A quartet of pro-biofuel groups, frustrated with the Environmental Protection Agency’s use of waivers that exempt small refineries from certain biofuel blending requirements, have sued the agency in an effort to curb the practice.

In a lawsuit filed today in the 10th Circuit Court of Appeals, the Renewable Fuels Association, American Coalition for Ethanol, National Corn Growers Association, and National Farmers Union say the EPA is awarding the exemptions too liberally. In the lawsuit, they challenge three waivers offered in particular: two given to HollyFrontier and another awarded to CVR Energy, the company owned by former Trump administration adviser Carl Icahn. Those three waivers saved the companies an estimated $170 million in compliance costs.

Bob Dinneen, president and CEO of the Renewable Fuels Association, said the lawsuit seeks to overturn the granted waivers and establish better justification before exemptions are issued.

“We want to make sure that there is a criteria for granting these hardship waivers that is consistent with the statute,” he said in an interview with Agri-Pulse. “That is most certainly not occurring today and most certainly did not occur in at least these three decisions.”

Under the law, the EPA can exempt small refineries – those producing less than 75,000 barrels of oil per day – from the requirements of complying with the Renewable Fuel Standard. However, the facilities must prove complying with the biofuel mandate would present a “disproportionate economic hardship.” While the recipients of hardship waivers are confidential, reports of granted exemptions have increased during Scott Pruitt’s time as EPA administrator.

Those in favor of the waivers say the EPA is simply complying with a 2017 ruling that the agency was previously being too stringent in dealing with waiver requests. That case (Sinclair Wyoming Refining v. EPA) served as justification for the increasing number of waivers granted by the agency. John Barrasso, the Wyoming Republican who chairs the Senate Environment and Public Works Committee, said in a statement that the agency is required “to grant relief to any small refinery that suffers disproportionate economic hardship from the Renewable Fuel Standard.

“During the Obama administration, EPA ignored this requirement and the federal courts rebuked the agency,” Barrasso said. “We can’t go back to those days. I will oppose any agreement that would make it more difficult for small refineries to obtain hardship relief in the future.”

While the groups acknowledge that decision, Dinneen said that lawsuit doesn’t mean EPA should award a waiver “to anybody that asks.”

“There’s been no demonstration of economic hardship required by EPA,” he said. “As far as we can tell, all you need to do to get a waiver from the agency these days is to have a stamp and know Scott Pruitt’s address. And that’s not enough.”

Pruitt and the EPA have both faced criticism for issuing the waivers, including from a handful of influential Republicans. Ag Secretary Sonny Perdue said the practice amounted to “demand destruction,” a statement contested by an energy sector spokesman who said there has been “no loss of any ethanol blending” due to the exemptions. Sen. Chuck Grassley, an Iowa Republican and one of the most vocal RFS supporters in Washington, has said that Pruitt should either stop issuing the waivers or Grassley would call for the administrator’s resignation.

An effort to address the waivers is said to have been included in a pending deal still being hammered out by Trump administration officials. In exchange for a waiver that would allow E15 sales during the summer, it was thought to be on the table that the administration would consider reallocating exempted gallons either to other companies or toward exports. Currently, only domestically consumed galons count toward that mandate.

Grassley, who has met with administration officials and other senators recently seeking a solution, said it remains to be seen whether or not he can support that type of approach.

“I haven’t seen anything on paper,” he said, “and until I do, I can’t make a conclusion whether or not the meeting we had three weeks ago is entirely positive for ethanol.”

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