February 10, 2021
Sometimes, the only thing you need is Stan, the man with the plan…or in this case, Michael Regan. The Biden Administration’s pick to lead the Environmental Protection Agency (EPA) plans to sit down with general counsel to go over the biofuels policy with respect to Small Refiner Exemptions (SREs).
As many of you know, each new presidential administration is able to pick its own administrators. The head of the EPA, otherwise known as the EPA Administrator, is one such position. The person picked for this position is typically someone who can best enable the incoming administration’s environmental policy. As the biofuels industry is painfully aware, EPA’s treatment of certain biofuels policies, such as SREs, can vary greatly from administration to administration as well as from administrator to administrator.
Before we get too much farther into discussing Regan’s plan, it might be worth it to give you a couple of quick reminders. First, at the beginning of January 2020, the 10th Circuit overturned the EPA’s decision to grant SREs to three different refineries based on various reason. These reasons included that the refinery had never been granted an exemption but had applied for and been granted an extension, or the exemption had lapsed because an extension had not been filed for in consecutive years. The refineries affected by this decision had appealed to the Supreme Court and that decision is expected to be published this June.
The second thing you’ll probably want to remember is how an SRE works. To be brief, an SRE may be granted to a refiner who may not be able to meet the compliance obligation created due to the refiner’s business activities. The EPA has various sets of criteria when determining whether to grant an SRE as well as certain regulatory timelines that must be met. Over the past few years, the biofuels industry has experienced EPA’s rampant granting of SREs which has undermined the biofuels industry as well as become problematic for industry stakeholders. To complicate matters, the courts have not been consistent on the outcome anytime a party had challenged EPA’s rulings on SREs. Between the inconsistencies with EPA and the courts, biofuels participants have found navigating this ever-changing landscape to be beyond difficult.
So who is this Michael Regan and what’s his plan? Regan was the former head of North Carolina’s environmental regulator. According to a statement made by Mr. Regan during a hearing on his nomination, the one thing he knows is that he has to sit down with legal counsel. Ewww. Lawyers. It takes one to know one, am I right? To be more precise, Regan is quoted as saying, “[t]he one thing I know I have to do is consult with our general counsel, understand where we are in the legal process, and also understand what options do we have to continue conversations.” When asked if he would wait to see what the Supreme Court would do, Regan is quoted as saying that’s “one way to go.” Yes Regan, it sure is. Regan also noted the importance of transparency and communication surrounding SREs as well as a commitment to following the law.
Great, so his plan is to talk to some lawyers and be clear. Awesome. Actually, after these past years’ turmoil, greater transparency, and a return to a closer read of the regulations would be refreshing. Hopefully, this means that the Biden Administration’s EPA will at least give us a more consistent biofuels policy. It is encouraging that Mr. Regan is taking steps to be guided by informed people for determining the direction of the current court case. Time will be the best teller of whether Regan is able to achieve a more stable biofuels policy.