Facing a court-ordered deadline for action, the Environmental Protection Agency denied on Thursday 36 requests by small refiners for “hardship” exemptions from the U.S. ethanol mandate. Biofuel and farm groups lamented the decision “fails to remedy the economic harms” of reduced demand for corn ethanol.
The EPA said none of the 36 petitions demonstrated a hardship due to the Renewable Fuel Standard, which obliges refiners to mix ethanol into gasoline or to buy credits known as RINS to make up for shortfalls. The agency said it would create an alternate method of compliance for 31 refiners that would not require them to buy or retire RINs.
At issue were exemptions granted by the EPA during the Trump administration for RFS obligations in 2018. The Biden administration has indicated it will be more stringent in considering such requests. The 36 exemptions were part of a 2021 Supreme Court ruling on EPA’s discretion to issue exemptions. Later that summer, an appellate court remanded the exemptions to the EPA with instructions to make a decision on them by April 7, 2022.
In explaining its denial of the exemptions, the EPA said “we conclude that small refineries do not face DEH” (disproportionate economic harm) from the RFS. “We find that all refineries face the same cost to acquire RINs,” whether by blending ethanol or by purchasing the credits, it said. Refiners have argued the high cost of RINs was an undue burden that justified an exemption if they were unable to blend enough ethanol, but the EPA said higher fuel prices generate additional revenue that refiners can use to buy RINs.
In creating the alternate compliance for 31 small refineries, the EPA said there were extenuating circumstances, including that the exemptions were previously granted.
Biofuel advocates said the exemptions amounted to a 1.4 billion-gallon reduction in the ethanol mandate.
“While today’s decision is an important step in reversing past abuse of refinery exemptions, the decision fails to remedy the economic harms the improperly granted 2018 SREs have already caused,” said a coalition of biofuel and farm groups that has challenged the RFS exemptions for years. “EPA’s move to hold refiners accountable to the law is a welcome step toward getting the RFS back on track that, when applied to pending and future SRE petitions, would improve certainty in the marketplace, and lead to more blending of American-made biofuels.”
Members of the coalition were Growth Energy, Renewable Fuels Association, National Corn Growers Association, Clean Fuels Alliance America, American Coalition for Ethanol and National Farmers Union.
An EPA dashboard showed nearly six dozen active requests for RFS exemptions for “compliance” years 2016-21.