Governors’ Biofuels Coalition urges EPA to reject gap year SREs

By Erin Voegele | June 29, 2020

The Governors’ Biofuels Coalition sent a letter to U.S. EPA Administrator Andrew Wheeler on June 29 urging the agency to deny the 52 gap year small refinery exemptions (SREs) oil companies have filed in an effort to circumvent the Tenth Circuit Court of Appeal’s Jan. 24 ruling.

As part of that ruling, the court determined that the EPA cannot extend exemptions under the Renewable Fuel Standard to any small refinery whose earlier, temporary exemptions had lapsed.  Wynnewood Refining and HollyFrontier challenged the ruling in March by seeking a rehearing en banc. The court, however, rejected those petitions on April 7. The EPA has not yet announced how it plans to implement the court’s ruling.

The EPA on June 18 updated the data posted to its online SRE dashboard showing that 52 gap year SRE petitions have been filed. Those gap year SRE petitions represent an effort by several impacted refineries to establish a continuous chain of exemptions allowing those refineries to continue to be eligible for future SREs.

“If these applications are approved, another unnecessary financial burden will be placed on the nation’s farmers and consumers,” said the member of the Governors’ Biofuels Coalition in the June 19 letter to Wheeler. “If all 52 applications are approved, the market will lose more than 2 billion gallons of biofuel blending requirements.”

“We are concerned that EPA is considering exemptions for prior years that were specifically submitted to evade the court of appeal’s decision by allowing refineries with lapsed SREs to establish a continuous chain of exemptions,” they wrote. “Approving prior-year SREs in this manner ignores the court’s decision and congressional intent and will severely impact farmers and rural communities that support the biofuels industry.

“Even before the coronavirus pandemic, the misuse of small refinery waivers under the RFS caused a significant number of plants to partially or fully shut down,” they continued. “The resulting job losses, decreases in commodity purchases and prices, and shortages of co-products affect rural America every day. Your approval of these SRE 'gap filings' would only worsen the unprecedented economic challenges facing the renewable fuels industry and rural communities. We strongly urge you to reject these applications and work with us to uphold the spirit and intent of the RFS by ensuring a role for biofuels in the nation’s energy future.”

The letter is signed by South Dakota Gov. Kristi Noem, Minnesota Gov. Tim Walz, Iowa Gov. Kim Reynolds, and Nebraska Gov. Pete Ricketts. Noem currently serves as chair of the Governors’ Biofuels Coalition while Walz serves as vice chair. Reynolds and Ricketts are former chairs of the coalition.

The Renewable Fuels Association has spoken out to thank the Governors’ Biofuels Coalition for their effort. “These governors have witnessed first-hand the significant effects of the COVID-19 pandemic on the U.S. ethanol industry and know that now is not the time for EPA to give in to oil-industry demands and harm the rural American economy further,” said Geoff Cooper, president and CEO of the RFA. “The governors know the value of our members’ work in creating jobs and economic opportunity throughout the American heartland, and we thank them for their passion for this cause.”

Growth Energy also cheered the coalition for its opposition to gap year SREs. “We’re grateful to Governors Noem, Walz, Reynolds, and Ricketts for standing up against this latest scheme to steal markets from struggling farmers and biofuel workers,” said Emily Skor, CEO of Growth Energy. “From state capitols to the U.S. senate, rural champions are putting their foot down because there is no excuse for allowing these regulatory games to hold back the rural recovery. The last thing farm states need right now is another legal battle driving uncertainty in the market and undermining efforts to rebuild the agricultural supply chain.”

A full copy of the letter can be downloaded from the Governors’ Biofuels Coalition website.