Ethanol Blog

Refiner Files Motion to Intervene in RFS Waivers Lawsuit

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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A number of ethanol and agriculture industry groups point to HollyFrontier Corp.'s small refinery waiver from the Renewable Fuel Standard as an example of why something is amiss with how the EPA uses the waiver system, in a recent lawsuit filed in the U.S. Circuit Court of Appeals for the 10th Circuit in Denver.

Now, HollyFrontier is attempting to intervene in the case filed on May 30, 2018.

"HollyFrontier has a direct and substantial interest in the outcome of this proceeding," the company said in a motion to intervene filed on Thursday.

"HollyFrontier's interest in this proceeding could not be more direct or more substantial. The petition seeks to challenge the particular economic hardship exemptions granted to HollyFrontier by EPA, in consultation with the department of energy."

The original lawsuit filed by the Renewable Fuels Association, National Corn Growers Association, American Coalition for Ethanol and National Farmers Union, with support of Farmers Union Enterprises, challenged EPA on three recent waivers granted. Those groups argue the agency did not publish in the Federal Register what were final actions by the agency.

In the petition, the groups said they are challenging agency actions made "under unusually clandestine proceedings" to exempt refineries in Wynnewood, Oklahoma; Cheyenne, Wyoming; and Woods Cross, Utah.

"Because EPA never published the exemption letters or determinations, in the Federal Register or otherwise, and the coalition thus does not have actual notice of EPA's determinations within the meaning of the statute, the 60-day period for filing a petition for review did not begin to run and the time period set forth for unpublished determinations is not applicable to the Coalition," the petition said.

The Wynnewood refinery is owned by a subsidiary of CVR Energy, and the Cheyenne and Woods Cross refineries are owned by HollyFrontier.

The EPA granted RFS waivers for 2016 and 2017 totaling 2.25 billion gallons. Indications are the agency has received what would be a record number of waiver requests for 2018, including from large oil companies.

Rather than challenge the agency's authority to grant waivers, the groups said the three refineries named are examples of the agency's "abuses" of the authority.

"EPA should be forced to explain why an otherwise profitable refinery faces disproportionate hardship from compliance with the RFS," the groups said in a news release.

"We want EPA to explain why it is reasonable for HollyFrontier, which apparently could not afford to comply with the RFS, could nonetheless afford to undertake a $1 billion stock share repurchase program during the same time -- and that's before the company received over $300 million in tax cuts last year."

Refinery interests have flooded the EPA with waiver requests following a 10th Circuit Court of Appeals ruling. The court ruled against the idea that hardship waivers were only available to refineries likely forced to close if they had to comply with the RFS.

EPA has taken heat on how it defines "hardship" when it granted waivers. The ethanol industry and others have maintained the waivers were not designed for oil companies that report billions of dollars in profits.

Large companies like Marathon Petroleum are taking their chances in filing for waivers, largely based on recent agency action to step up the number of waivers granted in the past two years. The wave of requests has continued based on a couple of things.

The law only allows refiners that produce 75,000 barrels per day or less to qualify for waivers. Marathon's smallest refinery produces about 93,000 barrels per day. Other large refiners have filed for waivers.

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

Follow me on Twitter @toddneeleyDTN

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