Trump EPA May Reject Refiner Waivers

OMAHA (DTN) -- President Donald Trump reportedly has ordered the EPA to reject 67 so-called gap-year small-refinery exemption requests weeks after Trump said he would speak directly to the agency.

In addition to a report by Reuters on Wednesday morning, one industry source told DTN on background Trump gave the agency marching orders. EPA did not respond to DTN's request for comment.

"Our folks are confident the White House is rowing in the right direction, but we're still waiting to learn if the EPA will fight its marching orders," an ethanol industry source told DTN on background.

Though support for Trump remains strong in rural America, the retroactive waivers issue has been hanging over the president's re-election campaign in some key ethanol-producing states.

Trump said Aug. 18 visiting storm damage in Iowa that he would talk to EPA officials about the small-refinery exemptions.

EPA received 67 requests from small refiners for retroactive waivers for 2011 to 2018.

The requests poured in after the Trump administration decided not to appeal a January 2020 ruling from the U.S. Court of Appeals for the 10th Circuit in Denver. The court ruled EPA mishandled three waivers granted to small refiners.

In addition, CVR Refining and HollyFrontier Corp. on Sept. 4 filed a petition with the U.S. Supreme Court, asking for a review of the 10th Circuit ruling. The Trump administration did not file an appeal to the Supreme Court before the deadline.

"We are encouraged by reports that President Trump has called upon EPA to reject these absurd gap-year waiver petitions out of hand," the Renewable Fuels Association, National Corn Growers Association, National Farmers Union and American Coalition for Ethanol, said in a statement on Wednesday.

"If the reports are accurate, it is our hope that EPA swiftly acts upon the president's directive and closes the door once and for all on the refiners' brazen attempt to rewrite history.

"At the same time, we are disappointed, but not surprised, by the refiners' 11th-hour petition to the Supreme Court to review the 10th Circuit decision. In April, these same refiners asked the 10th Circuit to re-hear the case and the court swiftly and unanimously denied that request, and the Supreme Court should do the same."

The biofuel and ag groups said the 10th Circuit decision "does not warrant" further review.

"It is well-reasoned and based on a plain reading of the Clean Air Act, which clearly intended small-refinery exemptions to be temporary and used only as a 'bridge to compliance' for certain eligible small refineries. Additionally, there are no conflicting decisions in other federal courts of appeal.

"It is also telling that EPA -- the defendant in the original litigation -- did not request a re-hearing in the 10th Circuit, nor did it join the refiners' Supreme Court appeal on any aspect of the decision. Now, more than ever, our nation's farmers and ethanol producers are counting on the RFS to provide market stability and certainty during an incredibly difficult and tumultuous time."

On Jan. 24, the 10th Circuit ruled EPA didn't have the authority to issue small-refinery exemption extensions to three refiners that were not originally granted waivers in 2017 and 2018.

The court also found EPA "abused its discretion" by not explaining its conclusion a small refinery could suffer disproportionate economic hardship while also maintaining refiners passed on Renewable Fuel Standard compliance costs to consumers at the pump.

Congress allowed EPA to extend some small-refinery exemptions temporarily.

From 2007 through 2010, 59 small refineries received waivers. The U.S. Department of Energy then examined the 59 waivers and determined that 24 of them could be extended for another two years.

In 2011 and 2012, the number of exemptions was whittled down to eight, then down to seven in 2015.

The ethanol and agriculture groups were the four petitioners in the 10th Circuit case. A panel of judges found EPA abused its authority by granting small-refinery exemptions to CVR Refining and HollyFrontier that were not extensions of previously existing exemptions.

The gap-year waiver requests in question were made to "establish a chain of continuously 'extended' exemptions," the groups said.

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

Follow him on Twitter @toddneeleyDTN

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