Small Refinery Exemptions Fight Makes Way to Congress

On October 30, the House Energy & Commerce Committee held a hearing entitled, “Protecting the RFS: The Trump Administration’s Abuse of Secret Waivers.” The hearing was an opportunity for the committee to wade into the ongoing fight between the biofuel and refining industries over renewable fuel volumes under the Renewable Fuel Standard (RFS). At issue was the Administration’s approval of 31 Small Refinery Exemptions (SREs) that grant relief from renewable fuel compliance obligations. The Renewable Fuel Standard Integrity Act, which would institute numerous reforms to the SRE process, was recently introduced and referred to the committee.

For the most part, committee Democrats focused their comments on the SRE process and the increase in issuing such waivers under the Trump Administration. Concerns included a lack of transparency between the Department of Energy’s recommendations and Environmental Protection Agency (EPA) decision-making and a lack of information available regarding which companies are applying for and receiving SREs. Under the current system, information submitted by SRE applicants is characterized as Confidential Business Information.

Several Republicans pointed to the hearing’s title and nature, noting that Democrats’ focus has been on eliminating all liquid fuels, noting the harm that approach would have on both the refining and agricultural industries. On the issue of SREs, most comments and questions fell along established constituencies, with farm-state representatives supporting the program and the Renewable Fuel Standard Integrity Act, while their oil-state colleagues supported the use of SREs and raised concerns about the RFS, generally.

The discussion demonstrates the difficulty fuel issues present to Congress. As refining and agricultural interests fight over the existing pool of transportation fuel, Democrats look for ways to increase electrification — introducing a third variable into an already stubborn issue. While the hearing offered no direct path forward on how to resolve these issues, it served to demonstrate the high political stakes surrounding the constituencies on this issue, particularly as we head into the 2020 elections.

November and December will continue to be busy months for renewable fuel issues for both Congress and this Administration. EPA is expected to publish its Final Rule on Renewable Volume Obligations for 2020 (and 2021 for biomass-based diesel) by the end of November. Congress is also negotiating a tax extenders package that would likely include an extension of the biodiesel and renewable diesel tax credits, among other issues.