The EPA justified its exemption of 31 refineries from the Renewable Fuel Standard in a two-page memorandum that it did not reveal for weeks, said a coalition of four biofuel groups and two farm groups in a challenge filed in a U.S. appeals court. The petition was filed at the same time biofuel backers are accusing the EPA of a “bait and switch” on promises to increase ethanol consumption.
“From a substantive and procedural perspective, this is not the way for a federal agency to make such a momentous decision,” said the coalition in asking the U.S. Court of Appeals for the District of Columbia to review the EPA decision. Its petition quotes the EPA as saying the memorandum, signed by an acting assistant EPA administrator on Aug. 9, is the “only concrete, identifiable, and reviewable EPA ‘final action’ ” on small-refinery exemptions.
Biofuel groups said the two-page decision document was not published in the Federal Register. “In fact,” they said, “its existence remained a secret until Sept. 19, 2019, when EPA attached it as an exhibit” in the federal appeals court in Denver. “Even as the Trump administration indicates it is taking steps to account for future small-refinery exemptions, the coalition remains concerned that EPA’s abuse of the small-refinery exemption program diverges from the letter and spirit of the Clean Air Act,” said the plaintiffs. The groups filing the court challenge were Growth Energy, the Renewable Fuels Association, the American Coalition for Energy, the National Biodiesel Board, the National Farmers Union, and the National Corn Growers Association.
The exemptions relieved 31 refineries from complying with the RFS in 2018 by mixing enough corn ethanol into gasoline or buying ethanol credits known as RINs. The ethanol industry says the retroactive waivers effectively lowered the ethanol mandate by 1.4 billion gallons from its announced target of 15 billion gallons. The oil industry says the waivers do not harm ethanol consumption while sparing small-volume refineries from the potentially ruinous costs of buying RINs.
“Another lawsuit by the ethanol industry is not surprising. They want their cake and everyone else’s, too,” said LeAnn Johnson of the Small Refiners Coalition. Wyoming Sen. John Barrasso, chairman of the Senate Environment and Public Works Committee, said the EPA was following the law. “The Clean Air Act requires EPA to grant relief to small refineries suffering from disproportionate economic hardship under the Renewable Fuel Standard,” he said.
At the same time the EPA approved waivers for 31 refineries, it denied requests from six others. Two requests for waivers on 2018 production are pending, according to EPA data. The agency has not yet acted on five petitions for waivers for 2019 activities.
Corn Belt farmers and ethanol makers say the EPA is backsliding with an Oct. 15 supplemental rule intended to require other refineries to make up for ethanol gallons “lost” due to RFS waivers. The critics say the EPA told them it would adjust the RFS by taking the waivers into account. In its proposed rule, the EPA said it would use Energy Department estimates of waived gallons, a potentially smaller number.
An EPA spokesman told DTN/Progressive Farmer that the farm and biofuel groups were wrong. “EPA has consistently stated that it will seek comment on how to and at what levels it projects small refinery relief in the 2020 compliance year.”
Iowa Gov. Kim Reynolds told reporters in Des Moines that she will lobby the EPA to change its proposal rather than appeal to Trump for action. Radio Iowa quoted the governor as saying, “We’re working with industry, and that’s the way that we’ll be able to hold them accountable.”
At a cabinet meeting on Monday, Trump said that the ethanol issue was resolved. Agriculture Secretary Sonny Perdue, after noting Trump had approved the year-round sale of E15, said to the president, “You’ve also balanced up the smaller refinery waivers with the farmers and RFS. And once they understand what you’ve done here, they’ll be fine.”