Trump to Appeal RFS Waivers Ruling

Reports: Trump Administration Set to Appeal Court Decision on Small-Refinery Exemptions

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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The Trump administration reportedly is prepared to appeal a recent court victory for the biofuels and agriculture industries. (DTN file photo by Todd Neeley)

OMAHA (DTN) -- The Trump administration plans to appeal a federal appeals court decision that delivered a major victory to biofuels producers and farmers who have for years fought the EPA's expansion of the small-refinery exemptions program.

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 with the U.S. Court of Appeals for the 10th Circuit in Denver.

On Jan. 24, the 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. An appeal would be asking the 10th Circuit for an en banc hearing -- a hearing before all judges in the 10th Circuit.

EPA has until Monday to make a decision. 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.

"Just days ago, thousands of farmers rallied behind Secretary Perdue, who expressed his confidence that we had finally reached the end of a long and painful fight against EPA demand destruction. Tearing open that wound, against the advice of rural champions and the president's own advisers, would be viewed as a stunning betrayal of America's rural workers and farmers. We cannot stress enough how important this decision is to the future of the rural economy and to President Trump's relationship with leaders and voters across the heartland."

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."

The odds of the 10th Circuit agreeing to an en banc hearing are long, as the court grants a hearing in just one-tenth of 1% of cases.

In the Jan. 24 ruling, 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 RFS compliance costs on 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.

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 court remanded back to EPA waivers issued to refiners in Wynnewood, Oklahoma; Cheyenne, Wyoming; and Woods Cross, Utah. The Cheyenne and Woods Cross petitions were from 2017, while the Wynnewood petition was in 2018.

Congress provided a temporary exemption for small refiners that could extend beyond 2010, based on a U.S. Department of Energy study or EPA determination of disproportionate economic hardship on a case-by-case basis.

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 him on Twitter @toddneeleyDTN

(AG/BAS)

Todd Neeley