By JORDAN STRICKLER

Kentucky Correspondent

WASHINGTON, D.C. — Reports of recent action taken by the U.S. EPA toward oil companies has biofuel groups up in arms; in fact, several plaintiffs are taking the EPA to court to challenge exemptions to the Renewable Fuel Standard (RFS) that Administrator Scott Pruitt granted for three oil refineries.

The Renewable Fuels Assoc. (RFA), National Corn Growers Assoc. (NCGA), American Coalition for Ethanol and National Farmers Union, with support from Farmers Union Enterprises, filed their Petition for Review on May 29 in the U.S. Court of Appeals for the 10th Circuit in Denver, arguing the EPA did not publish the waivers in the Federal Register.

The legal action comes a month after the Advanced Biofuels Assoc. submitted a petition to ask the U.S. Court of Appeals in Washington, D.C., to rule whether the EPA violated the law with these and other waivers the government body had given to refineries.

"Although EPA typically publishes its proposed actions and final decisions in the Federal Register, EPA has not followed those protocols for small refineries; nor has EPA even informed the public by any means that it had received or acted on such carve-out requests,” said a statement by the RFA.

“Instead, the petitioners learned of the unprecedented number of exemptions secondhand, through media reports and secondary sources.”

The refineries named in the suit are HollyFrontier Corp.’s Woods Cross, UT and Cheyenne, Wyo., refineries and The Wynnewood Refining Co. LLC’s Wynnewood, Okla., division.

Wynnewood is a subsidiary of CVR Energy, Inc, which is owned by energy billionaire Carl Icahn, a former advisor to President Trump. Icahn had recommended the hiring of Pruitt – at the time, Oklahoma attorney general – as EPA administrator and promoted reforms of the RFS during his tenure as advisor.

It was estimated the waivers saved the companies a combined $170 million in compliance costs. The hardship waivers are traditionally a  little-used federal law historically reserved for smaller operations in peril of going bankrupt.

An earlier Reuters report also found that an exemption to the Texas-based Andeavor refinery, which was granted in March, has the ability to reduce its regulatory costs by more than $50 million this year.

To date, the EPA has exempted approximately 20 refineries from their 2016 biofuel requirements and at least 25 for 2017. The Chevron, Exxon Mobil and Marathon Oil corporations have also requested waivers for their refineries.

“We want EPA to explain why it is reasonable for HollyFrontier, which apparently could not afford to comply with the RFS, could nonetheless afford to undertake a $1 billion stock share repurchase program during the same time – and that’s before the company received over $300 million in tax cuts last year,” stated the RFA.

“Likewise, the petitioners would like to understand how EPA could find hardship at CVR Energy, which reported a $23 million profit in the biofuels credit market in the first quarter of 2018 due to what it called a lower RFS obligation.”

Under the RFS, refining companies must blend gasoline with ethanol while diesel must be blended with other approved biofuel; however, refineries that use fewer than 75,000 barrels of crude oil per day may be granted a temporary exemption, if complying with the regulations cause them to "suffer disproportionate economic hardship."

The RFS law has helped farmers by creating a 15 billion-gallon market for ethanol, but refining companies say it has put strains on their budgets.

“EPA is trying to undermine the RFS program under the cover of night,” said Bob Dinneen, CEO and president of the RFA. “And there’s a reason it has been done in secret – it’s because EPA is acting in contravention of the statute and its own regulations, methodically destroying the demand for renewable fuels.

“With the little information we’ve been able to piece together through secondary sources, it’s clear that EPA has been extending these exemptions to refineries that didn’t qualify for them.”

Another recent report from Reuters stated the EPA has awarded tens of millions of dollars’ worth of biofuel blending credits for this year to both HollyFrontier and Sinclair Oil. The release of the credits marks the first reported instance of credits from previous years being allowed into the present market.

The oil companies had argued the previous administration’s EPA had wrongly denied them waivers from the biofuel law dating back to 2014. So far, the EPA has denied that credits were given to any other companies.

Reuters reported the EPA granted Hollyfrontier nearly $34 million worth of credits for 2018 to compensate a rejection for a waiver at one of its Wyoming plants dating back to 2015. Its sources said undisclosed millions more were given to Sinclair for two of its facilities in the same state, for 2014 and 2015.

According to the U.S. Securities and Exchange Commission, Hollyfrontier earned in excess of $900 million in profits for 2017 and saved $57.8 million thanks to prior hardship waivers.

“With their rapidly rising profits, it’s difficult to see what economic hardship these refineries are facing,” said Kevin Skunes, president of the NCGA. “The apparent lack of hardship raises serious questions of why EPA granted these exemptions, which is compounded by the fact that there is zero transparency in EPA’s small-refinery exemption process.

“America’s corn farmers, who are expecting their fifth consecutive year of low commodity prices, and who are experiencing the lowest net farm incomes since 2006, understand economic challenges. When refineries are reporting profit increases and repurchasing stock shares, we expect EPA to explain why these refineries were granted exemptions from their RFS volume obligations.”