WASHINGTON -- Ethanol industry group Growth Energy is suing the U.S. Environmental Protection Agency (EPA) after the agency approved an “unprecedented” number of small refinery exemptions, which relieved many refiners of having to meet biofuel blending obligations under the Renewable Fuel Standard (RFS) and resulted in billions of gallons in lost biofuel demand.
Growth Energy filed a petition in the Court of Appeals for the District of Columbia Circuit that accuses the EPA of failing to reallocate in its 2019 renewable volume obligations the millions of biofuel gallons lost through numerous small-refinery exemptions.
Under the RFS, the EPA may grant waivers to small refineries—defined as those with a crude input of 75,000 barrels per day or less—to temporarily relieve them of their obligation to blend set amounts of biofuels. The waivers are meant to be granted to refiners that demonstrate that complying with their RFS blending obligations would cause “disproportionate economic hardship.”
But in the past year, the number of these waivers granted by the EPA rose dramatically compared to previous years. The EPA approved 19 waiver petitions out of the 20 it received for the 2016 compliance year, according to agency data. It approved 29 out 37 petitions for the 2017 compliance year. This compares to only seven waivers granted for 2015 out of 15 received. The 2017 waiver alone represented 13.62 billion gallons of gasoline and diesel.
Growth Energy charges that the EPA made “no apparent effort” to identify which refineries received the exemptions, why the number of waivers increased or account for the biofuel blending obligations affected by the waivers. It estimates that these small-refinery exemptions added up to nearly 2.25 billion gallons of lost renewable fuel demand. Growth Energy also says the EPA did not attempt to reallocate these billions of gallons in its renewable volume obligations (RVOs) for 2019.
The EPA announced it would not address the small-refinery exemptions in its 2019 RVOs, saying they were “beyond the scope” of the rulemaking. Critics of the small-refinery exemptions have charged that the EPA granted some of them to global oil companies such as Chevron Corp. and ExxonMobil, when instead they were meant for small operators.
“EPA’s inaction on addressing lost gallons due to small-refinery exemptions in this rulemaking is a clear violation of law,” said Emily Skor, CEO of Growth Energy, Washington, D.C. “In doing nothing to remedy these and other deficiencies, EPA has again failed to meet its statutory obligation to ensure that annual RVOs are met each year. Today’s filing calls for greater accountability from EPA to ensure that every renewable-fuel obligation is fulfilled as the law intended.”
Growth Energy's lawsuit follows those filed by a collection of other biofuel industry groups. In 2018, the Renewable Fuels Association, National Corn Growers Association, American Coalition for Ethanol and National Farmers Union sued the EPA, challenging three specific small-refinery waivers.