API petitions EPA to revise 2020 RFS rule

The American Petroleum Institute sent a letter to U.S EPA Administrator Andrew Wheeler April 6 petitioning the agency to reconsider and revise its final rule that set 2020 renewable volume oblations (RVOs) under the Renewable Fuel Standard and the 2021 RVO for biomass-based diesel.

The petition requests that EPA reconsider the rule’s treatment of small refinery exemptions (SREs) in light of the Tenth Circuit Court’s Jan. 24 ruling that struck down three SREs approved by the agency. API argues that reconsideration of the rule is mandatory because the court’s decision was issued after EPA published the final 2020 RFS rule and “the decision undermines multiple key aspects of the RFS 2020 rule’s treatment of small-refinery-exempt volumes EPA projected would exist in 2020.”

“EPA’s 2020 RFS rule altered the agency’s long-standing approach to accounting for small refinery exemptions,” said API in the petition. Specifically, the rule takes into account volumes of gasoline and diesel that are projected to be exempt during the upcoming compliance year. According to API, the resulting rule effectively shifts RFS obligations from exempt small refineries to other obligated parties. API notes the EPA also announces changes to the way in which it would evaluate SRE requests, and estimated under the new approach it would grant SREs totaling 7.26 billion gallons worth of gasoline and diesel volumes for 2020.

“EPA’s new approach to accounting for small-refinery exemptions significantly increased the [RVOs] for other, non-exempt obligated parties from 10.92 percent total renewable fuel in the original proposal to 11.56 percent,” the API said in the petition.

API argues the Tenth Circuit Court’s decision “demolishes the foundations of EPA’s projections” because it found that several aspects of EPA’s SRE policy are not in accordance with law. In part, the court determined that small refineries must receive an exemption in each year to continue to be eligible for exemptions. As a result, the number of SREs approved by the EPA should be drastically reduced.

API cites Wheeler as acknowledging during congressional testimony that the court’s decision “goes to the heart of the small refinery exemption program.”

“In a revised 2020 rule, EPA should decline to reallocate volumes for small-refinery exemptions not granted as of the date of the final rule,” API said in its petition. “In the alternative, EPA should at a minimum reduce its projections for small-refinery-exempt volumes to account for the [Tenth Circuit Court] decision.”

The Iowa Renewable Fuels Association released a statement on April 21 stressing that revising 2020 blend levels without reversing RFS exemptions would undermine the RFS.

“Thanks to three years of liberally awarded, illegal RFS refinery exemptions, the petroleum industry has enjoyed over 4 billion gallons of biofuel demand destruction and a huge stockpile of RINs they were not required to turn in to EPA,” said Monte Shaw, executive director of the IRFA. “Now, for fear EPA will actually follow the law and apply the Tenth Circuit Court ruling nationwide, petroleum lobbyists are asking the 2020 blend levels be lowered. By this request, API is acknowledging the legitimacy of the Tenth Circuit decision, and essentially agreeing that the last three years of refinery exemptions were illegal and should not have been granted. But API is not asking EPA to reverse those exemptions and restore the four billion destroyed gallons. API wants to continue benefiting from the past illegal exemptions. So their request is not reasonable, it is rank hypocrisy. Unless EPA reverses the past three years of illegal exemptions, lowering the 2020 blend levels would only further punish biofuels producers and farmers at a time when they are already bleeding after years of illegal exemptions, trade disputes, and now COVID-19-driven demand loss.” 

A full copy of the petition can be downloaded from the Regulations.gov website.