EPA Denies Sinclair’s Exemption For Ethanol Content

One of Wyomings three oil refineries is among 36 nationally to have its request to be exempted from biofuel blending rules refused.

Leo Wolfson

April 29, 20223 min read

Sinclair refinery 4 29 22 v2 scaled
(Cowboy State Daily Staff)

One of Wyoming’s three oil refineries is among 36 nationally to have its request to be exempted from biofuel blending rules refused.

Documents filed in the U.S. Court of Appeals showed the Sinclair Refinery near Rawlins applied with the U.S. Environmental Protection Agency for an exemption from the rules, but the application was denied April 7.

While the state’s other two refineries, Sinclair Casper Refining Co. and the Wyoming Refining Co., in Newcastle are listed in the court documents with Sinclair Refinery, there is no way to tell if they asked for the exemption.

Oil refineries are required to blend a certain amount of soybean or corn-derived fuel into their gasoline product under the Renewable Fuel Standard administered by the EPA, or, in the alternative, purchase compliance credits.

Small refineries, those processing less than 75,000 barrels of crude oil a day, can claim the biofuel requirements pose a “disproportionate economic hardship” and seek an exemption.

All three of Wyoming’s crude oil refineries meet the production requirements aspects of this waiver. 

The 36 refineries addressed in the EPA’s decision had all asked for exemptions for the 2018 production year. The exemptions were granted in 2019, but in 2020, a federal court adopted much more stringent rules facilities had to meet to qualify. 

One Wyoming refinery, HollyFrontier in Cheyenne, stopped processing crude oil and is transitioning to full biofuel production, a move that led to the layoff of 200 workers in 2020.

U.S. Sen. Cynthia Lummis, in an opinion piece in “The Hill,” said HollyFrontier’s decision was influenced by the plant’s loss of its exemption to the blending requirement.

“Many small refineries seek these small refinery exemptions annually,” Lummis wrote. “To remain competitive, they have no other choice. The cost of compliance credits is commonly their second-highest production expense, trailing only the cost of crude oil.”

Lummis also spoke on the poor timing of the decision in relation to rising gas prices. She said the compliance credits within the Renewable Fuel Standard program add 30 cents to 50 cents to the cost of a gallon of gasoline.

Lummis said the EPA has also indicated it will deny all requests for exemptions for production years from 2019 to 2021.

Decisions against the exemptions further limit the ability of American refineries to meet demand for gasoline, said Ryan McConnaughey, director of communications for the Petroleum Association of Wyoming.

“We still see an increase in demand for petroleum products in Wyoming and across the globe,” McConnaughey told Cowboy State Daily on Friday. “The recent increases in gas prices show the need for production.”

However, the biofuel and petroleum industries are at odds over the blending rules.

The Renewable Fuels Association, in a statement about the EPA’s decision to deny the exemptions, said the exemptions address past wrongs by refineries, but the EPA’s decision did not do enough to remedy economic problems created by the exemptions in the past.

The RFA also opposed the EPA’s plan to give 31 of the refineries whose exemptions were rejected an alternative to buying compliance credits.

To receive relief, the 31 refiners must resubmit compliance reports for 2018 and report their fuel production for that year and other data.

“EPA is granting this compliance flexibility because the agency has determined that there are extenuating circumstances specific to this set of petitions, including the fact that SRE petitions were previously granted,” the department said in its SRE announcement.

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Leo Wolfson

Politics and Government Reporter