Ethanol Blog: Supreme Court to Hear Small-Refinery Exemption Appeal

January 11, 2021

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by Todd Neeley (DTN Progressive Farmer) The Supreme Court will review a ruling from the U.S. Court of Appeals for the 10th Circuit in Denver that found EPA mishandled the small-refinery exemptions program in the Renewable Fuel Standard.

The 10th Circuit ruling in January 2020 led the EPA to reject more than 50 requests for retroactive exemptions in recent months. The court's ruling was considered to be one of the biggest court victories by the biofuels and agriculture industries as it pertains to the RFS.

The justices without comment agreed to hear an appeal by HollyFrontier Corp. and Wynnewood Refining Co. The companies have argued the 10th U.S. Circuit ruling wrongly deprives small refineries of economic relief authorized by Congress. Under law, small refineries facing an "economic hardship" from the RFS can receive exemptions.

Oral arguments before the Supreme Court are expected to take place sometime this spring.

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Renewable Fuels Association President and Chief Executive Officer Geoff Cooper, said in a statement to DTN he believe the high court will side with the ethanol industry.

"We strongly believe the 10th Circuit Court's ruling is consistent with the Clean Air Act and congressional intent, and we are confident that the Supreme Court will ultimately affirm the 10th Circuit's decision," he said.

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HollyFrontier appealed to the high court in September after the 10th Circuit turned down a request for the whole 10th Circuit to rehear a case involving small-refinery exemptions. In that case, the appeals court originally ruled the EPA mishandled the small-refinery exemptions program in the Renewable Fuel Standard and granted exemptions to three refiners who did not qualify.

In its petition to the Supreme Court, HollyFrontier asked the court to consider whether the RFS exemption program has been implemented correctly by the EPA.

At issue is whether the agency can require small refiners to have received exemptions uninterrupted in order to continue to qualify.

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In addition, CVR Refining and HollyFrontier Corp. on Sept. 4 filed a petition with the Supreme Court, asking for a review of the 10th Circuit ruling. The Trump administration did not file an appeal to the Supreme Court before the deadline.

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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 on Renewable Fuel Standard compliance costs to consumers at the pump.

Congress allowed EPA to extend some small-refinery exemptions temporarily. READ MORE

Supreme Court agrees to hear biofuel waiver case (Reuters)

Supreme Court to Review Refinery Waivers From Biofuel Quotas (Bloomberg)

HIGH COURT TAKES SMALL REFINERY EXEMPTION CASE (Politico's Morning Energy)

US high court will hear biofuel mandate fight: Update (Argus Media)

Supreme Court to hear biofuel waiver case (Agri-Pulse)

Tenth Circuit Court Plaintiffs Respond to Supreme Court Action (Renewable Fuels Association)

Supreme Court will take up heated refinery exemption fight (E&E News)

Supreme Court to review Tenth Circuit Court ruling on SREs (Ethanol Producer Magazine)

SUPREME COURT TO HEAR BIOFUEL BLENDING APPEAL (Brownfield Ag News)

RINs weaken after US Supreme Court decides to consider 10th Circuit SRE decision (S&P Global/Platts)

Biofuel debate awaits Biden on way to court: It's the oil industry vs. farmers in the debate over ethanol and other biofuels (Roll Call)

RINS “Hardship Waivers” Rise Again (BioCycle Magazine)

The RFS Stands Before the Supreme Court (FarmDoc Daily)

Refiners file brief in Supreme Court SRE case (Ethanol Producer Magazine)

Refiners File Opening Brief: Small Refiners Argue to SCOTUS That Federal Appeals Court Made Error on Exemptions Ruling (DTN Progressive Farmer)

States, Refiners Plead to SCOTUS on RFS -- States, Refiners Push Supreme Court to Maintain Small-Refinery Exemptions (DTN Progressive Farmer)

High Court Told Biofuel Ruling Would Cause Economic Strain (Law 360)

Oil groups urge Supreme Court to overturn SRE ruling (Ethanol Producer Magazine)

Waiver no more: Ethanol court decision helps corn farmers (Farm Progress)

Biofuels Coalition Files Brief in Supreme Court Case (Energy.AgWired.com)

EPA Reiterates RFS Position to SCOTUS: Agency Defends 10th Circuit Decision on RFS Small-Refinery Exemptions (DTN Progressive Farmer)

EPA to Supreme Court: RFS hardship complaints 'overstated' (E&E News)

EPA, Biofuels Groups Urge Supreme Court To Uphold Bar On RFS Waivers (Inside EPA)

Iowa, joined by seven other states, urges Supreme Court to preserve ethanol blending requirement (Des Moines Register)

Biofuel groups, states file amicus briefs in SCOTUS SRE case (Ethanol Producer Magazine)

States support efforts to defend RFS in Supreme Court case (Farm Progress)

8 States Join RFS Fight at SCOTUS -- States Make Case Small-Refinery Exemptions Hurt Their Economies (DTN Progressive Farmer)

Iowa Attorney General Urges U.S. Supreme Court To Support Renewable Fuels Industry In Upcoming Case (Iowa Public Radio)

Iowa attorney general asks U.S. Supreme Court to block biofuels exemptions (Storm Lake Times)

Biden EPA gets argument time in biofuels showdown (E&E News)

Michigan Attorney General Dana Nessel joined a coalition of attorneys general in filing an amicus brief (Detroit Legal News)

BOTH SIDES OF SMALL REFINERY EXEMPTION DEBATE GEARING UP FOR SUPREME COURT CASE (Brownfield Ag News; includes AUDIO)

RFA INSISTS LAW CLEAR IN ETHANOL WAIVERS CASE, BUT UNSURE WHY SUPREME COURT REVIEWING (NewsDakota)

Excerpt from Argus Media: The 10th Circuit decided that once a refinery passed a compliance year without a waiver, it would no longer be eligible for the exemptions. That was a sharp reversal from approvals granted under President Donald Trump's administration. After years of approving few waivers for refineries, the agency approved dozens of exemptions for the 2017 compliance year. Because EPA did not shift blending obligations from exempted facilities to larger operators, the waivers effectively reduced total fuel blending requirements for a given year.

Without those requirements, prices for compliance credits — and incentives to blend especially biodiesel into the US transportation supply — sank.

"We strongly believe the 10th Circuit Court's ruling is consistent with the Clean Air Act and Congressional intent, and we are confident that the Supreme Court will ultimately affirm the 10th Circuit's decision," said Geoff Cooper, chief executive of the ethanol producer trade group Renewable Fuels Association.

The 10th Circuit decision applied only to its Rocky Mountain jurisdiction. US attorneys last month asked the Supreme Court to wait for a decision with national jurisdiction on the same issues in the District of Columbia US Court of Appeals. Initial briefs before that court are scheduled to continue into May.

A separate consent agreement between the EPA and a small Pennsylvania refinery would compel a decision on waivers for the 2019 compliance year in February, less than a month into president-elect Joe Biden's administration. The agency had previously held off making any decisions, in part to wait for clarity from higher courts.

It takes four justices to agree to hear a case. The court typically does not explain why it chooses to hear or not hear cases, or the justices that agreed to hear them. READ MORE

Excerpt from Ethanol Producer Magazine: The National Biodiesel Board has also spoken out to express disappointment in the Supreme Court’s decision. "We are disappointed in the Supreme Court's decision to review the case but will continue to vigorously pursue a resolution to the damage that small refinery exemptions do to the biodiesel industry,” said Kurt Kovarik, vice president of federal affairs for the NBB. “Refiners are challenging the 10th Circuit's findings on a single issue. EPA must still explain how the RFS itself is a hardship to refiners and why it arbitrarily failed to consider its own evidence that refineries recoup the costs of RINs." READ MORE

Excerpt from FarmDoc Daily: The Renewable Fuels Standard (RFS) has experienced more than its fair share of litigation over the course of its 15-year existence but it had not reached the Supreme Court. January marked a new milestone, the Supreme Court granted certiorari—the technical term for the Supreme Court agreeing to hear a case on appeal—for three small refineries challenging a recent decision by the 10^th Circuit (Argus Media, Jan. 9, 2021; Renewable Fuels Ass’n v. U.S. Envtl. Prot. Agency, 948 F.3d 1206 (10^th Cir. 2020); farmdoc daily, March 12, 2020). The question presented to the Supreme Court is one of statutory interpretation. The petitioning small refineries sought review of the authority to grant extensions of exemptions for small refineries from the RFS mandates (Petition for Writ of Certiorari). The 10^th Circuit Court of Appeals had overturned decisions by EPA to grant these refineries request for an extension of the exemption from the RFS mandates; the refineries are asking the Supreme Court to reverse the 10^th Circuit decision. This article reviews the case presented to the Supreme Court and builds upon previous discussions about the small refineries exemption (SRE) issue (farmdoc daily, September 19, 2019; March 14, 2019; January 16, 2019). READ MORE

Excerpt from Ethanol Producer Magazine: In the filing, HollyFrontier and Wynnewood argue that Tenth Circuit Court’s position that SREs can only be extended to a refinery that has received uninterrupted, continuous exemptions is counterintuitive. The refiners also argue that the lower court’s interpretation of the term “extension” is wrong, in that the word can mean “both an increase in the length of time and the offering or making something available to someone, such as the granting of a benefit.”

A full copy of the filing can be downloaded from the Supreme Court’s website. READ MORE

Excerpt from DTN Progressive Farmer: In a brief filed on Monday, the states of Oklahoma, Louisiana, Wyoming, Texas, West Virginia, Utah and Montana told the Supreme Court the 10th Circuit ruling may spell the end of small refineries. The EPA classifies small refineries as those producing 75,000 barrels or less per day.

"This decision likely marks the beginning of the end for most small refineries," the states said.

"Few small refiners can currently meet the 10th Circuit's test, and eventually none will be able to meet it. Absent access to the hardship exemption, the whole small-refining industry may soon disappear."

The 10th Circuit ruled three small refineries did not qualify for exemptions because they had not received them continuously since 2011. But the states said the appeals court "overlooked ambiguity in the statutory language" that they believe shows small refineries can attain exemptions at any time. READ MORE