Ethanol Groups Petition Court on SREs

9 Jan 2024

LINCOLN, Neb. (DTN) -- The Renewable Fuels Association and Growth Energy on Monday asked for a rehearing on a previous court decision in November to overturn EPA's rejection of small-refinery waiver requests to the Renewable Fuel Standard for six oil companies.

The ethanol groups asked the U.S. Court of Appeals for the Fifth Circuit for a rehearing on the challenge brought by oil companies. In addition, Growth Energy filed a separate petition with the court asking for an en banc hearing, which would be held before all judges in the Fifth Circuit.

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.

In its petition for a rehearing, Growth Energy argues EPA was well within its authority to deny the petitions.

"As we noted in November, this lawsuit was never about the purported economic hardship faced by a small group of refineries -- its ultimate goal was to allow those refineries not to comply with the law, and to block consumer access to lower-cost, lower-carbon fuel options at the pump," Growth Energy CEO Emily Skor said in a statement.

"In its opinion, the Fifth Circuit made procedural and substantive errors and failed to consider the record, which demonstrates that EPA's decision to deny the refinery exemptions was correct and well within its authority."

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."

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."

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