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Ethanol industry receives two major blows by federal courts

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The ethanol industry has received major blows that could affect demand in the future. In the past week, not only did the D.C. Circuit Court of Appeals reverse the year-round sale of E15, but also the U.S. Supreme Court overturned a 2020 appellate court ruling that struck down three improper small refinery exemptions 

Year-round sale of E15

The D.C. Circuit Court of Appeals reversed a 2019 rule by the Environmental Protection Agency that lifted outdated restrictions on the sale of a fifteen percent ethanol fuel blend (E15). The case, American Fuel & Petrochemical Manufacturers, et al. vs. EPA, was a challenge by oil refiners to the rulemaking that allowed the year-round sale of E15. Growth Energy, the Renewable Fuels Association, and the National Corn Growers Association were intervenors on behalf of EPA in the case.

The organizations issued a joint statement saying, “We disagree with the court’s decision to reject EPA’s move to expand the RVP waiver to include E15, a decision that could deprive American drivers of lower carbon options at the pump and would result in more carbon in the atmosphere.

“We are working to ensure the continuity of E15 sales through the 2021 summer season and beyond. This decision could impact summertime sales across all non-RFG areas where nearly two-thirds of retail sites offering E15 currently do business. If E15 in those markets were to end, summertime E15 sales would fall by 90%.

On August 21, 2020, Growth Energy, RFA, and NCGA filed a brief as intervenors in the oil industry’s lawsuit against EPA’s regulation allowing year-round E15. The brief provided strong support for EPA’s position that parity in RVP regulations for E10 and E15 is consistent with the provisions of the Clean Air Act and the congressional intent behind those provisions. The organizations further pointed out that extending the volatility waiver from E10 to E15 is appropriate because the volatility of the fuel actually decreases as more ethanol is added into gasoline beyond E10.

10th Circuit’s RFS refinery exemption ruling

U.S. Supreme Court also overturned a 2020 appellate court ruling that struck down three improper small refinery exemptions granted by previous EPA administrators. However, because certain elements of the appellate court ruling were left unchallenged and were not reviewed by the Supreme Court, corn and biofuel groups remain optimistic that the Biden Administration will discontinue the abuse of the refinery exemption program.

The decision stems from a May 2018 challenge brought against EPA in the U.S. Court of Appeals for the Tenth Circuit by the Renewable Fuels Association, the National Corn Growers Association, National Farmers Union, and the American Coalition for Ethanol, working together as the Biofuels Coalition. The petitioners argued that the small refinery exemptions were granted in direct contradiction to the statutory text and purpose of the RFS.

On Friday, Rep. Randy Feenstra (IA-04) and Rep. Angie Craig (MN-02) introduced the Small Refinery Exemption Clarification Act of 2021. This bipartisan proposal clarifies the definition of “extension” in response to the Supreme Court’s recent ruling that favored oil refineries over biofuel producers.

“This legislation will help ensure transparency and predictability for family farmers and biofuels producers in Minnesota and across the country as they make important decisions based on the Renewable Fuel Standard,” said Representative Craig. “I look forward to continuing our bipartisan work to ensure that the oil industry does not receive unnecessary assistance at the expense of family farmers.”

The Small Refinery Exemption Clarification Act of 2021 would allow certain refineries to apply for an exemption from renewable fuel blending requirements only if the refinery has received an exemption continuously since 2011. This comes after the Supreme Court ruled that certain refineries can still request and qualify for an exemption “extension,” even if previous exemptions are already expired.

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