Appeals court orders the U.S. Environmental Protection Agency to revisit blending exemptions issued to small refineries in OK, Wyoming and Utah
Recent renewable fuel standard exemptions the U.S. Environmental Protection Agency issued to several small refineries, including one in Oklahoma, need to be reconsidered, an appeals court has ordered.
The U.S. Court of Appeals for the 10th Circuit ordered the agency to re-evaluate decisions it made to provide exemptions to the CVS Refinery in Wynnewood, as well as two other small refineries owned by HollyFrontier in Wyoming and Utah.
The exemptions were granted by the agency under rules it developed and implemented under renewable fuel standard blending requirements established as part of the Clean Air Act by the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007.
The Energy Policy Act required that the amount of renewable fuels blended into the nation’s fuel supply be increased from 4 billion gallons in 2006 to 7.5 billion gallons in 2012.
The Energy Independence and Security Act required the amount of renewable fuel required to be blended into the nation’s fuel supply to be increased to 36 billion gallons in 2022. Additionally, it required up to another 21 billion gallons of advanced biofuel and up to 16 billion gallons of cellulosic biofuel to also be added into the blending mix by the end of 2022.
The law allows the EPA to grant small refineries exemptions from the blending requirements in cases where it determines those refinery owners couldn't meet those without enduring financial hardships.
However, an increasing number of exemptions that critics have argued are unwarranted has been issued to small refiners by the Trump administration the past two years.
A news release issued Monday by the Renewable Fuels Association hailed the appeal court’s decision as one that is “expected to broadly impact the Environmental Protection Agency’s approach to granting small refinery exemptions under the renewable fuel standard.”
Data from the EPA’s website shows it granted 85 out of 94 extension petitions that small refiners submitted to the agency from 2016 through 2018.
The amount of exempted volumes of gasoline and diesel increased from about 2 billion gallons in 2013 to a peak of 17 billion gallons in 2017.
The ruling issued by Judge Mary Beck Briscoe, Senior Judge Paul J. Kelly, Jr. and Judge Carlos F. Lucero focused on “extensions” of renewable fuel standard exemptions granted to three specific refineries under the EPA’s rules.
The problem with the exemption extensions given to the three refineries in question, the judges ruled, was that they weren’t extensions at all.
HollyFrontier Cheyenne Refining in Wyoming, which submitted its petition for an extension in March 2017, had been awarded an exemption in 2011 and 2012, but didn’t apply for an extension until 2015. That request was denied by the EPA under the Obama administration.
HollyFrontier Woods Cross Refining in Utah, which submitted its petition for an extension in September 2017, never had been granted an exemption in the first place.
And Wynnewood Refining Company received an exemption in 2011-2012, but not in subsequent years. It submitted its petition for an extension to the EPA in January 2018.
“Ordinary definitions of ‘extension,’ along with common sense, dictate that the subject of an extension must be in existence before it can be extended,” the opinion states. “A small refinery which did not seek or receive an exemption in prior years is ineligible for an extension, because at that point there is nothing to prolong, enlarge, or add to.”
The challenge to those extensions was brought in May 2018 against EPA by the Renewable Fuels Association, the National Corn Growers Association, the American Coalition for Ethanol and National Farmers Union.
Geoff Cooper, RFA’s CEO, said the litigants are satisfied with the ruling.
“The Court has affirmed our long-held position that EPA’s recent practices and policies regarding small refinery exemption extensions were completely unlawful,” Cooper said.
“While the decision addresses three specific exemptions, the statutory interpretation issues resolved by the court apply much more broadly.”
The litigants also noted the opinion determined the EPA hasn’t adequately explained how it concludes a small refinery suffers a disproportionate economic hardship under the blending requirements.
“The court’s ruling highlights how EPA abused the small refinery exemption provision of the renewable fuel standard in broader terms to unfairly enrich the oil industry, which could have far-reaching implications on the legitimacy of other refinery waivers and limit how they can be used moving forward,” said American Coalition for Ethanol CEO Brian Jennings.
The EPA did not respond Monday to an email seeking response to the court’s ruling.