The U.S. Environmental Protection Agency filed a motion in the U.S. Court of Appeals for the Tenth Circuit asking the court to vacate and remand three last-minute small refinery exemptions granted to Sinclair by the Trump administration.
According to EPA’s April 30 filing, the agency under the previous administration failed to properly analyze the waiver petitions submitted by Sinclair. The filing says the Trump administration’s EPA “…granted exemption extensions that EPA now believes are ‘outside the scope of the EPA’s statutory authority.’”
With less than 24 hours remaining before the inauguration of President Joe Biden, EPA on January 19 announced that three small refinery exemptions had been issued to unidentified refineries, letting those facilities out of their Renewable Fuel Standard compliance obligations for 2018 and 2019.
Data released by EPA the same evening showed that the two 2019 compliance exemptions reduced that year’s RFS standards by 150 million gallons, while one 2018 exemption erased 110 million gallons of renewable fuel requirements. The total eliminated volume of 260 million gallons is equivalent to shutting down three or four ethanol plants for a full year, or akin to erasing the total statewide annual ethanol consumption from Maryland, Massachusetts or South Carolina.
As noted in EPA’s brief, the Renewable Fuels Association immediately filed a petition for review and an emergency motion to stay the effectiveness of the exemptions in the U.S. Court of Appeals for the D.C. Circuit, even though the identity of the refineries was unknown at the time. On January 21, the D.C. Circuit granted the administrative stay requested by RFA. Sinclair later confirmed that its Wyoming refineries were the recipients of all three exemptions, and the proceedings then moved to the Tenth Circuit.
In its April 30 filing, EPA said the previous administration “…did not analyze determinative legal questions regarding whether Sinclair’s refineries qualified to receive extensions of the small refinery exemption under controlling case law established by this Court in Renewable Fuels Association v. EPA…, and there is substantial uncertainty whether, if EPA performed such an analysis, it could grant the petitions submitted by Sinclair.”
EPA’s brief underscores that Sinclair has already retired the RINs necessary to demonstrate compliance with its 2018 and 2019 RFS obligations. Thus, vacating the three exemptions, as requested by EPA, would preserve stability in the marketplace “…by ensuring that the RINs that Sinclair already retired to demonstrate its small refineries’ compliance with their 2018 and 2019 compliance obligations remain retired.”
The EPA motion adds, “EPA in no way considered whether the costs of Sinclair’s RFS compliance were passed on in the price of its product, thereby offsetting any costs of compliance to the small refineries.”
Commenting on the news, RFA President and CEO Geoff Cooper says, “We strongly support EPA’s request for vacatur and remand of these three midnight-hour exemptions that were handed out to Sinclair in the waning moments of the Trump administration. If allowed to stand, these improperly granted exemptions would have erased demand for another 260 million gallons of low-carbon renewable fuels, undermining the rural communities that depend on a strong RFS.”
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Cooper adds, “We are greatly encouraged by EPA’s actions, which are consistent with President Biden’s commitment to stem the tide of unwarranted refinery exemptions and put the RFS back on track.”