A three-judge panel of the 10th U.S. Circuit Court of Appeals has ruled the EPA cannot exempt small refineries from biofuel-blending mandates unless the facilities were already exempt from the requirement the prior year.
The EPA can only extend existing exemptions, not grant new ones—a restriction that could sharply reduce the number of such exemptions if applied nationally. The court's decision relied on the definition of "extension," which is in the 2005 law governing the renewable fuel standard.
Congress initially exempted small refineries, citing the likelihood of economic hardship at the outset of the program and allowed for extensions in subsequent years on an annual basis. The judges interpreted the law, which Congress updated in 2007, to mean that only exemptions already in place could be granted again.
The court ruled that the common meaning of 'extension' requires that a small refinery which did not seek or receive an exemption in prior years is ineligible for an extension, because at that point there is nothing to “prolong, enlarge, or add to," the judges said. The ruling added, "Congress presumably used the term 'extension' for a reason, and we should be hesitant to strip that word of significant meaning." At this point the ruling only applies in the 10th Judicial Circuit—Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming.
The EPA has a few options in the case, including asking the three judges to reconsider the case, seeking an appeal by the full 10th Circuit, appealing to the Supreme Court or letting the opinion stand.