U.S. Senator Ted Cruz (R-Texas), along with Senator Mike Lee (R-Utah) and several colleagues, has urged the Environmental Protection Agency (EPA) to abandon proposals that would increase compliance costs for oil refineries by reallocating exempted renewable volume obligations (RVO). In a letter addressed to EPA Administrator Lee Zeldin, the senators argued that these changes would particularly affect smaller and independent refiners and could lead to higher fuel prices for American consumers.
The letter states: “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.
“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 Any regulation that relies on Chevron must be repealed or not implemented.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.”
The letter was also signed by Senators John Barrasso (R-Wyo.), Mike Crapo (R-Idaho), and Cynthia Lummis (R-Wyo.).
Earlier this year, Cruz joined Lee in introducing legislation called the Protect Consumers from Reallocation Costs Act, which seeks to prevent the EPA from requiring refineries to take on forgiven volumes from other refineries unable to meet environmental standards set by the agency.
Under current regulations, U.S. refineries must blend a certain amount of renewable fuel into their products or pay penalties if they do not comply. Some small refineries can receive exemptions if meeting these requirements would cause them significant economic hardship. The EPA is now considering whether non-exempt refineries should be required to make up for those exemptions—a move critics say lacks authorization under existing law.
According to figures released by the EPA, such a rule change could cost approximately $6.7 billion per year in compliance expenses while producing only $200 million annually in benefits. The American Fuel & Petrochemical Manufacturers group estimates even higher potential costs at $70 billion per year.
Senator Cruz has maintained political prominence in Texas over several election cycles; he defeated Colin Allred in 2024 with 53.1% of votes compared to Allred’s 44.6%.
