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Growth Energy Challenges EPA Action on Small-Refinery Exemptions

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Growth Energy has asked a federal appeals court to review EPA's recent actions on small-refinery exemptions. (DTN file photo)

LINCOLN, Neb. (DTN) -- Growth Energy asked the U.S. Court of Appeals for the District of Columbia Circuit to review an EPA decision to excuse certain small refineries from having to comply with the Renewable Fuel Standard.

In April, the agency reversed 31 small-refinery exemptions previously granted for 2018 but did not require the refiners to meet blending obligations.

Instead of requiring those refineries to blend biofuels or purchase renewable identification numbers, or RINs, the EPA released what it called an "alternative compliance demonstration approach" document that allowed the refineries to "resubmit their 2018 RFS annual compliance reports with zero deficit carryforward and no additional RIN requirements."

On June 3, EPA reaffirmed the alternative approach by granting the same relief to three refineries that had sought SREs for the 2016 and 2017 compliance years. Unlike the 31 SREs denied upon remand for the 2018 compliance year, these three refineries had never previously been granted the SREs.

"EPA's 'alternative' approach to RFS compliance provides no actual alternatives for refineries to meet their biofuel blending obligations," Growth Energy CEO Emily Skor said in a news release.

"It's a mistake that needlessly pulls EPA off the forward-looking path this administration set under the new 2022 renewable volume obligation. As President Biden said in Iowa, 'you simply can't get to net-zero by 2050 without biofuels.' To take full advantage of the carbon reductions and cost savings offered by biofuels, EPA must hold refineries accountable to their blending obligations."

In August 2019, the Trump administration approved 31 SREs for the 2018 RVO compliance year.

A coalition of biofuels and ag leaders, including Growth Energy, filed a petition in the D.C. appeals court challenging EPA's decision.

The coalition asked the court to stay the 2018 SRE case in November 2019 pending the outcome of related litigation in both the U.S. Court of Appeals for the 10th Circuit and D.C. appeals court.

In January 2020, the 10th Circuit ruled in Renewable Fuels Association et al. v. EPA that the agency has no power to 'extend' an exemption that had lapsed.

The court also held EPA lacks authority to grant an exemption based on hardships not caused by RFS compliance, and also found it was "arbitrary and capricious" for EPA to ignore its own prior studies showing that refiners recoup RFS compliance costs.

The Supreme Court on June 25, 2021, vacated the 10th Circuit ruling in HollyFrontier v. Renewable Fuels Association that EPA may only extend continuously pre-existing exemptions but the other two holdings from the 10th Circuit decision remained intact.

Thus, EPA had the opportunity to apply the other two 10th Circuit precedents not challenged in the HollyFrontier case and request a remand and vacatur of the 31 SREs at issue in the D.C. Circuit. However, on Aug. 25, 2021, EPA instead filed a motion to remand the SREs without vacatur. In response, the D.C. Circuit remanded the exemptions back to EPA, but, as a result of this biofuel coalition's motion in opposition, required the agency to make new determinations on the contested SREs no later than April 7, 2022.

Read more on DTN:

"EPA's RFS Volumes Include Ethanol Cuts,"…

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