Ag Policy Blog

Governors Warn EPA's Wheeler Against Approving Retroactive SREs

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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The governors of South Dakota and Minnesota led a letter on Monday to EPA Administrator Andrew Wheeler cautioning him against approving retroactive refinery exemptions to the Renewable Fuels Standard. (DTN file photo by Chris Clayton)

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 from the Renewable Fuels Standard.

Noem, a Republican, and Walz, a Democrat, are the chair and vice chair of the Governors' Biofuels Coalition. Iowa Gov. Kim Reynolds and Nebraska Gov. Pete Ricketts, both former chairs of the coalition, also joined the letter. "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 Governors' Biofuels Coalition includes governors from 22 states that make up the lion's share of ethanol and biodiesel production.

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.

The governors' letter comes after several Midwest senators sent a similar letter last week. Each letter lays out that retroactive small refinery exemptions (SREs) are inconsistent with the 10th Circuit Court of Appeals decision against EPA's management of SREs, as well as against congressional intent, EPA's guidance on the RFS and against the interests of agriculture and rural communities.

“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. 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,” the governors wrote.

The governors noted that EPA has granted 85 SREs to refiners since 2017, "undermining farmers and biofuel producers throughout the nation." The governors added, "If all 52 applications are approved, the market will lose more than 2 billion gallons of biofuel blending requirements."

The governors added in their letter, “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. 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 unprecedented economic challenges facing the renewable fuels industry and rural communities."

Wheeler, a former lobbyist for the coal industry, has shown his continued support for the fossil fuels industry while leading EPA. Yet, the applications from the 52 small refiners for retroactive SREs now comes leading up to the presidential election. Approving a new wave of SREs would be one more turning point in the battle for rural voters in Midwest states. In 2016, President Donald Trump won Iowa by 9 percentage points, but a recent Des Moines Register poll shows the president leading former Vice President Joe Biden by just 1 percent.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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