Court rejects challenge to SRE ruling

The Tenth Circuit Court of Appeals on April 7 rejected two petitions filed by Wynnewood Refining and HollyFrontier on March 24 requesting a rehearing en banc of the court’s Jan. 24 ruling that struck down three small refinery exemptions (SREs) that had been approved by the U.S. EPA.

The court’s Jan. 24 ruling, if implemented nationally, would significantly lower the number of small refineries that are eligible to apply for exemptions to their Renewable Fuel Standard blending requirements. This is because the court ruled that the EPA cannot extend exemptions to any small refineries whose earlier, temporary exemptions had lapsed. The court also found that the EPA abused its discretion in failing to explain how the agency could concluded that a small refinery might suffer a disproportionate economic hardship when the agency has simultaneously consistently maintained that costs for renewable identification numbers (RINs) are passed through and recovered by those same refineries.

“Both the HollyFrontier petition and the Wynnewood petition were transmitted to all non-recused judges of the court who are in regular service,” said the court in an April 7 filing. “As no member of the panel and non-recused judge in regular active service requested that the court be polled, the requests for rehearing en banc are denied pursuant to Fed. R. App. P. 35(f)."

The court ruling stems from a May 2018 challenge brought against EPA by the American Coalition for Ethanol, Renewable Fuels Association, the National Corn Growers Association, and National Farmers Union.

Representatives of the biofuels industry are applauding the court’s decision.

“We’re pleased the Tenth Circuit Court promptly rejected refiners’ request for a rehearing,” said Brian Jennings, CEO of the American Coalition for Ethanol. “We always believed the appeal by HollyFrontier and CVR had no merit. Now, we fully expect EPA to comply with the law and end its mismanagement of the RFS. The economic fall-out of COVID-19 is causing substantial damage to the ethanol industry, and in this world filled with so much uncertainty, EPA can provide some much-needed certainty to the RFS by applying the Tenth Circuit Court precedent nationwide. As ACE penned in our letter to EPA on Friday, the Agency can and should act immediately to deny most of the 25 small refinery exemptions (SREs) pending for the 2019 RFS compliance year and then continue to follow this more legally-sensible approach to SREs moving forward.”

"We are pleased the 10th Circuit Court acted so quickly to deny the refiners' baseless request for a rehearing," said Geoff Cooper, president and CEO of the Renewable Fuels Association. "There was absolutely no need to revisit the court's clear and unambiguous ruling that EPA vastly exceeded its authority by granting illegal small refinery exemptions. Now, EPA and the refiners need to accept the facts and move on. It's time for EPA to immediately implement the 10th Circuit decision nationwide, starting with the pending 2019 petitions. There are no excuses left for further delaying implementation of this important decision that helps restore integrity to the Renewable Fuel Standard. Now, more than ever, ethanol producers and farmers are counting on the RFS to provide market stability and certainty during an incredibly difficult and tumultuous time."