NATSO Urges EPA to ‘Reverse Course’ on Small Refinery Exemptions


The Environmental Protection Agency (EPA) should obligate itself to align the volume of renewable fuel it waives under its "small" refinery exemption program with volume it reallocates to other obligated parties, NATSO said in comments filed with the agency.

NATSO filed comments in response to a Supplemental Notice of Proposed Rulemaking seeking additional comment on EPA’s proposed rule to establish the cellulosic biofuel, advanced biofuel, and total renewable fuel volumes for 2020 and the biomass-based diesel volume for 2021 under the RFS. Specifically, the agency requested comment on plans to project the volume of gasoline and diesel that will be exempt in 2020 due to small refinery exemptions (SREs) based on a three-year average of the relief recommended by the Department of Energy (DOE).

[Read NATSO’s Nov. 29 comments to EPA Administrator Andrew Wheeler here].

EPA’s October Supplemental Notice of Proposed Rulemaking did not stay true to a previous deal negotiated by the President and presented to the biofuels stakeholders under which EPA would be legally prohibited from waiving more gallons through small refinery exemptions than it reallocates through prospective accounting when developing the renewable volume obligations for a given year.

EPA’s Supplemental Notice would provide accounting relief for just 580 million to 770 million gallons -- far less than the 1.346 billion gallons that President Trump had negotiated. NATSO said in its comments that the only way to live up to Congress’s and the President’s directives is to legally obligate EPA to align the volume it reallocates with the volume it waives.

NATSO said in its comments that EPA has been misleading NATSO’s members and the entire biofuels industry regarding the agency’s intention to utilize small refinery exemptions to lower prices for RINS and demand for advanced biofuels. 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 they can prove that it would cause them an economic hardship.

EPA has granted small refinery exemptions to an unprecedented number of refineries in recent years. This has dramatically lowered RIN prices and in turn lowered demand for advanced biofuels that NATSO’s members buy, blend and sell.

NATSO also argued that 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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