Appeals court signals EPA likely violated law in biofuels compliance program

Source: By KELSEY TAMBORRINO, E&E News • Posted: Monday, January 30, 2023

A spokesperson for EPA said it will review the decision.

The Biden EPA last year finalized a decision to deny nearly 70 pending small refinery exemption petitions dating back to 2016, arguing those refineries do not face disproportionate economic hardship caused by compliance with their volume obligations.Justin Sullivan/Getty Images

A federal appeals court Friday granted a request by two small refiners to halt their compliance obligations under the Renewable Fuel Standard — signaling EPA’s decision to reject dozens of hardship exemption applications likely violated the law.

Refiners are legally required to blend certain volumes of renewable fuels into the nation’s fuel supply, but small refiners could petition the agency for an exemption based on disproportionate economic hardship.

“That retroactive application of EPA’s ‘new interpretation’ — which quite possibly will read the exemption framework promulgated by Congress out of the statute entirely, such that no small refinery will ever qualify for one — is thus likely contrary to law,” the 5th Circuit Court of Appeals wrote.

The court on Friday granted the motions from two small refiners — San Antonio Refinery, or TSAR, and Calumet Shreveport Refining — that sought to stay their compliance obligations following EPA’s move last year. The stay prevents the agency from applying its new standard to deny the refiners’ requested exemptions until the court can determine, on the merits, whether the new standard can legally be applied.