. They also questioned whether the refineries that received the waivers are facing economic hardship from achieving renewable fuel targets.

“EPA is trying to undermine the RFS program under the cover of night,” said Bob Dinneen, CEO and president of the Renewable Fuels Association. “And there’s a reason it has been done in secret — it’s because EPA is acting in contravention of the statute and its own regulations, methodically destroying the demand for renewable fuels.”

Joining Dinneen’s group in the suit are the National Corn Growers Association, American Coalition for Ethanol and National Farmers Union. They are represented by Washington, D.C., law firm Pillsbury Winthrop Shaw Pittman LLP.

Under the renewable fuel standard and in coordination with the Energy Department, EPA can grant waivers exempting small refiners that demonstrate economic hardship from meeting biofuel-blending targets. Refiners can also meet the yearly biofuel mandates by buying renewable fuel credits.

EPA has said it has granted exemptions for around 25 refineries. The agency, though, hasn’t said which refineries receive waivers, because it says doing so would reveal private business information.

The lawsuit in the 10th Circuit specifically challenges EPA’s decision to grant waivers for Wynnewood Refining Co.’s facility in Wynnewood, Okla., and HollyFrontier Corp.’s refineries in Cheyenne, Wyo., and Woods Cross, Utah.

According to the complaint, the ethanol groups found out about the exemptions for the three refineries from news reports citing EPA sources.

“EPA did not even provide public notice that it had received or had acted upon any requests for an extension of a small refinery exemption,” the petition says.

The agency has since “refused to disclose” information about its small refinery exemptions to journalists, ethanol advocates and members of Congress, the lawsuit alleges.

The groups say they’re not challenging EPA’s underlying authority to issue waivers to small refineries that have trouble meeting renewable fuel targets, but rather the decision to issue three waivers at hand.

“EPA left us with no choice but to challenge their systematic cuts to ethanol blending in the U.S. by distorting the intent of the law to grant secret hardship waivers to refineries which in some cases exceed the definition of ‘small’ and fall short of demonstrating ‘disproportionate economic hardship,'” said Brian Jennings, CEO of the American Coalition for Ethanol.

‘Fundamental misunderstanding’

The 10th Circuit — which spans Wyoming, Utah, Colorado, New Mexico, Kansas and Oklahoma — has previously considered the issue of RFS waivers.

Last August, the court rebuffed an Obama administration decision to reject exemptions for two small Sinclair Oil Corp. refineries.

A three-judge panel ruled that EPA exceeded its authority under the Clean Air Act when it found the company failed to show that complying with the RFS would threaten the “viability” of the Wyoming refineries (Greenwire, Aug. 16, 2017).

Scott Segal, an attorney at Bracewell LLP representing refiners, who has slammed biofuel advocates for having a “fundamental misunderstanding” of the waiver, said that the 10th Circuit rejected the idea that the RFS waiver is a limited exemption.

“Language in the opinion says that EPA must compare a small refinery’s cost of compliance to the industry average, and if the small refinery’s cost is significantly higher, it faces a disproportionate economic hardship,” he said. “The granting of the waiver thereafter simply is not discretionary.”

Earlier this month, the Advanced Biofuels Association filed its own lawsuit seeking review of the agency’s waiver process in the U.S. Court of Appeals for the District of Columbia Circuit.

The group argues that an arbitrary change in EPA’s criteria for determining economic hardship accounts for the large number of exemptions last year (Greenwire, May 2).