Kern Oil threatens to sue EPA over delayed biofuel waiver decision

WASHINGTON (Reuters) - Kern Oil & Refining Co has threatened to sue the U.S. Environmental Protection Agency for failing to respond to its request for a small refinery biofuel waiver within the proscribed 90 days, according to a letter seen by Reuters on Tuesday.

“Kern Oil would prefer to resolve this matter and receive a response ... without the need for litigation,” the company said in the letter addressed to EPA Acting Administrator Andrew Wheeler and dated Feb. 7. “If EPA does not, however, Kern Oil intends to sue you and EPA in U.S. District Court ...”

Kern, a privately owned California company, said in the letter that it had applied for a waiver on July 19, 2018, that would have excused it from complying with its 2017 obligations under the U.S. Renewable Fuel Standard (RFS).

Under the RFS, oil refiners must blend certain volumes of biofuels like corn-based ethanol into their fuel each year or purchase blending credits from those that do. But small oil refineries can be exempted from the standard if they prove that compliance would cause disproportionate hardship.

Under the RFS, EPA has 90 days to respond to requests for such waivers.

“We are reviewing the incoming letter. We don’t have any additional details to share on the Kern Oil SRE review process,” an EPA official told Reuters in an email.

The Trump administration had initiated a review of the scoring system it uses to evaluate waiver applications, sources familiar with the matter told Reuters late last year. But EPA officials have said the agency would continue meeting its obligation to process waiver requests on time.

The status of the scoring system review was not immediately clear.

The waiver program has become a lightning rod of controversy between the rival oil and corn industries since the EPA vastly increased the number of waivers to help the refining industry since Republican President Donald Trump took office.

Reporting by Humeyra Pamuk; writing by Richard Valdmanis; editing by Susan Thomas and Jonathan Oatis