EPA Reiterates RFS Position to SCOTUS

Agency Defends 10th Circuit Decision on RFS Small-Refinery Exemptions

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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The EPA and biofuel groups filed briefs with the Supreme Court on Wednesday ahead of oral arguments in April. (DTN file photo by Chris Clayton)

LINCOLN, Neb. (DTN) -- EPA solidified its new position on the scope and purpose of the small-refinery exemptions program on Wednesday in a brief filed with the U.S. Supreme Court. The agency argues three refiners who received Renewable Fuel Standard exemptions in 2017 and 2018 did not qualify.

In January 2020, the U.S. Court of Appeals for the 10th Circuit in Denver ruled EPA violated the law in granting three exemptions. The ruling led biofuel agencies to push the Trump administration to apply the ruling nationally.

EPA said in its brief to the Supreme Court that few refiners would be eligible for extensions if the law is followed. For example, in 2014, five small refineries were eligible for extensions because they "maintained an exemption since the start of the RFS program," EPA said. There were three such refineries in 2015 and two in 2016.

From 2016 to 2020, the Trump EPA granted 88 small-refinery exemptions.

The EPA said in its brief the three refiners in the 10th Circuit case did not qualify.

"Although EPA typically treats as confidential the identities of the small refineries that receive exemption extensions," the agency said, "it is undisputed that petitioners were not among the small refineries that had maintained exemptions through the years for which they sought extensions.

"Thus, when petitioners sought extensions in 2017 and 2018, EPA had no authority to grant their requests."

The 10th Circuit remanded three exemptions granted 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, https://www.dtnpf.com/….

The Renewable Fuels Association, American Coalition for Ethanol, National Corn Growers Association and National Farmers Union also filed a brief on Wednesday calling for the 10th Circuit decision to hold.

In February 2021, the Biden EPA reversed course on the exemptions program and sided with the 10th Circuit ruling, https://www.dtnpf.com/….

EPA said the exemptions program in the RFS was put in place as a bridge toward eventual compliance for small refineries.

"Small refineries, by contrast, sometimes required more time to develop and implement compliance strategies," the agency said in its brief.

"Each of the petitioners in this case, for example, was exempt from the RFS annual volume requirements for five to seven years at the outset of the program, and each then complied with those requirements for several years before seeking the relief at issue here. Petitioners thus have proven themselves capable of developing and implementing successful strategies for complying with the RFS annual volume requirements."

The biofuel and agriculture groups said refiner claims about a need for exemptions as a result of COVID-19 effects lack merit.

"In a last-ditch attempt, petitioners claim that the 'unique conditions' caused by the COVID pandemic demonstrate a need for permanent small-refinery exemptions," the groups said in their brief.

"This argument fails because, in a holding that petitioners declined to challenge, the 10th Circuit held that 'renewable fuels compliance must be the cause of any disproportionate hardship' used to justify an exemption. In fact, EPA's rationale for changing the definition of 'small refinery' in the 2014 small-refinery rule is consistent with the 10th Circuit's interpretation of the small-refinery exemption."

Refiners argue in the Supreme Court case they can request small-refinery exemptions at any time, https://www.dtnpf.com/….

The biofuel and agriculture groups, however, said the time period for extending previously granted extensions was limited by law.

"Most refineries and petroleum importers in the United States have complied with the requirements of the RFS, diversifying the United States' energy portfolio while reducing carbon-based pollution across the country," the groups said in their brief.

"Recently, however, EPA has allowed certain smaller refineries to avoid compliance through unlawful application of the statute's small-refinery exemption provisions. These provisions establish a temporary exemption for all small refineries. That refineries may submit their petitions 'at any time' has no bearing on the refineries' eligibility for exemption extensions."

Read EPA's brief here: https://www.supremecourt.gov/….

Read the biofuels brief here: https://www.supremecourt.gov/….

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

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Todd Neeley