The Environmental Protection Agency (EPA) on Aug. 9 said it granted 31 small refinery waivers in 2018 that exempt refiners from their obligations to acquire Renewable Identification Numbers (RINs) under the Renewable Fuel Standard.
NATSO, which will release a statement this week, is very disappointed with the decision and thinks that EPA is acting in bad faith. NATSO is studying the issue and will have further updates in the coming days.
Applications for 40 small refinery waivers were submitted to EPA. Thirty-one were granted, six were denied, and three were withdrawn. The agency approved 35 exemptions in 2017, with EPA’s small refinery exemptions removing 2.6 billion gallons from the RFS mandates for 2016 and 2017.
The announcement came just days after biofuel producers and corn growers asked the U.S. Court of Appeals for the District of Columbia to lift a stay on a petition filed in 2018 challenging the agency for issuing small refinery waivers and seeks to force EPA to reallocate gallons lost to the RFS mandate through the waivers.
EPA has the authority to grant waivers exempting small refineries — those producing less than 75,000 barrels of fuel per day — from their obligations under the RFS if the refineries can prove that acquiring RINs would cause them a substantial economic hardship. However, in recent years an unprecedented number of exemptions have been granted, including to some of the nation’s biggest refineries. NATSO has long argued that these exemptions have been designed as a vehicle to lower RIN prices — and thus incentives for blending biofuels — rather than in response to actual economic hardships.
Annual renewable fuel volume obligations established under the RFS are designed to create market certainty and encourage fuel retailers to invest in the infrastructure necessary to incorporate and sell renewable fuels such as biodiesel. Small refinery waivers fundamentally impact the entire intent of the RFS by lowering demand for biofuels and diminishing the value of the investments the industry has made in response to Congressional policy.
NATSO thinks EPA needs a transparent process to guide its assessment of small refinery waiver requests to ensure that such exemptions don’t continue to undermine the law’s intent and decrease demand for biofuels.
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