Environmental Protection Agency sides with ethanol industry
Wynnewood refinery's Renewable Fuel Standards appeal is at stake
The U.S. Environmental Protection Agency on Monday emphasized it is taking the side of the ethanol industry in a case that pits the agency against small, independent refiners.
On Monday, the agency published a news release reaffirming its support of an appeals court de cision invalidating decisions made by the Trump-led EPA to allow a small ref in erin Oklahoma and others to sidestep renewable fuels blending requirements.
The decision issued by the U.S. Court of Appeals for the 10th Circuit in January 2020 was heavily criticized by political leaders of oil and natural gas-energy dominant states and was appealed by the refiners to the U.S. Supreme Court.
The 10 th Circuit ruling ordered the EPA to re-evaluate decisions it made to provide blending requirement exemption “extensions” to the CVS Refinery in Wynnewood, as well as two other small refineries owned by HollyFrontier in Wyoming and Utah.
The extensions were granted by the agency thanks to rules developed and implemented under renewable fuel standard blending requirements established as part of the Clean Air Act by the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007.
“EPA supports that court' s interpretation of the renewable fuel standard (RFS) small-refinery provisions,” the statement issued Monday read. “This conclusion, prompted by a detailed review following the Supreme Court's grant of certiorari in the case, represents a change from EPA's position before the Tenth Circuit. The change reflects the Agency's considered assessment that the Tenth Circuit's reasoning better reflects the statutory text and structure, as well as Congress's intent in establishing the RFS program.”
Once the Supreme Court agreed to take the case, the U.S. Justice Department filed a brief that argued the 10th Circuit decision should be allowed to stand.
The appellees likely will have a tougher time getting the appeals court decision reversed or remanded, given that the EPA has reiterated it is supporting the court' s position.
How the laws work
The Energy Policy Act initially required the amount of renewable fuels blended into the nation' s fuel supply to be increased from 4 billion gallons in 2006 to 7.5 billion gallons in 2012.
The Energy Independence and Security Act went further, requiring the amount of renewable fuel to be blended into the nation's fuel supply to be increased to 36 billion gallons in 2022.
Additionally, it required up to another 21 billion gallons of advanced biofuel and up to 16 billion gallons of cellulosic biofuel also to be added into the blending mix by the end of 2022.
But the renewable fuel standard, as the requirements are commonly called, also allows refiner stoop tout of that requirement by purc hasing credits called Renewable Identification Numbers, or RINs, as offsets.
RINs are generated on a pergallon basis by refiners that blend renewables into the fuels they produce. Typically, those refine rs generate far more
RINs than they need to meet their required obligations, and place excess RINs on a market where they are bought by other refiners that don't blend renewable sin to their fuel, to be used as offsets.
The EPA also allowed refiners who don't blend renewables to obtain waivers if they could show they couldn't afford to meet that offset requirement, and offers extensions of waivers in subsequent years, where appropriate.
Over the years, prices for RINs have flu ctuated, based upon supply and demand. Their value increased dramatically in early 2020, as refiners everywhere curtailed operations after motorists started driving less to adhere to travel restrictions imposed as part of the nation's response to COVID-19.
Under the Trump administration, the use of the waivers program expanded dramatically, compared to its use under the Obama administration. Data from the EPA's website show it granted 85 out of 94 extension petitions that small refiners submitted from 2016 through 2018, with amounts of exempted volumes of gasoline and diesel increasing from about 2 billion gallons in 2013 to a peak of 17 billion gallons in 2017.
In May 2018, the Renewable Fuels Association, comprising corn growers and ethanol refiners, joined other plaintiffs to challenge the EPA's decisions to issue waiver extensions to the smaller refine rs the case involves, arguing they hadn't requested or received waivers from the federal agency for years.
The appeals court judges agreed with plaintiffs in the case.
“Ordinary definitions of` extension ,' along with common sense, dictate that the subject of an extension must be in existence before it can be extended,” their opinion stated. “A small refinery which did not seek or receive an exemption in prior years is ineligible for an extension, because at that point there is nothing to prolong, enlarge, or add to.”