The U.S. Environmental Protection Agency (EPA) announced decisions on 175 Small Refinery Exemption (SRE) petitions spanning compliance years 2016 through 2024. Of those, 63 petitions received full exemptions, 77 received partial exemptions, 28 were denied and seven were deemed ineligible.

For the 2023 compliance year onward, EPA also announced that it will soon release a draft rule addressing the potential reallocation of renewable fuel volumes associated with the SREs, which may require other non-exempt refiners and importers to assume that compliance obligation.

The Renewable Fuel Standard (RFS), established under the Clean Air Act, requires a minimum volume of renewable fuels to be blended into the nation’s transportation fuel supply each year. Refiners and importers can demonstrate compliance either by blending the fuels themselves or by purchasing credits (called Renewable Identification Numbers, or RINs) from other blenders.

Small refineries—those with an average input of less than 75,000 barrels of crude oil per day—may petition for exemptions from their annual RINs obligation if they can demonstrate that they would suffer “disproportionate economic hardship” from complying.

According to NACS Deputy General Counsel Matt Durand, such hardship claims are dubious because refiners of all sizes pass their RFS compliance costs down through the fuel supply chain, thus recouping the price of any RINs they purchased.

"That’s why we advocated for an outright denial of all SRE petitions, although EPA ultimately determined that some still had merit," Durand said. "In those cases, it does seem like EPA is approaching the reallocation issue in a reasonable way, and we’re looking forward to reviewing their proposal to ensure transparency and stability in the market."