Alert

U.S. Court of Appeals Reverses EPA Decision on Small Refinery Biofuel Exemptions

July 29, 2024

On Friday, July 26, 2024, a federal appeals court overturned the Biden administration’s decision to reverse small refinery exemptions to the Renewable Fuel Standard (RFS). The U.S. Court of Appeals for the District of Columbia Circuit kept its opinion on the case confidential for seven days but issued a two-page judgment that seems to favor refining companies. The exact number of exemptions impacted remains uncertain.

In 2022, the EPA rescinded 36 Small Refinery Exemptions (SREs) that the Trump administration had granted for the 2018 compliance year in April and denied 69 exemption requests in June. However, in the same month, the EPA provided most refineries with an alternative compliance method with the RFS that didn’t necessitate the companies compensating for the 1.4 billion gallons of biofuels or compliance credits initially exempted.

There were 32 lawsuits filed against the EPA regarding the Biden administration’s decision, which the court consolidated into one group, while another six cases were grouped together. The court’s judgment stated that the petitions of company A and company B were denied, but the petitions for review in the first group were granted. These cases were sent back to the EPA for further proceedings.

Following the court’s decision, the Renewable Fuels Association, Growth Energy, and the American Coalition for Ethanol, who all supported the EPA in the lawsuit, expressed their disappointment in a joint statement. They stated their dissatisfaction with the court’s decision to overturn and remand the EPA’s denial of numerous small refinery exemption petitions. They praised the EPA’s 2022 decision to deny the petitions as well-reasoned, economically sound, and in line with both the Clean Air Act and the RFS goals. They are considering their next steps, which may include seeking a further review of the court’s decision, and they remain determined to protect and uphold the proper implementation of the RFS.

In the second group of cases, the court dismissed petitions filed by Growth Energy and Wynnewood Refining Company and denied a petition filed by Sinclair Wyoming Refining Company LLC. These lawsuits challenged the EPA’s alternative compliance option provided to small refiners. In December 2021, the Biden EPA proposed to reject all pending exemption requests. The Trump administration had approved more than 80 small refinery exemption requests.

The appeals court’s action is the latest in a long drama that has played out across multiple administrations.