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DOE Response to Sen. Grassley Shows EPA Ignored Recommendations on Small Refiner Exemptions

July 24, 2019


JULY 24, 2019 - A recent letter from Secretary of Energy Rick Perry to Sen. Chuck Grassley (R-IA) confirms that the Environmental Protection Agency (EPA) has ignored DOE recommendations regarding whether small refiners should receive exemptions from their Renewable Fuel Standard (RFS) blending obligations. "The admissions of the DOE letter flatly contradict previous statements from EPA officials who claimed their hands were tied by DOE recommendations on small refiner exemptions," said RFA President and CEO Geoff Cooper. "EPA has claimed it must follow DOE's guidance on whether to grant or deny exemptions, but this letter clearly shows EPA ignored the recommendations and analysis provided by DOE. The demand destruction that has resulted from these exemptions has been real and significant. Ethanol producers and the corn farmers who supply our industry are facing some of the worst market conditions in a generation, and these small refinery bailouts are largely to blame for that. We urge President Trump and Administrator Wheeler to restore some integrity and judiciousness to the small refiner exemption program, and ensure that any exempted renewable fuel blending requirements are redistributed to non-exempt refiners." The DOE letter, which responds to an April inquiry from Sen. Grassley, states that EPA granted an exemption to a refinery when DOE analysis found no exemption was warranted. Further, DOE states that EPA has never granted partial exemptions--opting instead to grant full exemptions--despite the fact that in many instances DOE analysis indicated only a partial exemption may be considered. According to the letter, "DOE is aware of one instance in which DOE's analysis indicates that EPA consider no exemption, but the result was an EPA decision to grant an exemption to the petitioner." DOE further acknowledges that "EPA has never granted a 50 percent exemption. EPA has...granted...(full) exemptions in the past for which the results of DOE's analysis indicate that a 50 percent exemption may be appropriate." Cooper said the letter also corroborates information recently uncovered through a Freedom of Information Act request filed by RFA, in which a former EPA official warned former Administrator Scott Pruitt that granting certain exemptions "would be a clear violation of Mr. Pruitt's oath of office." Other information uncovered in the FOIA request shows the White House knew exemptions were being granted without any demonstration of "true economic hardship." Since the beginning of the Trump Administration, small refinery exemptions have increased nearly four-fold and not a single request for an exemption has been denied. EPA gave out 54 exemptions from 2016 and 2017 compliance, reducing RFS blending requirements by 2.6 billion gallons. The 2016 and 2017 exemptions led to a reduction in both the volume of ethanol consumed and the ethanol blend rate in 2018—the first annual decline in either measure of ethanol demand in at least 20 years. Another 38 exemption requests remain pending at EPA.