[Federal Register Volume 86, Number 237 (Tuesday, December 14, 2021)]
[Proposed Rules]
[Pages 70999-71000]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26983]



40 CFR Part 80

[EPA-HQ-OAR-2021-0566; FRL-9090-01-OAR]

Notice of Opportunity To Comment on Proposed Denial of Petitions 
for Small Refinery Exemptions

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed denial of petitions.


SUMMARY: The Environmental Protection Agency (EPA) is proposing to deny 
all undecided/pending small refinery exemption petitions under the 
Renewable Fuel Standard program currently before the agency. EPA is 
providing an opportunity for the public to comment on our proposed 
denial of these petitions.

DATES: Comments must be received on or before February 7, 2022.

ADDRESSES: Comments. You may send your comments, identified by Docket 
ID No. EPA-HQ-OAR-2021-0566, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov 
(our preferred method) Follow the online instructions for submitting 
     Email: [email protected]. Include Docket ID No. EPA-
HQ-OAR-2021-0566 in the subject line of the message.
     Mail: U.S. Environmental Protection Agency, EPA Docket 
Center, Air Docket, Mail Code 28221T, 1200 Pennsylvania Avenue NW, 
Washington, DC 20460.
     Hand Delivery or Courier (by scheduled appointment only): 
EPA Docket Center, WJC West Building, Room 3334, 1301 Constitution 
Avenue NW, Washington, DC 20004. The Docket Center's hours of 
operations are 8:30 a.m.-4:30 p.m., Monday-Friday (except Federal 
    Instructions: All submissions received must include the Docket ID 
No. for this rulemaking. Comments received may be posted without change 
to https://www.regulations.gov, including any personal information 
provided. For the full EPA public comment policy, information about CBI 
or multimedia submissions, and general guidance on making effective 
comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.
    Out of an abundance of caution for members of the public and our 
staff, the EPA Docket Center and Reading Room are closed to the public, 
with limited exceptions, to reduce the risk of transmitting COVID-19. 
Our Docket Center staff will continue to provide remote customer 
service via email, phone, and webform. We encourage the public to 
submit comments via https://www.regulations.gov or email, as there may 
be a delay in processing mail and faxes. Hand deliveries and couriers 
may be received by scheduled appointment only. For further information 
on EPA Docket Center services and the current status, please visit us 
online at https://www.epa.gov/dockets.
    EPA continues to carefully and continuously monitor information 
from the Centers for Disease Control and Prevention (CDC), local area 
health departments, and our Federal partners so that we can respond 
rapidly as conditions change regarding COVID-19.

[[Page 71000]]

FOR FURTHER INFORMATION CONTACT: Karen Nelson, Office of Transportation 
and Air Quality, Compliance Division, Environmental Protection Agency, 
2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: 734-214-
4657; email address: [email protected].


I. Background

    The Clean Air Act (CAA) provides that a small refinery \1\ may at 
any time petition EPA for an exemption from the obligations of the 
Renewable Fuel Standard (RFS) program for the reason of 
disproportionate economic hardship (DEH).\2\ In evaluating such 
petitions, the EPA Administrator, in consultation with the Secretary of 
Energy, will consider the findings of a Department of Energy (DOE) 
study and other economic factors.\3\

    \1\ The CAA defines a small refinery as ``a refinery for which 
the average aggregate daily crude oil throughput for a calendar year 
. . . does not exceed 75,000 barrels.'' CAA section 211(o)(1)(K).
    \2\ CAA section 211(o)(9)(B)(i).
    \3\ CAA section 211(o)(9)(B)(ii).

    The CAA provided an initial blanket small refinery exemption (SRE) 
to all small refineries, exempting them from their RFS obligations 
until calendar year 2011.\4\ The CAA includes two additional provisions 
regarding extensions of the temporary exemption for the period after 
the initial blanket exemption expired. The first statutory mechanism, 
applicable to 2011 and 2012, was based on a DOE determination, through 
the above-mentioned study, that compliance with the RFS requirements 
would impose DEH on a small refinery. If DOE made such a determination, 
EPA was required to extend the small refinery's exemption for no less 
than two years.\5\ Under the second statutory mechanism, small 
refineries are authorized to petition at any time for extensions of the 
original statutory exemption for the reason of DEH.\6\ Since 2013, EPA 
has shared the incoming petitions and supporting information with DOE, 
and DOE has provided EPA with its findings based on a scoring matrix; 
however, the ultimate decision of whether to grant or deny a petition 
rests with EPA.\7\

    \4\ CAA section 211(o)(9)(A)(i).
    \5\ CAA section 211(o)(9)(A)(ii)(II).
    \6\ CAA section 211(o)(9)(B)(i).
    \7\ More information on the RFS program and the history of SREs, 
including how EPA's approach to evaluating SRE petitions has changed 
over time, can be found in Section II of the ``Proposed RFS Small 
Refinery Exemption Decision,'' available in the docket for this 

II. Proposed Decision

    In the Proposed RFS Small Refinery Exemption Decision (hereinafter 
``the proposed adjudication,'' available in the docket for this action 
(Docket ID No. EPA-HQ-OAR-2021-0566) and on EPA's website at https://www.epa.gov/renewable-fuel-standard-program/proposal-deny-petitions-small-refinery-exemptions), we have conducted an extensive analysis and 
review of information provided by small refineries in their SRE 
petitions to EPA, finding that all refineries face the same costs to 
acquire RINs regardless of whether the RINs are created through the act 
of blending renewable fuels or purchased on the open market. This 
happens because the market price for these fuels increases to reflect 
the cost of the RIN, much as it would increase in response to higher 
crude prices. In other words, this increased price for gasoline and 
diesel fuel allows obligated parties to recover their RIN costs through 
the market price of the fuel they produce. Because the market behaves 
this way for all parties subject to the RFS, there is no 
disproportionate cost to any party, including small refineries. As a 
result, we conclude that small refineries do not face DEH.
    Given this conclusion and the other reasons described in the 
proposed adjudication, we are proposing to deny all pending SRE 
petitions by finding the petitioning refineries do not face DEH caused 
by compliance with their RFS obligations. We seek comment on all 
aspects of this proposed denial, most notably on our conclusions that 
the CAA requires small refineries to demonstrate that DEH is caused by 
compliance with the RFS program and our economic analyses concluding 
that no small refineries face such disproportionate costs of compliance 
due to the RFS program. Specifically, we seek comment on our findings 
regarding the absence of a causal relationship between compliance with 
the RFS program and DEH experienced by small refineries. We request 
additional data that would show the relationship between RFS compliance 
costs and the price of transportation fuel blendstocks. We also seek 
comment on our proposed change in approach to SRE eligibility based on 
receipt of the original statutory exemption, and our decision to deny 
all pending/undecided SRE petitions based on the proportional nature of 
the RFS requirements and our findings regarding RIN cost passthrough. 
We intend to consider these comments before making a final 
determination on these pending petitions.

Joseph Goffman,
Principal Deputy Assistant Administrator, Office of Air and Radiation.
[FR Doc. 2021-26983 Filed 12-13-21; 8:45 am]