22 Aug EPA Announces Action on Small Refinery Exemptions
The U.S. Environmental Protection Agency (EPA) has announced action on a backlog of 175 Small Refinery Exemption (SRE) petitions from 38 small refineries for 2016 – 2024 compliance years. In consultation with the U.S. Department of Energy (DOE), EPA reviewed and considered information submitted by each petitioning small refinery. EPA then evaluated each SRE petition consistent with the Clean Air Act and case law. EPA is granting full exemptions to 63 petitions, granting partial exemptions to 77 petitions, denying 28 petitions, and determining 7 petitions to be ineligible.
EPA stated it is reaffirming the policy it set through the 2020 Renewable Volume Obligation Rulemaking, granting partial relief (a 50 percent exemption) where a small refinery has demonstrated that it faces partial hardship.
Under DOE’s 2011 Small Refinery Study, small refineries would have been denied any relief despite demonstrating partial hardship. EPA claims it is getting the SRE program back on track with an approach that recognizes some small refineries are impacted more significantly than others and that EPA’s relief should reflect those differences.
Concurrent with this decision, EPA announced it will update the Renewable Fuel Standard (RFS) Small Refinery Exemption website to reflect action on the 175 petitions.
EPA also claims it is reaffirming a policy to return RFS compliance credits, known as Renewable Identification Numbers (RINs), previously retired for compliance when a small refinery receives an exemption for a prior compliance year.
Under the RFS program, RINs have a two-year window for use, covering the compliance year in which they were generated and the following compliance year. Therefore, while 2022 and earlier vintage RINs are not eligible for use to meet the open 2024 compliance obligations or future obligations, these vintage RINs can be used to demonstrate compliance for prior compliance years consistent with their two-year window.
Ultimately, this means that the 2022 and earlier vintage RINs will not impact the number of RINs available to meet 2024 and future compliance obligations and are not expected to impact demand for biofuels.
EPA noted in the near future it will submit a draft supplemental proposed rule to the Office of Management and Budget (OMB) on the proposed reallocations of the 2023 and later compliance year exempted volumes.
EPA does not plan to propose reallocation of any of the exempted volumes for any SREs from 2016 – 2022 in light of the limitation on their potential use. EPA will also be providing updated information on how the agency intends to project SREs for 2026 and 2027 in the context of establishing percentage standards for those years.
EPA stated the supplemental proposal will seek to balance the goals of the RFS in supporting the production and use of renewable fuels while taking into account economic impacts, following the law, and ensuring opportunity for stakeholder comment.
Please see EPA’s Renewable Fuel Standard program website for more information.