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Supreme Court will review case on small refinery exemptions

Supreme Court 2019
Biofuels industry confident Supreme Court will ultimately affirm lower court's decision noting SREs should not have been granted.

The U.S. Supreme Court has announced it will review the U.S. Court of Appeals for the Tenth Circuit’s decision in RFA et al. v. EPA, which overturned three small refinery exemptions under the Renewable Fuel Standard which the Tenth Court found were inappropriately granted.

The four co-petitioners in the lawsuit - the Renewable Fuels Association, National Corn Growers Association, National Farmers Union and American Coalition for Ethanol – issued a joint statement which says: “Our groups believe the Tenth Circuit got it right the first time, and we will continue to defend the court’s ruling and stand up for the renewable fuel producers and farmers who have been harmed by the granting of these waivers.”

CVR Refining and HollyFrontier Corporation’s filed a last-minute request, filed late on September 4, for the U.S. Supreme Court to review the Tenth Circuit Court’s ruling. The court ruling stems from a May 2018 challenge brought against EPA by the RFA, NCGA, ACE and NFU.

A panel of judges unanimously found EPA abused its authority by granting small refinery exemptions to CVR Refining and HollyFrontier that were not extensions of previously existing exemptions. In the wake of the decision, small refineries flooded EPA with 67 petitions for retroactive waivers—some dating back as far as 2011—in an attempt to establish a chain of continuously “extended” exemptions.

HollyFrontier announced it had returned $758 million to shareholders in 2019, with $533 million in stock buybacks. CVR Energy told investors it “delivered solid 2019 full-year and fourth quarter results…Our petroleum business again posted increased earnings year-over-year, driven by higher throughput rates, increased capture rates and higher refining margins despite lower crack spreads.” Yet, these are the same companies claiming they have disproportionate economic hardship compared to other refineries.

Among other findings, the Court held in a ruling issued in January 2020 that EPA cannot “extend” exemptions to any small refineries whose earlier, temporary exemptions had lapsed. According to the Court opinion, “the statute limits exemptions to situations involving ‘extensions,’ with the goal of forcing the market to accept escalating amounts of renewable fuels over time. None of the three small refineries here consistently received an exemption in the years preceding its petition.

The EPA exceeded its statutory authority in granting those petitions because there was nothing for the agency to ‘extend.’” EPA’s own data show that a maximum of only seven small refineries could have received continuous extensions of their previously existing exemptions. Yet, recently EPA has granted as many as 35 exemptions in a single year.

The groups add, “We strongly believe the Tenth 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 Tenth Circuit’s decision.”

 

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