The US Environmental Protection Agency (EPA) is denying petitions for small refinery exemptions for past compliance years, the so-called “gap-filling” petitions for the 2011-18 compliance years. In total, the agency had received 68 retroactive exemption requests from petroleum refiners seeking to skirt obligations under the Renewable Fuel Standard (RFS); the current decision denies 54 of those requests.
The Clean Air Act requires EPA to set annual RFS volumes of biofuels that must be used for transportation fuel for four categories of biofuels: total, advanced, cellulosic, and biomass-based diesel. EPA implements the RFS program in consultation with the US Department of Agriculture, the US Department of Energy, and consistent with the Clean Air Act.
EPA’s longstanding interpretation of the Clean Air Act allows for the granting of a petition for exemption from blending requirements under the RFS program for the reason of demonstrated, disproportionate economic hardship.
Congress created three classes of exemptions from the RFS program for “small refiner[ies],” which are defined as refineries with crude oil throughput averaging 75,000 barrels or less per day for a calendar year.
Congress granted all small refineries a blanket exemption from the RFS program until 2011.
Congress directed the DOE to study whether compliance with the RFS program would impose a disproportionate economic hardship on small refineries. For any small refinery so identified, Congress directed EPA to extend the exemption for a period of not less than 2 additional years.
Finally, Congress provided that a small refinery may at any time petition the EPA for an extension of the exemption for the reason of disproportionate economic hardship.
EPA issued regulations for small refinery exemptions (SRE) implementing the three classes in 2010, and amended the regulations in 2014.
In 2020, 17 small refineries submitted petitions asking EPA either to reconsider exemption denials or to grant exemptions for prior years in which the refineries had not sought them.
In a letter announcing the decision, EPA Administrator Andrew Wheeler wrote:
Based on DOE’s recommendations, I am denying exemptions for the gap-filling petitions that seek reconsideration of prior EPA decisions because those small refineries have not provided any new information that would necessitate EPA changing its prior decisions for those RFS compliance years. DOE and EPA thoroughly and carefully evaluated the petitions for those years at that time, and EPA has found nothing in these new submissions that would merit a change in those previous decisions. These small refineries did not demonstrate then or now that they experienced disproportionate economic hardship from compliance with the RFS program and do not warrant an exemption for those RFS compliance years.
… Based on DOE’s recommendations, I am denying exemptions for those gap-filling petitions where DOE recommended no relief.
… I am also denying exemptions for all the gap-filling petitions where DOE recommended 50 percent relief. EPA doubts that Congress intended to exempt small refineries that already successfully complied with their RFS obligations many years past without demonstrating that they experienced disproportionate economic hardship as a result of that compliance.
EPA renewable fuel volume mandates have continued to rise in EPA’s annual rulemakings, and, with it, renewable transportation fuel use in the US. EPA is ensuring a net of 15 billion gallons of conventional biofuel are blended into the US fuel supply. From 2016 to 2019 domestic ethanol production in increased by 2%.
Additionally, as promised, EPA eliminated a significant barrier to E15 market access, and E15 is now used in 30 states at over 2,000 stations. As a next step, EPA is moving to update E15 labels to ensure consumers have informed choices at the pump and clarify the ability of existing fuel infrastructure to support expanded E15 use.