WASHINGTON, D.C. – Yesterday, Growth Energy submitted comments in response to the U.S. Environmental Protection Agency’s (EPA) proposal to deny 65 pending small refinery exemption (SRE) requests. Growth Energy CEO Emily Skor released the following statement applauding the proposed denials:
“A full sweep denial of the 65 SREs pending before EPA would provide the biofuels industry with certainty in the marketplace and encouragement that the loss of over 4 billion gallons of biofuel blending during years of SRE abuse will soon become a practice of the past,” said Skor. “We are glad to see this EPA recognize that SREs can be granted in a narrow set of circumstances caused only by the RFS. Finalizing this proposal would help get the RFS back on track and ensure greater compliance by refiners so more cleaner-burning biofuels are blended, just as Congress intended.”
In the proposal, EPA presents a statutory interpretation of the SRE provisions of the Clean Air Act that would, upon application to 65 pending SRE petitions, lead EPA to deny all 65 petitions. The interpretation would lead EPA to conclude that none of the 65 pending SRE petitions meet the “disproportionate economic hardship” standard for SREs, for three reasons: (1) no refiner bears RFS compliance costs that are disproportionate relative to others’ costs; (2) obligated parties recover RFS compliance costs and thus they do not suffer economic hardship; and (3) because of (1) and (2), none of the 65 SRE petitioners bear disproportionate economic hardship.
EPA supported its proposal by interpreting the RFS to require refineries to show that any hardship must be caused by compliance with the RFS itself, and not by other factors external to the RFS. In addition, EPA proposed further to find (which it has consistently found since at least 2015) that refiners recover the costs of acquiring RINs to achieve RFS compliance and, therefore, that small refineries do not suffer from economic hardship, let alone disproportionate economic hardship, from compliance with the program.
Growth Energy has been a leader in the charge to end the abuse of small refinery exemptions, repeatedly urging EPA to faithfully implement rigorous standards for SRE eligibility, as it is required to do so under the RFS. For example, Growth Energy challenged EPA’s improper, blanket grant of 31 SREs for the 2018 compliance year in the D.C. Circuit Court of Appeals; those SREs are now under review by EPA upon remand from the court, and Growth has urged EPA to deny them on the same grounds as contained in this proposed SRE exemption denial decision. In addition, Growth Energy submitted comments on Friday in response to the proposed 2020, 2021, and 2022 Renewable Volume Obligations (RVOs), urging EPA to ensure that any future SREs are accounted for during the RVO rulemaking process, and to ensure that past SREs issued retroactively, after RVOs were finalized, be made up in future RVO years.