Biofuel groups are praising a ruling by the 10th Circuit Court of Appeals after it struck down three small refinery exemptions, finding that the waivers were improperly granted by the Environmental Protection Agency.

The Friday ruling comes from a May 2018 challenge brought against the Environmental Protection Agency by the Renewable Fuels Association, the National Corn Growers Association, the American Coalition for Ethanol and National Farmers Union.

The court said EPA cannot “extend” exemptions to any small refineries whose earlier, temporary exemptions had lapsed. This was the case for a Cheyenne, Wyo., refinery that had an SRE in 2012 but did not apply for an extension in 2013 or 2014. The facility then applied for an extension of the previous SRE for the 2015 compliance year, which the court assumes "for the purposes of this opinion" it received after a denial was remanded back to the agency following a separate SRE lawsuit. 

“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 court’s opinion stated.

The ruling later went on to say the EPA exceeded its statutory authority in granting those petitions because there was nothing for the agency to “extend.”

The court also ruled on EPA improperly relied on other economic factors other than compliance with the Renewable Fuel Standard in determining whether a refiner was eligible for the exemption because of disproportionate economic hardship.

SREs are issued to refiners with production capacity of less than 75,000 barrels per day who claim RFS compliance would cause them undue economic harm. The waivers have become a hot-button political issue as biofuel groups claim they destroy demand for ethanol and biodiesel; refiners disagree and have steadfastly defended their use of SREs. The issue has also become a proxy battle in the 2020 election as President Donald Trump seeks to campaign on his efforts to boost rural America but opposing Democrats point to the waivers as a sign to the contrary. 

Biofuel groups who brought the lawsuit said they were pleased with the court's ruling. 

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“The Court has affirmed our long-held position that EPA’s recent practices and policies regarding small refinery exemption extensions were completely unlawful,” said Geoff Cooper, President and CEO of the Renewable Fuels Association. “And while the decision addresses three specific exemptions, the statutory interpretation issues resolved by the court apply much more broadly.”

Refinery interests said the ruling "seems inconsistent" with previous legislative history on the subject.

“It is at odds with the clear language that small refineries may 'at any time' apply for SREs,” the Fueling American Jobs Coalition, a coalition of union workers, gas station owners, small retailers, and independent American oil refiners said in a statement. “The court failed to address much of the definitional and statutory argument made in the briefs and at oral argument by the Justice Department.”  

In a released statement to Agri-Pulse, an EPA spokerperson said “the Administration continues to review and examine the opinion in this case as we continue to implement the Renewable Fuel Standard consistent with the statute.”

Joe Kakesh, legal counsel for Growth Energy, has been watching the case closely. He told Agri-Pulse EPA basically has three legal options moving forward: The department could petition for a panel rehearing in front of the same three judges that ruled, petition for a rehearing before the entire 10th Circuit Court of Appeals judges, or file a petition in the Supreme Court.

*Story was updated at 3:00pm EDT to include EPA's statement*

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