U.S. Senator Mike Lee (R-UT) has led a group of Senate colleagues in urging the Environmental Protection Agency (EPA) not to shift compliance costs related to renewable fuel standards onto oil refineries. The letter, also signed by Senators John Barrasso (R-WY), Mike Crapo (R-ID), Ted Cruz (R-TX), and Cynthia Lummis (R-WY), calls on the EPA to align with former President Trump’s energy policies.
The senators thanked the EPA for addressing the backlog in Small Refinery Exemption (SRE) requests and emphasized the importance of the SRE program in supporting American energy production and protecting consumers from price increases. They stated:
“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.”
Earlier this year, Senator Lee introduced legislation aimed at preventing refineries from being required by EPA rules to pay fines forgiven from other facilities that failed environmental standards. Several senators have cosponsored this bill, which has support from industry groups such as American Fuel & Petrochemical Manufacturers and American Energy Alliance.
Under current policy, U.S. refineries must blend a set amount of renewable fuels like ethanol into their products or pay penalties if they fall short; small refineries can seek exemptions if compliance would cause economic hardship. The EPA is considering whether payments excused through these exemptions should be redistributed among non-exempt refineries—a move critics say lacks clear authorization under existing law.
The Renewable Fuel Standard program was established during concerns about reliance on foreign oil but continues raising its requirements annually; recent proposals set record-high renewable volume obligations for producers.
According to EPA estimates cited by Senator Lee’s office, new rules could cost about $6.7 billion per year while providing only $200 million annually in benefits; industry sources claim actual compliance costs could reach $70 billion per year.
Senator Lee argues his legislative efforts would help keep gasoline prices lower by stopping what he describes as unfair financial burdens being placed on compliant refineries.
