On Friday, June 25, 2021, the U.S. Supreme Court reversed a Tenth Circuit Court decision that had vacated an Environmental Protection Agency (“EPA”) exemption relieving small refineries from the fuel blending requirements of the Renewable Fuel Program (“RFP”), codified by 42 U.S.C. § 7545(o). The decision represents a huge victory for small refineries.
In an effort to reduce greenhouse gas emissions and reduce America’s dependence on imported oil, Congress created the Renewable Fuel Program in 2005, and expanded it in 2007, to require gasoline sold in the United States to contain a certain blend of renewable fuels. However, Congress created a temporary small refinery exemption to avoid disparately impacting small refiners (defining a “small” refiner as one with an average daily crude oil throughput of 75,000 barrels or less). Although the exemption applied through 2011, any small refinery could petition the Department of Energy for a two-year extension of the exemption. After two years, Congress permitted small refineries to petition for additional extensions of the exemption in circumstances of “disproportionate economic hardship,” as determined by the EPA.
The Court’s decision in HollyFrontier Cheyenne Refining, LLC, et al. v. Renewable Fuels Association et al. considered whether the EPA could grant an extension to small refineries that did not continuously receive a hardship exemption each year since 2011. Renewable fuel producers argued that small refineries must have a continuous, unbroken exemption to be eligible for an extension. However, the Court held that the statutory language of the RFP, under 42 U.S.C. § 7545(o), imposed no continuity requirement upon small refineries, confirming that a small refinery that previously received a hardship exemption may obtain an extension even if it did not continuously receive the exemption.