Co-op to SCOTUS: Closure Without SREs

CountryMark Tells SCOTUS Farmer-Owned Cooperative Would Face Financial Ruin Without RFS Exemptions

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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The CountryMark cooperative tells the Supreme Court the business cannot survive without small-refinery exemptions. (Photo courtesy of CountryMark)

OMAHA (DTN) -- Its very business would be threatened if it is unable to receive exemptions from the Renewable Fuel Standard, a farmer-owned cooperative told the Supreme Court in a brief filed on Friday in an upcoming case that could determine the fate of the small-refinery exemption program.

CountryMark operates in Indiana, Illinois, Michigan, Ohio and Kentucky. Most of its customers at more than 100 retail stations are farmers and rural communities that have benefitted from the commodities markets bolstered by the RFS since 2005.

The high court will be hearing oral arguments in an appeal filed by refiners HollyFrontier and Wynnewood Refining Company. The refiners were the subject of a lawsuit won by the biofuels industry in the U.S. Court of Appeals for the 10th Circuit in Denver in January 2020.

"CountryMark has a significant interest in this appeal because the 10th Circuit's decision threatens financial ruin for CountryMark," the cooperative said in an amicus brief filed with the SCOTUS in support of the refiners.

"Much like the small refineries petitioners discussed, the demise of CountryMark would significantly harm the rural regions in which it operates."

The cooperative is -- by EPA's definition -- a small refinery, producing 75,000 barrels per day or less. In 2017 and 2018, CountryMark received small-refinery waivers to the RFS that made its business more viable, https://www.dtnpf.com/….

The 10th Circuit ruled EPA mishandled three small-refinery exemptions granted to the HollyFrontier and Wynnewood.

CountryMark employs nearly 500 workers. In Posey County, Indiana, alone, a county with only 26,000 residents, CountryMark provides more than $30 million in wages and benefits each year.

In 2019, the company said it purchased more than $500 million of crude oil primarily from the Illinois Basin, and those purchases provided income to the 40,000 royalty owners in the Illinois Basin.

CountryMark's refinery uses 100% American crude oil to process 30,000 barrels of crude per day. The company supplies more than 65% of agricultural market fuels and 50% of school district fuels in the state of Indiana, the brief said.

"While CountryMark plays a critical role in its regional market, it is a small refinery on a relative basis -- its capacity is one-tenth the size of the average refinery in its region," CountryMark said.

"It is therefore the very sort of small refinery that Congress had in mind when enacting small-refinery exemptions. The 10th Circuit's decision threatens financial ruin for small refineries like CountryMark because it effectively eliminates those exemptions, and without those exemptions, CountryMark's financial viability would be in significant doubt."

On Monday, the refining companies at the center of the Supreme Court case filed an opening brief, arguing the RFS allows small refiners to receive exemptions at any time, https://www.dtnpf.com/….

Attorneys for HollyFrontier and Wynnewood said Congress intended for small refiners to have the ability to request exemptions whenever they can prove economic hardship in complying with the RFS.

In January 2020, the 10th Circuit ruled the EPA improperly granted three exemptions to companies that had not received exemptions continuously.

Congress originally granted a blanket RFS exemption to refiners producing less than 75,000 barrels per day, up to 2011. Then, Congress directed EPA to grant two-year extensions of the exemption to those companies that could prove disproportionate economic hardship.

The 10th Circuit, however, ruled three refiners received exemptions in 2016 and 2017, although they did not receive them continuously from 2011 forward.

Read CountryMark's brief filed with the Supreme Court here: https://www.supremecourt.gov/….

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

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Todd Neeley