EPA Grants 2018 Small Refinery Exemptions

Late Friday, August 9, EPA provided an answer to small refineries with outstanding small refinery exemption petitions still before the Agency. Additionally, EPA updated the publicly available information on the small refinery waiver exemptions to reflect the recent waiver decisions.

Once again, the number of exemptions is higher than had been historically issued. For the year 2018, EPA granted 31 of the 40 petitions submitted to EPA for consideration and denied 6. In 2017, EPA approved 35 of the 37 petitions submitted for approval and denied only 1. This recent wave of granted exemptions only covers those small refineries with outstanding small refinery waiver petitions, and could increase by the end of the year.

EPA hasn’t always been this willing to grant exemptions. The landmark increase in granted exemptions began in 2016 when EPA granted 19 of the 20 submitted petitions. Over time, EPA has only increased the number of granted exemptions. Previous to 2016, EPA granted fewer than 10 petitions a year and denied nearly as many as it granted. 

In order to be eligible for a small refinery exemption under the Clean Air Act, the petitioner must demonstrate to EPA that complying with the requirements of the renewable fuel standard would prove to be a disproportionate economic hardship. EPA has sole authority to grant or deny petitions using their own interpretation of regulatory criteria. 

EPA’s announcement effectively reduces demand for renewable fuels and impact RIN pricing. EPA estimates that the waivers resulted in 13,420 million gallons of gasoline and diesel and 1,430 million RINS being exempted from its 2018 RFS Required Volume Obligations (RVOs). According to Progressing Fuels Limited, D6 RIN prices fell 40% and D4 RINs fell 15% following the announcement.