Governors Request Help For Small Refineries From EPA

Apr 16, 2020

Sinclair's 25,000 barrel-per-day refinery near Casper
Credit Sinclair Oil Corporation

Governors from Texas, Oklahoma, Louisiana, Utah and Wyoming requested that the U.S. Environmental Protection Agency make a move to prevent "existential harm" to small oil refineries, of which Wyoming has five.

The April 15 letter requests the EPA waive the renewable volume obligation (RVO) under the federal Renewable Fuel Standard invoking the provision for severe economic hardship. The RVO requires refineries to blend some percentage of biofuels, an energy source derived from biomass like corn, into their supply which several refineries say is economically burdensome.

"As our country comes to grips with this national emergency, continuing to implement the current RVO imposes an added obligation that would 'severely' harm the sector, and consequently harm the economy of the States and the Nation," read the letter.

Demand for refined products have already dropped with the decline of the economy meaning less global delivery of goods, air transport, and demand for oil.

Adam Suess, VP of government relations for Sinclair Oil Corporation, said the requirement to produce biofuels has been flawed from that start and now it could push some refineries over the edge.

Sinclair has refineries near Casper and in the town of Sinclair.

"This program hurts refinery workers, it hurts manufacturing workers in the state of Wyoming, and, for whatever reason, [the] federal government is not paying enough attention to the interest of refining employees," he said.

Suess said the current regulatory expectation is for refineries to make 11.56 percent of its production renewable fuel, which he says is just about impossible. What ends up happening, he said, is that companies end up paying ethanol producers for credits to come into compliance.

"The current RVO made assumptions regarding the ability of the U.S. refining sector to blend renewable fuels that simply no longer obtain," read the letter.

Screenshot of relevant paragraph from the Federal Register
Credit Federal Register

Joanne Ivancic, executive director of Advanced Biofuels USA, a non-profit educational organization, said biofuels shouldn't be targeted given COVID-19 and international conflict led to economic pain in the oil and gas industry.

"The sad part is that the same problems are impacting the whole biofuels industry, and perhaps even more than they're hurting the oil industry because nearly half of the ethanol production, for example, has been halted," she said.

Domestic ethanol production has dropped by 45 percent since March 6. In the same timespan, domestic crude oil production has dropped by only 5 percent.

The letter argued the Clean Air Act doesn't say a waiver depends on RFS compliance being the only economic factor in play.

Ivancic said the biofuel industry will certainly fight back if the EPA does grant the waiver.

Small refineries took a hit earlier this year with a decision from the 10th Circuit Court of Appeals. After refineries persistently applied and received waivers, ethanol producers sued over three waivers finding the EPA was not properly analyzing the criteria to obtain one. The court sided with ethanol producers making it more difficult for small refineries to obtain economic hardship waivers going forward.

The Trump administration did not appeal the decision.

Suess said his corporation and other refineries requested that Gov. Mark Gordon join the letter.

Have a question about this story? Contact the reporter, Cooper McKim, at cmckim5@uwyo.edu.