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Supreme Court Ruling Gives Refineries Leeway In A Decision That Could Hurt Ethanol

The U.S. Supreme Court on Friday sided with three small oil refineries seeking exemptions from requirements to blend ethanol into their gasoline. The decision overturns an appellate court ruling from last year.

The ruling sets a precedent, giving the U.S. Environmental Protection Agency more leeway in granting exemptions to oil refineries to rules intended to promote the use of corn-based ethanol and other fuel made from renewable sources. 

Last year, the 10th U.S. Circuit Court of Appeals ruled that the refineries can only qualify for an exemption if they’ve been continuously exempt already. But in a 6-3 decision, the high court ruled refineries can seek extensions even if they wait until an earlier waiver has lapsed. The justices compared it to a student asking their professor for an extension for a big paper after it’s due.

“It is entirely natural — and consistent with ordinary usage — to seek an ‘extension’ of time even after some lapse,” the majority wrote. “Think of the forgetful student who asks for an ‘extension’ for a term paper after the deadline has passed, the tenant who does the same after overstaying his lease, or parties who negotiate an ‘extension’ of a contract after its expiration.”

Justices Amy Coney Barrett, Sonia Sotomayor and Elena Kagan dissented, saying, the “statute’s text and structure direct a clear answer: EPA cannot ‘extend’ an exemption that a refinery no longer has.”

In a statement, a coalition of renewable fuels and agriculture groups called the Biofuels Coalition criticized the ruling. But it said unresolved legal issues still could give the Biden administration the room to be more ethanol-friendly than the Trump administration.

“We are optimistic that other elements of the 10th Circuit decision, which were not reviewed by the Supreme Court,” the group said in a statement, “will compel the Biden administration and EPA’s new leadership to take a far more judicious and responsible approach to the refinery exemption program than their predecessors did.”

Iowa Governor Kim Reynolds said in a statement the decision “undermines demand for ethanol and biodiesel” and could increase the number of waivers handed out to small refineries. She called on the Biden administration to “take a clear stance” against the exemptions.

The conflict surrounding the Renewable Fuel Standard made its way to the 10th Circuit Court of Appeals in January 2020 after the Biofuels Coalition sued the EPA in 2018 over the small refinery exemptions. Oil refiners then appealed the ruling and the Supreme Court agreed to hear the case.

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Katie Peikes was a reporter for Iowa Public Radio from 2018 to 2023. She joined IPR as its first-ever Western Iowa reporter, and then served as the agricultural reporter.