D.C. Circuit Court blasts refiner arguments on RFS

In Washington, D.C., the Renewable Fuels Association welcomed the D.C. Circuit Court’s outright rejection of arguments from oil refiners that the Renewable Fuel Standard causes them economic hardship and therefore the Environmental Protection Agency should have waived their 2019 RFS obligations.

The court’s rebuke of the refiners’ arguments was part of a decision published Friday regarding litigation involving many parties on the 2019 RFS volume requirements. The decision also discards arguments from the refiners regarding the RFS point of obligation and treatment of exported renewable fuels.

“The court saw right through the many specious arguments raised by the oil refiners in this litigation, and today’s decision is a strong repudiation of the false narrative refiners continue to push about the Renewable Fuel Standard,” said RFA President and CEO Geoff Cooper. “RFA was pleased to see the court methodically reject the refiners’ claims one by one, and this ruling should dispel the myth—once and for all—that the RFS somehow harms oil refiners. We hope Congress and the Administration pay close attention to what the court had to say today about the real economic impacts of the RFS on refiners.”

• Severe Economic Harm Waiver: The court rebuffed the refiners’ argument that EPA should have waived the 2019 RFS requirements because East Coast refiners purportedly could not pass through their RFS compliance costs and thus experienced “severe economic harm.” According to the judges, “Obligated parties assert that the ‘pass-through’ theory is flawed and that RFS requirements impose severe economic consequences on refiners in the Eastern United States. We reject this challenge. EPA reasonably concluded that obligated parties had failed to make the strong causal showing required to trigger the waiver.” The court added, “It was reasonable for EPA to conclude that RFS costs alone were not the primary driver of the refineries’ economic difficulties.”
• Inadequate Domestic Supply Waiver: The court also shot down the refiners’ claim that a waiver of 2019 RFS requirements would have been justified due to an “inadequate domestic supply” of renewable fuels to meet the standards. “EPA adequately explained its refusal to exercise the inadequate domestic supply waiver,” the judges wrote.
• Point of Obligation: Refiners also argued that EPA should have used the 2019 RFS rulemaking to change the “point of obligation” for RFS compliance from refiners and importers to fuel blenders. But the court discarded that argument as well, stating “Refiners have repeatedly but unsuccessfully urged EPA to include blenders in the point of obligation…EPA’s decision not to undertake another reassessment in the 2019 rulemaking was not an abuse of discretion.”
• Exported Renewable Fuel: The court similarly rejected refiner arguments that exported renewable fuels should count toward RFS compliance. “EPA at no point suggested that it was substantively reconsidering its longstanding policy concerning the treatment of exported renewable fuel, and it reasonably refused to consider obligated parties’ arguments for changing that policy…” the judges wrote.

Meanwhile, environmental petitioners involved in the litigation argued that EPA’s “aggregate compliance” approach for assessing the impact of the RFS on agricultural land use is “in violation of the Clean Air Act’s text.” The court disagreed and dismissed the environmental groups’ challenge because it was untimely.