EPA Denies “Gap-Year” Small Refinery Exemptions

After years of U.S. EPA approving most small refinery exemptions (SREs) under the Renewable Fuel Standard (RFS), the Agency finally denied a significant number this week. EPA has stated it will deny 54 “Gap-Year” SREs reviewed to date by the Department of Energy (DOE). These “Gap-Year” petitions ranged from 2011 to 2018.

This is welcomed news for RIN owners — any SREs approved by EPA have the potential to reduce demand for renewable fuel blending, and thereby, reduce RIN prices. By denying the petitions, demand is retained.
Part of whether EPA grants or denies petitions for SREs is based on recommendations from DOE. For those petitions where DOE recommended no relief, EPA is issuing a denial. For those petitions where DOE recommended 50 percent relief, EPA is also issuing a denial. EPA noted that its decision, in part, is based on the fact that the Clean Air Act is unclear as to whether these “gap” waivers were allowed. DOE has issued its review of 54 of the 68 “gap” petitions submitted for its guidance, leaving a remaining 14 that have yet to be analyzed.

EPA has not issued a decision on SREs for the current and previous compliance years. As of this email, EPA has received 28 petitions for SREs for the compliance year 2019, and 3 for 2020. For details on SREs, click here.