Ethanol, Farm Groups Sue EPA Over RFS Waivers

On Tuesday a coalition of ethanol supporters, including the National Corn Growers Association (NCGA) filed a lawsuit against the EPA over Renewable Fuel Standard obligation waiver exemptions.

The lawsuit is centered on a handful of waivers EPA has granted to small refineries allowing them to escape their RFS requirements on blending biofuels.

According to Pro Farmer’s Jim Wiesemeyer, the groups filed suit over three specific waivers granted via the small refiner waiver provision: waivers granted to CVR Refining's operation in Wynnewood, Oklahoma, and the HollyFrontier refineries at Cheyenne, Wyoming, and Woods Cross, Utah.

Those refineries have collectively saved $170 million in compliance costs, according to the court filing by the Renewable Fuels Association (RFA), NCGA, American Coalition for Ethanol (ACE) and the National Farmers Union.

“EPA is trying to undermine the RFS program under the cover of night,” said Bob Dinneen, CEO and president of RFA. “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 fuels.”

The groups are not challenging EPA's authority to grant the waivers, which are aimed at small refiners that can show economic hardship due to complying with the RFS. Instead, they are challenging those three specific waivers, demanding EPA explain why an “otherwise profitable” refinery faces hardship from complying with the RFS.

“We want EPA to explain why it is reasonable for HollyFrontier, which apparently could not afford to comply with the RFS, could nonetheless afford to undertake a $1 billion stock share repurchase program during the same time—and that’s before the company received over $300 million in tax cuts last year,” the groups wrote in a press release. “Likewise, the petitioners would like to understand how EPA could find hardship at CVR Energy, which reported a $23 million profit in the biofuels credit market in the first quarter of 2018 due to what it called a lower RFS obligation.”

The “rapidly rising” profits make it difficult to see what kind of economic hardship these refineries are facing, Kevin Skunes, NCGA president.

“The apparent lack of hardship raises serious questions of why EPA granted these exemptions, which is compounded by the fact that there is zero transparency in EPA’s small refinery exemption process,” he said. “America’s corn farmers, who are expecting their fifth consecutive year of low commodity prices and who are experiencing the lowest net farm incomes since 2006, understand economic challenges. When refineries are reporting profit increases and repurchasing stock shares, we expect EPA to explain why these refineries were granted exemptions from their RFS volume obligations.”

The groups also allege EPA has not followed proper protocols for small refineries including a requirement to inform the public that it received or acted on these specific requests.

“EPA left us with no choice but to challenge their systematic cuts to ethanol blending in the U.S. by distorting the intent of the law to grant secret hardship waivers to refineries which in some cases exceed the definition of ‘small’ and fall short of demonstrating ‘disproportionate economic hardship,’” said Brian Jennings, CEO of ACE. “We cannot sit by and allow EPA to violate the RFS which requires increasing the use of renewable fuels in the U.S.”

Based on EPA data, RFA estimates that small refinery exemptions granted for the past two years have effectively reduced volumes of renewable fuel by as much as 1.6 billion gallons.