EPA Rejects RFS Small-Refinery Petition

LINCOLN, Neb. (DTN) -- The EPA on Friday denied one small-refinery exemption petition to the Renewable Fuel Standard, according to the agency RFS dashboard, leaving 65 petitions still pending.

The denial of a small-refinery petition is the first for the Biden administration, following 88 exemptions granted by the Trump administration in four years.

Renewable Fuels Association President and CEO Geoff Cooper said he's hopeful the action means the current administration will follow a recent court decision on SREs.

"We are greatly encouraged by EPA's decision to deny this bailout request from an oil refinery that has continually attempted to dodge its legal obligations to blend low-carbon renewable fuels," Cooper said in a statement.

"It appears EPA and DOE (Department of Energy) are indeed following the criteria for deciding SRE petitions established by the 10th Circuit Court decision in the RFA et al. v. EPA case. Our industry lost more than 4 billion gallons of demand due to the previous administration's rampant abuse of the SRE program, and we are pleased to see that the days of EPA-induced demand destruction appear to be behind us."

Growth Energy CEO Emily Skor said she's hopeful the administration will take additional steps to help the RFS.

"As our industry awaits three years' of renewable volume obligations from EPA, we hope today's SRE denial is an indication that they are working toward getting the RFS back on track," she said in a statement.

"For too long, refiners have misused SREs as a way to avoid their statutory requirements to blend more clean, renewable fuels, and we're encouraged that today's SRE denial means that this SRE abuse will be a practice of the past. If our country wants to achieve the climate goals being discussed this week at COP26, we need to blend more cleaner-burning biofuels, not less, and EPA should take this into consideration when issuing the upcoming RVOs."

In January 2020, the U.S. Court of Appeals for the 10th Circuit in Denver ruled EPA violated the law in granting three exemptions. The ruling led biofuel agencies to push the Trump administration to apply the ruling nationally.

"EPA's new leadership appears to be making good on its promises to rein in the SRE program, and today's decision is consistent with the new policy direction announced by EPA earlier this year and President (Joe) Biden's position that the last administration's SRE abuse was a 'gigantic mistake,'" Cooper said.

"However, 65 exemption petitions are still pending, and we urge the agency to swiftly deny any and all remaining applications that fail to pass the common-sense test established by the 10th Circuit."

The Supreme Court's decision in June to side with petroleum refiners over the biofuels industry could drive down demand for corn, soybeans and other biofuels crops as the EPA responds to the court's ruling.

In a 6-3 decision, the Supreme Court overturned a unanimous ruling by the 10th Circuit. The Supreme Court ruled that small refiners such as HollyFrontier and others can receive extensions of their exemptions to the Renewable Fuels Standard even if their earlier exemptions had lapsed.

In September, agriculture and biofuels groups asked a federal court to set deadlines for EPA to review 31 small-refinery exemptions to the RFS for 2018, and to vacate those exemptions while the review is ongoing.

The 31 exemptions that had been granted by EPA earlier involve roughly 1.3 billion gallons of renewable fuel. The agricultural and biofuel groups contend the exemptions, if they stood, would lower the ethanol industry's revenue by $109 million and lower ethanol prices by another $439 million. Those 2018 decisions led to idling of ethanol plants and caused at least one to permanently close.

In addition to Friday's denial, the Biden EPA has reversed three exemptions granted by the previous administration, and 15 pending SRE petitions have been withdrawn.

Read more on DTN:

"SCOTUS Sides With Refiners on RFS," https://www.dtnpf.com/…

"Ag, Biofuels Oppose EPA on 2018 SREs," https://www.dtnpf.com/…

"EPA Moves to Remand '18 RFS Exemptions," https://www.dtnpf.com/…

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

Follow him on Twitter @DTNeeley

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