EPA denies small refiners’ bids for retroactive relief
Small refiners will not get the retroactive relief they requested to ease the financial burdens of the federal renewable fuel program, the Environmental Protection Agency (EPA) announced Sept. 14.
Seventeen small refiners this year submitted petitions to the EPA to obtain retroactive waivers from the Renewable Fuel Standard (RFS), which obligates refiners to either blend a certain percentage of biofuels into their gasoline and diesel or pay for compensatory credits.
EPA Administrator Andrew Wheeler announced the agency doubted it had the legal authority for retroactive exemptions and did not seem them as justified.
It was the latest economic blow to refiners in a long-running fight over renewable fuels, which reward corn growers and the makers of ethanol and biodiesel, primarily in the Midwest, while financially burdening refiners. The decision drew a sharp rebuke from Chet Thompson, president of the American Fuel & Petrochemical Manufacturers.
“The notion that this administration is ‘following the rule of law’ through its latest betrayal of US refinery workers is laughable,” Thompson said in a reaction issued Sept. 14. “The legacy of this administration’s handling of RFS will be fewer union refining jobs, facility closures, reduced US refining capacity, and increased imports of foreign biodiesel.”
“The administration promised to protect small refineries. Today’s announcement by EPA breaks that promise,” Sen. John Barrasso (R-Wyo.) said. “It is one of many poor decisions, which have already contributed to the loss of one small refinery in my home state of Wyoming.”
Iowa senators pleased
Sens. Joni Ernst (R-Iowa) and Chuck Grassley (R-Iowa), champions of the ethanol industry in their corn-growing state, welcomed the decision.
“I’ve been calling for these ‘gap year’ waivers to be thrown out since they were announced,” Ernst said. “Now, the administration has listened to our calls for action.”
Ernst, like President Trump, is up for reelection in November, and polls have been rating her chances a tossup. Polls also have been giving former Vice President Joe Biden a better than even chance of beating Trump. Midwestern swing states could determine who controls the White House and the Senate in the coming year.
The American Fuel & Petrochemical Manufacturers, an association including most US refiners, has been saying for some time that the US fuel industry is absorbing as much ethanol as it realistically can. No tinkering with the regulations to promote ethanol, as the Trump administration has been doing, will change that, the group has said.
“Telling ethanol interests everything they want to hear in a press release is not going to increase the amount of ethanol that gasoline can absorb or do anything to help farmers and ethanol producers. EPA knows this,” Thompson said.
Court ruling undercut waivers
The latest regulatory action stems from a federal appeals court ruling Jan. 24 that concluded waivers from RFS obligations could not be granted to a refiner unless the refiner had received waivers every year since 2011, when the RFS obligations began to apply to small refiners.
The ruling was a novel interpretation of the meaning of the word “extension,” used by Congress in the Energy Policy Act of 2005 to allow refiners to apply for an extension of a waiver. The court decided that “extension” implies continuity in use, with no gaps.
Refiners in some years had decided economic conditions were sufficient to allow them to get by without RFS exemptions, and they had not anticipated—nor had the EPA anticipated—such a court interpretation.
After the court ruling, small refiners scrambled to file petitions for retroactive waivers that would plug the gap years in their history of exemptions.
