Refiner Sues EPA on RFS Waiver Denials

Source: By  Todd Neeley, DTN Staff Reporter • Posted: Wednesday, May 11, 2022

Small Refiner Sues EPA on RFS Waiver Denial, Despite Agency Leniency

A small refiner in Louisiana has sued the EPA on the Biden administration's decision to reject 2018 small-refinery exemptions. (Photo by Tim-Evanson, CC-by-SA-2.0)
A small refiner in Louisiana has sued the EPA on the Biden administration’s decision to reject 2018 small-refinery exemptions. (Photo by Tim-Evanson, CC-by-SA-2.0)

LINCOLN, Neb. (DTN) — A Shreveport, Louisiana, small refinery company has sued the EPA, asking a federal appeals court to review the agency’s decision to deny retroactively a small-refinery exemption granted in 2018.

The EPA announced on April 7 that it denied 36 SREs for 2018 but offered refiners another way to comply with the Renewable Fuel Standard.

Calumet Shreveport Refining, LLC, appealed the decision that included revoking a 2018 SRE for the 60,000-gallon refiner, to the U.S. Court of Appeals for the Fifth Circuit in New Orleans in the first week of May.

The refiner, however, had not yet submitted its legal arguments for challenging EPA’s action as of Tuesday afternoon.

The latest legal challenge is not the first by Calumet, as the refiner also was part of a Sinclair Wyoming Refining Co. lawsuit in 2019. Sinclair filed suit in September 2019, challenging the agency’s decision to approve 31 of 36 pending SREs at the time. Calumet was one of several oil companies to challenge EPA’s plans to reconsider the 31 approvals.

Calumet’s new legal challenge comes despite the Biden administration giving refiners an “alternative compliance approach” that wouldn’t require refiners to make up for the 1.4 billion gallons of biofuels or renewable identification numbers, or RINs.

The EPA’s action in April angered the biofuels industry because the alternative approach would require those refiners to resubmit their 2018 compliance reports but not to actually blend biofuels or purchase RINs.

EPA said in a news release last month, that it was giving refiners more flexibility “because the agency has determined there are extenuating circumstances specific to the set of petitions, including the fact that the SRE petitions were previously granted. Five refiners were dropped because two were declared ineligible and three others withdrew their initial petitions.”

The 36 SREs in question have been the subject of litigation since they were initially granted in August 2019.

The U.S. Court of Appeals for the District of Columbia Circuit ordered EPA last December to issue a ruling on the 2018 SREs within 120 days. That court decision came after the Biden administration’s EPA had been granted a court stay on the Trump administration’s initial approval of the SREs. The D.C. court remanded the decision back to EPA.

EPA had argued the agency needed to pull the 36 SREs to stay consistent with a ruling against refiners by the U.S. Court of Appeals for the 10th Circuit in Denver. That court concluded that SREs may only be granted when a small refinery’s hardship is caused by compliance with the RFS program. The 10th Circuit decision from 2020 required EPA to create a new interpretation of how to decide on SREs.

EPA still has 69 pending petitions from refiners for SREs going back as far as the 2016 compliance year, though the bulk of them — 64 of the petitions — involve 2019, 2020 and 2021 compliance years.

Read more on DTN:

“EPA Denies 36 RFS Exemptions From 2018,” https://www.dtnpf.com/…

“EPA Asks Court to Vacate RFS Exemptions,” https://www.dtnpf.com/…

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

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