Demonstration Method for Compliance with Alternative RFS Standards in Specific Small Refineries, as of June 2022
EPA Denies 69 Small Refinery Exemption Petitions Under Renewable Fuel Standard
The Environmental Protection Agency (EPA) has denied 69 petitions for Small Refinery Exemptions (SRE) under the Renewable Fuel Standard (RFS) program, as announced in a notice published on June 8, 2022. This decision marks a significant shift in the EPA's approach to SREs, following the agency's more stringent stance on granting exemptions.
The denials were primarily based on the refineries' inability to demonstrate unique, disproportionate economic harm from RFS compliance, a requirement set by the EPA since the original SRE provision expired in 2011. According to the EPA, the costs associated with RFS compliance, such as purchasing Renewable Identification Numbers (RINs), are widely embedded in refinery margins across the industry, not affecting small refineries disproportionately as once claimed.
Three of the denied SRE petitions for the 2016 and 2017 compliance years were previously granted by the EPA but were remanded by the U.S. Court of Appeals for the Tenth Circuit. In response, the EPA has supplemented its "April 2022 Alternative RFS Compliance Demonstration Approach for Certain Small Refineries" to include these petitions. The supplemented approach provides an alternative approach to demonstrating compliance with 2016 and 2017 RFS obligations for the small refineries that submitted the remanded SRE petitions.
The June 2022 decision denies petitions for RFS Small Refinery Exemptions is a final Agency action. The EPA has issued a notice for public comment with docket number EPA-HQ-OAR-2021-0566, inviting the public to submit comments on the RFS Small Refinery Exemptions. The details of the June 2022 Alternative RFS Compliance Demonstration Approach for Certain Small Refineries are outlined in EPA-420-R-22-012.
The EPA's June 2022 Denial of Petitions for RFS Small Refinery Exemptions is part of a broader legal and regulatory landscape. Ongoing legal challenges, including Supreme Court reviews, continue to shape the regulatory framework and EPA's approach to SREs under the RFS program.
It is important to note that the notice does not specify the exact nature of the changes or adjustments to be made to the RFS Small Refinery Exemptions, nor does it mention any specific small refineries that may be affected by these changes. The EPA continues to navigate complex legal and economic analyses in balancing RFS enforcement with the relief options for small refineries.
The public is invited to submit comments on the RFS Small Refinery Exemptions until further notice. The EPA will consider these comments as it continues to shape its policy on SREs under the RFS program.
The EPA's decision on denying Small Refinery Exemptions under the Renewable Fuel Standard could impact the finance sector, as refineries may seek alternative financial solutions due to increased compliance costs. The energy industry might also experience changes, as stricter RFS compliance could potentially influence refinery operations and fuel production.
