According to a report from Reuters, a U.S. appeals court has ruled that the Environmental Protection Agency (EPA) must reconsider three of the biofuel waivers it recently granted to small oil refineries, arguing the agency’s justification for approving the exemptions was flawed.

The decision from the U.S. Court of Appeals for the 10th Circuit dated Jan. 24 came after a coalition of biofuel industry groups had challenged the 2016 exemptions for Holly Frontier's Woods Cross and Cheyenne refineries, as well as CVR Energy's Wynewood refinery.

According to the court's decision, the EPA overstepped its authority to grant the Holly Frontier and CVR waivers, because the refineries had not received exemptions in the previous year. The court said the Renewable Fuel Standard (RFS) is worded in such a way that any exemption granted to a small refinery after 2010 must take the form of an “extension.”

“Because an ‘extension' requires a small refinery exemption in prior years to prolong, enlarge or add to, the three refinery petitions in this case were improvidently granted,” according to the court's decision. “We remand these matters to the EPA for further proceedings consistent with this opinion.”

A news release from the National Corn Growers Assn. offered praise for the decision, noting that EPA’s own data show that a maximum of only seven small refineries could have received continuous extensions of their previously existing exemptions.

“The Court’s decision is welcome news for corn growers,” said National Corn Growers Assn. president Kevin Ross. “Ethanol is an incredibly important value-added market for corn farmers, and EPA’s waivers have reduced RFS volume requirements by more than 4 billion gallons over the past 3 years, impacting corn demand. We are optimistic this decision will finally put an end to the demand destruction caused by waivers and keep the RFS back on track.”

Other agricultural groups expressed similar support, such as the National Farmers Union.

“This ruling comes at a critical time for America’s farmers and the biofuels industry,” said National Farmers Union president Roger Johnson. “Due in large part to EPA’s rampant and ongoing abuse of the SRE program, 2019 was one of the most challenging years in history for the agriculture and biofuel sectors. We believe this ruling will help restore the ability of the RFS to drive demand and expand markets for renewable fuels, as Congress intended, providing a badly needed shot in the arm for rural America.”

The EPA’s handling of small refinery exemption waivers has received considerable backlash in the past months, following a proposal in October that plans to account for the blended gallons of ethanol lost in small refinery exemptions based on a 3 year average of those exemptions.