1. Finally, a federal judge called you know what on the EPA's awarding of #SREs under the RFS. I am not sure of the practical significance of extending vs. year by year. If you go back far enough there was a blanket waiver for all small refineries back in 2010/11.
2. It strikes me that the more momentous part of the ruling is the judge calling out the EPA for the blatant contradiction in its use of RIN pass through arguments in one set of policies but not for SREs.
3. Specifically, the EPA used its own and academic studies to argue that changing the RFS point of obligation was not needed. If RIN costs are passed through by obligated parties what difference would changing the point of obligation make? This is current EPA official position
4. But these pass through arguments are nowhere to be found apparently in any #SRE applications. The judge said uhhh....no way. See text below.
5. The highlighted text pretty much sums it up. Sub silentio=in silence (I had to look that up).
6. This gets to the practical stuff. Judge said it was not the issue that EPA relied too heavily on its previous analysis of RIN cost pass through but that it did not RELY ON IT ALL in the SRE application.
7. In sum, this has to at least throw a major spanner in the works of current EPA policy of approving virtually all SRE applications. Ugly process under Pruitt, prettier process under Wheeler, but same outcome.
8. My interpretation: Judge said that EPA has to consider pass through evidence for SRE applications. Did not say which way EPA has to rule just that it had to be considered.
9. Let me help everyone out with a very simple proposal that will cut to the heart of the matter. Every SRE application going forward must include a graph of the refineries operating profits vs. RIN costs. If profits do not vary inversely with RIN costs, well, there you go.
10. If the EPA is force to consider this kind of evidence to approve SREs, then the jig may be up on the current SRE policy. Every sentient crude oil trader in the world knows that RIN costs generally are passed through in the crack spread.
11. Good luck in future SRE applications proving RIN costs are not passed through! But I have learned by now not to under estimate the legal acumen of the refiners' lawyers. Lots of court fights ahead on this one.
Share this Scrolly Tale with your friends.
A Scrolly Tale is a new way to read Twitter threads with a more visually immersive experience.
Discover more beautiful Scrolly Tales like this.