Lee Calls on EPA to Advance Trump Agenda by Not Shifting Compliance Costs to Refineries

WASHINGTON - U.S. Senator Mike Lee (R-UT) led a letter today with colleagues from the Senate calling on the U.S. Environmental Protection Agency (EPA) to support President Trump's American energy dominance agenda by preventing unfair reallocation of compliance costs onto oil refineries in Utah and across the country. U.S. Senators John Barrasso (R-WY), Mike Crapo (R-ID), Ted Cruz (R-TX), and Cynthia Lummis (R-WY) signed their support.

The letter reads as follows:

"Thank you for the Environmental Protection Agency's (EPA) work to clear the Small Refinery Exemption (SRE) backlog. The SRE program is essential to advancing President Trump's energy dominance agenda by ensuring that refiners are protected from burdensome regulations and that American families do not face government-driven price hikes.

"We write to express our strong opposition to the proposal to reallocate exempted renewable volume obligations (RVO). Reallocating exempted volumes, whether at 100% or at 50%, poses a serious threat for smaller market and independent refiners that are ineligible for SREs but not large enough to absorb the dramatic increase in costs posed by the updated RVO and newly proposed reallocation costs. Reallocation costs would likely impose tens of millions of dollars of additional Renewable Fuel Standard (RFS) compliance burdens on each refiner. This proposal is an existential threat to many refiners and will certainly result in price hikes for American families.

"Furthermore, Congress has not authorized the reallocation of exempted volumes. As the EPA itself conceded, "the statute does not specifically require EPA to redistribute exempted volumes," instead relying solely on its "authority under Chevron" due to alleged ambiguity. As you know, the Loper Bright Enterprises v. Raimondo decision expressly overturned Chevron deference in 2024, completely removing the statutory justification for the proposal.

"Even so, Congress was unambiguous on several matters. First, the RVO "shall…be expressed in terms of a volume percentage of transportation fuel sold or introduced into commerce in the United States." The reallocation proposal manipulates the calculation by changing the denominator required by statute to artificially increase nonexempt refiner obligations. Second, Congress stipulated in the Clean Air Act that adjustments to the percentage must be made "to prevent the imposition of redundant obligations." Nonexempt refiners are already subject to obligations. The proposal subjects nonexempt refiners to redundant obligations that the nonexempt refiners themselves did not incur.

"The reallocation proposal is a relic of the Biden- and Chevron-era. It is contrary to President Trump's energy dominance and regulatory agenda, including his Executive Order "Directing the Repeal of Unlawful Regulations." Any regulation that relies on Chevron must be repealed or not implemented. We respectfully request that EPA not move forward with any proposal to reallocate exempted volumes.

"Thank you for your attention to this matter and for your work to advance President Trump's agenda. We eagerly await your response."

Background

Senator Lee introduced legislation earlier this year to block the EPA from forcing refineries to shoulder forgiven fines from other refineries that do not meet the EPA's environmental standards. U.S. Senators John Barrasso (R-WY), Bill Cassidy (R-LA), Mike Crapo (R-ID), Ted Cruz (R-TX), John Fetterman (D-PA), John Kennedy (R-LA), Cynthia Lummis (R-WY), James Risch (R-ID) have cosponsored the legislation, which received endorsements from the American Fuel & Petrochemical Manufacturers and the American Energy Alliance.

Currently, the EPA requires refineries in the U.S. to include a minimum volume of renewable fuel (e.g., ethanol, biodiesel, etc.) in all fuel sold, or pay to make up for any level of noncompliance. Small refineries may be granted exemptions if complying would cause "disproportionate economic hardship." The EPA is currently considering whether to reallocate forgiven payments over to non-exempt refineries, forcing compliant producers to shoulder even more costs despite no authorization from the Clean Air Act to do so.

This is an antiquated Bush-era program that originated in a time when there were fears about an "addiction to foreign oil" and a looming cliff for domestic oil production, seeking to turn the industry toward biofuels. Despite those fears proving unfounded, the program escalates its requirements each period, with the most recent Renewable Volume Obligation (RVO) being the highest ever proposed.

By the EPA's own calculation, the proposed rule would impose compliance costs of approximately $6.7 billion per year, while returning benefits of only $200 million per year. The American Fuel & Petrochemical Manufacturers (AFPM) estimates that compliance costs are closer to $70 billion. This is simply a handout for the biofuel and agriculture industries at the expense of American refineries and consumers, who will see prices at the pump increase if the EPA moves forward with its proposed rule and reallocation of exempted payments.

Senator Lee's proposal would protect Americans from artificially high gas prices by blocking the EPA from forcing refineries to shoulder unfair fines.

Access the full text of the letter here.

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