WASHINGTON — The Environmental Protection Agency is again sending mixed messages to the biofuels industry, this time in regard to how it will handle small refinery exemptions, or SREs, in light of the 10th Circuit Court of Appeals ruling earlier this year.
The court ruled in favor of the biofuels industry, unanimously finding that the EPA abused its authority by granting Renewable Fuels Standard refinery exemptions in recent years. That action was illegal, the court determined.
“It could mean billions of gallons moving forward and maybe some retroactively, especially those that were mentioned specifically in the case,” says Robert White, the vice president of industry relations of Renewable Fuels Association, which originally filed the case against the EPA.
U.S. Secretary of Agriculture Sonny Perdue also told farmers at the recent Commodity Classic gathering in San Antonio that the court’s decision would have a bearing on the methodology EPA would use going forward when granting the hardship waivers to refiners.
“The statute said these exemptions had to have been ongoing. You know extending an exemption doesn't mean starting a new one, it means extending and that's what the court case said,” Perdue said at the conference. “So we think it’s going to limit the number of small refiner waivers extensively and we think that's where the policy is heading for the White House.”
The EPA followed up the ruling with a statement saying it would apply the 10th Circuit decision nationally regarding the exemptions.
Corn growers were also optimistic the court ruling would stop the waivers that eroded 4 billion gallons of ethanol from the Renewable Fuels Standard in 2016 to 2018.
“Going forward, it gives us maybe a little glimmer of hope that we can maybe stop those or at least reduce the amount of waivers they have been giving,” says Doug Noem, South Dakota Corn Growers Association president.
He says the companies that received the waivers did not meet the criteria for a hardship waiver.
“The huge oil companies had refineries that were blending ethanol got the waivers and they had no reason to show a hardship. They were very profitable companies making money doing this,” he says.
However, the U.S. Department of Justice on March 5 filed a motion seeking a 15-day extension of the deadline to file a petition for the 10th Circuit Court to either have a panel rehear the case or for the entire court to hear the case. Several petroleum companies also have filed for an extension. The petition now must be filed by March 24.
To many people in the biofuels industry, the administration possibly seeking a rehearing opens up the possibility that the EPA could join petroleum companies in an appeal of the court decision.
“If not changed, this would go down as one of the worst decisions I’ve seen in 20 years of biofuels policy," says Iowa Renewable Fuels Association Executive Director Monte Shaw in response. "When you have a unanimous panel decision, the full 10th Circuit only accepts about 1% of appeals for a rehearing and almost never overturns the original decision.”
Shaw says Trump is on the verge of angering every farm and biofuels group in the country and it will destroy the trust of the rural sector in the administration.
Shaw says if Trump makes the mistake of joining the oil companies’ appeal, Trump should direct the EPA to hold off on implementing the pending 2019 refinery exemption requests while the legal action plays out. He says if they use the legal action as a cover to grant 2019 exemptions, which are essentially illegal, it would reduce the effective Renewable Fuels Standard
National Corn Growers Association President Kevin Ross says there still seems to be some disconnect between President Donald Trump and EPA that needs to be rectified going forward.
“We’ve got the assurances that 15 billion gallons will be 15 billion gallons or more moving forward and that’s something that we are going to fight for tooth and nail every day,” he says.