Grassley asks for clarity on DOE’s review of SRE applications

Sen. Chuck Grassley, R-Iowa, sent a letter to Energy Secretary Rick Perry on April 11 asking for clarity on the U.S. Department of Energy’s review process concerning Renewable Fuel Standard small refinery exemption (SRE) applications. Under statute, the DOE reviews SRE applications and provides recommendations to the U.S. EPA.

In his letter, Grassley notes the EPA granted an unprecedented number of SREs in 2016 and 2017, with 39 SRE applications currently pending for compliance year 2018. “With renewable identification numbers (RINs) at multi-year lows, it’s hard to comprehend the alleged disproportionate economic hardship that any refinery could face,” he wrote. “I am writing to seek clarity regarding the DOE’s review of requests to exempt certain small refineries from their obligations to comply with the RFS provisions of the Clean Air Act.”

While EPA makes the final decision on SRE applications, Grassley said Wheeler has suggested the agency simply follows the recommendations of the DOE. “If this is the case, I would like to understand what has changed in DOE’s approach to evaluating such requests that would explain the sudden surge in the number of exemption extensions granted to small refineries over the last two years.”

The letter stresses that that criteria to which DOE is supposed to evaluate small refinery exemption extensions have not changed since 2011. “DOE’s methodology requires an evaluation of the structural impacts that compliance with the RFS might cause, such as limited access to capital and credit, as well as an evaluation of how RFS compliance would significantly impair refinery operations viability,” Grassley wrote. “Although DOE maintains it hasn’t changed these criteria, the number of small refinery exemption applications that approvals inexplicably has soared in the last two years.”

Grassley cites recent litigation that has revealed that out of 48 applications for SREs for compliance years 2016 and 2017, the DOE had given the applicant a viability score of zero in at least half of those cases. “That seems to indicate that compliance costs with the RFS had little or no impact on the small refinery’s ability to stay competitive and profitable,” he wrote.

Within the letter, Grassley asks Perry to answer several questions, including one related to any changes in the DOE’s criteria. He also asks Perry if he is aware of any instances when the EPA acted against DOE recommendations, and asks him to explain some technical aspects of how the DOE scores SRE applications.

The Renewable Fuels Association has spoken out in support of Grassley’s letter. "We are grateful to Senator Grassley for asking the Department of Energy for clarity around DOE’s process on RFS hardship exemptions submitted by small refineries,” said Geoff Cooper, president and CEO of the RFA. “The simple fact is that the criteria for evaluating small refinery exemptions hasn’t changed, but the number of exemptions granted has skyrocketed. The situation demands transparency. Senator Grassley is right to ask DOE for these details and he continues to be a tireless and effective advocate for renewable fuels."

A full copy of Grassley’s letter can be downloaded from his website.