Top farm and biofuel leaders responded to the U.S. Environmental Protection Agency’s (EPA) decision to reverse 31 controversial small refinery exemptions (SREs) granted in August 2019 and expressed disappointment with EPA’s decision to allow refineries with previously-granted SREs to not have to take additional actions to meet their obligations under the RFS by blending more biofuel or purchasing additional Renewable Identification Numbers (RINs). Biofuel and farm advocates had challenged the exemptions in the D.C. Circuit Court of Appeals, forcing the agency to reevaluate its approval for select oil refiners to avoid their obligations under the Renewable Fuel Standard (RFS). Leaders at Growth Energy, Renewable Fuels Association, National Corn Growers Association, Clean Fuels Alliance America, American Coalition for Ethanol, and National Farmers Union released the following statement on yesterday's decision from EPA:
“While today’s decision is an important step in reversing past abuse of refinery exemptions, the decision fails to remedy the economic harms the improperly granted 2018 SREs have already caused. Low-carbon biofuels are the single best tool to deliver immediate relief at the pump, strengthen U.S. energy security, and protect the climate. EPA’s move to hold refiners accountable to the law is a welcome step toward getting the RFS back on track that, when applied to pending and future SRE petitions, would improve certainty in the marketplace, and lead to more blending of American-made biofuels. However, EPA’s readiness to excuse individual refineries from their obligations to comply with 2018 blending requirements comes at the expense of our biofuels producers, farmers, and American consumers.”
In August 2019, the Trump Administration EPA approved an unprecedented 31 SREs for the 2018 RVO compliance year with only a cursory, two-page decision. This coalition of biofuels and ag leaders filed a petition in the D.C. Circuit Court challenging EPA’s decision. The coalition asked the court to stay the 2018 SRE case in November 2019 pending the outcome of related litigation in both the 10th Circuit and D.C. Circuit Courts. In January 2020, the 10th Circuit ruled in Renewable Fuels Association et al. v. EPA that EPA has no power to ‘extend’ an exemption that had lapsed. The Court also held that EPA lacks the authority to grant an exemption based on hardships not caused by RFS compliance, and also found that it was arbitrary and capricious for EPA to ignore its own prior studies showing that refiners recoup RFS compliance costs.
On June 25, 2021, in HollyFrontier v. Renewable Fuels Association, the Supreme Court vacated the 10th Circuit’s holding that EPA may only ‘extend’ continuously pre-existing exemptions but the other two holdings from the 10th Circuit decision remained intact. Thus, EPA had the opportunity to apply the other two 10th Circuit precedents not challenged in the HollyFrontier case and request a remand and vacatur of the 31 SREs at issue in the D.C. Circuit. However, on August 25, 2021, EPA instead filed a motion to remand the SREs without vacatur. In response, the D.C. Circuit remanded the exemptions back to EPA, but, as a result of this biofuel coalition’s motion in opposition, required the agency to make new determinations on the contested SREs no later than April 7, 2022.