U.S. Court Rules Against the Removal of Refinery Blending Waivers

A court has struck down the Biden administration’s decision to deny biofuel blending waivers to small refineries.

The refiners sued after earlier this year the Environmental Protection Agency denied almost all requests for the so-called ‘hardship waivers” from refiners who said the requirement to blend a certain amount of biofuel into their products would cause them financial hardship.

Under the Renewable Fuel Standard, oil refiners are required to blend growing amounts of renewable fuels into gasoline and diesel. Refiners that don’t have the infrastructure to blend biofuels must purchase tradeable blending credits known as Renewable Identification Numbers, or RINs.

The EPA has the authority to grant waivers from the RFS to refineries whose oil processing capacity is below 75,000 barrels per day (bpd) and who can prove that blending biofuels would hurt them financially to an unsustainable level.

In July, the EPA denied as many as 26 petitions from 15 small refineries that had applied for waivers for the 2016-2018 and 2021-2023 compliance years.

“After reviewing more than a decade of RFS market data and confidential information submitted by petitioning small refineries, EPA concluded that none of the 26 SRE petitions demonstrated disproportionate economic hardship caused by compliance with the RFS program,” the agency said at the time.

The refiners sued, and the U.S. Court of Appeals for the Fifth Circuit decided in their favor, saying in its ruling that the EPA’s decision had been "impermissibly retroactive; contrary to law; and counter to the record evidence".

Ever since the blending regime was first introduced, the refining industry and the biofuel industry have been locked in a tight race to lobby for their interests to the federal government. The biofuel industry has been dead against the hardship waivers for obvious reasons and the refining industry has been criticizing the ever-increasingly blending mandates.

By Charles Kennedy for Oilprice.com

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