The U.S. Supreme Court heard arguments Tuesday on how to interpret federal law requiring renewable fuels to be blended into the nation’s transportation fuel supply.
The U.S. Environmental Protection Agency runs the Renewable Fuel Standard Program, which was created by Congress in 2005 and expanded in 2007. The RFS maintains that renewable fuels must be blended into transportation fuel. The volume of renewable fuels that is required to be blended into gasoline increases annually.
At the start of the program, all small oil refineries had blanket exemptions from blending requirements. They could apply to extend an exemption and get one if they could prove financial struggles would result from complying with the RFS. The RFS considers any refinery that produces 75,000 or fewer barrels of crude oil per day to be a small refinery.
On Tuesday in front of the Supreme Court, lawyers for biofuels groups and small oil refineries put their definitions of the word “extension” on center stage.
Matthew Morrison is an attorney who represents the Biofuels Coalition, which consists of the Renewable Fuels Association, the National Farmers Union, the National Corn Growers Association and the American Coalition for Ethanol. He argued “extension” means to prolong and the U.S. Environmental Protection Agency can prolong an exemption from blending requirements, but not create new exemptions.
“EPA’s unauthorized carve outs have resulted in billions of dollars of lost revenue to biofuels producers, devastating the rural economies anchored by the renewable fuels industry,” Morrison said.
Morrison said exemptions given outside of compliance of the Renewable Fuel Standard lowers the demand for renewable fuels.
“There have been almost 4 billion gallons over the last few years that have been lost to small refinery exemptions,” Morrison said. “That has had a devastating effect on the renewable fuels sector.”
Peter Keisler, an attorney for the refineries HollyFrontier Cheyenne Refining and Wynnewood Refining Company, argued the statute that created the Renewable Fuel Standard allows small refineries to ask to extend their exemption any time if they’re struggling financially.
“No dictionary defines extension to require continuity,” Keisler said. “And Congress has used the term elsewhere, when it's specifically authorizing the temporal resumption of a benefit after a lapse.”
Justice Elena Kagan challenged Keisler’s interpretation of the word “extension” with a hypothetical.
“Suppose that I rented an apartment five years ago and I rented it for a year. And then I decided to give it up,” Kagan said. “And five years later, I'm now really tired of where I'm living now. And I want to move back. And I call the landlord and say, ‘I'd like an extension of my lease.’ What would the landlord say?”
“I think the landlord would scratch her head and think that’s a very strange context in which to be using the word extension. I agree with that,” Keisler said. He instead related the interpretation of the word "extension" to how Congress has used it “in the context of benefits and programs that existed, lapsed and resumed.”
The Supreme Court also heard from Christopher Michel, the Department of Justice Assistant for the Office of the Solicitor General, who represents the EPA. President Joe Biden’s EPA announced in February that it supports the Tenth Circuit Court of Appeals' ruling that said the EPA overreached in granting three exemptions to small refineries. The EPA's backing is a shift from former President Donald Trump’s EPA.
“If a small refinery no longer has the exemption, it cannot obtain an extension,” Michel said. “EPA cannot grant something that does not exist. That is the ordinary common sense meaning of the statutory text.”
Chief Justice John Roberts brought up another hypothetical. “If you miss the deadline for a term paper, normal language is for you to go into the professor and ask for an extension. You wouldn't go in and ask for a new deadline. Given all those hypotheticals ... you’re not arguing that this term is plain or unambiguous, right?”
Michel said the EPA is not arguing the term “extension” is unambiguous. “We do think this is clearly the more ordinary use of the term in common parlance. And we think that the court's decisions have said it will apply the ordinary meaning of a statute unless there's a good reason not to, and we think there's no good reason not to here.”
Shortly after the oral arguments finished, Iowa Attorney General Tom Miller released a statement. Miller, who filed an amicus brief with several other attorneys general in support of the renewable fuels groups, said the arguments heard were “critical” to the renewable fuels industry in Iowa.
“We think we have the stronger argument: that Congress intended to advance renewable fuels, and not freely grant exemptions to small refineries,” Miller said in a statement. “The plain, common sense meaning of the statute language prevails, in our opinion.”
The case made its way to the high court after three small oil refineries appealed the 2020 Tenth Circuit ruling. The appellate court ruled small refineries can only get extensions of an exemption from blending renewable fuels into their gasoline if they’ve been continuously exempt already.
