May 17

May 17, 2019: Top Ten Errors in Reuters Story on Small Refiner Issue Timeline

In an article published May 16, Reuters reporters again appear to have framed an RFS story around their own pre-conceived notions. The facts are far from where Reuters landed. Here are the top ten errors and omissions we noticed in the story:

1) The story claims that the Sinclair decision finding that EPA had erred in its approach to addressing small refiner exemptions, or SREs, came after EPA’s consideration of revising its policy. But Reuters fails to disclose that the March 21, 2017, oral argument in Sinclair—some three months before a single footnote in a letter Reuters finds instructive—gave clear indication of the court’s direction. The team that argued the case told the Reuters reporter just that before he published, but Reuters nevertheless failed to disclose this key point.

2) Reuters fails to note that Congress expressed misgivings with the analysis of small refiners’ plight as early as 2009. Senate report language cried foul regarding the Department of Energy’s analysis, stating that it “contained inadequate small refinery input, did not assess the economic condition of the small refining sector, take into account regional factors, or accurately project RFS compliance costs.” S. Rep. No. 111-45, at 109 (2009).

3) The story fails to explain that Congress as early as May 21, 2015—literally years before the Reuters footnote—had placed EPA on notice in the Energy and Water Appropriations bill that RFS compliance “may impose a disproportionate economic hardship on a small refinery even if the refinery makes enough profit to cover the cost of complying with the program.”

4) The story fails to disclose that Congress again reiterated its positon on December 17, 2015, still years before the footnote.

5) Again in the Conference Report to Division G of the Consolidated Appropriations Act of 2017 (S. Rep. 114-281), Congress stated that it “is inconsistent with congressional intent” to deny relief to small refineries that experience “disproportionate economic impact” as a result of the RFS Program but nonetheless remain profitable. “[T]he statute does not contemplate that a small refinery would only be able to obtain an exemption by showing that the RFS program threatens it viability.” That’s almost a year before the footnote. Reuters was placed on notice of this dispositive information in writing before it published, but purposefully neglected to inform its readers, creating a false impression.

6) Irrespective of the timing of the Sinclair decision in relationship to EPA’s deliberations, it is nevertheless the case that the decision did reflect that the law REQUIRES EPA to base SREs on disproportionate economic impact, not on the viability of the refinery. While claiming to interpret the decision, Reuters doesn’t even let readers know what the decision said. On August 15, 2017, the Tenth Circuit issued its decision in Sinclair in which the court rejected EPA’s interpretation that “disproportionate economic hardship” requires a threat to the refinery’s viability. “EPA exceeded its statutory authority” under Clean Air Act Section 211(o)(9)(B) “in interpreting the hardship exemption to require a threat to a refinery’s survival as an ongoing operation.”

7) Reuters failed to indicate that tangible expressions of Congressional intent which started in 2015 continued in 2018. On March 22, 2018, in a Joint Explanatory Statement to Division G of the Appropriations Act of 2018, Congress repeated “the directive contained in Senate Report 114-281 related to small refinery relief.”

8) Reuters misstates the legislative purpose behind the SRE provision, claiming that it was intended only to allow small refiners an opportunity to invest in blending operations. Not so, and Reuters cites no evidence to that effect. The real reason is clear on its face: To prevent disproportionate economic hardship as reflected directly in the statute and reinforced by subsequent Congressional and judicial pronouncements.

9) Reuters repeats a false premise with respect to SREs, noting the “corn lobby” argument that SREs “threaten…demand for ethanol.” But Reuters fails to disclose that this theory has been totally debunked, even by sources that typically support ethanol interests. For example, Prof. Scott Irwin, a University of Illinois economist, stated last September, “There is widespread interest in whether small refinery exemptions (SREs) under the RFS have ‘destroyed’ demand for ethanol in the physical market…However, analysis of data on ethanol and gasoline consumption in the U.S. shows there is little if any evidence that the blend rate for ethanol has been reduced by SREs.”

10) Reuters accuses EPA of misrepresenting the purpose of its current policy, but it is Reuters that creates a false impression of the basis of EPA policy. When Administrator Wheeler stated that, “The courts have clearly told us we have to follow the law, and that’s what we are going to do,” it was well after four statements of Congressional intent, three court decisions, and the clear reading of the statute.  Simply put, Wheeler is right, and Reuters is wrong