Small Refineries Petition Courts

OMAHA (DTN) -- Two small refiners not receiving exemptions to the Renewable Fuel Standard in EPA's latest round of waivers announced on Aug. 9, continue to fight the agency's rejection in federal court. At the same time, agriculture and biofuel interests continue to wait for a potential biofuels deal from the Trump administration.

On Aug. 9, the EPA announced the approval of 31 new small-refinery exemptions to the RFS for 2018 and rejected six total requests. The agency still has two additional requests for 2018 pending.

At this point, two refiners have petitioned federal courts for a review of the EPA's decision. That includes Big West Oil Company in Salt Lake City, Utah, which operates a 31,500-barrel-per-day refiner, and Sinclair Wyoming Refining Company in Sinclair, Wyoming, a 75,000 barrel per day (bpd) facility.

In all, President Donald Trump's EPA has granted 85 exemptions, totaling more than 4 billion ethanol-equivalent gallons not blended in petroleum. That includes several hundred million gallons of biodiesel.

The Trump administration's Aug. 9 announcement rocked rural America when it was reported the president himself ordered the agency to grant the latest exemptions.

Since then, both oil and ethanol interests have had meetings at the White House to consider a supposed deal to make changes to the RFS as a result of the outcry about the exemptions.

Earlier this week, reports in Reuters and Bloomberg said the White House has agreed to make changes to the RFS to reallocate exempted gallons.

DTN contacted EPA Tuesday afternoon requesting more information, but as of Wednesday morning, the agency had not responded.

Meanwhile, Big West has petitioned the U.S. Court of Appeals for the District of Columbia Circuit, https://www.epa.gov/…, and Sinclair has filed two petitions in separate courts. including the appeals court in Washington, D.C., and the U.S. Court of Appeals for the 10th Circuit in Denver, https://www.epa.gov/….

"The action in this case applies only to one refinery that is located in Wyoming and is a wholly-owned subsidiary of a parent company located in Utah," Sinclair said in its petition. "Notwithstanding this fact, EPA argues that its action is 'nationally applicable' under Section 307(b)(1) of the Clean Air Act because a senior EPA official sent a short memorandum to another EPA official saying that she had granted 31 small-refinery RFS exemption petitions and denied six others. Although Sinclair was not mentioned in this memorandum, and the memorandum contained no justification for denying Sinclair's petition, EPA argues that the memorandum was a nationally applicable action in which Sinclair's petition was denied."

The EPA has filed a motion to dismiss Sinclair's petition in the 10th Circuit, which prompted the company to file the same petition in the D.C. court.

Ironically, the EPA frequently has cited an August 2017 10th Circuit ruling related to the denial of a previous Sinclair exemption request. In that case, the court found the EPA had used too strict of a standard when it denied Sinclair's request.

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

Follow him on Twitter @toddneeleyDTN

(AG/BAS)

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