June 15, 2021

Court vacates three refinery exemptions

DENVER — The U.S. Court of Appeals vacated three 11th-hour small refineries exemptions granted by the previous administration’s Environmental Protection Agency.

The 10th Circuit Court’s ruling concurred with a motion filed on April 30 by the new administration’s EPA to vacate and remand the exemption granted to Sinclair the day before the Biden inauguration.

According to EPA’s filing, the agency under the previous administration failed to properly analyze the waiver petitions submitted by Sinclair. The filing said the Trump administration’s EPA “granted exemption extensions that EPA now believes are ‘outside the scope of the EPA’s statutory authority.’”

The EPA’s request to vacate exemptions wrote that in the Sinclair action, the previous EPA administration “did not analyze determinative legal questions regarding whether Sinclair’s refineries qualified to receive extensions of the small refinery exemptions under controlling case law established in this court in Renewable Fuels Association v. EPA and there is substantial uncertainty whether, if EPA performed such an analysis, it could grant the petitions submitted by Sinclair.”

The most recent court order states that any further administrative proceedings on these exemptions must be “consistent with this court’s decision in Renewable Fuels Association v. EPA,” where the 10th Circuit ruled that EPA may only extend pre-existing refinery exemptions, that EPA’s exemption decisions must reconcile the agency’s consistent findings that all refineries recover the costs of compliance with the Renewable Fuel Standard, and that EPA may only use hardship caused by the RFS to justify granting exemptions.

Notably, EPA’s brief underscores that Sinclair has already retired the Renewable Identification Numbers necessary to demonstrate compliance with its 2018 and 2019 RFS obligations. Thus, vacating the three exemptions, as requested by EPA, would preserve stability in the marketplace “by ensuring that the RINs that Sinclair already retired to demonstrate its small refineries’ compliance with their 2018 and 2019 compliance obligations remain retired.”

Immediately after EPA granted the three exemptions in January, RFA filed a petition for review and an emergency motion in the U.S. Court of Appeals to stay the EPA ruling. The court granted the administrative stay requested by RFA on Jan. 21.

“We’re pleased that the court has vacated these improperly granted waivers and is sending them back to EPA for reconsideration,” said Geoff Cooper, RFA President and CEO. “If these exemptions had been allowed to stand, they would have erased RFS blending requirements for 260 million gallons of low-carbon renewable fuels, destabilizing rural communities and taking a step backward in the fight against climate change.

“EPA did the right thing in April by requesting that these spurious exemptions be vacated, and we applaud the agency for honoring President Biden’s commitment to putting an end to the surge of illegitimate refinery waivers.”

“We are glad to see the court move swiftly and agree with EPA’s motion to vacate and remand Sinclair’s improperly granted SREs. Going forward, the U.S. Supreme Court should affirm the 10th Circuit’s opinion and affirm EPA’s authority to deny this and all other improper SREs outright, once and for all,” said Emily Skor, Growth Energy CEO.

The federal RFS requires that oil refineries blend billions of gallons of biofuels into fuel each year or pay a compliance fee. Small oil refineries can apply for waivers based on financial hardship.

Tom Doran

Field Editor