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Biofuels Group's Small Refinery Waivers Lawsuit Runs Into Trouble in Court of Appeals

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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A federal court in Washington, D.C., delivered a key ruling in an ongoing small refinery waivers case. (Photo by Michael Coghlan; CC BY-SA 2.0)

The EPA and a handful of small refiners won a partial victory in federal court on Friday, in a lawsuit filed by a biofuels interest group calling itself Producers of Renewables United for Integrity, Truth and Transparency, or PRUITT, aimed at stopping the agency's issuance of small refinery waivers to the Renewable Fuel Standard.

The U.S. Court of Appeals for the District of Columbia Circuit issued an order, dismissing some of the group's claims and transferring others to the U.S. Court of Appeals for the 10th Circuit in Denver. PRUITT consists of several biodiesel producers.

In July 2018, PRUITT asked the DC court to stop EPA from issuing waivers until the agency changes the regulation. The group alleged that EPA could not legally grant waivers retroactively, and asked the agency to remove invalid Renewable Identification Numbers, or RINs, from the market. By law, retired RINs cannot be used for RFS compliance.

On Friday, the DC appeals court dismissed the portion of the lawsuit challenging EPA's timeframe for issuing waivers, saying the group did not file a timely challenge. The court ruled the DC court was not the proper venue for the RINs portion of the lawsuit and ordered it transferred to the 10th Circuit.

"As to the challenge to EPA's timeframe for extending small-refinery exemptions, we dismiss for lack of jurisdiction," the court said in its decision. "Producers of renewables did not file its petition for review within 60 days of any of the EPA announcements petitioner characterizes as subject to challenge, nor within 60 days of any after-arising ground that might have created a new opportunity to timely petition.

"The upshot is that, even assuming petitioner has identified agency action subject to challenge, and identified developments amounting to 'after-arising grounds,' these grounds arose more than 60 days before producers of renewables filed its petition for review and hence cannot render the current challenge timely."

EPA has granted 54 small refinery waivers since 2016, and has another 39 under consideration for 2018. In all, those waivers amount to 2.61 billion ethanol-equivalent gallons not blended with gasoline.

In court documents filed previously by PRUITT, the group outlined how the biofuels industry has been harmed by the agency granting waivers.

"The biofuel industry has devoted significant resources toward preparing for the RFS and has made significant investments in reliance on implementing the RFS volumes," the group said.

"The RFS program has been vital to the investment and growth of the advanced biofuel industry. EPA's failure to ensure the RFS volumes through the grant of small refinery exemptions and reinstatement of retired/expired RINs has created uncertainty and volatility in the market the RFS was supposed to support. As a result, EPA's actions have caused irreparable harm to the members of petitioner.

"EPA's actions have resulted in a drop in RIN prices. For example, biodiesel is often sold to discretionary blenders rather than obligated parties. RIN values provide these blenders incentives for blending biodiesel. The artificial drop in RIN prices reduces those incentives, resulting in lost sales and customers."

Scott Segal, an attorney with Bracewell LLP who works with refiners, said the PRUITT will have a difficult time before the 10th Circuit.

"The biofuel industry will have an uphill battle trying to persuade the court that small refineries can't get meaningful relief under a program designed to give small refineries meaningful relief," he said.

The 10th Circuit is the same court where the Renewable Fuels Association also filed an ongoing legal challenge to the EPA's issuance of waivers.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow me on Twitter @toddneeleyDTN

(TN)

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