EPA’s Proof of Economic Hardship is the New Focus in Battle Over Small Refinery Exemptions

Biofuel proponents are pressuring the EPA to release its policy on granting small refinery waivers from blending obligations under the RFS in light of last week’s U.S. Supreme Court ruling that sides with refiners on the issue. The biofuel industry demands come after the Supreme Court ruled in HollyFrontier Cheyenne Refining, LLC, et al., v. RFA, et al. to uphold the right of small refineries to request extension of economic hardship waivers after they lapse.

Biofuel proponents argued that the EPA did not have the authority to issue waiver extensions once the original underlying waiver expired. They hoped the Supreme Court would strictly limit the granting of small refinery waivers that mushroomed under the Trump administration, by narrowing the timeframe within which an extension request is valid.

The large number of small refinery waivers granted under the Trump administration effectively kept annual biofuel blending volumes stagnant, thus preventing E15 gasoline from making significant new inroads into retail markets outside the Midwest.

Now that the Supreme Court took the extension issue off the table, biofuel supporters are changing tactics and focusing on the economic hardship demonstration small refiners must show to obtain a waiver. Biofuel proponents want the EPA to release its waiver policy to determine whether the conditions small refiners must meet to prove economic hardship are sufficiently vigorous to prevent new waivers from being granted.

The EPA’s economic hardship demonstration policy promises to be the new battle ground for limiting small refinery waivers and ensure annual RFS blending mandates continue to grow. Biofuel proponents are asking that the EPA either issue the policy in memorandum form or as part of the upcoming rules setting annual RFS blending mandates for 2021 and 2022. The EPA has made no decision on whether it will release its small refiner waiver policy or whether it plans any changes to limit economic hardship determinations.

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