EPA approves 31 SREs, lowers 2018 RVO by 1.43 billion RINs

By Erin Voegele | August 12, 2019

The U.S. EPA announced Aug. 9 it has approved 31 of the 38 small refinery exemptions (SREs) that had been pending for compliance year 2018. Eight remaining SRE petitions that were pending for compliance years 2016, 2017 and 2018 were denied, while one SRE for 2018 was withdrawn or declared ineligible. According to EPA data, no additional SRE petitions are pending at this time.

The 31 SRE petitions approved for compliance year 2018 have exempted 13.42 billion gallons of gasoline and diesel from having to meet Renewable Fuel Standard renewable volume obligations (RVOs), accounting for 1.43 billion RINs. That volume represents nearly 7.5 percent of the 2018 RFS blending requirements finalized by the agency nearly two years ago.

According to the EPA, six of the remaining SRE petitions for compliance year 2018 were denied, while one was declared ineligible or withdrawn. An SRE petition that had been pending for compliance year 2017 and another for compliance year 2016 were also denied by the agency.

For the six compliance years spanning from 2013 through 2018 the EPA has approved SRE petitions that have exempted a combined 45.66 billion gallons of gasoline and diesel from meeting RFS blending obligations, representing 4.73 billion RINs.

For 2013, eight of 16 SREs were approved, accounting for 1.98 billion gallons of gasoline and diesel, or 190 million RINs. For 2014, the EPA approved eight of 13 SRE petitions, resulting in blending obligations for 2.3 billion gallons of gasoline and diesel to be waived, accounting for 210 million RINs. The agency approved seven of 14 SRE applications for compliance year 2015, exempting 3.07 billion gallons of gasoline and diesel, or 290 million RINs. For compliance year 2016, the EPA approved 19 of 20 SREs, exempting 7.84 billion gallons of gasoline and diesel from meeting RFS blending requirements, accounting for 790 million RINs. For compliance year 2017, the number of SRE applications soared to 37, with 35 of those petitions approved. As a result, 17.05 billion gallons of gasoline and diesel were exempted, accounting for 1.82 billion RINs. According to the EPA, 40 SRE applications have been filed to date for 2018. The 31 approved SREs exempted 13.42 billion gallons of gasoline and diesel, or 1.43 billion RINs.

In a statement released Aug. 9 on the SRE announcement, the EPA announced its intention to further explore opportunities to remove regulatory burdens that prevent marketplace entrance and growth to natural gas, flexible fuel vehicles, and E85 fuels.

The Coalition for Renewable Natural Gas has spoken out to criticize the EPA’s approval of SREs. "The process for granting exemptions to the Renewable Fuel Standard obligations is broken,” said David Cox, operations director for the RNG Coalition. “Retroactive small refinery exemptions (SREs) undermine America's biofuel industries by eroding demand for the fuels that Congress asked us to make for the sake of our nation's energy security and independence. The RNG Coalition calls on EPA to account for all available RNG fuel volume in setting the 2020 renewable fuel standards, including volumes stranded by these most recent SREs."

The American Biogas Council condemned EPA’s continued abuse of SREs. “The EPA and Trump’s Administration clearly have a flagrant disregard for the livelihood of farmers, rural America and renewable fuel producers of all kinds,” said Patrick Serfass, executive director of the American Biogas Council. “In a year in which agricultural interests have suffered under the strain of President Trump’s trade war, this action is especially callous. Due to the large volume of fuel represented by these waivers, the biogas industry will undoubtedly stop development and investment in many new projects that should be creating new jobs and infrastructure in rural, suburban and urban America. This is not how the RFS was designed to work.

“It seems that President Trump’s campaign promises to support the RFS were empty at best, as his EPA is doing everything within their power to undermine markets and disregard court orders,” Serfass continued. “This abuse must stop immediately. EPA must follow the letter and spirit of the law that Congress passed.”

The Biotechnology Innovation Organization called the SRE’s unjustifiable. “The administration is inflicting significant economic pain on American farmers and biofuel producers by granting these 31 Renewable Fuel Standard exemptions to the oil industry,” said Stephanie Batchelor, vice president of BIO’s industrial and environmental section. 

“These exemptions stifle biofuel innovation, jeopardize energy security, and drive down the demand for sustainable solutions that reduce greenhouse gas emissions. If the administration is serious about strengthening rural economies, protecting farmers and reducing environmental impact, it will cease these unjustifiable waivers and approve pending pathways and production facilities for American-made biofuels.”

Representatives of the ethanol industry have sharply criticized the EPA for the newly approved SRE exemptions.

The Renewable Fuels Association called the SREs refiner bailouts that represent a broken promise that will haunt rural America. “At a time when ethanol plants in the Heartland are being mothballed and jobs are being lost, it is unfathomable and utterly reprehensible that the Trump Administration would dole out more unwarranted waivers to prosperous petroleum refiners,” said Geoff Cooper, president and CEO of the RFA. “Today’s announcement comes as a total shock, as just two months ago President Trump himself heard directly from Iowa farmers and ethanol plant workers about the disastrous economic impacts of these small refinery handouts. In response, he told us he would ‘look into it’ and we believed that would lead to the White House and EPA finally putting an end to these devastating waivers. Instead, the Trump administration chose to double down on the exemptions, greatly exacerbating the economic pain being felt in rural America and further stressing an industry already on life support.

“There is absolutely no evidence whatsoever that small refineries are suffering ‘disproportionate economic harm’ due to the RFS, meaning the entire EPA decision-making process is a sham,” Cooper continued. “Making matters worse, the process remains cloaked in secrecy and bias, and there is mounting evidence that the administration is continuing to grant full exemptions against the recommendations of the Department of Energy—and even against the advice of some EPA officials.”

RFA noted that 13 ethanol plants have recently shut down—three of them permanently—due in large part to the demand loss resulting from the administration’s abusive exploitation of the small refiner waivers.

“Ethanol demand has fallen and prices have plummeted to their lowest values in more than a decade,” Cooper said. “When operating, the 13 plants that recently shut down bought nearly 300 million bushels of corn and supported more than 2,400 jobs in rural communities from Iowa and Minnesota to Mississippi and Virginia. Who will tell those workers and their families that the demands of Big Oil are more important to this administration than the livelihood of rural America?”

The American Coalition for Ethanol said the approved SREs are a step backward that will further damage the U.S. agricultural community. “EPA’s refiner-win-at-all-costs oversight of the RFS is doing real damage to America’s farmers and renewable fuel producers who are already suffering from trade wars and volatile markets,” said Brian Jennings, CEO of ACE. The RFS is supposed to ensure the use of ethanol and biodiesel increases from one year to the next, but 85 Small Refinery Exemptions later and over 4 billion waived gallons represents an enormous step backwards.

“The agency’s actions on the 2018 waiver requests reinforces our decision to join with others to challenge  EPA’s handling of certain small refinery exemptions in Court and petition for EPA to account for lost volumes of renewable fuel resulting from the unprecedented number of retroactive waivers granted by the Agency that we recently asked the court to move forward on due to no response from EPA,” Jennings continued.

Growth Energy said the approved SREs are handouts that give oil refineries a free pass under the RFS. “The EPA has proven beyond any doubt that it doesn’t care about following the law, American jobs, or even the president’s promises,” said Emily Skor, CEO of Growth Energy. “Now farmers and biofuel producers are paying the price.

“These exemptions are destroying demand for homegrown energy at a time when family farms are struggling, farm income is plummeting and many ethanol plants have been forced to close their doors or idle production,” Skor continued. “The impact on rural communities cannot be overstated. President Trump must move quickly if there is any hope of repairing the damage. If he won’t hold the EPA accountable, then he’s failing to uphold the commitment he’s made to rural America.”

More data on SREs is available on the EPA’s website