WASHINGTON – U.S. Senator Mike Lee (R-UT) introduced legislation today to support President Trump’s American energy dominance agenda and shield Americans from artificially high gas prices by protecting Utah oil refineries from unfair fines by the federal government. The Protect Consumers from Reallocation Costs Act would block the Environmental Protection Agency (EPA) from forcing refineries to shoulder forgiven fines from refineries that do not meet the EPA’s environmental standards. U.S. Senators John Barrasso (R-WY), Bill Cassidy (R-LA), Ted Cruz (R-TX), and Cynthia Lummis (R-WY)  cosponsored the legislation, which received endorsements from the American Fuel & Petrochemical Manufacturers and the American Energy Alliance.

“The Protect Consumers from Reallocation Costs Act advances President Trump’s growth agenda for American energy and lowers costs for hardworking families, ensuring that refineries in Utah and across the nation are not subjected to unlawful regulations invented by DC lobbyists,” said Senator Mike Lee.  “Nowhere in the Clean Air Act does it say that the swampy corn lobby can force Americans to pay more for their products. By jamming through more biofuels and environmental compliance costs, the corn lobby is stifling US energy producers and jacking up the price of fuel. It’s bad for refineries, bad for American families, and bad for American energy independence.”

“Our refineries play a critical role in supplying Wyoming families and businesses with affordable energy. Outrageous compliance costs under the Renewable Fuel Standard threaten to raise prices for families across the country,” said Senator John Barrasso. “Our legislation will prevent increased compliance costs and help keep gas prices down for the people of Wyoming.”

“The small refinery exemption was meant to provide relief, not shift costs onto larger refineries,” said Senator Cynthia Lummis. “I’m proud to join my western colleagues in introducing legislation that preserves fairness and common sense at the EPA by clarifying Congress’ intent. This will prevent unfair compliance costs, protect Wyoming jobs while keeping gas prices down for people throughout the Cowboy State, and uphold President Trump’s commitment to unleashing American energy.”

“As if a $70 billion RFS price tag and a mandate for record imports wasn’t enough, the U.S. EPA is threatening to further undercut the President’s energy dominance agenda by reallocating more than a billion gallons of exempted RFS volumes from small refiners to their competitors. This is akin to your neighbor getting a tax break and the IRS showing up at your doorstep with the bill. It is simply wrong and will not meaningfully change the volume of corn ethanol that gets blended into American gasoline. We’re grateful to Senator Lee for introducing this legislation that will make it explicitly clear that EPA cannot re-assign massive regulatory burdens from one refinery to others. This bill will save American consumers billions of dollars. It will benefit U.S. energy security and help to ensure that American fuel manufacturers use more of their resources on productive things — like jobs, facility construction projects, and energy infrastructure — instead of red tape from the EPA.” – Chet Thompson, CEO and President, American Fuel & Petrochemical Manufacturers 

Background

The EPA requires refineries in the U.S. to includes 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.

The Protect Consumers from Reallocation Costs Act would protect Americans from artificially high gas prices by blocking the EPA from forcing refineries to shoulder unfair fines.

Read bill text of the Protect Consumers from Reallocation Costs Act here.

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