20 Refiners Appeal RFS Waiver Denials

by Todd Neeley (DNT Progressive Farmer) Refining Companies Line Up to Challenge Biden Administration on Denial of RFS Exemptions -- Though the ethanol industry has celebrated the Biden administration's rejection of all pending small-refinery exemptions to the Renewable Fuel Standard, legal challenges to that action are beginning to pile up after a wave of new lawsuits were recently filed in a federal appeals court.

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As a result, 20 appeals have been filed since Aug. 1 in the U.S. Court of Appeals for the District of Columbia Circuit, including 11 on Aug. 8.

Those appellants include Wynnewood Refining Company LLC, Delek US Holdings Inc., Sinclair Wyoming Refining Company LLC, CHS Inc., HollyFrontier Refining and Marketing LLC, Kern Oil and Refining Company, Cross Oil Refining and Marketing Inc., United Refining Company, American Refining Group Inc., Calumet Montana Refining LLC, Countrymark Refining and Logistics LLC, Ergon Refining Inc., Hunt Refining Company, Par Hawaii Refining LLC, Placid Refining Company LLC, San Joaquin Refining Company, and The San Antonio Refinery LLC.

Earlier this year, Growth Energy sued the EPA in the same court for an action taken on 31 small-refinery exemptions granted in 2018.

In April 2022, the agency reversed 31 small-refinery exemptions previously granted for 2018 but did not require the refiners to meet blending obligations.

Instead of requiring those refineries to blend biofuels or purchase renewable identification numbers, or RINs, the EPA released what it called an "alternative compliance demonstration approach" document that allowed the refineries to "resubmit their 2018 RFS annual compliance reports with zero deficit carryforward and no additional RIN requirements."

On June 3, 2022, EPA reaffirmed the alternative approach by granting the same relief to three refineries that had sought SREs for the 2016 and 2017 compliance years. Unlike the 31 SREs denied upon remand for the 2018 compliance year, these three refineries had never previously been granted the SREs.

In August 2019, the Trump administration approved 31 SREs for the 2018 RFS compliance year.

A coalition of biofuels and ag leaders, including Growth Energy, filed a petition in the D.C. appeals court challenging EPA's decision.

In January 2020, the 10th Circuit ruled in Renewable Fuels Association et al. v. EPA that the agency has no power to "extend" an exemption that had lapsed.

The court also held EPA lacks authority to grant an exemption based on hardships not caused by RFS compliance, and also found it was "arbitrary and capricious" for EPA to ignore its own prior studies showing that refiners recoup RFS compliance costs.

The Supreme Court on June 25, 2021, vacated the 10th Circuit ruling in HollyFrontier v. Renewable Fuels Association that EPA may only extend continuously pre-existing exemptions, but the other two holdings from the 10th Circuit decision remained intact.

EPA had the opportunity to apply the other two 10th Circuit precedents not challenged in the HollyFrontier case and request a remand and vacatur of the 31 SREs at issue in the D.C. Circuit. However, on Aug. 25, 2021, EPA instead filed a motion to remand the SREs without vacatur. In response, the D.C. Circuit remanded the exemptions back to EPA, but, as a result of this biofuel coalition's motion in opposition, required the agency to make new determinations on the contested SREs no later than April 7, 2022. READ MORE

Despite Mass Denials, EPA Insists Refineries Can Still Win RFS Waivers (Inside EPA)

Excerpt from Ethanol Producer Magazine: The EPA’s data shows that 346 SRE petitions were filed with the agency from 2011 through 2021. Of that number 121 were ultimately approved, with 184 denied, 15 declared ineligible and 23 withdrawn. From 2013 through 2021, the number of approved SREs officially accounted for 3.12 billion renewable identification number (RINs).

The true demand destruction of the SRE petitions, however, likely surpasses 3.12 billion RINs. The EPA in April overturned 31 SRE petitions that had previously been approved by the agency. Those 31 refineries were provided with an alternative compliance approach for demonstrating compliance with their 2018 renewable volume obligations (RVOs). Under that alternative approach, the impacted refineries can resubmit their 2018 RFS annual compliance reports with zero deficit carryover and no additional RIN retirements. The agency in June extended that approach to three additional SREs denied for compliance years 2016 and 2017. Growth Energy in June filed petitions for review with the U.S. Court of Appeals for the D.C. Circuit challenging the EPA’s alternative compliance approach. READ MORE

Excerpt from Inside EPA: Refiners are charging that EPA’s blanket denial of small refiners’ requests for economic hardship waivers from renewable fuel standard (RFS) biofuel blending mandates willfully misinterprets the Clean Air Act and relies on ‘extra-statutory factors’ and vacated legal precedent to support the policy. In the redacted brief filed by multiple refiners in the U.S. Court of Appeals for the District of Columbia Circuit June 15 in Sinclair Wyoming Refining Company, LLC., et al, v. EPA , refiners seek to overturn EPA’s... READ MORE