Ethanol: Issues Over EPA SRE (Small-Refinery Exemption) Requests Persist

Rachel Frazin reported recently at The Hill Online that, “The Senate Environment and Public Works Committee will not take up Douglas Benevento’s nomination for the No. 2 position at the Environmental Protection Agency (EPA) after Sen. Joni Ernst (R-Iowa) announced her opposition. 

“Ernst said in a statement on [June 26th] that she would oppose the nomination, citing issues that ethanol and biodiesel producers have with the agency over blending requirement waivers for oil refiners.

‘Until EPA tells us exactly what they plan to do with the ‘gap year’ waivers, Mr. Benevento does not have my vote,’ Ernst said. ‘Iowa’s hardworking ethanol and biodiesel producers are sick of being yanked around by Andrew Wheeler and the EPA. Our producers need certainty; until we get that, no EPA nominee is getting my vote.’

The Hill article pointed out that, “During a confirmation hearing in March, Ernst pressed the nominee over exemptions to ethanol blending requirements for small oil refiners.

“There has been a chasm among Senate Republicans who live in corn-producing states and those who live in oil-producing states over Renewable Fuel Standards (RFS) and waivers for blending requirements.”

Ms. Frazin added that, “And it was recently reported that the EPA is weighing more than 50 waiver requests.”

Washington Examiner writer Abby Smith reported late last month that, “Ernst’s announcement comes just one day after she led a bipartisan letter with more than a dozen senators calling on Wheeler to ‘outright’ reject the oil refiners’ petitions.

Ms. Smith explained that, “Biofuels producers and corn-state lawmakers say the ‘gap petitions‘ are a way to circumvent [a federal appeals court ruling in January], which said the EPA couldn’t grant exemptions for refineries whose waivers had lapsed. By petitioning for previous years, refiners are attempting to establish a ‘continuous chain of exemptions,’ even though they weren’t experiencing economic hardship to comply at the time, the bipartisan group of senators said in their recent letter.”

And last week, Reuters writer Stephanie Kelly reported that, “U.S. Senator Chuck Grassley said on Tuesday he supported a plan by one of his Senate colleagues to block the nomination of an Environmental Protection Agency official until the agency makes clear how it would handle requests from oil refiners for retroactive exemptions from their biofuel blending mandates.”

Meanwhile, DTN Ag Policy Editor Chris Clayton reported last week that, “South Dakota Gov. Kristi Noem and Minnesota Gov. Tim Walz wrote EPA Administrator Andrew Wheeler on Monday calling on EPA to reject 52 petroleum refiner applications for retroactive small refinery exemptions [SREs] from the Renewable Fuels Standard.”

“The 52 refiners have applied for SREs in past years going back to 2011 under the argument that by granting the exemptions for prior years that would bring them in ‘compliance’ with the 10th Circuit Court of Appeals decision handed down in January,” Mr. Clayton said.

And on Thursday, Reuters writer Stephanie Kelly reported that, “The U.S. Environmental Protection Agency has put on hold indefinitely a proposal for the amount of biofuels refiners must blend into their fuel next year, two sources familiar with the matter said.

“Many anticipated the proposal would come out in late June or early July. The EPA was expected to lift biofuel blending obligations in 2021 to 20.17 billion gallons, from 20.09 billion this year, two sources previously told Reuters.”

Ms. Kelly explained that, “The debate over blending obligations has taken on a new urgency after plummeting fuel demand because of the coronavirus pandemic and stay-at-home orders devastated profits for both oil refiners and ethanol producers.”