[Federal Register Volume 87, Number 79 (Monday, April 25, 2022)]
[Pages 24300-24301]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-08686]



[EPA-HQ-OAR-2021-0566; FRL-9711-01-OAR]

April 2022 Denial of Petitions for Small Refinery Exemptions 
Under the Renewable Fuel Standard Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Denial of petitions.


SUMMARY: The Environmental Protection Agency (EPA) is providing notice 
of its final action entitled April 2022 Denial of Petitions for RFS 
Small Refinery Exemptions (``SRE Denial'') in which EPA denied 36 small 
refinery exemption (SRE) petitions under the Renewable Fuel Standard 
(RFS) program. EPA is providing this notice for public awareness of and 
the basis for EPA's decision issued on April 7, 2022.

DATES: April 25, 2022.

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 extension of the exemption from the 
obligations of the 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).

II. Decision

    In the SRE Denial,\4\ we conducted an extensive analysis and review 
of information provided to EPA by small refineries in their SRE 
petitions and in the comments submitted in response to the Proposed 
Denial.\5\ We sought comment on all aspects of the Proposed Denial, 
including on our conclusions that the CAA requires small refineries to 
demonstrate that DEH is caused by compliance with the RFS program. We 
also sought comment on our economic analyses and conclusion that no 
small refineries face disproportionate costs of compliance due to the 
RFS program, no economic hardship, and, therefore, no DEH caused by RFS 
compliance. We requested additional data that would show the 
relationship between RFS compliance costs and the price of 
transportation fuel blendstocks. We also sought comment on our proposed 
change in approach to SRE eligibility based on receipt of the original 
statutory exemption, and our proposed decision to deny all pending SRE 
petitions based on the proportional nature of the RFS requirements and 
our findings regarding RIN cost passthrough. We considered all the 
comments received and have responded to them in the SRE Denial and its 
corresponding appendices.

    \4\ ``April 2022 Denial of Petitions for RFS Small Refinery 
Exemptions,'' EPA-420-R-22-005, April 2022.
    \5\ ``Proposed RFS Small Refinery Exemption Decision,'' EPA-420-
D-21-001, December 2021 (hereinafter the ``Proposed Denial''). 86 FR 
70999 (December 14, 2021).

    In the SRE Denial, we find 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 are 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 program, there is 
no disproportionate cost to any party, including small refineries, and 
no hardship given that the costs are recovered. As a result, we 
conclude that small refineries do not face DEH. Given this conclusion 
and the other reasons described in the SRE Denial, we have denied 36 
SRE petitions by finding the petitioning refineries do not face DEH 
caused by compliance with their RFS obligations.

III. Judicial Review

    Section 307(b)(1) of the CAA governs judicial review of final 
actions by the EPA. This section provides, in part, that petitions for 
review must be filed in the United States Court of Appeals for the 
District of Columbia Circuit: (i) When the agency action consists of 
``nationally applicable . . . final actions taken by the 
Administrator,'' or (ii) when such action is locally or regionally 
applicable, but ``such action is based on a determination of nationwide 
scope or effect and if in taking such action the Administrator finds 
and publishes that such action is based on such a determination.'' For 
locally or regionally applicable final actions, the CAA reserves to the 
EPA complete discretion whether to invoke the exception in (ii) 
described in the preceding sentence.
    This final action is ``nationally applicable'' within the meaning 
of CAA section 307(b)(1). In the alternative, to the extent a court 
finds this final action to be locally or regionally applicable, the 
Administrator is exercising the complete discretion afforded to him

[[Page 24301]]

under the CAA to make and publish a finding that this action is based 
on a determination of ``nationwide scope or effect'' within the meaning 
of CAA section 307(b)(1).\6\ This final action denies petitions for 
exemptions from the RFS program for over 30 small refineries across the 
country and applies to small refineries located within 18 states in 7 
of the 10 EPA regions and in 8 different Federal judicial circuits.\7\ 
This final action is based on EPA's revised interpretation of the 
relevant CAA provisions and the RIN discount and RIN cost passthrough 
principles that are applicable to all small refineries no matter the 
location or market in which they operate. For these reasons, this final 
action is nationally applicable or, alternatively, the Administrator is 
exercising the complete discretion afforded to him by the CAA and 
hereby finds that this final action is based on a determination of 
nationwide scope or effect for purposes of CAA section 307(b)(1) and is 
hereby publishing that finding in the Federal Register.

    \6\ In deciding whether to invoke the exception by making and 
publishing a finding that this final action is based on a 
determination of nationwide scope or effect, the Administrator has 
also taken into account a number of policy considerations, including 
his judgment balancing the benefit of obtaining the D.C. Circuit's 
authoritative centralized review versus allowing development of the 
issue in other contexts and the best use of Agency resources.
    \7\ In the report on the 1977 Amendments that revised section 
307(b)(1) of the CAA, Congress noted that the Administrator's 
determination that the ``nationwide scope or effect'' exception 
applies would be appropriate for any action that has a scope or 
effect beyond a single judicial circuit. See H.R. Rep. No. 95-294 at 
323, 324, reprinted in 1977 U.S.C.C.A.N. 1402-03.

    Under section 307(b)(1) of the CAA, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the District of Columbia Circuit by June 24, 2022.

Joseph Goffman,
Principal Deputy Assistant Administrator, Office of Air and Radiation.
[FR Doc. 2022-08686 Filed 4-22-22; 8:45 am]