Biofuel producers and corn growers on July 31 asked the U.S. Court of Appeals for the District of Columbia to lift a stay on a petition filed in 2018 challenging the Environmental Protection Agency (EPA) for issuing small refinery waivers that exempt refiners from their obligations to acquire Renewable Identification Numbers (RINs) under the Renewable Fuel Standard.
The legal challenge, filed by the Renewable Fuels Association, the American Coalition for Ethanol, the Biotechnology Innovation Organization, Growth Energy, the National Biodiesel Board, the National Corn Growers Association and the National Farmers Union, 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.
For its part, NATSO supports a lawsuit filed by the Advanced Biofuels Association that does not call for reallocation but rather seeks to unwind small refinery waivers that were given in contravention of Department of Energy recommendations. This remedy would require the companies that have wrongfully received waivers to purchase Renewable Identification Numbers (RINs) to offset the unlawful waivers, rather than requiring companies that did not receive waivers to pick up the tab for those who received them.
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.
Biofuel producers and corn growers first challenged EPA’s blending requirements in 2018. The court put the lawsuit in abeyance, however, in anticipation that EPA would deal with the groups’ concerns administratively. The groups said in their most recent request to the court that 13 months have passed without even a proposed substantive response from EPA.
EPA’s small refinery exemptions removed 2.6 billion gallons from the RFS mandates for 2016 and 2017. The agency currently is considering 38 applications for exemptions from 2018 requirements.
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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