US Supreme Court denies review of RFS point of obligation issue

By Erin Voegele | May 19, 2020

The U.S. Supreme Court announced May 18 that it has denied a petition filed by Valero Energy Corp. asking the court to determine whether the U.S. EPA is required to consider petitions to change the point of obligation under the Renewable Fuel Standard.   

Valero Energy Corp. and the American Fuel and Petrochemical Manufacturers filed a petition Dec. 30 with the Supreme Court asking the court to determine whether EPA is required to consider petitions to change the point of obligation under the RFS. The petition argued that the Clean Air Act’s RFS program requires EPA to undertake annual notice-and-comment rulemaking to determine annual renewable volume obligations (RVOs) for the U.S. transportation fuel supply and states that the first of three annual required elements is to determine the point of obligation. 

“EPA admits that it initially placed the point of obligation on refineries and importers, but not on blenders, for reasons of administrative convenience,” Valero and AFPM said in the petition. “EPA has repeatedly refused to reexamine that placement in annual rulemaking, and it denied petitions for rulemaking seeking reconsideration outside the statutorily mandated annual assessment.”

The petition asked the court to determine “whether the requirement that EPA ‘shall’ make a ‘calendar year’ determination of the ‘appropriate’ point of obligation requires EPA to consider in each annual rule whether the point of obligation remains appropriate,” and “whether EPA can evade the annual duty by partitioning the point of obligation into a one-time collateral proceeding that ignores key evidence, relies primarily on the agency’s own convenience, and claims more deference from a reviewing court than an annual rule would receive.”

The EPA filed a document April 3 with the court explaining that reviews of the point of obligation issue it has undertaken in the past show “that changing the point of obligation would not increase, and might decrease, the production or use of renewable fuels.” The agency has also determined that “the point-of-obligation rule did not disproportionately impact any particular group of refineries or provide windfall profits to unobligated blenders.” In addition, “EPA determined that moving the point of obligation to encompass blenders would have the counterproductive effects of greatly increasing the number of obligated parties and the complexity of the renewable fuels program” and “found that changing the point of obligation would not increase energy security.”

Due to those determinations and other factors, the EPA urged the Supreme Court to deny Valero’s petition for writ of certiorari.

Court documents related to the challenge were distributed to the Justices April 22. The case was considered by the court during a May 15 conference. The court announced May 18 that the petition has been denied.

Additional information is available on the Supreme Court website under Docket No. 19-835.

 
 
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