EPA Reverses Course on Granting Biofuel Waivers to Refineries

The new Biden EPA late February said it would support the ethanol industry in a lawsuit over biofuel waivers granted to oil refineries under the Trump administration. EPA said it was reversing course and would support a January 2020 decision by the Denver-based 10th U.S. Circuit Court of Appeals in a lawsuit filed by the Renewable Fuels Association and farm groups. The lawsuit is headed to arguments before the U.S. Supreme Court, probably in April.

Federal law requires refiners to blend billions of gallons of biofuels in the nation’s gasoline supply or buy credits from refineries that do the blending. Refineries can seek waivers if they can show that meeting the ethanol quotas would create a financial hardship for their companies.

The appeals court concluded the EPA improperly granted exemptions to refineries that didn’t qualify. The court said that refineries should be granted waivers only as extensions, but most refineries seeking exemptions had not continuously received them year after year. The decision effectively limited the EPA’s ability to grant most exemptions. Two refineries appealed the decision to the Supreme Court.

While Trump had promised to back policies that helped agriculture, his EPA approved sharp increases in the waivers, helping oil refiners and dampening demand for corn-based ethanol.

Roughly 40% of U.S. corn is used to produce ethanol. The EPA under Trump issued 85 retroactive small refinery exemptions for the 2016-2018 compliance years, undercutting the renewable fuel volumes by a total of 4 billion gallons, according to the Renewable Fuels Association.

Roughly a month after President Joe Biden took office, his EPA reversed the federal government’s position, saying the EPA agrees with the appeals court that the exemption was intended to operate as a temporary measure. Biofuels and farm advocates applauded the decision.