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RFA Supports EPA Proposal to Deny Small Refinery Exemption Petitions

February 7, 2022

EPA, Regulatory, RFS, SRE


The Renewable Fuels Association today expressed strong support for the Environmental Protection Agency’s proposal to deny 65 pending small refinery exemption (SRE) petitions, noting that such an action would “restore confidence” in the Renewable Fuel Standard program. EPA’s proposal also would ensure that, moving forward, the SRE program complies with the Tenth Circuit Court’s 2020 decision in Renewable Fuels Association v. EPA.


“EPA’s proposed decision is consistent with the statute and with EPA’s repeated determinations that small refineries pass through the cost of RFS compliance to the wholesale prices of their products and therefore do not face disproportionate economic hardship,” wrote RFA President and CEO Geoff Cooper in comments submitted to the agency. “When finalized, the proposed approach will restore confidence in the RFS program, which in turn will stimulate the increased investment in renewable fuel production that Congress sought to encourage.”


RFA also encourages EPA to deny 31 SREs granted by the previous administration for compliance year 2018. Those exemptions were inappropriately issued in 2019 and were recently remanded to EPA by the D.C. Circuit following a legal challenge led by RFA. 


Cooper noted that the congressional goals of enhanced energy security and greenhouse gas emissions reduction have been undermined over the past several years due to the massive increase in SREs: “America’s biofuel producers and farmers have been forced to pay the price—the uncertainty and market instability caused by the surge of exemptions have left them unable to fully benefit from a program intended to increase demand for their products.”


Specifically, RFA’s comments stressed five points:


  1. RFA urges EPA to apply the Tenth Circuit’s holdings in the RFA decision nationwide;
  2. RFA supports EPA’s recommitment to its consistent position that all refineries recoup RFS compliance costs;
  3. EPA’s position that all refineries recoup RFS compliance costs is also supported by findings from academic literature, financial analysts, and oil refiners themselves;
  4. EPA should also deny the 2018 SREs that the D.C. Circuit recently remanded; and
  5. RFA supports EPA’s decision to make public its proposed adjudication and to open its SRE policy to public comment.

As the lead petitioner in the RFA v. EPA case in the Tenth Circuit, the respondent in the HollyFrontier Cheyenne Refining LLC v. RFA case in the Supreme Court, and a leading petitioner challenging EPA’s 2018 SREs, RFA has been at the forefront of the legal debates surrounding the RFS program’s SRE provisions. “RFA is pleased to see our hard-fought legal battles on SREs are paying off at long last,” Cooper said. “As a direct result of the Tenth Circuit decision, EPA is moving to finally shut the floodgates on the previous administration’s wave of SREs.”


In a related development, RFA on Friday submitted comments to the EPA on the agency’s proposed renewable volume obligations for 2020-2022, which were announced at the same time as the SRE proposal. While RFA is “strongly supportive of the proposed volumes for 2022 for all categories of renewable fuel,” it noted that ethanol producers are “very troubled by EPA’s questionable proposed use of its ‘reset’ authority to reopen the 2020 RVO.”