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DOJ Asks Court For Extension on RFS Small-Refinery Exemptions Case

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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The Trump administration is seeking a two-week extension on a deadline for making a decision on the future of the small-refinery exemption program. (Scales of Justice by Michael Coghlan (CC BY-SA 2.0))

The Trump administration has asked a federal court for an extension of the Monday deadline for making changes to the small-refinery exemptions program, two days after reports surfaced EPA was going to challenge what was a court victory for biofuels and agricultural interests on Jan. 24, 2020.

In a court filing in the U.S. Court of Appeals for the 10th Circuit in Denver filed late on Friday night, the U.S. Department of Justice asked for a two-week extension to consider what could be a major change to the Renewable Fuel Standard.

"While the court's interpretation is one of first impression, it alters EPA's interpretation and practice, which has been employed in the adjudication of past exemption petitions from many small refineries," the DOJ said in its filing.

"The court's interpretation of (the law) could also have significant practical impacts on the RFS program going forward."

The DOJ said it still is considering whether or not to file for an en banc hearing of the full 10th Circuit. The odds of the court granting such a hearing are slim, as the court accepts just one-tenth of 1% of cases.

"Beyond the statutory interpretation, the court's 99-page opinion is complex and addresses many jurisdictional, statutory, and fact-specific issues. The United States reasonably seeks more time to determine whether to file a petition for rehearing en banc on these myriad, complicated issues. Even if the court's opinion ultimately stands, EPA will require significant time to consider any potential actions in response."

Several news outlets reported on Thursday evening -- citing multiple unnamed sources -- that a last-minute appeal from Sen. Ted Cruz, R-Texas, and other lawmakers reportedly convinced President Donald Trump to file an appeal.

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

The ruling applied to about one-third of all small refineries in the country, meaning EPA is faced with either appealing the ruling or applying it nationally.

Leading up to this latest development, signs were the administration was set to limit the scope of the SRE program. U.S. Agriculture Secretary Sonny Perdue said during a press gaggle at the Commodity Classic, "I think they'll be significantly reduced this year. Let me warn you, in D.C., it's not over until it's over."

In a joint statement issued on Thursday night, the National Corn Growers Association, the Renewable Fuels Association, the American Soybean Association, the National Farmers Union, Growth Energy, the American Coalition for Ethanol, the National Biodiesel Board, the Iowa Renewable Fuels Association, and Fuels America, called on Trump to stand with rural America in implementing changes as a result of the 10th Circuit ruling.

"The president needs to understand that Ted Cruz doesn't care about this administration or families across the heartland who are counting on the White House to keep its promises," the groups said.

Recently, more than 20 farm and biofuel groups, including the American Farm Bureau and the National Farmers Union, asked President Trump in a letter to reject "an appeal of the court decision, given the clarity, unanimity, and strength of the ruling."

In the Jan. 24 ruling, the court found EPA "abused its discretion" by not explaining its conclusion that a small refinery could suffer disproportionate economic hardship while also maintaining refiners passed RFS compliance costs on to consumers at the pump.

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.

EPA defines small refiners as those producing 75,000 barrels or less per day. Small refiners have successfully petitioned the agency for exemptions by arguing the costs to purchase renewable identification numbers, or RINs, are too much to handle financially.

The EPA granted 85 small-refinery exemptions between 2016 and 2018, totaling more than 4 billion ethanol-equivalent gallons not blended with petroleum. The agency currently has 23 exemption requests pending for the 2019 compliance period.

EPA data shows a maximum of seven small refineries could have received continuous extension of previous waivers. However, EPA granted as many as 35 exemptions in 2017.

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

Follow me on Twitter @toddneeleyDTN

(TN)

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