RFA Petitions Court on RFS Exemptions

8 Jan 2024

LINCOLN, Neb. (DTN) -- The Renewable Fuels Association on Monday asked for a rehearing on a previous court decision to overturn EPA's rejection of 100 small-refinery waiver requests to the Renewable Fuel Standard.

The RFA asked the U.S. Court of Appeals for the Fifth Circuit for a rehearing on the challenge brought by oil companies.

In November 2023, the Fifth Circuit determined it was the proper venue to hear a challenge brought by six small refineries that saw their RFS compliance exemption petitions denied by the EPA. The court also overturned EPA's denial of those exemption requests.

The RFA said the Fifth Circuit erred in ruling it was the proper venue to hear the oil companies' petition.

"The (Washington) D.C. Circuit has exclusive venue over challenges to EPA's April and June 2022 decisions to deny small-refinery petitions for exemptions from compliance with the RFS program," RFA said in its petition. "The panel erred in declining to transfer this case to that court."

RFA's petition said the U.S. Court of Appeals for the District of Columbia Circuit is the only proper venue for hearing such challenges.

In particular, the Clean Air Act specifies that the D.C. Circuit is the only appropriate court to hear challenges regarding EPA actions that are "nationally applicable" and considered by the agency to have nationwide scope or effect.

RFA's petition said the Fifth Circuit's decision to hear the refiners' challenge departs from the court's precedent and past practices.

RFA said that four other circuit courts transferred similar cases to the D.C. Circuit or dismissed them altogether.

The dissenting opinion in the Fifth Circuit in November 2023 agreed the proper venue was the D.C. Circuit because the SRE denials "are inescapably nationally applicable."

The RFA said a rehearing is necessary to avoid adverse consequences to the RFS program and biofuel producers, and to established precedent on the Clean Air Act's venue provisions.

Back in November 2023, the Fifth Circuit said the EPA's April 2022 rejection of 31 exemptions previously granted and the later rejection of 69 more exemptions in June 2022 were not allowed by law.

"Six small refineries challenge the EPA's decision to deny their requested exemptions from their obligations under the Renewable Fuel Standard program of the Clean Air Act," the court said in the ruling. "The EPA denied petitioners' years-old petitions using a novel CAA interpretation and economic theory that the agency published in December 2021. We conclude that the denial was (1) impermissibly retroactive; (2) contrary to law; and (3) counter to the record evidence. We grant the petitions for review, vacate the challenged adjudications, deny a change of venue, and remand."

Filing the original legal challenge were Calumet Shreveport Refining LLC, Placid Refining Company LLC, Ergon Refining Inc. and Wynnewood Refining Company LLC.

The Fifth Circuit called out the agency for changing the procedure it previously followed in taking the actions.

"EPA's new interpretation and approach -- which it applied in the denial actions -- displaced the adjudicative methodology the agency had relied on for over a decade," the court said in its ruling.

"In that prior approach, EPA granted and denied petitions based on DOE's findings through its application of the DOE scoring matrix. That scoring matrix -- developed as part of the statutorily mandated 2011 DOE study -- 'was designed to evaluate the full impact of disproportionate economic hardship on small refiners and used to assess the individual degree of potential impairment.'"

The court said that starting with the April 2022 denial of the exemption requests, "EPA has now completely abandoned" the scoring matrix.