Axne calls for OIG investigation into EPA’s misuse of SREs

By Erin Voegele | August 21, 2019

Rep. Cindy Axne, D-Iowa, sent a letter to U.S. EPA Acting Inspector General Charles Sheenhan Aug. 21 requesting the EPA Office of the Inspector General conduct an investigation into the agency’s questionable decision-making and misuse of its small refinery exemption (SRE) authority to benefit large or unqualified companies that may be exerting an undue amount of influence over the regulatory process.

The letter references the 31 SREs the EPA approved on Aug. 9 and notes the EPA’s unprecedented use of SREs over the past several years has waived more than 4 billion gallons of Renewable Fuel Standard blending requirements. The letter explains that last year was the first time ethanol consumption fell, even with historically low prices. Biodiesel has also been strongly impacted with biodiesel losses estimated at $7.7 billion over the past three years. The most recent round of SRE approvals came at a time when farm income is down an estimated 49 percent since the end of 2018.

“I have serious concerns that the EPA continues to ignore the boundaries of its authority under the law in its administration of this waiver authority,” Axne wrote in the letter. “Relying on the veil of secrecy provided by claims of confidential business information conceals the EPA’s highly questionable decision-making and misuse of its authority to benefit a small group of companies that may be exerting an undue amount of influence over the regulatory process.”

In the letter, Axne requests an investigation into SREs granted in 2016, 20178 and 2018, including which refiners received the waivers, the financial value of the waivers received by each company, any contract by refineries seeking waivers with the EPA or the White House, the consistency of EPA’s decisions with statutory requirements and regulations, the EPA’s decision-making process, and the presence of conflict of interest for any of the EPA staff or administration officials involved in the SRE process. Axne also asks the Office of Inspector General to determine what reasoning the EPA had for each waiver for 2016 to 2018, including if there was any statutory or legal rule to support it.

The letter points out that less than 10 waivers were granted between 2008 and 2016, compared to the 85 waivers that have been granted to date for compliance years 2016-2018. “I request that OIG work to determine if there were refineries who were denied a waiver within that 8-year period but received a waiver under this administration,” Axne wrote.

Axne made the announcement that she was seeking the investigation during an Aug. 21 event at Southwest Iowa Renewable Energy in Council Bluffs, Iowa. Trump visited SIRE earlier this year to celebrate the EPA’s rule to allow year-round sales of ethanol. During that event, farmers and industry representatives discussed their concerns over the EPA’s treatment of SREs with Trump. According to information released following that event, Trump indicated he would look into the SRE issue.

Following the EPA’s approval of 31 SREs for compliance year 2018 on Aug. 9, several news agencies reported that Trump intervened and personally approved the those waivers. Following that news, Axne released a statement expressing disappointment in the waivers themselves and the fact that Trump personally approved those requests.

Speaking at SIRE Aug. 21, Axne announced her request for the OIG investigation, noting that EPA’s treatment of SREs is hurting Iowans, famers, and every downstream economy related to the agriculture industry.

“Right now what we are seeing with this administration is a dogged approach to allow the biggest fossil fuel players an opportunity to put more money back in the pockets of their large shareholders and take that money out of the pockets of hardworking farmers right here in Iowa,” she said.

“We’ve seen a dramatic increase in the amount of waivers that this administration is allowing and we have reason to believe that the allowances that are being given aren’t legal,” she said and referred to reports that the U.S. Department of Energy’s analysis showed many waivers should be denied.

“We believe there is a play at hand that is actively working against hardworking farmers in my district and in our state at the expense of the entire agriculture community and every job associated with it to benefit large fossil fuel companies and quite honestly, the wealthiest among us, and that’s wrong, Axne said. “ So, I’m here to make sure we stand up for that. I remember hearing the president say that he’s the best thing to ever happen to farmers. As a matter of fact—that’s a joke. He is creating problems that are hurting our farming community. He is hurting our farmers and we need to make sure we hold this administration accountable to doing the right thing, which is making sure that we protect the ethanol industry and stop issuing these waivers that aren’t needed, that are unnecessary, and don’t benefit anybody but already rich fossil fuel companies.”

Axne was joined at SIRE by Mike Jerke, president and CEO of SIRE; Tom Shipley, a republican state senator for Iowa; Jeff Jorgenson, a board member of the Iowa Soybean Association; and Delayne D. Johnson, CEO of Quad County Processors.

Jerke referenced Trump’s visits to Iowa, including the June visit to SIRE in celebration of year-round E15. He stressed that year-round E15 wasn’t the only promise Trump made to ethanol producers on those trips. “He also promised to preserve and protect the RFS,” Jerke said, specifically the 15 billion gallon volume obligation within the RFS primarily filled by corn ethanol. The 31 SREs approved with Trump’s input “guts the RFS and breaks the president’s promise,” Jerke said, noting that 15 ethanol plants have been shuttered or idled in the past 12 months—25 percent of those since Aug. 9.

“If we look at the Aug. 9 announcement of 31 SREs, the recent China trade developments and last week’s most recent USDA report, there has been a potential of $10.6 billion of wealth transferred from farmers in rural America and the ethanol industry to Big Oil,” Jerke said, noting hundreds of direct hobs and thousands of indirect jobs have also been impacted.

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