July 2023 Rejection of Pleas for Small Refinery Exemptions under the Renewable Fuel Standard
The Environmental Protection Agency (EPA) has announced the denial of 26 petitions from small refineries seeking exemptions from the Renewable Fuel Standard (RFS) program for compliance years between 2016 and 2023. The decision, published in a document titled "EPA-420-R-23-007" with a size of 268 KB, was made after a thorough review of over a decade of RFS market data and confidential information submitted by the petitioning small refineries.
The EPA's denial is consistent with its current interpretation of the Clean Air Act SRE provisions, as held by the U.S. Court of Appeals for the Tenth Circuit in Renewable Fuels Association et al. v. EPA. According to the Tenth Circuit, Small Refinery Exemptions (SREs) may only be granted when a small refinery's hardship is caused by compliance with the RFS program.
This decision marks a final Agency action, following previous denials of petitions for SREs in April and June 2022. The size of the notice of the July 2023 denial of petitions for Small Refinery Exemptions Under the Renewable Fuel Standard Program is 117 KB.
However, the EPA's latest decision does not provide clear guidance or definitive policy changes on the backlog or future handling of small refinery exemptions (SREs). The agency's 2026-2027 biofuel volume proposal suggested that exemptions for these years could vary widely, but it did not clarify how it will evaluate or grant exemptions to individual small refineries. The agency plans to continue estimating future exemption volumes when calculating blending requirements, effectively increasing obligations for other refiners to meet high biofuel targets.
The uncertainty surrounding the handling of SREs leaves significant questions about how exemptions will impact blending obligations and mandates for refining companies moving forward. It is important to note that other related EPA proposals around the same period focus primarily on biofuel blending volumes and removing electricity from the list of qualifying biofuels, but these are separate from the small refinery exemption issues.
In summary, the EPA's latest decision on Renewable Fuel Standard Exemptions for Small Refineries does not offer a clear resolution on the large backlog of exemption requests from prior years or provide policy clarity on how individual small refinery hardship claims will be judged or granted. This uncertainty leaves significant questions about how exemptions will impact blending obligations and mandates for refining companies moving forward.
- The EPA's decision to deny SREs to small refineries is expected to have a significant impact on the energy sector, potentially affecting the overall energy production and distribution in the industry.
- As the EPA continues to estimate future exemption volumes when calculating blending requirements, this could result in increased financial obligations for other refiners aiming to meet high biofuel targets, impacting the finance sector as well.
- In the realm of environmental-science, the EPA's lack of clear guidance on SREs might affect the air quality, as the uncertainty surrounding exemptions could influence the blending obligations and mandates for refining companies, potentially leading to changes in their emissions output.
