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Oil Refiners Vs. Biofuels Clash Ends Up In Supreme Court

The U.S. Supreme Court is hearing oral argument on Tuesday in a case that has pitted the oil industry and the corn lobby for years—whether refiners can obtain exemptions from blending ethanol in gasoline and diesel under the Renewable Fuel Standard.

Under the Renewable Fuel Standard (RFS), oil refiners are required to blend growing amounts of renewable fuels into gasoline and diesel. Refiners that don’t have the infrastructure to blend biofuels must purchase tradeable blending credits known as Renewable Identification Numbers, or RINs.

The Environmental Protection Agency (EPA) has the authority to grant waivers from the RFS to refineries whose oil processing capacity is below 75,000 barrels per day (bpd) if the companies owning the refinery can prove that the credits they must buy are causing them financial hardship.

The Trump Administration has given refiners exemptions from the biofuel policies, but the Biden Administration is not expected to do so.

The case in the Supreme Court, however, could remove the Administration’s discretion of granting waivers.

The court case, HollyFrontier Cheyenne Refining v. Renewable Fuels Association, is set to determine whether the EPA has the authority to grant those waivers.

“We don’t think the Biden administration intends to give out the small refiner exemptions like the Trump administration,” Height Capital Markets analyst Benjamin Salisbury told Bloomberg. “But it would limit their ability to change their mind,” Salisbury added.

The Supreme Court is asked to rule on a 2020 decision of the U.S. Court of Appeals for the Tenth Circuit, which held that only small refineries that have been continuously exempt from obligations are eligible for future extensions of the compliance exemption.

“EPA had exceeded its authority by creating new exemptions when the statute only authorizes the agency to extend the temporary, time-limited exemption that Congress provided to small refineries. Because none of the three refineries involved in this case still had that exemption, there was nothing for EPA to extend,” four organizations comprising the Biofuels Coalition said on Monday, ahead of arguing the case at the Supreme Court. 

The refiners-ethanol producers clash at the Supreme Court hinges on the meaning of a single word, “extension”, Emily Hammond, who is Glen Earl Weston Research Professor of Law at The George Washington University Law School, wrote in a case preview on SCOTUSblog. 

By Tsvetana Paraskova for Oilprice.com

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