RFS showdown in the courts

By Leisa Boley Hellwarth

This spring, the U.S. Supreme Court will hear oral arguments in HollyFrontier Cheyenne Refining v. Renewable Fuels Association. The case is from the Tenth Circuit, which includes Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming. The Court will review a decision denying economic hardship exemptions for small refineries dealing with the costs of the federal renewable fuel mandate.

            Congress enacted the Renewable Fuel Standard Program to move the United States toward greater energy independence and “to increase the production of clean renewable fuels.” To accomplish these goals, the statute provides “increasing volume requirements that are designed to force the market to create ways to produce and use greater and greater volumes of renewable fuels each year.”

            The EPA has the authority to extend a temporary exemption from Renewable Fuel Standards obligations that allowed small refineries additional time to prepare for the obligations. In this matter, the EPA agreed with the refiners until the appellate court issued its decision, after which the agency switched sides amid the difficult politics of an election year.

            This case is the latest in a long tug-of-war between refiners and the farm lobby. The Renewable Fuels Association and other agricultural interests advocate for the blending of corn-based ethanol into gasoline, an obligation refiners claim is an often costly. The Renewable Fuels Association is the respondent in this litigation as well as the American Coalition for Ethanol, the National Corn Growers Association, and the National Farmers Union. 

            An amicus curiae brief filed in this matter is notable. Amicus curiae is Latin for “friend of the court.” Frequently, a person or group who is not a party to a case, but has a strong interest in the matter, will petition the court for permission to submit a brief in the action with the intent of influencing the court’s decision. CountryMark Refining and Logistics, a farmer-owned cooperative that began in 1919 and is owned by over 140,000 farmers in Indiana, Michigan, Illinois and Ohio, filed a brief in support of the refiners. CountryMark supports the blending of ethanol but asserts that denying economic hardship exemptions threatens financial ruin for the cooperative. 

            In the case before the Court, HollyFrontier Cheyenne Refining submitted exemption extensions for compliance year 2016 on behalf of two small refineries owned by its subsidiaries. The U.S. Circuit Court of Appeals for the Tenth Circuit vacated the hardship extensions. There is lengthy discussion about the meaning of “extension” and “temporary.”

            The appellate court ruling meant that only a refinery that has received an exemption every year since 2011 could be given another extension. This hinged on the court’s interpretation of the word “extension” as implying continuation of something year-by-year without gaps.

            The refiners contend the word “extension” has various meanings depending on the context, and that the court failed to take into account the provision for a refinery “at any time” petition. Through its ruling, the court is not allowing petitions at any time, as the law provided. In addition, markets and refinery economics fluctuate from year to year, making the value of exemptions variable, rather than continuous. 

HollyFrontier has already demonstrated a partial impact. The company ended oil refining at its Cheyenne refinery in August and is switching the facility to bio-diesel production. It cited the appellate court decision as one of its several reasons for the change.

            Oliver Wendell Holmes said that “the young man knows the rules, but the old man knows the exceptions.” This case is all about the exceptions. The specific issue before the Supreme Court is whether, in order to qualify for a hardship exemption of the Renewable Fuels Standards, a small refinery needs to receive uninterrupted, continuous hardship exemptions for every year since 2011. We should know the answer to that question later this year. 

            Reading all of the lengthy memoranda filed in this case reminded me of a Franz Kafka quote, “A lawyer is a person who writes a 10,000-word document and calls it a ‘brief.’”

Leisa Boley Hellwarth is a dairy farmer and an attorney. She represents farmers throughout Ohio from her office near Celina. Her office number is 419-586-1072.