Oil refineries challenge Tenth Circuit Court ruling on SREs

By Erin Voegele | March 24, 2020

Wynnewood Refining and HollyFrontier filed petitions with the Tenth Circuit Court of Appeals March 24 requesting a rehearing en banc of the court’s Jan. 24 ruling that struck down three small refinery exemptions (SREs) 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.

The lawsuit challenging the EPA’s approval of the three SREs was filed in May 2018 by the Renewable Fuels Association, American Coalition for Ethanol, National Corn Growers Association, and National Farmers Union. The Jan. 24 decision was handed down by a unanimous panel of three judges. The petitions for a rehearing en banc request that the decision be reconsidered by the entire Tenth Circuit Court.

In its petition challenging the court’s decision, Wynnewood Refining Co. LLC argues that the court’s Jan. 24 decision that states small refineries must consistently receive exemptions from the RFS in all prior years to be eligible for SREs “contradicts the language and structure of the statute.” Rather, Wynnewood argues that the statute allows small refineries to petition exemptions “at any time” from escalating RFS requirements. The petition also references RIN prices, claiming the court’s decision would force 12 Tenth Circuit refineries out of business, and questions whether the coalition of biofuel groups that filed the original lawsuit had standing to sue. The petition field by HollyFrontier Cheyenne Refining LLC, HollyFrontier Refining and Marketing LLC, and HollyFrontier Woods Cross Refining LLC makes similar arguments.

 

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