US biofuel and farm groups asked a federal appeals court Wednesday to review waivers granted to oil refineries in Oklahoma, Utah and Wyoming exempting them from the US renewable fuel mandate.
The groups contend that the Environmental Protection Agency's accelerated use of hardship waivers to the Renewable Fuel Standard has eroded biofuel blending by as much as 1.6 billion gallons over the past two years.
Ethanol Renewable Identification Numbers have plunged 63% since the start of the year amid an ongoing debate in Washington over reforming the biofuel mandate.
S&P Global Platts assessed D6 ethanol RINs for 2018 compliance at 25.75 cents/RIN Tuesday, down from 30.75 cents/RIN a week earlier.
The lawsuit filed in the US 10th Circuit Court of Appeals in Denver challenges EPA's granting of waivers to CVR Refining subsidiary Wynnewood Refining's Wynnewood, Oklahoma, plant and to two HollyFrontier refineries in Woods Cross, Utah, and Cheyenne, Wyoming.
Energy Information Administration data show the refineries have capacities of 70,000 b/d at Wynnewood, 39,330 b/d at Woods Cross and 47,000 b/d at Cheyenne.
The lawsuit was filed by the Renewable Fuels Association, American Coalition for Ethanol, National Corn Growers Association and National Farmers Union.
The groups said EPA has "refused to provide even the most basic information" about the waivers and "consistently rejected all attempts to bring greater transparency to the small refinery exemption" process.
EPA has granted 25 hardship waivers to the RFS for 2017 compliance out of 33 applications received so far, an EPA spokesman said last week.
The EPA spokesman has not responded to requests for comment or updated figures since then.
NO DEMAND DESTRUCTION
Scott Segal, a partner at Bracewell & Giuliani who works with the refining industry, said EPA's actions are fully consistent with the Clean Air Act and follow a 10th Circuit ruling in a previous case.
"Language in the opinion says that EPA must compare a small refinery's cost of compliance to the industry average, and if the small refinery's cost is significantly higher, it faces a disproportionate economic hardship," Segal said. "The granting of the waiver thereafter simply is not discretionary. The small refinery exemption provision is well established."
Segal also disputed the groups' claim that the small refiner waivers are lowering biofuel demand. He said there has been no statistical reduction in blending, even as the waivers have exerted downward pressure on RINs.
RINs are tradable credits EPA issued to track production and use of alternative transportation fuels. For corn-based ethanol, one gallon of ethanol yields one RIN.
The RFS allows EPA to grant hardship waivers to the biofuel mandate for plants that process less than 75,000 b/d of crude. It has accelerated its use of the waivers under Administrator Scott Pruitt, leading farm-state senators and biofuel groups to accuse him of finding a backdoor way to undermine the biofuel mandate.
