I Take It Back! EPA Files to Reconsider 2019 SREs

September 8, 2021

Have you ever made a decision and then were like, uh, actually, wait, I didn’t mean that? I do this all the time. Some people call it being indecisive, I call it my prerogative, but we can agree to disagree right? In that spirit, U.S. EPA has recently filed a Motion to Remand without Vacatur with the D.C. Circuit Court to voluntarily reevaluate 31 Small Refiner Exemptions (SREs) that were granted in previous compliance years.

For those of you who don’t know what an SRE is or how it applies to the industry, I have an article for you to read before this one. Read Becoming The Outcast: The “What” Portion Of The Small Refiner Exemption written by yours truly. If you just scroll down on this page, the article is provided for you at the low, low cost of free. That is, unless you want to pay me for them, then I have a Venmo account. #Ihavestudentloans.

For those of you that don’t speak legalese, Motion to Remand without Vacatur, means EPA is requesting that the D.C. Circuit Court allow EPA to review its decisions without requiring them to simultaneously take back or vacate those decisions. It’s bit like saying, “We would like it if you just let us figure it out.”

Ok, now, down to business. As many of you remember the United States Supreme Court (SCOTUS) ruled on the 10th Circuit case concerning whether SREs could be granted on an ad hoc basis or had to be granted in perpetuity in order for the applicant small refiner to be granted an exemption. SCOTUS ruled that while a small refiner could apply for an exemption on a year-to-year basis, it did still have to meet the disproportionate economic hardship qualification. When this decision was finally published last July, the entire industry, whether renewable fuel or nonrenewable fuel, was a bit confused. This confusion was mostly caused by SCOTUS’s attempt at creating a compromise. On the one hand, small refiners are able to apply for SREs on an ad hoc or “as needed” basis. On the other, the small refiners still had to meet the “disproportionate economic hardship” portion of the application process. In any event, SCOTUS provided EPA with an entirely different framework with which to review SRE applications, including prior year decisions.

Why would EPA do this? If you’ve already made the decision on these SREs, isn’t that it? Actually, this is more of pre-emptive action than it is EPA changing its mind. More specifically, in the year 2019, EPA granted 31 SREs of the 36 applications submitted for that year. After SCOTUS issued the recent decision, some refiners, among other parties, brought suit against EPA for past SREs that they claim should have been granted. By many estimates, these suits are just a few of many that could be filed. Put in EPA’s own words, “…voluntary remand would save parties from having to spend any more time litigating over the current record for the adjudication that EPA seeks to reconsider[1].” In other words, we’re doing this before any of you really make us.

Further, EPA is trying to either explain their rational for granting or denying SREs, as the case may be, for the year 2019. Given the time that these SREs were granted under the previous EPA Administrator, it might take some effort to dig into that policy. Again, in EPA’s own words “…EPA wishes to reconsider its Decision and, in doing so, also seeks an opportunity to consider whether to provide a more robust explanation for the adjudications underlying the Decision, should those adjudications remain undisturbed or for any new decisions rendered on reconsideration. While EPA does not confess error, EPA acknowledges that a more robust analysis and explanation of its rationale for any action taken on remand would make any judicial review more efficient[2].” In other words, we need to figure out what we did, give us a second.

Is this a good idea? From a procedural standpoint, it makes a lot of sense. Resolving this many procedural issues in one fell swoop is efficient. Does it mean that some things might change? Yes, that’s distinctly possible. The entire point of this motion was to point out that EPA might need to change their position. EPA just wants everyone to know they’re doing this because they want to, not because anyone else told them to. Will these possible re-adjudications change the framework for the way future SREs are analyzed? Yes, that’s also a distinct possibility.

In EPA’s defense, a lot has changed since the year 2019. There has been a pandemic, Supreme Court case that changed the way framework for the way SREs are evaluated, and a change in administrations, among other things. It’s encouraging to see that they are making time to take into account the new legal framework put forth by the courts.

[1] Sinclair Wyoming Refiner Company v. EPA, nos. 19-1196, 19-1197; Kern Oil & Refining Company v. EPA, no. 19-1216; Renewable Fuels Association et. al. v EPA no. 19-1220; and Wynnewood Refining Company LLC v. EPA no. 20-1099; EPA’s Motion for Voluntary Remand without Vacatur, Pg. 15 (Aug. 25, 2021).

[2] Id. at 13.