EPA issued a notice detailing the reasons for rejecting 26 small refinery exemptions. These exemptions relate to the obligations these refineries have to blend biofuels with conventional fuel under the Renewable Fuel Standard (RFS). The exemption requires small refineries to prove that adhering to the standard would lead to ‘disproportionate economic hardship’.
The rationale for the July rejections follows the precedent set by similar decisions made in April and June 2022.
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In their investigation, the EPA found that all refineries faced equivalent costs when obtaining Renewable Identification Numbers (RINs)—which serve as proof of complying with the RFS—irrespective of whether they procure them by blending renewable fuels or buying them on the open market.
The market price for fuels rises to accommodate the RIN cost, much like it would due to higher crude prices. The end effect is that these obligated parties can recoup their expenditure on RINs through the market price of the fuel they produce.
This process is universal, and the EPA clarifies there is no disproportionate cost for any party, including small refineries, as the costs are recovered in the market price.
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Under the Clean Air Act, those affected by this decision have the right to request a judicial review with the US Court of Appeals for the District of Columbia Circuit within 60 days of the notice’s Federal Register publication. Several of the small refiners involved have declared their intention to lodge such petitions.
