Internal White House Documents: EPA Ignored Trump Administration Recommendations to Redistribute Small Refinery Waived Volumes

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August 27, 2019

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(Renewable Fuels Association) Documents obtained by the Renewable Fuels Association (RFA) show that the Environmental Protection Agency (EPA) ignored strong recommendations from within the Trump Administration to redistribute Renewable Fuel Standard (RFS) blending obligations lost to small refinery exemptions in the proposed rule for 2020 Renewable Volume Obligations (RVOs).

According to the documents, which detail the White House Office of Management and Budget’s interagency review of the 2020 RVO proposal, some reviewers raised serious concerns about EPA’s failure to redistribute exempted biofuel blending volumes to non-exempt parties. Reviewers recommended that EPA include prospective redistribution of waived volumes in the 2020 proposal and also suggested a method for addressing a court order to restore 500 million gallons of blending obligations inappropriately waived in 2016. In the end, EPA ignored these recommendations.

“The revelations in these documents will only exacerbate the outrage and anger in farm country over EPA’s abuse of the small refinery waiver provision,” said RFA President and CEO Geoff Cooper. “The documents clearly show that EPA knowingly ignored strong recommendations from within the Administration to redistribute blending volumes that were exempted via small refinery waivers. EPA also disregarded recommendations to address a court order to restore 500 million gallons of lost blending obligations from 2016.”

According to comments from one of the interagency reviewers, “EPA … put a zero (0) in for projected volume of gasoline for exempt small refineries and projected volume of diesel for exempt small refineries, ensuring your projected totals are not met and all actual outcomes or resulting biofuel requirements are biased to one side, lower.…we recommend conducting an analysis based on expected conditions at small refineries and the historic issuance of exemptions. This would provide a more accurate estimate of volumes of gasoline and diesel for exempt small refineries.”

Reviewers suggested EPA include a projection of exempted gasoline and diesel of 12.5 billion gallons in the RVO formula, which would effectively ensure lost blending volumes are redistributed to non-exempt parties. The suggested projection of 2020 exempted volume is very close to the actual average exempted volume of 12.8 billion gallons of gasoline and diesel fuel during the 2016-2018 period.

To ensure the statutory purpose of the RFS is honored and exempted volumes were reallocated, reviewers recommended that “…[RVO] percentages should be adjusted to incorporate projected gasoline and diesel exempted through small refinery waivers to ensure consistency of your analysis throughout the document.”

In response, EPA essentially blew off the reviewers’ recommendations. The Agency curtly responded that “The approach taken in this proposal is consistent with the approach first laid out in 2011 and followed since, and we have not proposed to revisit it. Whether to revisit this issue is a matter already under review at Agency leadership levels and we anticipate discussing it further while this action is under review.”

“The solution to the small refinery waiver problem was right in front of EPA’s face the whole time, yet they chose to snatch defeat from the jaws of victory,” Cooper said. “The only way to begin calming the anxiety and aggravation in rural America is for EPA to immediately announce that it will resolve these issues in the upcoming 2020 RVO final rule. EPA must adopt the prospective reallocation approach recommended during the interagency review process in the 2020 rule, as well as include the 500-million-gallon remand. Anything short of that will be viewed by farmers and biofuel producers as another sellout to the oil industry and another kick in the teeth to the hardworking families in the Heartland.”

Reviewers also scolded EPA for proposing to ignore a D.C. Circuit Court order to restore 500 million gallons of blending requirements illegally waived by EPA in 2016, stating, “…you reject the ACE court remand because you conclude there is no ‘room’ to incorporate it, knowing that the stated RVO will not be achieved because of the issuance, and lack of incorporation of, small refinery waivers.”

EPA’s response? “This issue and our response to the ACE remand are the subject of ongoing discussions.”

EPA’s brazen disregard for recommendations and advice on SREs from other quarters of the Administration is not new, Cooper added. Only a short time ago, the Renewable Fuels Association and others pointed out how EPA ignored recommendations of the Department of Energy when it came to specific refinery exemptions.

Click here for key excerpts from the OMB interagency review document, with EPA’s response. READ MORE

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Perdue memo shows options to boost ethanol following SRE outrage (Ethanol Producer Magazine)

Axne calls for OIG investigation into EPA’s misuse of SREs (Ethanol Producer Magazine)

Representatives urge GAO investigation of SREs (Ethanol Producer Magazine)

Iowa officials urge EPA to account for SREs (Ethanol Producer Magazine)

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Ethanol industry shines light on EPA's rogue actions-EPA ignored interagency recommendations to redistribute waived small refinery volumes under RFS (Feedstuffs)

Docs Show EPA Ignored OMB on Waivers: Interagency Review Documents Show Reviewers Made Suggestions to Fix Waivers Issue (DTN The Progressive Farmer)

RFA: EPA IGNORED TRUMP ADMINISTRATION ‘REALLOCATION’ RECOMMENDATIONS (Brownfield Ag News)

Biofuel Blending Waivers Remain in Place for Now (READ MORE)

RFA: EPA REJECTED WHITE HOUSE RECOMMENDATION ON WAIVERS (NewsDakota.com)

Excerpt from Ethanol Producer Magazine: An emailed memo dated Aug. 20 from Agriculture Secretary Sonny Perdue obtained by Ethanol Producer Magazine outlines several actions federal officials are considering in response to backlash over the U.S. EPA’s Aug. 9 approval of 31 small refinery exemptions (SREs).

The memo was issued by Agriculture Secretary Sonny Perdue to U.S. EPA Administrator Andrew Wheeler, Energy Secretary Rick Perry, U.S. Ambassador to China Terry Branstad and several others. It references the Aug. 19 meeting held at the White House during which biofuels were discussed.

“Following yesterday’s Oval Office discussion on biofuels, you asked us to develop a list of actions the administration could take to assist the biofuel industry and help regain the support of famers and the biofuel industry,” Perdue wrote in the memo, which contains a list of five possible actions. According to the memo, Perdue, Wheeler, Perry and Branstad agreed to four of the five actions during a follow-up call after the Oval Office meeting

Under the first action, the EPA would rescind seven or eight of the SREs approved Aug. 9 that went to “big” companies.

Under another action outlined in the memo, the EPA would expeditiously take steps to allow E10 pumps to be approved for E15.

Under a third action, the EPA would take necessary actions to encourage and facilitate flex-fuel vehicles (FFVs) that can use E85. This would include immediately publishing FFV F-Factor guidance for automakers, updating the “R-factor” used in CAFE compliance, and including alternative compliance credits based on the demonstrated use of alternative fuels in FFVs in the final CAFE rules for 2021-2026.

Under a fourth action, EPA and USDA would work together to “’fix’ major problems” in the proposed Renewable Fuel Standard reset rule that the memo said are “negative toward biofuels and contrary to your stated support of the RFS.” The EPA delivered its proposed RFS reset rule to the White House Office of Management and Budget on May 20. It is still under review and has not been released publically.

The memo also includes a fifth action that Perdue said has not been agreed upon by EPA and is the subject of further discussion between EPA and USDA. Under that action, the EPA would redistribute on a prospective basis a reasonable number of gallons associated with projected SREs, beginning with the final rule to set 2020 RFS standards.

In the memo, Perdue also said he would like to explore with EPA and DOE programs that would assist with infrastructure build-out for E15. READ MORE

Excerpt from Ethanol Producer Magazine: 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. READ MORE