LINCOLN, Neb. (DTN) -- Two refining companies have petitioned the EPA to change the biofuels credit program at the center of the Renewable Fuel Standard (RFS), claiming in a letter to EPA in late December that the current renewable identification numbers (RINs) program was illegal and driving small refiners out of business.
In a Dec. 28, 2023, letter to EPA Administrator Michael Regan, the president and CEO of Coffeyville Resources Refining and Marketing LLC and Wynnewood Refining Company LLC said EPA is implementing the RINs program unlike other similar fuel credit trading programs.
"Despite this clear and unambiguous language, EPA unlawfully created a RIN-trading program in which any person may participate, generating credits for blending at any level they choose and selling RINs to anyone for any purpose -- including entities participating in the market purely for profit," company president and CEO David L. Lamp said in the letter to Regan.
"This departure from the statutory text and purpose has led to gross market manipulation that caused RIN prices to skyrocket from pennies at the outset of the program to more than $2 in 2022, inflicting disproportionate economic harm on small refineries, crippling many merchant refineries, contributing to the closure of several refineries, and by EPA's own admission, increasing fuel costs for the American consumer."
The two petitioning companies are owned by energy giant CVR Energy.
On Tuesday, D6 (ethanol) RINs prices hit their lowest level in four years, dropping just below 72 cents. In recent months, D6 RINs prices have hovered below $1.
Lamp said EPA was required by the Clean Air Act to develop a credit program for which RINs could be generated only by obligated parties that produced more RINs than they needed and could then transfer RINs to other obligated parties.
Instead, as Lamp points out in the letter of petition, RINs are bought and sold by entities that are not obligated parties.
"There can be no dispute that the RFS and small refinery hardship relief thereunder have been a political hot potato," the letter said.
"EPA's shifting approaches to the RFS and hardship relief have put several small and merchant refineries out of business and driven up the cost of fuel to the American consumer. EPA has also drained its own valuable time and resources through contorted legal positions that strain both statutory text and logic to accommodate the wiles of changing administrations and the political interests the agency seeks to appease."
Lamp said the RINs program violates the law because it allows non-obligated parties to generate RINs when blending at levels below RFS mandates. Those same parties are then allowed to transfer and sell RINs.
He said the program also allows the credits to be sold to "anyone for any purpose, including purely for profit, rather than for purposes of complying" with the Clean Air Act.
When EPA finalized the set RFS rule on July 12, 2023, Lamp said in the letter the agency "failed to meet that statutory requirement" by "ignoring the programmatic harms caused by its illegal" regulatory scheme.
"EPA claimed that, in the future, it would monitor the RIN market's health and proper functioning," the letter said.
"But the illegal RIN market is causing harm now (and has been for years), and EPA has the ability and obligation to fix it now by revising its own regulations. EPA also indicated in the set rule that it would meet with the Commodity Futures Trading Commission (CFTC) to reassess the sufficiency of the agencies' March 2016 memorandum of understanding that allows EPA to share RIN transaction data with CFTC to improve oversight of the RIN market. But EPA has not made information as to the outcome of that meeting public."
In previous rulemakings, Lamp said, EPA committed to revisiting the RINs regulations if the RIN market was not operating as intended.
"Despite its promise, EPA has failed to do so," the letter said.
"EPA's promulgation of regulations, directly at odds with the express direction of the Clean Air Act, has irreparably harmed merchant and small refineries like CRRM and WRC. The companies are captive buyers in an illegal RIN market where RINs trade at hundreds of times their production cost for the benefit of market speculators, criminals, large retail chain owners and RIN large vertically integrated refiners (who, it should come as no surprise, vehemently oppose any changes to the RIN market's current structure)."
Todd Neeley can be reached at todd.neeley@dtn.com.
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