Ethanol Blog

Grassley: 10th Circuit Ruling on RFS Exemptions Sets Precedent

Todd Neeley
By  Todd Neeley , DTN Environmental Editor
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Sen. Charles Grassley, R-Iowa, told reporters on Tuesday he hopes the EPA abides by a recent decision on the small-refinery exemptions program. (DTN file photo)

Sen. Charles Grassley, R-Iowa, said on Tuesday that he's hopeful the EPA will abide by the latest ruling from the U.S. Court of Appeals for the 10th Circuit in Denver when it comes to small-refinery exemptions, holding it in as high regard as the agency has a 2017 10th Circuit opinion on exemptions.

The court ruled last Friday that EPA didn't have the authority to issue small-refinery exemption extensions to three companies that were not granted waivers originally.

The court also found EPA "abused its discretion" by not explaining its conclusion that a small refinery could suffer disproportionate economic hardship while also maintaining refiners passed on RFS compliance costs to consumers at the pump.

"None of the three small refineries here consistently received an exemption in the years preceding its petition," the court said in its ruling.

The court ruling added, "The EPA exceeded its statutory authority in granting those petitions because there was nothing for the agency to 'extend.' Further, one of the EPA's reasons for granting the petitions was to address disproportionate economic hardship caused by something other than compliance with the renewable fuels mandate. That, too, was beyond the agency's statutory authority."

EPA has taken heat on how it defines "hardship" when it granted waivers. The ethanol industry and others have maintained the waivers were not designed for oil companies that report billions of dollars in profits.

You'll recall in the 2017 Sinclair Wyoming Refining Co. v. EPA ruling the same court held the agency's denial of a small-refinery exemption from the Renewable Fuel Standard exceeded EPA's statutory authority.

When former EPA Administrator Scott Pruitt stepped up dramatically the number of exemptions shortly after he was appointed by President Donald Trump, Pruitt often told agriculture interests his agency had no choice but to abide by the 10th Circuit ruling.

"Let me tell you how simple this is for me, and I hope EPA sees it this simple," Grassley said during a teleconference with agriculture journalists on Tuesday.

"So, let's say for two or three years they would say something like 'well we had to do this agreement because the 10th Circuit says such and such.' Well it looks like the 10th Circuit -- I don't want to say the 10th Circuit is reversing themselves -- but the 10th Circuit is now saying that EPA has granted too many waivers. And so, the EPA ought to be coming to Chuck Grassley and saying 'you know we were following the 10th Circuit when we did certain waivers, and now the 10th Circuit says we've done it wrong. We're going to start doing it right.'

"I was condemning them for following the 10th Circuit and not fighting it and getting it appealed or an en banc (full circuit) review of it. But it shows that we were right all the time. In other words, EPA ought to just follow the law. And the 10th Circuit was saying that they aren't following the law. So, the decision confirms what we've known and sets a precedent for future waivers, as far as I'm concerned."

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

Follow me on Twitter @toddneeleyDTN

(TN)

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