Supreme Court overturns small refinery ruling

WASHINGTON — The U.S. Supreme Court overturned a 10th U.S. Circuit Court of Appeals ruling that struck down three small refinery exemptions granted by previous Environmental Protection Agency administrators.

In a 6-3 decision, the court rejected arguments that the EPA’s exemption power is limited to only a handful of refineries that have received uninterrupted annual waivers from the Renewable Fuel Standard.

The June 25 decision stems from a May 2018 challenge brought against EPA in the U.S. Court of Appeals by the Renewable Fuels Association, the National Corn Growers Association, National Farmers Union and the American Coalition for Ethanol, working together as the Biofuels Coalition.

The petitioners argued that the small refinery exemptions were granted in direct contradiction to the statutory text and purpose of the RFS.

In January 2020, the 10th Circuit decided that EPA cannot “extend” exemptions to any small refineries whose earlier, temporary exemptions had lapsed.

According to the Circuit Court ruling, “the statute limits exemptions to situations involving ‘extensions,’ with the goal of forcing the market to accept escalating amounts of renewable fuels over time.”

While the Supreme Court failed to affirm this portion of the lower court’s decision, the Biofuels Coalition pointed out that the appeals court also ruled that EPA’s exemption decisions must reconcile the agency’s consistent findings that all refineries recover the costs of compliance with the RFS and that EPA may only use hardship caused by the RFS to justify granting exemptions.

“Despite this Supreme Court decision, EPA must still resolve those other aspects of the 10th Circuit ruling,” the Biofuels Coalition stated in a release following the latest ruling.

“Nearly a year and a half ago, the 10th Circuit handed down a unanimous decision that was ultimately adopted by the very agency we took to court in the first place. While we are extremely disappointed in this unfortunate decision from the Supreme Court, we will not stop fighting for America’s farmers and renewable fuel producers. Further, we are optimistic that other elements of the 10th Circuit decision, which were not reviewed by the Supreme Court, will compel the Biden administration and EPA’s new leadership to take a far more judicious and responsible approach to the refinery exemption program than their predecessors did.”

Despite the decision, the Biofuels Coalition thanked President Joe Biden and EPA Administrator Michael Regan for taking swift action to rein in the previous administration’s “mismanagement of the small refinery exemption program.”

After reviewing the issue, new EPA leadership in February reversed the agency’s previous position and announced support for the 10th Circuit decision.

In April, EPA decided to revoke three last-minute refinery exemptions granted the day before President Biden’s inauguration; and in May, EPA announced it would cooperate with a Government Accountability Office investigation into the past administration’s adjudication of small refinery exemptions.

As of June 25, 70 small refinery exemption petitions remain pending with EPA, for the compliance years 2011 to 2020.

The previous EPA administration granted 88 small refinery waivers, totaling 4.3 billion gallons of biofuels blending demand destroyed, according to Growth Energy.