Trump Should Accept Court Ruling and Put RFS Back on Track

March 12, 2020

Solutions from the Land (SfL) and other interests who seek to stem growing risks from a changing climate join the biofuels industry in its call to the Trump administration to accept a decision from the U.S. Court of Appeals for the Tenth Circuit, ruling that EPA vastly exceeded its authority in granting compliance exemptions to three refineries from 2016 and 2018 obligations under the federal Renewable Fuel Standard (RFS).

On Monday, the Justice Department successfully asked the court for a two-week extension – until March 24 – before the EPA must decide whether to appeal the January ruling from a three-member panel and seek a rehearing before the full court.

Biofuel interests that successfully sought to invalidate the “small refinery exemptions” granted by EPA – the Renewable Fuels Association(RFA), National Corn Growers Association (NCGA), American Coalition for Ethanol (ACE) and National Farmers Union (NFU) – said in a statement that they were “disappointed that the administration has opted to kick the can on deciding whether to appeal the court decision.”

Hope remains that the administration, which had previously indicated the EPA would not appeal the ruling, will use the delay to better recalculate the agency’s return to full adherence to RFS provisions.

Though supposedly restricted to refineries with a capacity of no more than 75,000 gallons per day, the waivers often go to operations owned by oil giants like Shell and Exxon-Mobil. The agency has granted 35 RFS waivers for the year 2017 and another 31 for 2018. By comparison, in the final year of the Obama administration, the EPA granted just seven exemptions.

Though the waivers are designed to help refineries facing “disproportionate economic hardship,” the owners of one of the three refineries receiving the 2018 exemptions overturned by the Tenth Circuit recently issued an annual statement touting returns in the hundreds of millions of dollars to investors. Another refiner said its business recorded a 47-percent increase in net income compared to the previous year.

The flood of SREs has cost the biofuel industry hundreds of millions of gallons, which, in turn, has cost farmers and rural communities billions of dollars in income. Any delay in adhering to the appellate court’s decision will only add to the uncertainty that has prevailed over the market since the influx of waivers began, and further frustrate those rural Americans who are sustained by the biofuel industry.

While the ruling applies only to the three exempted refineries in the Tenth Circuit, which is based in Denver and covers Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming, smart money suggests it’s a decision that will have nationwide implications.

The Trump administration can be expected to hear from refinery groups, oil companies and their backers in Congress to push for an appeal of the Tenth Circuit panel’s ruling. However, it should also be noted that many oil refiners and the American Petroleum Institute have joined farmers and the ethanol industry in opposing an appeal and advocating for nationwide application of the court decision.

Any effort to sustain and increase biofuels in our nation’s transportation system enhances a critical contribution that agricultural is making to stem climate change. Bioenergy emits far fewer greenhouse gas emissions (GHGs) than its petroleum equivalents, so broader use of ethanol, biodiesel and other low-carbon fuels can help mitigate climate change.

To illustrate this point, a USDA study released last year showed GHGs from corn-based ethanol are about 39 percent lower than those from gasoline. The study also stated that when ethanol is produced at refineries powered by natural gas, GHGs are even lower, running around 43 percent below gasoline.

It’s important that EPA return ethanol to its rightful and growing place as the clean, renewable fuel of our transportation system’s future. Solutions from the Land (SfL) calls on stakeholders to urge the White House and lawmakers in Congress to ensure EPA optimizes the role of biofuels in meeting climate challenges while boosting income opportunities for rural America.

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