DES MOINES — The federal government announced Monday it will support the ethanol industry in a lawsuit over biofuel waivers granted to oil refineries under President Donald Trump’s administration.
Now under President Joe Biden’s administration, the Environmental Protection Agency said it is reversing course and will support a January 2020 decision by the Denver-based 10th U.S. Circuit Court of Appeals in a lawsuit filed by the Renewable Fuels Association and farm groups.
An oil industry appeal is headed to arguments this spring before the U.S. Supreme Court.
Federal law requires refiners to blend billions of gallons of biofuels in the nation’s gasoline supply or buy credits from refineries that do the blending. Refineries can seek waivers if they can show that meeting the ethanol quotas would create a financial hardship for their companies.
The appeals court concluded the EPA improperly granted exemptions to refineries that didn’t qualify. The court said that refineries could be granted waivers only as extensions, but most refineries seeking exemptions under the Trump administration had not continuously received them year after year.
The decision effectively limited the EPA’s ability to grant most exemptions. Two refineries appealed the decision to the Supreme Court.
Trump, who had overwhelming support among Midwestern farmers, had promised to back policies that help agriculture, but his EPA approved sharp increases in the waivers, aiding oil refiners and reducing demand for corn and soybean derived fuels.
Roughly 40 percent of U.S. corn is used to produce ethanol.
The EPA under Trump issued 85 retroactive small refinery exemptions for the 2016-2018 compliance years, undercutting the renewable fuel volumes by a total of 4 billion gallons, according to the Renewable Fuels Association.
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Roughly a month after Biden took office, his EPA reversed the federal government’s stand, saying the EPA agrees with the appeals court that the exemption was intended to operate as a temporary measure.
“The change reflects the agency’s considered assessment that the Tenth Circuit’s reasoning better reflects the statutory text and structure, as well as Congress’s intent in establishing the (Renewable Fuel Standard) program,” the EPA said in a statement.
Iowa GOP politicians, who were loyal supporters of Trump but struggled to defend his administration’s ethanol policy, supported the move of Biden’s EPA.
“This is a step to provide much-needed certainty to ethanol and biodiesel producers,” U.S. Sen. Joni Ernst said in a statement.
“It’s been a long time coming, but I’m glad the EPA has finally come around to acknowledging that waivers it had been granting to Big Oil conflicted with the laws passed by Congress, as well as its own mission to promote a cleaner environment,” U.S. Sen. Chuck Grassley said in a statement.
Iowa Gov. Kim Reynolds called it an “encouraging sign” from the Biden administration.
American Petroleum Institute Vice President Ron Chittim said the group supports the EPA decision “as it follows the 10th Circuit court’s finding and is consistent with Congress’ intent when it enacted the Renewable Fuel Standard.”
The group, which represents a range of companies serving the oil and natural gas industry, advocates for equal treatment among refineries.
According to the Bloomberg Financial Service, roughly 66 refinery exemption applications are pending before the EPA, but the agency does not plan to decide on them before the Supreme Court’s ruling.
The case is called HollyFrontier Cheyenne et al. v. Renewable Fuels Association et al.