(Reuters) - U.S. environmental regulators quietly changed the way they assess applications from refineries for waivers from the 2017 federal biofuel law, making it possible for highly profitable plants to secure lucrative exemptions, according to court documents filed by a biofuels trade group on Thursday.
The new documents, part of a ongoing lawsuit that initially began last year, could provide the most complete explanation to date of how the Environmental Protection Agency, under former Administrator Scott Pruitt, vastly expanded the number of small refinery hardship biofuel waivers early in the Trump administration.
The change saved the oil industry hundreds of millions of dollars and angered farmers in the nation's heartland, who say the expansion crushed the credit prices that are an integral part of the ethanol industry.
The EPA stopped considering whether compliance with the U.S. Renewable Fuel Standard would prevent a refinery from making money and being competitive, according to the court filing by the Advanced Biofuels Association (ABFA) in 2017.
Instead the agency considered primarily whether compliance would cause a "disproportionate" impact on the facility, an easier hurdle to clear.
Under the government's Renewable Fuel Standard (RFS), refiners must mix biofuels like ethanol with their gasoline and diesel, but they can be exempt if they can prove that complying would cause them a level of financial harm.
RFS requires that refiners blend biofuels like ethanol into their fuel pool or buy credits from competitors who do.
To assess applications, the U.S. Department of Energy (DOE) scores facilities before the EPA makes a final decision.
The EPA turned over documents explaining their decisions to the ABFA related to 48 applications as part of the legal discovery process. In 24 cases, the DOE ruled that the RFS would have no impact on the refinery's ability to stay competitive and profitable, but the EPA still granted the waiver, ABFA alleged in the court documents.
EPA officials were not immediately available to comment. The EPA has said it has not changed how it handles biofuel waiver applications.
The trade group has asked a federal court in Washington to rule on the legality of the expansion of the hardship waivers under Pruitt.