Senators urge EPA to reject 52 ‘gap year’ SRE petitions

By Erin Voegele | June 25, 2020

A bipartisan group of 16 senators sent a letter to U.S. EPA Administrator Andrew Wheeler on June 25 urging him to reject the 52 gap year small refinery exemption (SRE) petitions recently filed by small refineries in an effort to circumvent the Tenth Circuit Court’s January ruling that determined the EPA cannot extend exemptions under the Renewable Fuel Standard to any small refinery whose earlier, temporary exemptions had lapsed.

“We urge you to reject these petitions outright and respond in writing to our questions about recent use of SREs under the RFS,” the senators wrote. “Granting these petitions would worsen the unprecedented economic challenges facing the biofuels industry and the rural communities that it supports while violating EPA’s own policy on this issue.”

If those gap year SRE petitions are approved, it would allow refineries with lapsed SREs to establish a continuous chain of exemptions, the senators explained. As a result, those refineries would continue to be eligible for future SREs.

“These are refineries who either did not submit petitions or were not granted waivers in past years, meaning they were not experiencing ‘true economic hardship’ to comply at the time,” the senators wrote. “These petitions should not even be entertained because they are inconsistent with the Tenth Circuit decision, Congressional intent, the EPA’s own guidance, and—most importantly—the interests of farmers and rural communities who rely on the biofuel industry.”

The letter points out that the EPA’s administration of the SRE program contradicts guidance issued by the agency and asks Wheeler to answer a series of questions related to the EPA’s SRE program. One of those questions asks Wheeler if he commits to applying the Tenth Circuit Court’s decision nationwide now that the court has unanimously rejected a petition for a rehearing. The letter also addresses recent RFS waiver requests filed by several oil state governors and asks Wheeler to confirm he is aware that the structure of the RFS already ensures that renewable volume obligations (RVOs) are effectively automatically adjusted proportionally based on actual sales of gasoline.

“Even before COVID-19, the misuse of small refinery waivers under the RFS had led many biofuel plants to shut down partially or altogether,” the senators wrote. “The further loss of biofuel demand and sales during COVID-19 has resulted in further harm to the industry, with over 100 biofuel processing plants now idled or closed. This has resulted in reductions to the rural workforce, decreases in commodity purchases and prices, and shortages of co-products critical to the agricultural supply chain. Meanwhile, the administration has taken steps to help the oil industry through purchases for the Strategic Petroleum Reserve.

“The approval of SREs for past compliance years at this moment would only worsen the unprecedented economic challenges facing the biofuels industry and the rural communities that it supports,” the senators continued. “EPA must deny these petitions and apply the 10th Circuit decision nationally.”

The letter is signed by Sens. Amy Klobuchar, D-Minn.; Joni Ernst, R-Iowa; Tammy Duckworth, D-Ill.; Chuck Grassley, R-Iowa; Tina Smith, D-Minn.; Roy Blunt, R-Mo.; Debbie Stabenow, D-Mich.; Michael Rounds, R-S.D.; Gary Peters, D-Mich.; Ben Sasse, R-Neb.; Tammy Baldwin, D-Wisc.; John Thune, R-S.D.; Richard Durbin, D-Ill.; Josh Hawley, R-Mo.; Sherrod Brown, D-Ohio; and Deb Fischer, R-Neb.

Growth Energy issued a statement thanking the senators for rejecting the gap year SREs. “The sole purpose of these retroactive exemptions is to circumvent the law at the expense of rural families struggling to get back on their feet,” said Emily Skor, CEO of Growth Energy. “There is no justification for allowing these petitions to hang over the market, injecting uncertainty into America’s agricultural recovery. EPA needs to dismiss the oil industry’s latest attempt to destroy demand for American biofuels and restore integrity to the RFS. We’re very grateful to Senate champions across the farm belt for standing up against this attempt to rewrite years of history, skirt the courts, and torpedo efforts to rebuild America’s agricultural supply chain.”

The Renewable Fuels Association is also speaking out in support of the letter. “We applaud this bipartisan group of Senators for exposing the absurdity of the oil industry’s latest ploy to undermine the Renewable Fuel Standard,” said Geoff Cooper, president and CEO of the RFA. “We thank them for holding Administrator Wheeler accountable and demanding answers. EPA’s failure to comply with the recent Tenth Circuit Court decision is prolonging uncertainty and exacerbating economic harm in rural America, which was already reeling from the effects of COVID-19 on the agriculture and biofuels sector. RFA agrees with these Senate leaders that granting gap-year small refinery exemptions would not only be illegal, but it would also worsen the demand destruction that renewable fuel producers have already endured at the hands of EPA in recent years. We proudly join these Senators in calling on EPA to immediately deny the gap-year petitions and apply the Tenth Circuit decision nationally.”

The National Biodiesel Board also thanked the senators and cautioned that EPA approval of the gap year SREs would worsen the economic challenges for the biofuel industry. "Biodiesel producers and soybean farmers across the country are already facing unprecedented economic challenges,” said Kurt Kovarik, vice president of federal affairs at the NBB. “A brand-new flood of unlawful small refinery exemptions is guaranteed to compound the damage from the past several years. The Senators are exactly right that EPA should immediately reject these petitions as inconsistent with a federal court decision. We thank Senators Amy Klobuchar and Joni Ernst for their leadership."

A full copy of the letter can be downloaded from Klobuchar’s website.