Ethanol Blog

Ethanol and agriculture told EPA Administrator Andrew Wheeler the agency must first determine how to respond to a recent court decision on the small-refinery exemptions program in the Renewable Fuel Standard, before entertaining an American Petroleum Institute petition to change 2020 volumes in the RFS.

In April, the API asked EPA to revise 2020 volumes in light of economic disruption from the COVID-19 crisis.

In a letter to Wheeler on Friday, Geoff Cooper, president and chief executive officer of the Renewable Fuels Association; Brian Jennings, chief executive officer of the American Coalition for Ethanol; National Farmers Union President Rob Larew; and Kevin Ross, president of the National Corn Growers Association, also said EPA likely does not have time to revisit 2020 volumes.

"Fundamentally, EPA should not be reconsidering the 2020 RFS rule unless and until it first acknowledges the 10th Circuit's (U.S. Court of Appeals for the 10th Circuit in Denver) holding as having national application," the groups said.

"Although API argues that the 10th Circuit's decision 'demolishes the foundations of EPA's (small refinery) projections,' there is no basis for revisiting or modifying EPA's current approach until EPA acknowledges that the central tenets of the 10th Circuit's decision are appropriately applied throughout the country."

The groups said the agency should emphasize small refineries, or those that produce 75,000 barrels or less per day, are entitled to an exemption only if an exemption "remained continuously in effect." In addition, the letter said it also includes that any finding of "disproportionate economic hardship" had to have been caused by compliance with the RFS. The letter said an EPA decision on waivers also should hold to the "longstanding view that RFS compliance costs are ultimately passed through to end users" and ultimately recovered by refineries.

"Even after acknowledging the appropriateness of applying the 10th Circuit's decision nationally, however, we do not agree it necessarily follows that the 2020 RFS rule must be reduced," the letter said.

"As noted by the court, EPA's recent abuse of its small-refinery exemption authority has significantly harmed the U.S. ethanol industry. Indeed, nationally, more than 4 billion gallons of 2016-2018 renewable fuel volume requirements were lost due to EPA's illegally issued small refinery waivers. Applying the Tenth Circuit decision nationally while leaving the 2020 RFS rule intact would begin to restore a small amount of the renewable fuel volume requirements lost to past small-refinery exemptions."

The groups said even if API was granted its petition, "convening a new notice and comment rulemaking on the 2020 RFS rule would be futile. By the time EPA were to propose a new rule, receive and consider public comment and finalize an amended rule, the 2020 compliance year will likely have passed."

The ethanol and refining industries are waiting for the agency to decide whether it will apply nationally a ruling from 10th Circuit, that the agency inappropriately approved many SREs without merit.

In an April 6 petition letter to EPA Administrator Andrew Wheeler, API attorney Maryam Hatcher said the court's ruling means the agency has to redo 2020 volumes.

The court ruled three refiners who were subject of the Renewable Fuels Association lawsuit were not eligible for waivers in 2017 and 2018 because they had not previously received them.

The API petition said the court's decision "dramatically narrows" EPA's small-refinery exemption program, and "thus bears directly on EPA's decision in the RFS 2020 rule to reallocate projected small-refinery-exempt volumes to other obligated parties."

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

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