HF Sinclair sues EPA over delays on 42 biofuel exemption petitions

HF Sinclair Corp. sued the U.S. Environmental Protection Agency for failing to decide on 42 pending small-refinery exemption petitions, escalating a regulatory battle over biofuel blending costs that has left refiners facing billions of dollars in compliance uncertainty.

The lawsuit, reported by Bloomberg News on Friday, follows a similar action by the American Fuel and Petrochemical Manufacturers, which represents U.S. refiners. Both challenges target the EPA's Renewable Fuel Standard mandates finalized in late March, which require oil refiners to blend billions of gallons of ethanol and other biofuels into the nation's fuel supply or purchase renewable identification numbers, or RINs, as compliance credits.

The EPA said earlier this month that 42 small refinery exemption petitions remained pending, with no approvals or denials issued over the previous month. The agency faces a Sept. 1 deadline to provide decisions on the outstanding requests. HF Sinclair is among a group of refiners waiting for relief from blending quotas that the industry argues would sharply increase compliance costs and raise fuel prices for consumers.

The dispute comes as Congress debates legislation to allow year-round sales of higher-ethanol E15 gasoline, a measure that would expand the biofuels market but further complicate the compliance landscape for refiners. A court ruling in favor of HF Sinclair could force the EPA to expedite exemption decisions, potentially lowering compliance costs for small refiners. Conversely, a ruling upholding the agency's delays would maintain the current regulatory pressure on the refining sector and keep RIN credit prices elevated, affecting margins across the industry.

This article is for informational purposes only and does not constitute investment advice.