April 24, 2019 / 9:56 PM / 3 months ago

UPDATE 1-U.S. biofuel trade group asks judge to halt new EPA small refinery waivers -documents

(Adds details on Trump administration's granting of exemptions, industry background)

By Jarrett Renshaw

NEW YORK, April 24 (Reuters) - A U.S. biofuels trade group asked a federal court on Wednesday to stop the Environmental Protection Agency from giving refiners new waivers from the country's biofuels law until the agency reverts to the tougher criteria it used to assess applications before Donald Trump's presidency, according to court papers.

The waivers can exempt small refineries — those with a production capacity of 75,000 barrels per day or less - from the requirements of the Renewable Fuel Standard, which mandates U.S. refiners blend biofuels into the fuel pool or buy compliance credits from those who do.

Trump's EPA has vastly expanded the biofuel waiver program to save the oil industry money, angering Midwest farmers who say the policy destroys demand for corn-based ethanol and other biofuels at a time they are already struggling - putting the administration in the center of a fight between two key constituencies.

"We want to return to normalcy," Michael McAdams, head of the Advanced Biofuels Association (ABFA), which filed the injunction in the U.S. Court of Appeals in Washington, said in an interview on Wednesday. "My members will continue to suffer irreparable harm unless the EPA changes its ways."

The U.S. Renewable Fuel Standard is meant to help farmers by requiring refiners to blend certain volumes of biofuels into their fuel each year or purchase credits from those that do. But the RFS also allows small refineries to apply for exemptions to the regulation if they can prove that compliance would cause them financial harm.

For 2017, the Trump administration's EPA granted 35 exemptions to small refineries without denying any applications, up from seven exemptions issued in the last year of the Obama administration, according to EPA data.

That has reduced the costs of credits some refiners such as Valero Energy Corp, PBF Energy Inc and HollyFrontier Corp must buy in order to comply with the RFS, saving them hundreds of millions of dollars.

The EPA has argued it was forced to use a more liberal assessment process for waiver applications after a U.S. Appeals Court said in 2017 that the agency had been too strict in granting waivers during the Obama administration.

But ABFA has argued the agency illegally changed its process of assessing applications, making it possible for refineries owned by major oil companies like Exxon Mobil Corp and Chevron Corp to secure them.

The EPA, which typically does not comment on pending litigation, did not immediately respond to requests for comment.

ABFA asked the court to stop the EPA from granting the next round of exemptions for the year 2018 - due to come any day now - until its case challenging the 2017 waivers is resolved or the agency decides to go back to its old way of assessing applications.

"We can't put the toothpaste back in the tube if the 2018 exemptions are approved using an illegal scoring system," said McAdams.

According to ABFA's complaint, the Trump administration's EPA stopped considering whether a refinery could remain profitable while complying with the RFS, and instead began considering only whether compliance would cause a “disproportionate” financial impact, an easier hurdle to clear.

In 24 out of 48 recent cases, the EPA granted waivers to refiners that the government believed would have remained competitive and profitable if they had been forced to comply with the RFS, ABFA alleged in the court documents, citing EPA documents outlining their decisions. (Reporting by Jarrett Renshaw in New York Editing by Matthew Lewis)

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