June 25, 2021

Supreme Court Decides HollyFrontier Cheyenne Refining, LLC v. Renewable Fuels Association

On June 25, 2021, the U.S. Supreme Court decided HollyFrontier Cheyenne Refining LLC v. Renewable Fuels Association, No. 20-472, holding that a small refinery can apply for a hardship exemption from the Environmental Protection Agency’s renewable fuel credit requirements at any time, even if a previous hardship extension had lapsed.

In 2005 and 2007, Congress created the renewable fuel program (“RFP”) to increase the supply of domestically produced renewable fuel. Congress included statutory exemptions from RFP requirements for small refineries. For example, Congress provided a blanket exemption for small refineries “until calendar year 2011” for all small refineries. Congress also permitted small refineries to seek extensions of a hardship exemption “at any time.” 42 U.S.C. § 7545(o)(9)(B)(i). The Environmental Protection Agency (“EPA”) administers the RFP program through a system of renewable fuel credits and evaluates requests for hardship exemptions.

Three small refineries petitioned the EPA for hardship exemptions under subparagraph (B)(i). Each small refinery had initially received a hardship exemption but had let their exemption lapse for a period before filing their current petitions. The EPA granted all three petitions, and a group of renewable fuel producers objected. The Tenth Circuit Court of Appeals vacated the EPA’s decisions based on the ground that the refineries were ineligible for an “extension” of their exemptions because they had allowed their previously granted hardship exemptions to lapse.

The Supreme Court reversed the judgment and held that the statute’s text permitted extensions of the hardship exemption, even if there had been a previous lapse. As a preliminary matter, the Supreme Court found that the term “extension” in subparagraph (B)(i) referred to an increase in time based on the neighboring provisions’ temporally described exemptions. Next, the Court determined based on the statute’s text and context that an “extension” of time could be granted after a period of lapse based on ordinary usage. No dictionary definition of the term “extension” required unbroken continuity. The Court’s interpretation of “extension” was further supported by many statutes that allow extensions to be granted after a deadline passes. Additionally, subparagraph (B)(i) permitted a petition “at any time,” a phrase that does not demand rigid continuity. The Court noted that the term “extension” was not used with a continuity requirement in the neighboring provisions either. The Court rejected the invitation to view the statute as generating a sunset scheme because the exemption provisions permitted small refineries to seek indefinite extensions of the hardship exemption. Further, the Court emphasized that statutory exceptions are to be read fairly, not narrowly. Finally, the Court noted that either party’s position could be supported by surmise about “legislative purpose and sound public policy.” However, the Court’s “analysis can be guided only by the statute’s text — and that nowhere commands a continuity requirement.”

Justice Gorsuch delivered the opinion of the Court, in which Chief Justice Roberts and Justices Thomas, Breyer, Alito, and Kavanaugh joined. Justice Barrett filed a dissenting opinion, in which Justices Sotomayor and Kagan joined.

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