Three corn ethanol advocacy organizations and the National Farmers Union jointly sued the US Environmental Protection Agency for allegedly abusing its authority to issue hardship waivers to three refineries having trouble meeting quotas under the federal Renewable Fuels Standard.
EPA extended RFS hardship waivers held by two HollyFrontier Corp. refineries in Utah and Wyoming in 2017 and one in Wynnewood, Okla., operated by a CVR Energy Inc. subsidiary in 2018 without publishing required notices of the decisions, the Renewable Fuels Association, National Corn Growers Association, American Coalition for Ethanol, and NFU said in their May 29 lawsuit in US Appeals Court for the 10th District in Denver.
Congress sought to temporarily protect small refineries with 75,000 b/d or less crude oil throughput capacity from financial hardships resulting from having to meet quotas set by the RFS when it passed the law a decade ago, the groups noted. It also allowed those refineries to seek extensions of their exemptions after 2 years if they could show that trying to meet the quotas created a disproportionate economic hardship, they said.
EPA granted “only a handful” of hardship requests until late in 2017 before granting several in the months since without providing the required explanations, including the three mentioned in their lawsuit, the group said. They sued several weeks after RFA criticized EPA for excusing three small refineries operated by San Antonio-based Andeavor from having to meet 2016 renewable fuel quotas (OGJ Online, Apr. 4, 2018).
“EPA is trying to undermine the RFS program under the cover of night,” RFA Pres. Bob Dineen said. “And there’s a reason it has been done in secret—it’s because EPA is acting in contravention of the statute and its own regulations, methodically destroying the demand for renewable fuel.”
Scott H. Segal, a partner in Bracewell LLP’s Washington office who works with the refining industry, questioned the lawsuit’s contention that the hardship waiver is a limited exemption available only to operations which likely would be forced to close if they had to meet the RFS’s renewable fuel quotas.
The 10th Circuit Court of Appeals, where the groups sued, explicitly rejected that the hardship waiver is a limited exemption, Segal said. “Language in the opinion says that EPA must compare a small refinery’s cost of compliance to the industry average, and if the small refinery’s cost is significantly higher, it faces a disproportionate economic hardship,” he said.
“The granting of the waiver thereafter simply is not discretionary. The small refinery exemption provision is well established,” Segal said.
Contact Nick Snow at [email protected].
