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Court action sought to force EPA to account for lost RFS demand

EPA asked to revise annual percentage standards of renewable fuel to make up for small refinery exemptions issued retroactively.

With Environmental Protection Agency officials about to testify at a hearing on the agency’s proposed 2020 renewable volume obligations (RVOs), an agricultural/biofuel coalition petitioned the U.S. Court of Appeals for the District of Columbia Circuit to lift a stay it placed on a joint 2018 petition asking the court to protect the renewable fuel industry from undue harm caused by EPA.

The petition, filed late Tuesday afternoon, asks EPA to revise its Renewable Fuel Standard (RFS) regulations for setting annual percentage standards of renewable fuel to account for small refinery exemptions the agency issues retroactively. EPA’s current regulations factor in only future small refinery exemptions granted prior to the compliance year, despite the fact that most of the exemptions granted in recent years have been for compliance periods that had already ended.

The coalition had asked for the stay to give EPA time to review the request to reconsider its current regulations. EPA’s response never arrived, but its statements and actions over the past 13 months indicate that EPA has effectively denied the request. Not content to wait further, the coalition asked the court to step in and restart proceedings.

The parties on the petition are: Growth Energy, Renewable Fuels Assn., American Coalition for Ethanol, National Biodiesel Board, National Corn Growers Assn., Biotechnology Innovation Organization and National Farmers Union. The group petitioned EPA for redress on this issue in June 2018 but has received no response from the agency. “Thirteen months have passed since the filing of the petition, without even a proposed substantive response from EPA,” the motion states. “Meanwhile, the agency has shown, through various actions, that it is not genuinely considering the coalition’s administrative petition and has, in effect, denied it.”

In recent years, EPA has granted an unprecedented number of retroactive small refinery exemptions from RFS obligations, destroying demand for renewable fuels -- including both ethanol and biodiesel -- and putting renewable fuel plants and American farmers at risk. EPA has steadfastly refused to redistribute lost gallons from prior years in subsequent annual obligations, including those for 2020 that were announced on July 5.

When EPA exempts certain small refineries from their obligations retroactively after the agency sets the annual percentage standard, EPA does not account for those exemptions in setting the standards. In those circumstances, it becomes impossible for EPA to ensure that the total annual RVO is met under its current implementation of the program. This is what has occurred for compliance year 2016 and on.

In the absence of any direct action from EPA, the coalition asked the court to require the agency to reconsider how its RFS regulations account for retroactive small refinery exemptions. The coalition maintains that exemptions granted after a final RVO rule is issued should be accounted for in the following year’s RVOs and that volumes lost to small refineries then be redistributed among other non-exempt obligated parties. In other words, small refinery exemptions -- whether they are granted before, during or after the compliance year -- should be accounted for similarly.

EPA’s failure to act on the petition hurts American agriculture and renewable fuel producers and pits the agency’s support for refineries against another industry critical to rural America. “EPA’s actions are particularly inexcusable given the time-sensitive nature of the annual RVO and percentage standard setting process,” the coalition noted. “By failing to act on the coalition’s request, EPA violated a statutory ‘right to timely decision-making’ implicit in the agency’s regulatory scheme that will result in the coalition being ‘irreparably harmed through [the] delay.’”

TAGS: Policy
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