EPA says it now ‘agrees’ with 10th Circuit waiver ruling

Source: By Spencer Chase, Agri-Pulse • Posted: Tuesday, February 23, 2021

The Environmental Protection Agency has flipped its official position in a critical court case for the future of waivers from the nation’s biofuel mandate, offering a signal of the Biden administration’s view on a major aspect of renewable fuels policy.

The decision, announced on EPA’s website Monday, concerns a ruling issued last year by the 10th Circuit Court of Appeals that remanded three small refinery exemptions from the Renewable Fuel Standard and effectively offered a new rationale for future waivers. The case is currently under appeal to the Supreme Court; arguments have not been scheduled.

Under the 10th Circuit opinion, the court said SREs – offered to facilities producing less than 75,000 barrels per day who claim compliance with the RFS would cause them undue economic harm – cannot be granted if they are not already in place for a given facility. Refiners disputed that interpretation of the Clean Air Act, the broader legislation that created the RFS.

In an announcement, EPA said the agency “has reevaluated the statutory text and now agrees … that an extension must exist for EPA to be able to ‘extend’ it.

“EPA agrees with the court that the exemption was intended to operate as a temporary measure and, consistent with that congressional purpose, the plain meaning of the word ‘extension’ refers to continuing the status of an exemption that is already in existence,” the agency said.

SREs had long been a part of the nation’s biofuel mandate, but their use exploded during the Trump administration. At the time, officials cited a previous court ruling that the EPA under the Obama administration was too strict in its requirements to receive an SRE, but biofuel supporters argued the administration was unnecessarily restricting biofuel demand.

The Trump administration had previously signaled an intent to appeal the ruling, but opted not to ask for a 10th Circuit rehearing following pressure from the biofuels sector.

The case was originally brought by a handful of ag and biofuel groups, including the Renewable Fuels Association, National Corn Growers Association, American Coalition for Ethanol, and the National Farmers Union. In a statement, RFA President and CEO Geoff Cooper called EPA’s decision “fantastic news.”

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“We are grateful that the new leadership at EPA took the time to thoroughly review and carefully assess the Tenth Circuit Court’s decision,” he said. “This announcement marks a giant step forward by the new administration to restore the integrity of the Renewable Fuel Standard and honor the statutory intent of the program.

“We strongly agree with EPA’s conclusion that the small refinery exemption was intended to be a temporary measure and we are pleased to see the Agency confirming that only previously existing exemptions may be extended,” Cooper added.

Refiners took a number of steps in response to the 10th Circuit ruling, including applying for so-called “gap-year” SREs to fill any gaps in previous exemptions. In September, EPA said it would not approve those waivers, which totaled nearly 100 requests. On the final full day of the Trump administration, the EPA granted three more waivers, but left dozens of pending applications for the next group of government regulators.

In January, the Supreme Court announced it would hear arguments on an appeal of the 10th Circuit decision. With Monday’s announcement, the EPA declined to offer a brief supporting the refiners’ position before the Supreme Court.

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