EPA Holds Off on RFS Waivers Decision

EPA to Extend RFS Compliance Date for Small Refineries

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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EPA has elected to wait until after a current court case plays out on small-refinery exemptions before deciding what direction to go on the program. (DTN Photo by Emily Unglesbee)

OMAHA (DTN) -- EPA announced its next steps on small-refinery exemptions following a recent decision by the Trump administration not to appeal a recent court case. The announcement was buried in a Friday news release on relieving gasoline requirements because of COVID-19.

The agency said it would wait for any appeals to play out in the U.S. Court of Appeals for the 10th Circuit in Denver.

Three refiners that lost a lawsuit filed by biofuels interest groups have asked the court for an en banc hearing before all of the judges in the 10th Circuit. It is unclear when or if the court will grant a hearing, as it does so in just one-tenth of 1% of all cases.

In the news release, EPA stated it would not revisit or rescind any previously granted small-refinery exemptions. Because of COVID-19, EPA also stated it would focus on "protecting our employees and ensuring continued protection of public health and the environment from acute or imminent threats during the COVID-19 pandemic."

The agency added that investigating and initiating enforcement actions against small refineries "is a low priority for the agency." So EPA will wait until the appeals are completed to enforce any decision.

"EPA intends to develop an appropriate implementation and enforcement response to the 10th Circuit's decision in RFA v. EPA once appeals have been resolved and the court's mandate has been issued," EPA stated. "Finally, in a forthcoming action, EPA intends to extend the RFS compliance date for small refineries to provide them with additional flexibility."

The original lawsuit was filed in May 2018 by the Renewable Fuels Association, National Corn Growers Association, American Coalition for Ethanol and National Farmers Union.

The U.S. Department of Justice did not file an appeal before the Tuesday deadline on a recent 10th Circuit ruling on the exemptions program.

That means it is unlikely EPA would continue to grant the number of exemptions it has annually since 2016. The agency has granted an average of 28 exemptions since 2016. There are currently 25 pending requests for 2019.

In a motion filed in the court on Tuesday, Wynnewood Refining Company LLC in Wynnewood, Oklahoma, said if EPA changes course, its business will falter.

"The nationwide price of RFS compliance credits tripled after the panel decision was published," the motion said. "For small refineries like Wynnewood, which can never achieve compliance on their own and will forever be hostage to the volatile RIN market, this ruling is a death knell."

HollyFrontier Cheyenne Refining LLC in Cheyenne, Wyoming; HollyFrontier Refining and Marketing LLC; and HollyFrontier Woods Cross Refining LLC in Woods Cross, Utah; filed a similar motion.

Earlier this year, a three-judge panel from the 10th Circuit ruled EPA didn't have the authority to issue exemption extensions to three companies that were not originally granted waivers.

In the Jan. 24 ruling, 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 RFS compliance costs on to consumers at the pump.

Read EPA's news release here: https://www.epa.gov/….

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

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(CC/AG)

Todd Neeley