Ethanol Blog

LINCOLN, Neb. (DTN) – Four refining companies petitioned U.S. appeals courts to review of EPA's recent rejection of 26 of 28 pending small-refinery exemptions to the Renewable Fuel Standard.

The agency made the announcement on July 14, denying 22 total SRE requests from 2021 and 2022, one from 2023 and one each from 2016, 2017 and 2018. There are two SRE petitions still pending for 2018.

The Biden administration has consistently rejected exemption requests and has yet to grant a single SRE. The Trump administration granted 88 exemptions.

Last week, the San Antonio Refinery, Calumet Shreveport Refining LLC, Hunt Refining Company and Calumet Montana Refining LLC filed petitions for review in the U.S. Court of Appeals for the District of Columbia Circuit.

In addition, the San Antonio Refinery filed a petition in the Fifth Circuit, Calumet Shreveport in the Fifth Circuit, Hunt Refining in 11^th Circuit and Calumet Montana in the Ninth Circuit.

The petitions were filed by the companies' attorney Perkins Coie LLC. The firm indicated in the filings the petitions were filed in multiple circuits as a "protective measure."

Earlier in 2022, the Biden administration announced the rejection of all remaining small-refinery exemptions -- about 100 in all -- as part of a broader release of RFS volumes for 2020 to 2022.

As a result of that action, at least 20 appeals were filed in the U.S. Court of Appeals for the District of Columbia Circuit.

In April 2022, 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, 2022, 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.

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

The 10^th Circuit also held EPA lacks authority to grant an exemption based on hardships not caused by RFS compliance, and found it was "arbitrary and capricious" for EPA to ignore its own prior studies showing that refiners recoup RFS compliance costs.

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 a biofuel coalition's motion in opposition, required the agency to make new determinations on the contested SREs no later than April 7, 2022.

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

Follow him on Twitter @DTNeeley

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