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Corn, Soybean, Soybean Oil Futures Fall On Supreme Court’s Ruling in Favor Of Refiners

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Renewable fuels groups were dealt a blow Friday as the U.S. Supreme Court issued a decision to overturn a 2020 appellate court ruling that said EPA could only grant waivers to refiners that had previously received them.

The Supreme Court ruling impacts Renewable Fuel Standard (RFS) waiver exemption extensions given to HolylFrontier Corp. and CVR Energy, Inc. The 10th Circuit Court of Appeals had overturned those waiver extensions granted under the Trump administration.

As a result, the ruling could open the door for more refiners to file exemption requests for a federal law requiring refiners to increase levels of ethanol and renewable fuels blended into their products.

Issue Over "Extension"

In the Supreme Court dissent, delivered by Supreme Court Judge Neil Gorsuch, the Court said the main issue was how you interpret “extension," with the RFS statute failing to provide a definition.

“The key term here — extension — is not defined in the statute,” the Court stated in the dissent.

After the news hit, corn and soybean prices slipped and soybean oil prices tumbled. Farm Journal Washington Correspondent Jim Wiesemeyer says it also creates more questions.

“This puts the SRE situation in disarray,” says Wiesemeyer. “The Biden administration had come out and backed the 10th Circuit Court decision which now the Supreme Court has overturned. It also raises several questions, including whether now those prior-year SRE requests are needed since the Supreme Court has ruled the word extension does not mean they had to be continuously extended.”

Biofuels Groups Voice Disappointment 

Renewable fuels groups also voiced extreme disappointment in Friday’s ruling. A biofuels coalition, compromised of Renewable Fuels Association, the National Corn Growers Association, National Farmers Union, and the American Coalition for Ethanol released a statement outlining what the decision means.

We and our allies in the Supreme Court case, @NationalCorn@ACEethanol and @NFUDC are extremely disappointed in today’s decision overturning the 2020 appellate court ruling that struck down three improper small refinery exemptions granted by previous @EPA administrators. ... — Renewable Fuels Association (@EthanolRFA) June 25, 2021

“Nearly a year and a half ago, the Tenth Circuit handed down a unanimous decision that was ultimately adopted by the very agency we took to court in the first place,” the Biofuels Coalition said. “While we are extremely disappointed in this unfortunate decision from the Supreme Court, we will not stop fighting for America’s farmers and renewable fuel producers. Further, we are optimistic that other elements of the 10th Circuit decision, which were not reviewed by the Supreme Court, will compel the Biden administration and EPA’s new leadership to take a far more judicious and responsible approach to the refinery exemption program than their predecessors did.”

Growth Energy also released a statement regarding the decision to overturn the lower court’s ruling that said in order to qualify for a hardship exemption under the RFS, a small refinery must have received uninterrupted, continuous hardship exemptions for every year since 2011.

“The Supreme Court disagreed with the lower court’s view of extensions, but today’s decision does nothing to change the 10th Circuit’s ruling that exemptions cannot be granted when refiners cannot properly trace their hardship to compliance with the Renewable Fuel Standard,” said Emily Skor, Growth Energy CEO. “In the past, the biofuel industry has looked to the courts to halt abuse. Today, new leaders at the Environmental Protection Agency have shown a willingness to defend the RFS, most recently by reversing three improperly granted exemptions. We look forward to working with the Biden administration to keep a lid on exemptions, further strengthen the RFS, and fast-track our progress toward decarbonization. Engine smart and earth kind biofuels are vital to achieving the nation’s climate goals.” 

Future of the RFS

So, what happens next? The Biofuels Coalition says as of today, 70 small refinery exemption petitions remain pending with EPA for the compliance years 2011 to 2020. Some analysts think the Supreme Court ruling could open the door for even more SRE requests by refiners.

10th circuit decision still put tight guardrails around the use of SREs which the Supreme Court did not overturn & I expect the Biden admin to keep their campaign promises to support biofuels EPA is on record that RINS DO NOT impose costs on refineries — ChuckGrassley (@ChuckGrassley) June 25, 2021

Sen. Chuck Grassley (R-Iowa) also voiced his frustration over the ruling, saying ultimately, it's a "decision allowing for more handouts to Big Oil." He also called on the Biden Administration to follow the law in the future.

“President Biden must keep his promise to biofuels producers to limit welfare to Big Oil, and promote greater reliance on renewable fuels," said Grassley. "I will continue working to ensure the administration follows the law and keeps its commitments to America’s renewable fuels producers."

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