Exclusive: Trump EPA Did Not Await Court Ruling to Loosen Biofuel Rules for Refiners - Documents

by Jarrett Renshaw (Reuters) The Trump administration made it easier for oil refineries to get waivers from the nation’s biofuel law at least four months before a 2017 court decision it often cites to justify the move to the corn lobby, and the move was motivated by a desire to save the oil industry money, Reuters has learned.

“EPA repeatedly told Congress its hands were tied and blamed the courts. That appears to have been a lie. EPA also said it was following Department of Energy recommendations. We also know that’s bunk. I’m going to get to the bottom of this,” U.S. Senator Chuck Grassley, a Republican from the farm state of Iowa, said in a statement on Thursday.

The waivers, granted to small refineries including those run by oil majors Exxon Mobil, Chevron Corp and billionaire investor Carl Icahn, saved the oil industry hundreds of millions of dollars. The waivers angered the corn lobby which argued they hurt farmers by threatening demand for ethanol.

Court documents filed by a biofuels advocacy group show that the EPA changed the policy before May 4, 2017.

On that date, the EPA told a refining company in a letter that “we are changing our approach” to the waiver program by allowing exemptions to refineries even if their operations “are not significantly impaired” by compliance, according to the documents filed by the Advanced Biofuels Association in a challenge of the expanded waiver program.

That puts the policy shift at least four months ahead of an August 2017 U.S. Court of Appeals ruling that found the agency was using too strict a standard when it denied Utah-based Sinclair Oil an exemption. The EPA subsequently withdrew its defense on a similar court case, and lost a third.

Those cases are often cited by EPA officials and refining industry representatives defending the expanded waiver program.

Mandy Gunasekara, who retired as principal deputy assistant administrator at the EPA’s Office of Air and Radiation this year, said the EPA under then-administrator Scott Pruitt had decided to “reinstate” the small refinery waiver program to help an industry that felt ignored by Obama.

She said Pruitt also believed loosening the standards could help lower the cost of compliance credits, known as RINS, which could help the entire industry as opposed to just smaller refiners.

“Certainly, one of the goals was to put downward pressure on the price of RINs,” she told Reuters in an interview.

She said the Sinclair case did not influence the changes to the waiver program. “When I saw the Sinclar decision come down, I saw it as a vindication of our changes,” she said.

The waiver provision was intended to temporarily exempt smaller refineries so they could invest in biofuel blending equipment. READ MORE

Excerpt from Politico's Morning Energy: THE EPA THAT CAN'T SAY NO: The Advanced Biofuels Association has asked the D.C. Circuit to block EPA from exempting any small refiners from its 2018 biofuel requirements under the Renewable Fuel Standard, and the trade association hopes the court will schedule oral arguments on the injunction as soon as today. ABFA filed an injunction request Monday, arguing that, according to documents it received from EPA, the agency changed its methodology for determining who should be exempt way back in March of 2017, as Pro's Eric Wolff reports. ABFA is particularly concerned the agency paid little attention to DOE's legally required recommendations for waivers.

Wait, March, you say? EPA and refiners have long pointed to the decision in Sinclair v. EPA, in which the court said EPA was setting the bar too high for waivers, as justification for expanding the number of exemptions. But, as Reuters reported Thursday, the methodology change happened months before the August 2017 decision.
EPA's approach "ignores all DOE recommendations for partial exemptions and universally awards full exemptions," the ABFA filing said. EPA issued no denials for the 2016 and 2017 compliance years, and it has 40 applications for 2018 awaiting a decision.

EPA begs to differ: "EPA has not ignored recommendations from the Department of Energy," EPA spokesperson Michael Abboud said in a statement. "The state of the Renewable Fuel Standard and accompanying small refinery exemption program have been subject to appropriations language and court opinions prior to and during the Trump Administration." READ MORE