Biofuels: EPA Moves to Remand ’18 RFS Exemptions – DTN

EPA wants a second look at its 2019 decision to grant 31 small-refinery exemptions to the Renewable Fuel Standard for 2018, after the Supreme Court ruled this summer that a federal appeals court erred in a January 2020 ruling that favored the ethanol industry.

On June 25, the Supreme Court overturned a unanimous ruling by the U.S. Court of Appeals for the 10th Circuit in Denver. The Supreme Court ruled small refiners such as HollyFrontier and others can receive extensions of their exemptions to the RFS even if their earlier exemptions had lapsed.

Now EPA has asked the U.S. Court of Appeals for the District of Columbia Circuit to send the Trump decision back to the agency for review.

The agency outlined its planned approach in a motion filed with the DC Circuit on Aug. 25.

“Following the Supreme Court’s decision, EPA plans to consider what, if any, impact the remaining holdings in the 10th Circuit’s decision may have on EPA’s implementation of the small-refinery exemption provision generally, and what, if any, resulting impact that may have on the small-refinery petitions adjudicated in the decision and challenged here,” EPA said in its motion.

The agency said it would have been “premature” to consider prior to the Supreme Court’s decision.

EPA said small refineries that applied for extensions “have not received continuous extensions” of the exemption.

“Therefore, had the Supreme Court upheld the 10th Circuit’s decision, most small refineries would have been statutorily ineligible to receive a further extension of the exemption,” EPA said in its motion.

“In that case, it would have been unnecessary for EPA to further consider whether the alternative holdings in the 10th Circuit’s decision affected those small refineries’ entitlement to relief in almost any setting.”

Agriculture and biofuels groups that petitioned the court to consider the case are pressing the court to remand and vacate the decision. Those groups include Renewable Fuels Association, Growth Energy, American Coalition for Ethanol, National Corn Growers Association, National Farmers Union and the National Biodiesel Board.

Renewable Fuels Association President and CEO Geoff Cooper said the EPA is doing what it should have years ago.

“RFA commends EPA’s efforts to reconsider the 31 small-refinery exemptions issued by EPA for compliance year 2018,” he said in a statement to DTN.

“EPA’s own records reflect the fact that these exemptions were issued without any analysis or substantiation, and it is unsettling yet unsurprising that EPA doesn’t even have the records to account for all the RINs involved in these giveaways. While RFA supports EPA’s reevaluation of these lawless exemptions, we object to EPA’s remand request because it is unaccompanied by vacatur or some kind of limitations on its review. EPA has to act promptly if it wants to restore stability and integrity to the RFS.”

The EPA said in its motion that it opposes vacating the decision.

“The court should not vacate the decision because doing so would be disruptive without any immediate benefit for any of the parties,” the agency argues in the motion.

“Remand without vacatur is therefore appropriate here to maintain the status quo, while allowing EPA sufficient time to reconsider the challenged adjudications underlying the decision and to consider whether to provide more explanation for any actions taken on remand.”

The Trump administration granted a total of 88 small-refinery exemptions from 2016 to 2020, amounting to about 4 billion gallons in lost biofuels demand. According to EPA’s RFS dashboard, there are 59 small-refinery exemption requests pending from 2016 to 2021.

The EPA made an about-face on small-refinery exemptions in the Biden administration, deciding it agreed with the 10th Circuit decision. The Trump administration approved a handful of additional exemptions on its way out the door, an action eventually vacated by a court.

The agency defended the biofuels industry before the Supreme Court, arguing in a brief 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.

Read more on DTN:

  • “SCOTUS Sides With Refiners on RFS” here
  • “EPA Reiterates RFS Position to SCOTUS” here
  • “EPA Grants Exemptions” here

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

Follow him on Twitter @DTNeeley

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