August 9, 2019 / 7:37 PM / a month ago

UPDATE 2-Small fuel retailers sue Trump EPA over E15 gasoline rule -filing

(Updates with background on refinery waivers)

By Humeyra Pamuk

WASHINGTON, Aug 9 (Reuters) - A group representing the country’s small fuel retailers has filed a lawsuit this week against the Environmental Protection Agency over its rule lifting a ban on the year-round sales of higher ethanol blends of gasoline, a court filing showed on Friday.

Delivering on a campaign promise, President Donald Trump has directed the EPA to lift an Obama administration ban and allow U.S. gasoline stations to sell, year-round, blends containing up to 15 percent corn-based ethanol, called E15.

The move was seen as a win for the U.S. farm lobby, which has pushed for widespread use of corn-based ethanol but marked a setback for the oil industry, which views biofuels as competition against its petroleum-based fuels and has threatened to sue the administration.

In a filing dated Aug. 6, the group, a trade association known as the Small Retailers Coalition, has petitioned the U.S. Court of Appeals for the District of Columbia Circuit for review of the final E15 rule.

The tug of war between rivaling corn and oil industries has intensified over the past year on how the EPA administers the Renewable Fuel Standard (RFS), a more than a decade-old federal policy that requires refineries to blend corn-based ethanol into their gasoline or buy credits from those that do.

At the heart of the dispute are the small refinery exemptions, waivers granted to smaller facilities if they prove that complying with RFS causes them financial hardship.

Since Trump took office, the EPA has more than quadrupled the number of waivers it has granted to refineries, saving the oil industry hundreds of millions of dollars, but enraging farmers who claim the exemptions threaten demand for one of their staple products.

Refiners dismiss the argument, saying ethanol demand has not been affected.

In June, Trump ordered members of his Cabinet to review the waiver program based on complaints from the corn lobby but a clear resolution to the problem is yet to emerge following weeks of working-level meetings between the Department of Agriculture, EPA and Department of Energy (DOE).

Industry sources told Reuters in recent weeks that decisions on some 40 outstanding waiver applications, covering the 2018 compliance year, were nearly finalized before Trump intervened and demanded the review.

During a visit to a refinery in Pennsylvania late last month, EPA Administrator Andrew Wheeler said the agency was still processing them and was hoping to make decisions within the next few weeks, or at most a month. (Reporting by Humeyra Pamuk, editing by G Crosse, Steve Orlofsky and Diane Craft)

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