The U.S. Environmental Protection Agency today disclosed that 52 new petitions have been received from small refineries seeking retroactive exemptions from their Renewable Fuel Standard requirements in 2011-2018.
According to the Renewable Fuels Association, refiners are filing these “gap year” waiver petitions as part of a cynical scheme to circumvent the recent Tenth Circuit Court decision. In its January decision, the court overturned three exemptions and set a precedent for significantly curtailing the waivers going forward.
“Just when we thought we’d seen everything, the refiners have come up with another new scam to undermine the RFS. This ‘gap year’ waiver ploy is as surreal as it is appalling, and certainly the courts would frown upon EPA flouting another unequivocal decision,” said RFA President and CEO Geoff Cooper. “It is beyond absurd that refiners who didn’t even ask for an exemption or claim hardship in the past are now asking for waivers dating all the way back to 2011. EPA should swiftly deny these waiver requests and immediately adopt the Tenth Circuit decision nationwide. The agency should stop trying to rewrite history and start trying to follow the law.”
"EPA's consideration of small refinery exemption petitions going back to 2011 flies in the face of the recent 10th Circuit decision," said Kurt Kovarik, National Biodiesel Board vice president of federal affairs. "By rolling back the clock, there appears to be no length EPA won't go to help refiners undermine the RFS. Make no mistake – this handout to the oil industry comes at the expense of biodiesel producers and soybean farmers across the country, and particularly the Midwest. Allowing these gap filings renders the program completely unpredictable for renewable fuel producers. The agency must immediately reject these petitions to restore confidence that it will abide by the law in administering the RFS."
'Gap year' petitions
In ruling on a petition filed by the Renewable Fuels Association, National Corn Growers Association, National Farmers Union, and American Coalition for Ethanol, a panel of Tenth Circuit Court judges unanimously found on January 24 that EPA had exceeded its authority in granting certain exemptions. The court ruled that EPA may only consider granting waivers to refiners who have received continuous extensions of their exemptions each compliance year. The judges also said EPA may only grant waivers to refiners who demonstrate the RFS itself is the cause of “hardship,” not some other factor, and noted that EPA’s own analysis shows that refiners pass compliance costs on to their customers. EPA’s own data show that no more than seven small refineries could have possibly received continuous extensions of their exemptions. Yet, EPA has recently granted as many as 35 exemptions in a single year.
Now, in a brazen attempt to get around the court decision, refiners are requesting exemptions for past years so that they may claim they are eligible for future waivers because their exemption was “continuously extended” by EPA. RFA first exposed the “gap year” plot in a letter to Administrator Wheeler on May 22, and called on EPA to reject the secretive waiver requests outright. The Tenth Circuit petitioners—RFA, NCGA, NFU and ACE—and other groups sent another letter to EPA later, requesting specific information about the “gap year” petitions.
Refiners are apparently attempting to justify the “gap year” waivers by suggesting the statute allows them to file a petition “at any time.” However, the Tenth Circuit said the phrase “at any time” does not open the door for EPA to grant a petition regardless of when it is received. The court stated that “even if a small refinery can submit a hardship petition at any time, it does not follow that every single petition can be granted.” The court noted the absurdity of a broader interpretation of “at any time,” explaining that “[b]y that logic, the EPA could grant a 2019 petition seeking a small refinery exemption for calendar year 2009 – more than a decade after the fact.”
Approving “gap year” waiver petitions would also contradict EPA’s long-held position that “…petitions be submitted as soon as possible to enable the EPA to conduct its evaluation and issue a decision prior to the…compliance deadline…”
Cooper said granting the “gap year” waivers “would be akin to a principal changing a high school senior’s freshman biology grade from an ‘F’ to an ‘A’ four years later so the student can get into college. It’s cheating—plain and simple. Farmers and biofuel producers in states throughout the Heartland are likely to view the granting of any ‘gap year’ waivers as the last straw in an increasingly tenuous relationship with the administration.”
He also noted a recent comment by Iowa Sen. Chuck Grassley, who said “If the EPA ends up accepting these petitions, not only will they lose again in court, they will risk President Trump’s support in Iowa and other Midwestern states.”