Biofuel trade association Growth Energy has filed suit against the Environmental Protection Agency for giving small refineries different ways of meeting their Renewable Fuel Standard obligations.

In the lawsuit filed Monday in the U.S. Court of Appeals for the D.C. Circuit, Growth Energy says EPA’s decision to offer “alternative compliance” options for small refinery exemptions from the RFS is “unlawful for multiple reasons.”

At issue are small refinery exemptions issued for the 2016-2018 RFS compliance years. The use of SRE authority during the Trump administration has spawned a lengthy series of legal battles — including a case argued before the Supreme Court on whether or not a facility needed to receive relief consecutively to remain eligible for an SRE. In the case of SREs during that time, the EPA proposed offering “alternative compliance” mechanisms for 31 facilities with SREs struck down by the courts.

But Growth Energy argues any form of compliance rather than restoring the blending requirements these facilities avoided through the waivers is insufficient.

“Despite their name, those actions do not facilitate the refineries’ compliance with their now-unmet 2016-2018 RFS obligations, but rather absolve them from those obligations. Thus, EPA’s ‘alternative compliance’ actions reduced the net amount of renewable fuel that must be used by about 1.63 billion gallons,” Growth Energy said in the lawsuit.

“Although 2016-2018 have passed, the refineries could still meet their unmet obligations by using extra renewable fuel (or buying credits from others that used extra renewable fuel) in the future. But EPA refused to require that, because of asserted concerns about imposing obligations ‘retroactively,’” the group added.

SREs can be offered to oil refineries with a production capacity of less than 75,000 barrels per day who claim complying with the RFS — and, thus, blending biofuels into gasoline — would cause them undue economic harm.

When it offered “alternative compliance” in 2022, the EPA said it did so because 2018 “is in the past and no additional fuel can be produced in that year.” Even if the agency were to require the facilities to acquire and then retire the credits used to track RFS compliance, “there would be no impact on renewable fuel production or demand in the 2018 compliance year,” EPA added at the time.

The decision angered biofuel groups at the time, but Growth Energy’s action is the first legal challenge to the decision.

“Refiners have been trying to dodge compliance with the RFS since it was first enacted,” Growth Energy CEO Emily Skor said in a statement. “Unfortunately, EPA’s ‘alternative compliance’ doublespeak facilitates refiners’ ability to shirk the responsibilities that EPA itself has explicitly concluded they have. As such, ‘alternative compliance’ is merely another term for unlawful ‘noncompliance.’”

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While Growth Energy is pushing to have the blending requirements for the facilities restored, the American Fuel and Petrochemical Manufacturers says that shouldn't be a possibility.

“We shouldn’t be discussing retroactive RFS increases. It’s not possible to go back in time and consume more ethanol, nor is it responsible to inflate future RFS volumes beyond the market’s ability to absorb conventional ethanol,” AFPM's Patrick Kelly said in a statement. “Litigating and reallocating past obligations will not result in any meaningful additional biofuel blending, but it will pointlessly increase the financial pain of RFS compliance by stoking an already overheated (Renewable Identification Number) market.” 

Spokespersons for the EPA did not immediately respond to a request for comment.

Story updated to include AFPM comment.

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