Supreme Court justices on both sides of the ideological spectrum expressed skepticism Tuesday that oil refiners are legally eligible for biofuel exemptions even if previous waivers have lapsed.
Refiners are seeking to overturn a ruling by the 10th U.S. Circuit Court of Appeals that struck down three small refinery exemptions from the Renewable Fuel Standard. A three-judge panel said previously expired waivers couldn't be renewed. The ruling created a new legal rationale for EPA to follow in considering future waivers.
Attorneys for refiners told the Supreme Court that an exemption may be granted “at any time."
“It seems rather odd to read it that way,” said Justice Clarence Thomas, one of the court's most conservative members. Liberal colleagues Elena Kagan and Sonia Sotomayor made similar points.
Peter Keisler, the refiners’ attorney, pushed back.
“This is a statute in which the burden escalates over time and the petition is supposed to be based on hardship," he said. "It seems implausible to think that Congress would assume that an early ability for a year to comply would (mean there is) no need (for a waiver) in the future.”
But the Environmental Protection Agency, which argued in support of the 10th Circuit ruling, and the biofuels coalition attorney did not get a pass either. The coalition includes the Renewable Fuels Association, American Coalition for Ethanol, National Corn Growers Association, and the American Coalition for Ethanol.
Several times, Department of Justice attorney Chris Michel had to defend his argument that the law only intended for exemptions to be temporary.
"Allowing an extension for only small refineries that maintain an exemption fits with the words and structure Congress adopted, not alternatives it could have chosen instead," Michel said. "The ordinary meaning reflects the statutory goals to drive the market toward renewable fuels while giving small refineries a significant but limited benefit."
But Justice Stephen Breyer said Congress may not have known the future market impacts the RFS program could have on refiners several years later.
“No one would know if we go out two or three years which small refineries will find hardship, and which won’t, and it will change from year to year or two years to three years,” Breyer said.
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A spokesperson for the American Fuel and Petrochemical Manufacturers said that swings in prices for ethanol credits, known as D6 Renewable Identification Numbers, prove Breyer's point.
"The cost of corn ethanol RINs for RFS compliance is at record highs, selling at nearly 15 times the price of early last year and higher than at any point in RFS history," the spokesperson told Agri-Pulse. "One side in this debate says the RFS is supposed to be aggressive and ‘market forcing,’ even if it means some refineries go out of business. That makes no sense."
Renewable Fuels Association President and CEO Geoff Cooper told Agri-Pulse the organization welcomed the opportunity to convey their arguments before the Supreme Court.
"As argued today by both the Department of Justice and our Biofuels Coalition, the small refinery exemption was meant to be temporary and EPA cannot extend exemptions that have lapsed, he said. "The RFS exemptions improperly granted to refiners in recent years have destroyed demand for both renewable fuel producers and the farmers who supply our industry."
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