Biofuels groups say SCOUS decision shouldn’t vastly increase SREs

Representatives of the biofuels industry on June 28 called the U.S. Supreme Court’s June 25 decision on small refinery exemptions (SREs) a setback but stressed that that ruling should not significantly increase the number of SREs approved by the Biden Administration.

The Supreme Court on June 25 reversed the Tenth Circuit Court of Appeal’s January 20, 2020, decision on small refinery exemptions (SREs), ruling that the U.S. EPA can extend SREs to small refineries whose earlier temporary exemptions had lapsed. Two other pillars of the Tenth Circuit Court’s ruling, however, remain in place.

The Tenth Circuit Court ruling stemmed from a May 2018 challenge brought against the EPA by the Renewable Fuels Association, the National Corn Growers Association, the American Coalition for Ethanol and the National Farmers Union. Representatives of those four biofuel and ag groups on June 28 held a press conference to discuss the expected impacts of the Supreme Court’s decision.

Geoff Cooper, president and CEO of the RFA, said that irrespective of the outcome of the Supreme Court’s review, the four petitioners “fully expect that the number of small refinery exemptions granted by the EPA moving forward will be greatly constrained by the other pillars from the Tenth Circuit case.”

The Tenth Circuit Court’s ruling contained three main pillars, he said. One of those pillars states that the EPA can only grant an SRE if the disproportionate economic hardship claimed by the small refiner is caused by the Renewable Fuel Standard and not an outside factor such as the COVID-19 pandemic or weak demand for refined products, Cooper explained. Another of the three pillars requires EPA to reconcile any decisions to grant exemptions with the agency’s long-standing position that refineries pass through their RFS compliance costs. The final pillar focused on the definition of extension and whether a refinery was required to maintain an uninterrupted chain of SRE approvals in order to petition the EPA for future SREs. The Supreme Court reviewed only the pillar related to the statutory definition of “extension.” The other two pillars of the Tenth Circuit’s ruling were not impacted by the Supreme Court’s review.

“These two pillars remain firmly in place and the EPA must reconcile these pillars as they consider the 70 pending SRE petitions that are currently at EPA—and any future petitions that they might receive,” Cooper said. 

While the Supreme Court’s decision is a setback, Cooper said “it will definitely not result in the reopening of the barn door on massive granting of small refinery exemptions. We think EPA has plenty of tools left in the toolbox to restore sanity to the SRE program and we would expect them to use those tools.”

Brian Jennings, CEO of ACE, stressed that the Supreme Court’s decision was narrow in scope and that the biofuel industry’s effort to “put the brakes on the number of [SREs] granted by the EPA should ultimately prevail” so long as the agency adheres to the other restraints that were established by the Tenth Circuit Court.

“Simply removing one of those three restraints does not really establish a major victory for refineries getting, sort of, unchecked exemptions going forward,” he said. “The Supreme Court did not say that EPA must approve waiver requests. The Supreme Court did not make it easier for refineries to win these waivers. To the contrary, because these other two [restraints] remain firmly in place, we are convinced that EPA will dramatically reduce the number of these small refinery exemptions going forward.”