The Supreme Court has ruled in favor of small refineries seeking relief from the Renewable Fuel Standard, delivering a major blow to biofuel groups in a long-running legal battle over the governance of the nation’s ethanol and biodiesel policy.
In a 6-3 ruling, the court ruled Small Refinery Exemptions from the nation’s biofuel blending requirements need not be extended in an uninterrupted fashion. The decision overturns a 10th Circuit decision issued in January 2020 that required the waivers be granted to a facility consecutively.
At issue was the interpretation of the word “extend” in the context of biofuel mandate relief. In April, lawyers for small refineries and the Department of Justice – along with biofuel groups – offered competing definitions; one side argued extension meant continuing an existing waiver, the other suggested "extend" in the legislative text could be interpreted as the extension of a handshake or the extended deadline for a tardy school assignment that has already lapsed.
“Neither the statute’s text, structure, nor history affords sufficient guidance to choose between these competing narratives and metaphors,” Justice Neil Gorsuch said in the opinion for the majority. “Instead, the analysis can be guided only by the statute’s text — and that nowhere commands a continuity requirement.”
Gorsuch was joined by Chief Justice John Roberts and Justices Clarence Thomas, Stephen Breyer, Samuel Alito, and Brett Kavanaugh in his ruling. Sonia Sotomayor, Elena Kagan, and Amy Coney Barrett dissented, arguing the majority was catering to an “outlier meaning of 'extend' and clashes with statutory structure.”
“The statute’s text and structure direct a clear answer: EPA cannot 'extend' an exemption that a refinery no longer has,” Barrett said in the dissenting opinion.
A spokesperson for HollyFrontier, the company that brought the appeal to the high court, said it was "pleased that our longstanding arguments were today validated by the Supreme Court: hardship relief may be granted at any time, as the statute provides, regardless of whether a small refinery also received relief in all prior years.
"As refiners both large and small face all time high renewable identification number (RIN) costs and are recovering from the economic impacts of COVID-19, we urge EPA to immediately take action to make the RFS a workable program for U.S. refiners and consumers."
In a statement, the groups that brought the case that produced the 10th Circuit ruling – the Renewable Fuels Association, American Coalition for Ethanol, National Corn Growers Association, and National Farmers Union – said they were frustrated in the ruling.
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“While we are extremely disappointed in this unfortunate decision from the Supreme Court, we will not stop fighting for America’s farmers and renewable fuel producers,” the coalition said. “Further, we are optimistic that other elements of the Tenth Circuit decision, which were not reviewed by the Supreme Court, will compel the Biden administration and EPA’s new leadership to take a far more judicious and responsible approach to the refinery exemption program than their predecessors did.”
The 10th Circuit ruling represented a huge victory for biofuels groups frustrated by the Trump administration’s use of SREs and their impact on biofuel blending. Under former EPA Administrator Scott Pruitt – and in conjunction with another court case ruling the Obama administration was too stingy in its granting of the relief – use of the waivers exploded. In 2017 and 2018, the EPA issued 35 and 31 waivers, respectively, a departure from the 19 issued in 2016 and 23 combined in 2013, 2014 and 2015.
Small Refinery Exemptions are offered to facilities producing less than 75,000 barrels of oil per day who claim complying with the Renewable Fuel Standard would cause them undue economic harm.
According to a dashboard created during the tenure of former EPA Administrator Andrew Wheeler, the agency has yet to issue any waivers for the 2019 or 2020 compliance years; the Trump administration did issue three SREs in their final days in office in January, but a court ultimately vacated those waivers.
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