Court Strikes Down Attempt to Expand Summer Ethanol Sales

Source: By Timothy Puko, Wall Street Journal • Posted: Tuesday, July 6, 2021

The decision invalidates a Trump administration plan intended to be a big compromise between farmers and refiners

The Kansas Ethanol plant in Lyons, Kan. Friday’s decision is a loss for farmers who have come to rely on ethanol sales. Photo: Alice Mannette/Associated Press

A federal appeals court Friday struck down a 2019 rule-change to expand summertime ethanol sales, saying the Trump administration overreached its authority when it lifted a ban on gasoline with a higher ethanol content.

The decision is a loss for corn farmers who have come to rely on ethanol sales for a large part of their revenue. They had aggressively lobbied President Trump to have the Environmental Protection Agency allow for a summertime expansion of the fuel in 2019, in part because it was one of the few options for growing ethanol sales.

Friday’s ruling may leave the ethanol lobby with little to show from four years of advocacy from Mr. Trump. It fully throws out a deal that the Trump administration had framed as its compromise between refiners and farmers, two big Republican allies that have long fought over federal mandates for adding corn-based, or “renewable fuel,” to gasoline. And the ruling is the second federal-court decision in roughly a week to undo an Trump EPA effort that intended to boost ethanol sales.

In that first decision, issued June 25, the Supreme Court had allowed small petroleum refineries to obtain exemptions. Iowa farmers had appealed directly to Mr. Trump to more closely limit those exemptions, making it central to his reelection campaign in a swing state.

Friday’s decision came from a three-judge panel on the U.S. Court of Appeals for the District of Columbia Circuit, which said the EPA had improperly reinterpreted legal language in the Clean Air Act long understood as limiting ethanol to 10% of the content of gasoline during four summer months. Once the court undid that decision, it said the rest of the rule was moot, overturning other parts of the package intended to help refiners as well.

That never satisfied refiners, who fought the rule from the start. Their big trade group, the American Fuel & Petrochemical Manufacturers, was the lead plaintiff in the case and cheered Friday’s ruling, saying it was in line with 30 years of precedent.

“There is no ambiguity in the statute and the previous administration’s reinterpretation overstepped the will of Congress,” Chet Thompson, the group’s leader, said in a statement.

Corn growers can still appeal the case and their trade groups said Friday they are pursuing all options. The groups specifically said they are appealing to allies in Congress to help their efforts protecting summer ethanol sales into the future.

Friday’s decision “is a heavy blow to the ethanol industry,” Geoff Cooper, leader of the Renewable Fuels Association, said in a statement. If “EPA were to return to the summertime ban … it would reverse the tremendous progress we’ve made.”

Write to Timothy Puko at tim.puko@wsj.com

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