The ethanol industry is optimistic the Biden administration will issue far fewer exemptions from the ethanol mandate than the Trump administration did despite a Supreme Court setback. Justices overturned, 6-3, an appellate court ruling that greatly restricted the eligibility of small refineries for “hardship” waivers from complying with the Renewable Fuel Standard.
Biofuel makers say past exemptions cumulatively have reduced ethanol demand by more than 4 billion gallons and that 70 petitions for exemptions are pending at the EPA, for compliance years 20110-20. Since February, the EPA has withheld action on the petitions while waiting for the Supreme Court ruling, which has implications for its biofuel rules as well as its handling of the requests for waivers. The EPA “will follow the law and base our decisions on sound science while ensuring transparency,” said one official.
In a decision issued on Friday, justices said the 10th Circuit U.S. Court of Appeals, based in Denver, erred in saying a small-volume refinery qualified for an exemption only if it had received one in the previous year. Congress did not define what it meant when it created the RFS, and said EPA could grant an “extension” of an RFS waiver. Justices said more latitude was allowed than given by the appellate court.
Justice Neil Gorsuch said in the majority opinion that it was “entirely natural — and consistent with ordinary usage — to seek an ‘extension’ of time even after some lapse. Think of the forgetful student who asks for an ‘extension’ for a term paper after the deadline has passed … ”
“While we are extremely disappointed in this unfortunate decision from the Supreme Court,” said a coalition of farm and biofuel groups, “we are optimistic that other sections of the 10th 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.” In particular, they pointed to language requiring refiners to prove they face undue hardship in complying with the requirement either to mix ethanol into gasoline or buy the credits, known as RINs, to make up for their shortfalls.
The coalition, composed of the Renewable Fuels Association, National Corn Growers Association, American Coalition for Ethanol and National Farmers Union, were victors in the appellate court in January 2020.
“We look forward to working with the Biden administration to keep a lid on exemptions, further strengthen the RFS and fast-track our progress toward decarbonization,” said the ethanol trade group Growth Energy.
The petroleum industry took the opposite view. EPA should speedily “provide critical relief to those small refineries that have demonstrated disproportionate economic harm resulting from the RFS,” said the American Fuel and Petrochemical Manufacturers Association. “Further delay from the administration in setting achievable annual volume standards, issuing small refinery waivers and responding to numerous petitions for relief will make a bad situation even worse.”
The Supreme Court decision is available here.