US Supreme Court will hear biofuel waiver arguments

The US Supreme Court will review a lower court's decision last year limiting exemptions of federal biofuel blending mandates that helped send costs to comply with the program to their highest levels in three years.

The high court today granted certiorari for independent refiners HollyFrontier and CVR Energy's appeal of a 10th US Circuit Court of Appeals decision issued last January.

The refiners and biofuel groups could not be immediately reached for comment.

The refiners argued that the appellate decision improperly limited access to waivers of the Renewable Fuel Standard (RFS) to no more than two US facilities, threatening closure for Rocky Mountain refineries. Biofuel groups urged the court to let the decision stand and for the Environmental Protection Agency (EPA) to extend the tough limits across the country.

RFS requires that refineries, importers and certain other companies to each year ensure that minimum volumes of renewables blend into the gasoline and diesel they add to the US transportation fuel supply. The law includes an exemption for refineries processing less than 75,000 b/d of crude a year.

This waiver began as a blanket exemption for all refineries meeting that criteria until 2011, when the program transitioned to requiring that refineries convince the EPA and Energy department that meeting requirements would cause a severe financial hardship.

The 10th Circuit decided that once a refinery passed a compliance year without a waiver, it would no longer be eligible for the exemptions. That was a sharp reversal from approvals granted under President Donald Trump's administration. After years of approving few waivers for refineries, the agency approved dozens of exemptions for the 2017 compliance year. Because EPA did not shift blending obligations from exempted facilities to larger operators, the waivers effectively reduced total fuel blending requirements for a given year.

Without those requirements, prices for compliance credits — and incentives to blend especially biodiesel into the US transportation supply — sank.

The 10th Circuit decision applied only to its Rocky Mountain jurisdiction. US attorneys last month asked the Supreme Court to wait for a decision with national jurisdiction on the same issues in the District of Columbia US Court of Appeals. Initial briefs before that court are scheduled to continue into May.

A separate consent agreement between the EPA and a small Pennsylvania refinery would compel a decision on waivers for the 2019 compliance year in February, less than a month into president-elect Joe Biden's administration. The agency had previously held off making any decisions, in part to wait for clarity from higher courts.

It takes four justices to agree to hear a case. The court typically does not explain why it chooses to hear or not hear cases, or the justices that agreed to hear them.

By Elliott Blackburn