The 10th U.S. Circuit Court of Appeals has struck down three small refinery exemptions from meeting the Renewable Fuel Standard, ruling they were improperly issued by Environmental Protection Agency.
The standard requires all transportation fuel sold in the U.S. to contain a minimum volume of renewable fuels.
The Jan. 24 court ruling stems from a May 2018 challenge brought against EPA by the Renewable Fuels Association, National Corn Growers Association, American Coalition for Ethanol and National Farmers Union.
The groups issued a joint press release on Jan. 27 saying the decision is expected to broadly impact EPA’s approach to granting small refinery exemptions.
“The court has affirmed our long-held position that EPA’s recent practices and policies regarding small refinery exemption extensions were completely unlawful,” Geoff Cooper, president and CEO of the Renewable Fuels Association, said.
The court vacated the EPA waivers for three refineries owned by CVR Energy and HollyFrontier.
“While the decision addresses three specific exemptions, the statutory interpretation issues resolved by the court apply much more broadly,” Cooper said.
Among other findings, the court held that EPA cannot “extend” exemptions to any small refineries whose earlier, temporary exemptions had lapsed.
None of the three small refineries consistently received an exemption in the years preceding its petition. The EPA exceeded its statutory authority in granting those petitions because there was nothing for the agency to “extend,” the court ruled.
“The court’s decision is welcome news for corn growers,” Kevin Ross, NCGA president, said.
Ethanol is an incredibly important value-added market for corn farmers, and EPA’s waivers have reduced RFS volume requirements by more than 4 billion gallons over the past three years, impacting corn demand, he said.
“We are optimistic this decision will finally put an end to the demand destruction caused by waivers and keep the RFS back on track,” he said.
The court also found that EPA abused its discretion in failing to explain how a small refinery might suffer a disproportionate economic hardship when the agency has simultaneously consistently maintained that costs for RFS compliance are passed through and recovered by those same refineries.
The American Coalition for Ethanol said EPA overstepped its authority in granting the three exemptions.
“The court’s ruling highlights how EPA abused the (Small Refinery Exemption) provision of the Renewable Fuel Standard in broader terms to unfairly enrich the oil industry, which could have far-reaching implications on the legitimacy of other refinery waivers and limit how they can be used moving forward,” Brian Jennings, ACE president and CEO, said.
National Farmers Union said the ruling comes at a critical time for America’s farmers and the biofuels industry.
“Due in large part to EPA’s rampant and ongoing abuse of the SRE program, 2019 was one of the most challenging years in history for the agriculture and biofuel sectors,” Roger Johnson, NFU president and CEO, said.
“We believe this ruling will help restore the ability of the RFS to drive demand and expand markets for renewable fuels, as Congress intended, providing a badly needed shot in the arm for rural America,” he said.