EPA Supports 10th Circuit Court Ruling to Tighten Small Refinery Exemptions

Renewable Fuels groups are celebrating an EPA win. More than a year after the 10th Circuit Court issued its initial ruling on the small-refinery provisions within the Renewable Fuels Standard (RFS), EPA announced Monday it’s supporting the court’s ruling. As a result, there will be tighter restrictions on issuing such waivers.

The 10th Circuit Court of Appeals ruled in January 2020 that Small Refinery Exemptions (SREs) can only be used as extensions for refineries that had secured them continuously each year since 2010. That standard excluded all but two refineries from consideration for future waivers.

In a release issued Monday, the EPA said, “This conclusion, prompted by a detailed review following the Supreme Court’s grant of certiorari in the case, represents a change from EPA’s position before the Tenth Circuit. The change reflects the Agency’s considered assessment that the Tenth Circuit’s reasoning better reflects the statutory text and structure, as well as Congress’s intent in establishing the RFS program.”

Despite the EPA’s change in position, the administration of the Small Refinery Exemptions is still up in the air. The oil industry has appealed the 10th circuit ruling and the Supreme Court has consented to take up the case. The Court will likely hear arguments in April.

After the announcement, Renewable Fuels Association (RFA)'s CEO Geoff Cooper told AgDay's Clinton Griffiths the move by EPA could set a more favorable tone for the RFS over the next four years. 

"I think it's an acknowledgement that the previous EPA had been abusing its waiver authority under the RFS," Cooper told Clinton Griffiths. "I think for the new administration to come out so quickly, with a repudiation of the previous administration's practice, is pretty telling."

Cooper went on to call EPA's announcement on Monday "great news."

"We think it's a very positive signal from new administration," Cooper also told Griffiths. "It's really the first indication we've had from the new EPA, about their approach to small refinery exemptions. We've been waiting for some sign from the agency. And to get this sort of very definitive announcement so early in the new administration, we think is very encouraging news."

While the full Senate still hasn't scheduled a vote to confirm President Biden's pick to lead EPA, Michael Regan received committee approval earlier this month. During his confirmation hearing, Regan promised to restore integrity to the RFS. 

Renewable Fuels Groups Celebrate a "Win"

Renewable fuels groups welcomed EPA's decision on Monday. 

“Our nation’s biofuel producers and farmers appreciate EPA’s careful review of the Tenth Circuit Court’s decision, and we are pleased the agency’s new leadership is reversing the previous administration’s flawed position on small refinery exemptions," said the RFA in a written statement after EPA issued its press release. "This announcement marks a major step forward by the Biden administration to restore the integrity of the Renewable Fuel Standard and honor the intent of Congress. We wholeheartedly agree with EPA’s conclusion that the small refinery exemption was intended to be a temporary measure and we are pleased to see the agency confirming that only previously existing exemptions may be extended.”

“We are pleased to see the Biden EPA signal support for the 10th Circuit’s ruling and repudiate the prior administration EPA’s misguided attempt to distort the plain language of the RFS to serve oil industry interests at the expense of America’s biofuel producers and farmers,” said Emily Skor, CEO of Growth Energy. 

"We appreciate EPA’s effort to restore integrity to the RFS and set consistent criteria for decisions on exemptions," said Kurt Kovarik, National Biodiesel Board Vice President for Federal Affairs. "The 10th Circuit Court set a reasonable standard that EPA’s authority is limited to extending existing exemptions. We applaud EPA’s agreement with that interpretation."

Background

Growth Energy also provided more background on the case. 

"HollyFrontier v. Renewable Fuels Association (Case No. 20-472) is challenging the Tenth Circuit decision (Renewable Rules Association v. EPA, Case No. 18-9533). In January 2020, the lower court rightly found that the plain language of the Renewable Fuel Standard (RFS) required refineries to have been granted small refinery exemptions (SREs) in all prior years as a condition of eligibility for any additional SREs."

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