Growth Energy Files Federal Lawsuit Against EPA on Small Refinery Exemptions

Today, Growth Energy filed a petition in the Court of Appeals for the District of Columbia Circuit challenging the Environmental Protection Agency’s (EPA) failure to address small refinery exemptions in its 2019 renewable volume obligation (RVO) rulemaking, which was issued late last year.

“EPA’s inaction on addressing lost gallons due to small refinery exemptions in this rulemaking is a clear violation of law,” said Growth Energy CEO Emily Skor. “In doing nothing to remedy these and other deficiencies, EPA has again failed to meet its statutory obligation to ensure that annual RVOs are met each year. Today’s filing calls for greater accountability from EPA to ensure that every renewable fuel obligation is fulfilled as the law intended.”

Background:

Each year by November 30, EPA is obligated to issue RVOs, which establish the total volume of renewable fuel that must be blended with transportation fuel for the upcoming calendar year. In 2018, it was revealed that in previous years EPA had been granting an unprecedented amount of small refinery exemptions to numerous refiners.

Under the Renewable Fuel Standard (RFS), refineries producing transportation fuel must demonstrate each year that they have blended certain volumes of renewable fuel into gasoline or diesel fuel or acquired credits from others called renewable identification numbers, or “RINs”, representing all of part of those volume obligations.

The RFS allows certain “small” refineries – those with a throughput of less than 75,000 barrels per day – to petition EPA for a temporary extension of an earlier exemption from the renewable fuel volume requirements. The exemption is supposed to exempt only those refiners who can show that compliance with the RFS would cause “disproportionate economic hardship.”

In 2018, Growth Energy became aware of a stark increase in the number of small refinery exemptions being granted in recent years, with no apparent effort by EPA to publicly identify those who received the exemptions, explain the increase, or account for renewable fuel obligations lost to the exemptions. The exemptions added up to close to 2.25 billion gallons of lost renewable fuel demand. Many of the exemptions had also been granted after EPA established the RVOs for a given year, but EPA made no effort to reallocate billions of biofuel gallons that had been lost as a result.

Despite repeated challenges by Growth and others in 2018, both in petitions and comments to the agency and before federal courts, EPA has steadfastly failed to make good its statutory obligation to ensure that RVOs established by the Agency are met each year. EPA explicitly refused to take up the issue of small refinery exemptions in its 2019 RVO rulemaking, stating that such exemptions were “beyond the scope” of the rulemaking.

Growth Energy filed extensive comments challenging EPA’s refusal to address the issue, in particular challenging EPA’s failure to reallocate renewable volume obligations of exempt refiners.