August 2025 Decisions on Petitions for RFS Small Refinery Exemptions


August 2025 Decisions on Petitions
for RFS Small Refinery Exemptions

SEPA

United States
Environmental Protection
Agency

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August 2025 Decisions on Petitions
for RFS Small Refinery Exemptions

This technical report does not necessarily represent final EPA decisions
or positions. It is intended to present technical analysis of issues using
data that are currently available. The purpose in the release of such
reports is to facilitate the exchange of technical information and to
inform the public of technical developments.

U.S. Environmental Protection Agency

NOTICE

United States
Environmental Protection
Agency

EPA-420-R-25-010
August 2025

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Table of Contents

I.	Executive Summary	1

II.	Background	2

III.	EPA Evaluation	6

A.	Eligibility	6

B.	Ineligibility Determinations	6

C.	SRE Petition Requirements	8

D.	DOE Consultation	8

E.	Meaning of Disproportionate Economic Hardship	9

F.	RIN Cost Passthrough	10

G.	EPA's Response to the Final GAO Report	13

H.	Authority to Find Partial Disproportionate Economic Hardship	13

IV.	Implementation	20

A.	RIN Return	20

B.	Legal Authority	20

C.	Reporting Requirements	22

V.	Final Action on Petitions	23

VI.	Judicial Review	23

VII.	Update on Status of Certain SRE Petitions	28

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I. Executive Summary

In this document, the U.S. Environmental Protection Agency ("EPA" or "the Agency") is
acting on 175 individual small refinery exemption ("SRE") petitions from 38 refineries seeking
an exemption from their Renewable Fuel Standard ("RFS") obligations for the 2016-2024
compliance years.1 In consultation with the U.S. Department of Energy ("DOE"), EPA reviewed
all the information submitted by each individual refinery in support of its petition. After careful
consideration of all statutory factors and the information submitted by the refineries, EPA is
granting full exemptions to 63 petitions (36 percent), granting partial exemptions to 77 petitions
(44 percent), denying 28 petitions (16 percent), and determining seven petitions to be ineligible
(4 percent). The decisions break down as follows:

Total

Compliance
Year

Exempted
RVO
(million RINs)

Petitions

Full

(100%)
Exemption

Partial
(50%)
Exemption

Denial

Ineligible

2016

2017

2018

2019

1,460

2020

770

2021

910

2022

760

2023

680

2024

710

Total

5,340

175

Note: This table summarizes the SRE decisions we are making in this document. It does not represent all SRE
decisions for each year. For a full list of SRE decisions by year, see https://www.epa.gov/fuels-registration-
reporting-and-compliance-help/rfs-small-refinerv-exemptions.

This document articulates EPA's interpretation of section 21 l(o)(9) of the Clean Air Act
("CAA" or "the Act") and EPA's authority with respect to SRE petitions. This document also
includes confidential, refinery-specific appendices that address information raised by the
refineries in their petitions.2 These appendices also include refinery-specific information
provided by DOE. As required by CAA section 211(o)(9), EPA's final actions on the pending

1 In this document, we are not deciding pending SRE petitions for the 2025 compliance year. EPA guidance suggests
that a small refinery submit three quarters of financial data for the year for which the refinery is seeking an
exemption. Petitioners are unable to provide this data until at least October 2025. See "Financial and Other
Information to Be Submitted with 2016 RFS Small Refinery Hardship Exemption Requests," December 6, 2016,
available at https://www.epa.gov/sites/default/files/2016-12/documents/rfs-small-refinerv-2016-12-06.pdf.

2 The refinery-specific appendices contain information claimed by the small refineries to contain confidential
business information (CBI). Under CAA section 114(c), and 40 CFR Part 2, Subpart B, Confidentiality of Business
Information EPA cannot publicly release information claimed as CBI unless EPA lias determined that the
information is not entitled to confidential treatment. 40 CFR §§ 2.204, 2.205, 2.208. EPA lias not yet made a CBI
determination for this information; therefore, EPA has not made the refinery-specific appendices publicly available.

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SRE petitions are based on the legal and factual analysis presented herein, after consulting with
DOE, and considering the DOE Small Refinery Study and "other economic factors."

This document also explains how EPA will implement SRE decisions when an exemption
is granted. In addition, this document articulates the status of 34 SRE petitions from 31 refineries
for the 2016-2018 compliance years.

II. Background

CAA section 21 l(o)(9)(B) authorizes the EPA Administrator to temporarily exempt small
refineries from their renewable fuel volume obligations under the RFS program "for the reason
of disproportionate economic hardship" ("DEH"). The statute directs EPA, in consultation with
DOE, to consider two things when evaluating SRE petitions: the DOE Small Refinery Study3
and "other economic factors." The statute does not define "disproportionate economic hardship,"
provides no direction on how EPA is to consider the DOE Small Refinery Study, and identifies
no particular "economic factors" to be considered when assessing DEH.4

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."5 Both the original
RFS statutory provisions enacted pursuant to the Energy Policy Act of 2005 (EPAct)6 and the
current text of the CAA as amended by the Energy Independence and Security Act of 2007
(EISA)7 provided all small refineries an initial blanket exemption from their obligations under
the RFS program until calendar year 2011.8 By regulation, EPA required small refineries that
were producing either "gasoline" under the initial RFS program (RFS1)9 or "transportation fuel"
under the RFS program as modified by EISA (RFS2)10 to notify the Agency that they qualified
for the temporary exemption by submitting verification letters stating their average crude oil
throughput rate during the applicable qualification period.11

3	"Small Refinery Exemption Study, An Investigation into Disproportionate Economic Hardship," Office of Policy
and International Affairs, U.S. Department of Energy, March 2011 ("2011 DOE Study").

4	Sinclair Wyo. Ref. Co. LLC. v. EPA, 114 F.4th693, 707 (D.C. Cir. 2024) ("Sinclair LV") ("We previously affirmed
EPA's broad discretion to consider a range of factors when deciding hardship petitions."); Hermes Consol., LLC v.
EPA, 787 F.3d 568, 574-75 (D.C. Cir. 2015) ("Hermes") ("The statute . . . contains no definition of the term
'disproportionate economic hardship'. . . . Congress required EPA to consult with DOE and to 'consider the findings
of the [2011 DOE Study] and other economic factors' when evaluating petitions. The statute gives no further
instruction and identifies no particular economic factors or metrics to be considered.")).

5	CAA section 21 l(o)(l)(K). Thus, a "small refinery" is determined based on the annual volume of crude oil
processed at the refinery, not on the size of the company that owns the refinery. Indeed, many "small refineries" are
owned by large multi-national companies.

6	Pub. L. No. 109-58, 119 Stat. 594.

7	Pub. L. No. 110-140, 121 1492.

8	CAA section 21 l(o)(9)(A)(i).

9	72 FR 23900 (May 1, 2007), 40 CFR 80.1141(a)(1) (2021).

10	75 FR 14670 (March 23, 2010), 40 CFR 80.1441(a)(1) (2021).

11	72 FR 23900, 23924 (May 1, 2007), 40 CFR 80.1141(b); 75 FR 14670, 14735-38 (March 23, 2010), 40 CFR
80.1441(b). EPA's regulations allowed for small refineries that had submitted verification letters to qualify for the
original statutory exemption under EPAct / RFS1 to also qualify under the SRE provisions in EISA / RFS2. The
small refineries were not required to re-certify their throughput to maintain eligibility under the RFS2 program.

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The CAA includes two additional provisions regarding extensions of the SRE for the
period after the initial blanket exemption expired:

1)	Under the first statutory mechanism, applicable to 2011 and 2012, if DOE
determined, through a study mandated under the CAA, that compliance with the RFS
requirements would impose DEH on a small refinery, EPA was required to "extend
the exemption ... for the small refinery" for at least two years.12 DOE completed its
study in 2009, finding that, given each refinery's proportional obligations under the
program, and the opportunity to comply with RFS obligation by blending or
purchasing RINs, in a liquid and competitive Renewable Information Number (RIN)
market, compliance with the RFS requirements would not impose DEH on any small
refinery.13 Subsequently, Congress, in report language, directed DOE to revisit the
2009 DOE Study and in so doing to solicit input from small refineries.14

In 2011, DOE completed a second study that used the small refinery input to develop
a set of financial and operational metrics intended to inform DOE whether a small
refinery was likely to experience DEH.15 Contrary to the 2009 DOE Study, the 2011
DOE Study did not assume that RFS compliance costs would be the same for all
refineries in a competitive market, but instead assumed that small refineries could
face higher compliance costs by purchasing RINs when compared to large integrated
refiners that would acquire RINs through blending. DOE organized the metrics into a
two-part matrix with sections addressing "disproportionate impacts" and "viability
impairment" (the "DOE matrix" or simply "the matrix"). DOE also developed a
scoring protocol for the matrix that required the score in both sections of the matrix to
exceed an established threshold for DOE to find that DEH existed at a given small
refinery. Using this regime, the 2011 DOE Study found that DEH existed at 14 small
refineries. As required by the CAA, EPA granted those small refineries a two-year
extension of the initial blanket exemption (through 2012).16

2)	The second statutory mechanism provided that small refineries "may at any time
petition the Administrator for an extension of the exemption under [section

21 l(o)(9)(A)] for the reason of [DEH]."17 When evaluating SRE petitions, the Act
directs the Administrator, "in consultation with the Secretary of Energy," to "consider
the findings of the study under [CAA section 21 l(o)(9)(A)(ii)(I)] and other economic
factors."18 After DOE conducted its 2011 DOE Study and EPA granted two-year
extensions to the 14 refineries the study identified, additional refineries petitioned
EPA to secure 2011 and 2012 exemptions. EPA shared these new petitions with
DOE, which applied the matrix scoring methodology developed in the 2011 DOE
Study and shared the scoring results with EPA. EPA chose to satisfy the statutory

12	CAA section 2 ll(o)(9)(A)(ii)(II).

13	"EPACT 2005 Section 1501 Small Refineries Exemption Study," Office of Policy and Internation Affairs, U.S.
Department of Energy, February 2009 ("2009 DOE Study").

14	Senate Report 111-45, at 109 (2009).

15	2011 DOE Study at 31-33.

16	77 FR 1320, 1323 (January 9, 2012).

17	CAA section 21 l(o)(9)(B)(i).

18	CAA section 21 l(o)(9)(B)(ii).

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requirements for consultation and consideration of the 2011 DOE Study by using
DOE's scoring results in its evaluation of each SRE petition. Consistent with the
extensions of exemptions it granted to the 14 small refineries through the 2011 DOE
Study, EPA then decided to grant an extension of the exemption to an additional 10
small refineries for 2011, and to nine for 2012. Since 2013, EPA has shared all
incoming SRE petitions and supplemental information with DOE.

In some SRE decisions prior to 2016, DOE and EPA concluded that DEH existed only
when a small refinery experienced both disproportionate impacts and viability impairment, as
measured by the DOE matrix. In response to concerns that this threshold for establishing DEH
was too stringent, Consolidated Appropriations Act report language directed DOE to recommend
a 50 percent exemption when a small refinery's score on either section of the DOE matrix
exceeded the applicable threshold.19 Subsequent Senate Report language directed EPA to follow
DOE's recommendation, and to report to Congress if it did not.20

The Congressional direction, along with changing administration policies, prompted EPA
to revise its approach to finding DEH at a small refinery. Whereas EPA had previously exercised
discretion in evaluating "other economic factors" in its analysis of a small refinery's petition,
EPA changed its approach to instead rely on DOE's findings and granted a full exemption
whenever DOE findings indicated that EPA consider providing a 50 percent exemption for the
small refinery, based on its DOE matrix score.21 Under this approach, EPA fully exempted a
small refinery from its RFS obligations based solely on this DOE finding, which was derived
from metrics that assumed some refineries faced higher RFS compliance costs. This approach
did not account for EPA's own finding that the costs of RINs used for compliance with the RFS
program are the same for all obligated parties and are passed through by all obligated parties to
consumers ("RIN cost passthrough").

Subsequent events led EPA to change its approach again, and on December 7, 2021, EPA
proposed to deny all then-pending SRE petitions and sought input from stakeholders through a
public comment period. On April 7, 2022, and June 3, 2022, EPA issued denials of 105 SRE
petitions from 39 refineries spanning the 2016-2021 compliance years on the basis that no small

19 Consolidated Appropriations Act, 2016, Pub. L. No. 114-113 (2015). The Explanatory Statement is available at
161 Cong. Rec. H9693, H10105 (daily ed. Dec. 17, 2015): "If the Secretary finds that either of these two
components exists, the Secretary is directed to recommend to the EPA Administrator a 50 percent waiver of RFS
requirements for the petitioner."

20 S. Rep. 114-281, 71 (2016) ("When making decisions about small refinery exemptions under the RFS program,
the Agency is directed to follow DOE's recommendations which are to be based on the original 2011 Small
Refinery Exemption Study prepared for Congress and the conference report to division D of the Consolidated
Appropriations Act of 2016. Should the Administrator disagree with a waiver recommendation from the Secretary of
Energy, either to approve or deny, the Agency shall provide a report to the Committee on Appropriations and to the
Secretary of Energy that explains the Agency position. Such report shall be provided 10 days prior to issuing a
decision on a waiver petition.").

21 A substantial number of small refineries that showed no viability impairment on the DOE matrix received a
finding from DOE that EPA consider a 50 percent exemption, based solely on the small refinery's disproportionate
impacts score. See, e.g., "Decision on 2018 Small Refinery Exemption Petitions," Memorandum from Anne Idsal,
Acting Assistant Administrator, Office of Air and Radiation to Sarah Dunham, Director, Office of Transportation
and Air Quality, August 9, 2019.

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refinery demonstrated that they suffer DEH as a result of their RFS compliance costs.22 EPA
presumed that all small refineries could pass on their costs of RFS compliance, and, therefore, no
small refinery experienced DEH.23

These decisions were challenged in different courts, with two courts issuing decisions on
the merits.24 In Calumet, the Fifth Circuit concluded that venue was proper and thus it had the
authority to evaluate the challenges to the 20 SRE petitions before it.25 The court vacated those
petition denials.26 EPA petitioned the Supreme Court for a writ of certiorari, appealing only the
court's decision as to venue. The Supreme Court granted the petition for certiorari and reviewed
the Fifth Circuit's holding. On June 18, 2025, the Supreme Court held that venue was proper in
the D.C. Circuit and vacated and remanded to the Fifth Circuit for disposition consistent with
that ruling.27 On August 7, 2025, the Fifth Circuit transferred the case to the D.C. Circuit due to
lack of venue.

In Sinclair IV, the D.C. Circuit vacated the 2022 SRE Denial Actions on several bases.
First, the court held that EPA improperly focused on RFS compliance costs and not economic
hardship.28 The court also held that EPA did not consider "other economic factors" as required
by CAA section 21 l(o)(9)(B).29 Finally, the court concluded that the statutory language did not
require the RFS program to be the "sole cause" of the small refinery's hardship.30 The court also
held that EPA's denials were arbitrary and capricious because the record evidence did not
adequately support EPA's conclusion that the petitioning small refineries fully recovered their
RFS compliance costs via the sales price of their fuel.31 The court did, however, uphold EPA's
determinations that certain small refineries were ineligible to petition for an exemption under the
text of the statute and EPA's implementing regulations.32

In July 2023, EPA denied 26 SRE petitions from 15 refineries spanning the 2016-2018
and 2021-2023 compliance years.33 The rationale for denying those petitions was largely based
on the explanation and analyses in the 2022 SRE Denial Actions. Judicial challenges to the 2023
SRE Denial Action were held in abeyance pending the outcome of the litigation on the 2022 SRE
Denial Actions and the Supreme Court's decision in Calumet34 Once those cases were resolved,

22 "April 2022 Denial of Petitions for RFS Small Refinery Exemptions," EPA-420-R-22-006, April 2022; "June
2022 Denial of Petitions for RFS Small Refinery Exemptions," EPA-HQ-OAR-2021-0556, June 2022 (collectively
the "2022 SRE Denial Actions").

23 2022 SRE Denial Actions Section IV.D.2.

24 Calumet ShreveportRef., L.L.C. v. EPA, 86F.4thll21, 1133 (5th Cir. 2023); Sinclair IV, 114 F.4th at 726-27.

25 Calumet, 86 F.4th at 1133.

26 Id. at 1142.

27 EPA v. Calumet Shreveport Ref., L.L.C., 145 S. Ct. 1735 (2025).

28 Sinclair IV, 114 F.4th at 707.

29 Id. at 707-08.

30 Id. at 708-09.

31 Id. at 711-14.

32 Id. at 714-21.

33 "July 2023 Denial of Petitions for RFS Small Refinery Exemptions," EPA-420-R-23-007, July 2023 ("2023 SRE
Denial Action").

34 See, e.g., The San Antonio Refinery v. EPA, and consolidated cases No. 23-60399, Doc. Nos. 69, 109 (5th Cir.).
Other challenges in various other circuits were also held in abeyance.

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EPA sought and received remand of many of the petitions addressed in the 2023 SRE Denial
Action.35

In this document, EPA is issuing decisions on 175 pending SRE petitions from 38
refineries for the 2016-2024 compliance years: 67 petitions (38 percent) stem from the 2022
SRE Denial Actions, and another 26 petitions (15 percent) from the 2023 SRE Denial Action.
The remaining 82 petitions (47 percent) were not previously adjudicated.

III. EPA Evaluation

This section describes EPA's evaluation of the 175 SRE petitions for compliance years
2016-2024 that EPA is addressing in this document.

A. Eligibility

In determining eligibility, CAA section 21 l(o)(9) provides that only small refineries that
received the initial blanket exemption are eligible to petition for an extension of that initial
exemption, consistent with a prior EPA interpretation.36 This does not mean that any refinery
that met the definition of "small refinery" at the start of the RFS program is qualified to seek an
exemption for later years; the small refinery must have actually received the blanket exemption
for the years before 2011 pursuant to the CAA and implementing regulations. This means that
the small refinery must have been producing transportation fuel, such that it was an obligated
party under the RFS program, to qualify for the initial blanket exemption from the RFS
requirements (i.e., a refinery processing fewer than 75,000 bpd of crude oil into only products
other than transportation fuel could not receive an exemption from an RFS obligation it did not
have). This understanding was affirmed by the D.C. Circuit in Sinclair IV, where the court noted
that the eligibility requirement was "adopted to align the RFS program with the statutory text and
clear implications of the Supreme Court's ruling m HollyFrontier

EPA is also maintaining its approach to size-based eligibility—only a refinery with an
average aggregate daily crude oil throughput that does not exceed 75,000 bpd for the year for
which the refinery is seeking an exemption and the prior year is eligible to petition for an SRE.38

B. Ineligibility Determinations

In this document, EPA is determining that four refineries, which collectively submitted
seven SRE petitions, are ineligible to petition for an SRE on the grounds that the refineries fail to
meet one or more requirements for eligibility and thus EPA is denying these petitions. These

35 See, e.g., Calumet Montana Refinery, LLC, v. EPA, and consolidated cases, No. 23-1194, Doc. No. 2091139 (D.C.
Circuit) (December 23, 2024). Other petitions seeking review of the 2023 SRE Denial Action were dismissed. See,
e.g., Hunt Refining Company v. U.S. EPA, No. 23-12347, Doc. No. 56 (11th Cir.) (March 18, 2025), American
Refining Group Lnc. v. EPA, No. 23-2664, Doc. No. 31 (Feb. 28, 2025).

36 2022 SRE Denial Actions Section IV. A.

37 Sinclair LV, 114 F.4th at 720; see also, HollyFrontier Cheyenne Refin., LLC v. Renewable Fuels Ass 'n, 141 S. Ct.
2172 (2021) ("HollyFrontier").

38 See CAA section 21 l(o)(l)(K), 40 CFR 80.2 Small refinery, 40 CFR 80.1441(e)(2)(iii).

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determinations are based on EPA's statutory interpretation, which is being applied to all
refineries subject to the RFS program.

For one refinery, EPA determines that the refinery is ineligible to petition for an SRE
because the refinery did not receive the initial blanket exemption. The refinery did not qualify as
a "small refinery" in 2004 or 2006 because the average aggregate daily crude oil throughput of
the refinery exceeded 75,000 bpd during those qualification years.39 The refinery did not submit
the verification letter required by regulation to receive the initial blanket exemption and, because
it did not receive that exemption, the refinery is ineligible to petition for an SRE.40

For another refinery, EPA determines that the refinery is also ineligible to petition for an
SRE because the refinery did not receive the initial blanket exemption. The refinery did not
qualify as a "small refinery" in 2004 or 2006 because the refinery did not produce transportation
fuel during those qualification years and thus was not an obligated party subject to requirements
of the RFS program.41 The refinery did not submit the verification letter required by regulation to
receive the initial blanket exemption and, because it did not receive that exemption, the refinery
is ineligible to petition for an SRE.42

For the final two refineries, EPA determines that the refineries are ineligible to petition
for an SRE for compliance years 2023 and 2024 because the refineries exceeded the 75,000 bpd
throughput limit in 2023. Under the RFS regulations, a refinery must meet the definition of a
small refinery (i.e., its average aggregate daily crude oil throughput does not exceed 75,000 bpd)
in the calendar year for which the refinery is seeking an exemption and the prior year.43 These
two refineries both exceeded the 75,000 bpd threshold in 2023, thereby making the refineries
ineligible to petition for an SRE in both 2023 and 2024.44

These two refineries each submitted a letter suggesting that EPA's regulations are
contrary to the statute or improperly interpreted. We disagree with these assertions.

CAA section 21 l(o)(9) provides exemptions for small refineries, as defined in CAA
section 21 l(o)(l)(K). The statutory definition of small refinery does not include a specific year
and instead speaks to a small refinery's throughput "for a calendar year." EPA, by regulation, has
changed the specification years in the definition of small refinery throughout the history of the

39	40 CFR 80.1141(a)(1), 72 FR 23900 (May 1, 2007); 40 CFR 80.1441(b), 75 FR 14670 (March 26, 2010).

40	We note that the ineligibility of this refinery to petition for an exemption was previously determined and upheld
by the D.C. Circuit in Sinclair IV.

41	40 CFR 80.1141(a)(1), 72 FR 23900 (May 1, 2007); 40 CFR 80.1441(b), 75 FR 14670 (March 26, 2010).

42	We note that the ineligibility of this refinery to petition for an exemption was previously determined and upheld
by the D.C. Circuit in Sinclair IV.

43	40 CFR 80.1441(e)(2)(iii); 79 FR 42128, 42152 (July 18, 2014) ("[W]e are modifying the final rule to require that
throughput be no greater than 75,000 barrels in the most recent full calendar year prior to an application for
hardship. We will also clarify that a qualifying small refinery can't be projected to exceed the threshold in the year
or years for which it is seeking an exemption... We believe that these changes reasonably implement the statutory
definition of 'small refinery,' which indicates that the 75,000 barrel aggregate daily crude oil throughput is for 'a
calendar year,' but does not specify which calendar year should be the focus of inquiry. The final rule places the
focus on the time period immediately prior to and during the desired exemption period, which we believe is most
appropriate given the objectives of the provision.").

44	We note that this determination does not extend to the refineries' petitions for other years.

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RFS program.45 Under 40 CFR 80.1441(b), we have also placed certain conditions, which have
been upheld by the D.C. Circuit, on small refineries seeking an exemption, including the
submission of a verification letter.46 Therefore, EPA's regulatory condition that in order to be
eligible for an SRE, a refinery must not exceed the 75,000 bpd throughput in the year for which
it is seeking an exemption and the prior year is consistent with the statute.47

The two refineries also posit that EPA is interpreting its regulations improperly, and that
the regulations should only apply in circumstances when a refinery petitions for an exemption at
a time when the year prior to which they are seeking an exemption is complete {i.e., full-year
crude oil throughput data is available), and the year for which they are seeking an exemption is
not yet complete {i.e., crude oil throughput data is projected). The refineries suggest that EPA
should instead only look at the compliance year for which the exemption is sought in the
circumstances where the year for which an exemption is sought has concluded. However, this
interpretation would be contrary to EPA's regulations, which, while written to apply in the
scenario put forward by the two refineries, nevertheless requires a qualifying small refinery to
have a crude oil throughput of less than 75,000 bpd for two consecutive years.48

We also note that EPA promulgated the regulations imposing the 75,000 bpd threshold
for the year for which a refinery is seeking an exemption and the prior year through rulemaking
in 2014,49 no parties challenged EPA's regulations at that time, and those regulations can no
longer be challenged.50

C.	SRE Petition Requirements

The applicable SRE petition requirements are contained in EPA's regulations at 40 CFR
80.1441(e)(2). EPA evaluated the information submitted in each petition—in consultation with
DOE as discussed in more detail below—to determine if the petition satisfied the regulatory
criteria and met the statutory requirement to demonstrate DEH based on EPA's interpretation of
the SRE provisions of the CAA.

D.	DOE Consultation

EPA consulted with DOE to evaluate SRE petitions from small refineries that have not
been determined to be ineligible by EPA. For the decisions issued in this document, EPA shared
the SRE petitions and all supporting information with DOE. DOE reviewed the petitions and all

45	See 72 FR 23900, 23992 (May 1, 2007); 75 FR 14670, 14866 (March 26, 2010); 79 FR 42128, 42159 (July 18,
2014).

46	Sinclair IV, 114 F.4th at 717-18.

47	We recognize that the two refineries argue that a hypothetical provided by the Supreme Court in HollyFrontier in
which a refinery remains eligible to petition for a compliance year subsequent to a year in which the refinery
exceeded the 75,000 bpd threshold evidences a statutory requirement that a refinery need only meet the 75,000 bpd
limit for the petitioning year. We disagree; the Supreme Court was merely providing an example, and EPA's
implementing regulations were not before the Court in that case, which only determined the meaning of the statutory
term "extension."

48	40 CFR 80.1441(e)(2)(iii).

49	79 FR 42128, 42152 (July 18, 2014).

50	See CAA section 307(b)(1), requiring the challenge to EPA rulemaking actions within 60 days of publication in
the Federal Register.

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the supporting information to inform its evaluation of the petitions utilizing the DOE matrix.
DOE then shared the matrix scores for each SRE petition for each compliance year with EPA.
These matrix scores and any DOE explanation are included in the confidential, refinery-specific
appendices to this document.

E. Meaning of Disproportionate Economic Hardship

The CAA authorizes EPA to grant an SRE "for the reason of [DEH]." The CAA
authorizes EPA to issue exemptions for small refineries based on consideration of the 2011 DOE
Study and other economic factors. In this document, and consistent with the D.C. Circuit's
opinion in Sinclair IV., both factors inform EPA's assessment of whether a small refinery would
experience DEH. EPA first looks to the DOE matrix, consistent with the statutory directive in
CAA section 21 l(o)(9)(B)(ii) to "consider the findings of the [2011 DOE Study]." As discussed
further below, the DOE matrix is a reasonable proxy for determining whether a small refinery
would experience DEH. EPA also considers DOE's findings in determining the exemption
amount that EPA should provide.

EPA finds that the DOE matrix—developed in the 2011 DOE Study "to determine
whether compliance with the [RFS] would impose a disproportionate economic hardship on
small refineries"—properly assesses DEH.51 Therefore, EPA finds that a small refinery's score
on the DOE matrix will generally determine whether the small refinery is experiencing DEH,
and to what degree, as described further in Section III.H.

EPA has, in the past, acknowledged DOE's expertise in evaluating economic conditions
at refineries and in "developing] a survey form and assessment process to identify when
disproportionate economic hardship exists in the context of the renewable fuel standard
program."52 EPA has also "accord[ed] considerable deference to DOE's analysis of
disproportionate economic hardship in deciding whether or not to grant a petition for
extension."53 While the Fourth Circuit has concluded that in some circumstances EPA's reliance
on the DOE scores was arbitrary and capricious,54 subsequent DOE scores have provided further
explanations in response to that decision. Most recently, the D.C. Circuit in Sinclair IV opined
that the "2011 DOE study is the component that calls for 'determine[ing] whether compliance
with the requirements of [the RFS program] would impose a disproportionate economic hardship
on small refineries,"' and that EPA is to consider other economic factors "in addition to
considering economic hardship from RFS compliance."55 These decisions, taken together,
indicate that it is appropriate for EPA to defer to DOE's expertise and matrix scoring to assess
DEH. It is also appropriate for EPA to continue to utilize the DOE matrix as the primary basis
for its assessment of DEH.

EPA also assesses "other economic factors" for a small refinery within the context of the
refining industry and the RFS program. The D.C. Circuit concluded that EPA retains "broad

51 CAA section 2 ll(o)(9)(A)(ii)(I) and 2011 DOE Study Section VIII.

52 Hermes, 787 F.3d at 577.

53 Id.

54 Ergon West Virginia, Inc. v. US EPA, 896 F.3d 600 (2018).

55 Sinclair IV, 114 F.4th at 708.

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discretion to choose which economic factors it will (and will not) consider."56 In doing so, EPA
independently evaluates all available information in determining whether to grant or deny an
SRE petition. If no "other economic factors" compel a different finding on DEH than the DOE
score, EPA will utilize the scores on the DOE matrix to determine whether a small refinery
would experience DEH. Further discussion of our consideration of other economic factors can be
found in the appendices to this document.

Consistent with court decisions, in considering the 2011 DOE Study and other economic
factors, EPA does not require compliance with the RFS program to be the sole cause of the small
refinery's hardship. However, the hardship does need to have some connection to RFS
compliance.57 The DOE matrix assesses factors related to RFS compliance such as local market
acceptance of renewables and percentage of diesel production, as well as renewable fuel
blending percentage and RINs net revenue or cost. Other factors unrelated to RFS compliance
can also contribute to a small refinery experiencing DEH, and EPA considers those factors as
well.

F. RIN Cost Passthrough

EPA's 2022 and 2023 SRE Denial Actions were premised on an understanding that all
obligated parties, including small refineries, benefit from the "RIN cost passthrough" principle.
Based on EPA's analysis of the RIN and fuels markets, we determined that obligated parties
recover the cost of acquiring RINs (whether those RINs are purchased from other parties or
acquired by blending renewable fuel) through higher sales prices for the gasoline and diesel they
produce. In this way the cost of acquiring RINs is passed through from obligated parties to
consumers of transportation fuel.

While the D.C. Circuit in Sinclair IVfound small refineries' arguments that they cannot
always purchase RINs ratably to be compelling, the court agreed with EPA in its subsequent
decision in Center for Biological Diversity v. EPA that the principle as applied to the entire
transportation fuel market is still valid in.58 Given the court's decision in Sinclair IV, we
evaluated SRE petitions by using the DOE matrix and making no presumptions about the extent
to which any particular small refinery is able to pass through its RIN costs. To the extent
petitioning small refineries presented arguments about RIN cost passthrough, we considered
those arguments in our assessment. We note that DOE's assessment of viability impairment in
the DOE matrix uses the full cost of RFS compliance with no RIN cost passthrough to assess
whether a refinery faces viability impairment. Because this approach presumes no passthrough, it
likely overestimates actual RFS compliance costs. Nevertheless, we find that such an approach is
appropriate due to our inability to evaluate the degree to which RIN costs are passed through in
each and every market into which a small refinery sells transportation fuel.

56 Hermes, 787 F.3d at 577.

57 Sinclair IV, 114 F.4th at 708-709 ("For RFS compliance to cause a hardship, the hardship would not have
occurred without compliance. But that does not foreclose other factors contributing to the hardship.").

58 Ctr. for Biological Diversity v. EPA, 141 F.4th 153 (D.C. Cir. 2025) ("('IV)") (recognizing that the "central
premise - refineries are able to pass RIN costs along to consumers - is generally true").

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Fundamental to the 2011 DOE Study and the approach that EPA and DOE used to
evaluate SRE petitions prior to calendar year 2017 was the assumption that small refineries that
were unable to blend renewable fuel may face a higher cost of compliance given the need to
purchase RINs.59 This potentially places such small refineries at a disadvantage compared to
refineries able to acquire RINs by blending renewable fuel. EPA analyzed the cost of purchasing
separated RINs relative to the cost of acquiring RINs by blending renewable fuel on multiple
occasions, beginning in 2015 with the Burkholder Study,60 and again in 2016 and 2017 when
EPA evaluated the RIN market as part of its consideration of petitions to change the RFS point
of obligation.61 EPA found that, on average, the cost of purchasing separated RINs was equal to
the cost of acquiring RINs by blending renewable fuel. Our analysis of pricing data demonstrated
that parties that blend renewable fuels discount the price of the fuel they sell to account for the
value of the RINs they receive when they purchase renewable fuels. Parties that blend renewable
fuel are effectively selling renewable fuel at a lower price than they paid for the renewable fuel.
This cost (the difference between the purchase price and the sales price for renewable fuel) is
equal to the RIN price. Further, as noted above, EPA's analysis showed that these compliance
costs are passed through to consumers in higher prices on the gasoline and diesel subject to the
renewable volume obligation (RIN cost passthrough).

EPA reassessed its interpretation of RFS compliance costs and other economic factors
unrelated to the RFS program and subsequently denied numerous SRE petitions in the 2022 and
2023 SRE Denial Actions based on its assessment that all small refineries face the same
compliance costs in acquiring RINs and recover those costs in the prices they receive for their
refined product sales. The D.C. Circuit found that EPA's denials were arbitrary and capricious
because of EPA's reliance on RIN cost passthrough principles that the court found had not been
demonstrated to be true for each small refinery in each petition year, making EPA's denials
contrary to the record evidence.62

EPA's previous analysis demonstrates that, at least at the national level and in
competitive markets, obligated parties are able to recover their compliance costs through the
prices they receive for the gasoline and diesel they sell.63 EPA acknowledges that some national-
scale studies have found less-than-perfect RIN passthrough; however, these deviations are
relatively small and therefore would be unlikely to lead to a disproportionate cost of compliance
large enough to constitute DEH. EPA also recognizes that its previous assessment of complete
RIN cost passthrough was premised on the assumption that small refineries can and should
purchase RINs ratably, and that parties that choose to delay RIN purchases may pay higher or
lower prices for these RINs than they recover when selling the gasoline and diesel they produce.
In Sinclair IV, the D.C. Circuit focused on this issue and held that the CAA provides obligated
parties flexibility regarding the timing of their RIN purchases and that it was therefore

59	Neither the 2009 DOE Study nor the 2011 DOE Study considered the possibility that refineries would recover the
cost of RINs through higher prices for their products.

60	"A Preliminary Assessment of RIN Market Dynamics, RIN Prices, and Their Effect," Dallas Burkholder, Office
of Transportation and Air Quality, US EPA, May 14, 2015.

61	"Denial of Petitions for Rulemaking to Change the RFS Point of Obligation," EPA-420-R-17-008, November
2017.

62	Sinclair IV, 114 F.4th at 711-15.

63	88 FR 44468 (July 12, 2023). This finding was upheld by the D.C. Circuit in CBD.

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impermissible for EPA to evaluate DEH based on a presumption that small refineries must
purchase RINs ratably.64

EPA's analysis of the renewable fuel, RIN, and petroleum fuel markets continues to
support our previous findings that at the national level and in competitive markets, obligated
parties are able to recover their RFS compliance costs (i.e., acquiring RINs) through the prices
they receive for the gasoline and diesel they produce. Further, our analysis continues to support
our finding that parties that acquire RINs by blending renewable fuels do not acquire these RINs
at a lower cost compared to parties that purchase separated RINs, but that these parties instead
discount blended fuels sold without a RIN by the value of the RIN. However, consistent with
Sinclair IV., the SRE decisions we are issuing in this document are not based on the conclusion
that all obligated parties, including small refineries, are able to fully recover their RFS
compliance costs through RIN cost passthrough.

EPA currently lacks the granular market-level data necessary to precisely evaluate the
degree to which a small refinery recovers its RFS compliance costs in each and every market into
which it sells transportation fuel. This analysis would require, for example, frequent (e.g., daily)
detailed information on the market prices for petroleum blendstocks, renewable fuels, blended
fuels, and RINs not only from the small refinery, but also from all other parties selling these
products in competition with the small refinery. While pricing information for some of these
products is available in many markets, much of this information is not available, particularly for
the markets in which small refineries operate. However, the CAA does not require that EPA
precisely determine RIN cost passthrough in evaluating SRE petitions. Instead, the CAA states
that a small refinery may petition EPA for an extension of the exemption for the reason of DEH.

The CAA also requires EPA to consult with DOE, which evaluates SRE petitions
primarily through the various factors identified in the DOE matrix. One of the factors DOE
considers is the ability for a small refinery to blend renewable fuel. A small refinery without this
ability could experience a competitive disadvantage relative to parties that can blend renewable
fuel if that small refinery was also unable to pass through the cost of acquiring RINs to
consumers or if parties that blend renewable fuel were able to retain all or a portion of the value
of the RIN they obtained by blending renewable fuel.65 DOE's evaluation of SRE petitions
therefore implicitly considers the ability for small refineries to recover the cost of acquiring the
RINs they need for RFS compliance. By relying on DOE's findings and, where appropriate, a
consideration of RIN cost passthrough principles as part of a consideration of other economic
factors, EPA has appropriately considered small refineries' ability to recover the cost of RINs in
a manner consistent with Sinclair IV and other relevant court decisions.

64	Sinclair IV, 114 F.4th at 709-15.

65	The difference in RIN cost recovery and/or RIN value retained between small refineries and their competitors
would also have to be of sufficient magnitude to constitute DEH.

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G.	EPA '.s Response to the Final GAO Report

Several small refineries suggested in their petitions that the November 2022 GAO
Report66 was evidence that they face higher costs of RFS compliance due to a purported
difference in the price they must pay to acquire RINs, and that they therefore will face DEH.
While RIN cost passthrough and the price of RIN acquisitions are no longer fundamental to our
assessment of DEH, we nonetheless maintain the analysis and conclusions of both EPA and
DOE provided comments on a September 2022 draft version of the GAO Report. These
comments are available in Appendices IV (EPA) and V (DOE) of the November 2022 GAO
Report, EPA's December 2022 RIN Price Analysis,67 and EPA's May 2, 2023, Response to Final
GAO SRE Report.68

H.	Authority to Find Partial Disproportionate Economic Hardship

CAA section 21 l(o)(9)(B) authorizes EPA to exempt small refineries from their RFS
obligations "for the reason of disproportionate economic hardship."69 The statute does not
provide a definition for DEH or its components and, over the life of the RFS program, EPA has
developed multiple interpretations of the meaning of DEH. After conducting an analysis of the
statutory language, and considering the structure of the SRE and RFS provisions and the
congressional objectives for the RFS program, EPA now concludes that the best reading of CAA
section 21 l(o)(9) includes authority for EPA to find that a small refinery would experience DEH
if required to comply with its RFS obligations, but that the degree of DEH warrants only a partial
exemption from its obligations.70

CAA section 21 l(o)(9)(A)(i) provided that small refineries would be exempt from the
requirements of the RFS program until 2011 and included mechanisms for extensions of this
initial exemption. First, subparagraph (A)(ii)(I) directed DOE to conduct "a study to determine
whether compliance with the [RFS Program] would impose a disproportionate economic
hardship on small refineries." For any small refinery that DOE determined would be subject to a
"disproportionate economic hardship" if required to comply with its RFS obligations, the statute
instructs EPA to extend the exemption for at least two additional years.71 Second, subparagraph
(B) permits a small refinery to petition EPA "at any time" for an "extension of the exemption
under subparagraph (A) for the reason of disproportionate economic hardship."72 In evaluating

66	"Renewable Fuel Standard: Actions Needed to Improve Decision-Making in the Small Refinery Exemption
Program," November 2022, GAO-23-104273.

67	"An Analysis of the Price of Renewable Identification Numbers (RINs) and Small Refineries," December 2022,
EPA-420-R-22-038.

68	Available at https://www.epa.gov/renewable-fuel-standard/epa-analYsis-price-rins-and-small-refineries.

69	CAA section 21 l(o)(9)(B)(i).

711 We refer to DEH that warrants a partial exemption as "partial DEH" throughout this document. We clarify here
that, when we say a small refinery would experience partial DEH, we mean that the small refinery would experience
DEH if required to comply with its RFS obligations, but that the degree of DEH warrants only a partial exemption
from its RFS obligations.

71	CAA section 21 l(o)(9)(A)(ii)(II).

72	CAA section 21 l(o)(9)(B)(i).

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an SRE petition, subparagraph (B) directs EPA to consider the findings of the DOE study and
other economic factors.73

CAA section 21 l(o) does not define "disproportionate economic hardship," nor has EPA
supplied a definition by regulation. In the absence of a statutory or regulatory definition, the text
of the statute is read in accordance with its ordinary meaning as informed by dictionary
definitions.74 "Disproportionate" means having too much or too little in relation to something
else.75 "Economic" means of, or relating to, or concerned with the production, distribution, and
consumption of commodities.76 "Hardship" means a privation, suffering, or adversity.77 Both
"disproportionate" and "economic" modify "hardship." Thus, in the context of CAA section
21 l(o)(9), "disproportionate economic hardship" means a financial privation or difficulty that is
too large for a small refinery in comparison to the financial difficulty faced by other refineries.78
However, CAA section 21 l(o)(9) does not establish at what point the economic hardship on the
small refinery becomes "too large" in comparison to other refineries, thus making that small
refinery eligible for an extension of the exemption.79 By requiring that extensions of the
exemption be "for the reason of disproportionate economic hardship," but leaving that term
undefined, Congress left it to the Agency's discretion to "fill up the details" by giving necessary
specification to these terms.80 When a court has determined that Congress has delegated
discretion to an agency, its role is to "fix[] the boundaries of the delegated authority, and ensur[e]
the agency has engaged in 'reasoned [sic] decisionmaking' within those boundaries."81

The comparative analysis is conducted primarily via the application of the DOE matrix.82
As DOE explained in the 2011 DOE Study, "[s]mall refineries can suffer disproportionate
economic hardship from compliance with the RFS program if blending renewable fuel into their
transportation fuel or purchasing RINs increases their cost of products relative to competitors."83

73	Id at (ii).

74	See. e.g., PG&E v. FERC, 113 F.4th 943, 947-58 (D.C. Cir. 2024) ("Courts must interpret statutes, no matter the
context, based on the traditional tools of statutory construction.... Therefore, when addressing a question of statutory
interpretation, we begin with the text. And when construing the text, we look to the ordinary meaning of its terms.")
(internal citations omitted); Yates v. United States, 574 U.S. 528, 537 (2015) ("Ordinarily, a word's usage accords
with its dictionary definition.").

75	Disproportionate, Black's Law Dictionary (11th ed. 2019).

76	Economic, Webster's Third New International Dictionary (1993).

77	Sinclair IV, 114 F.4th at 707 (quoting Black's Law Dictionary (11th ed. 2019)); see also Sinclair Wyo. Ref. Co. v.
EPA, 874 F.3d 1159, 1170 (10th Cir. 2017) ( "Sinclair F) ("[A] 'hardship' is something that 'makes one's life hard
or difficult...'").

78	Sinclair I, 874 F.3d at 1170 ("The statute also commands the EPA to consider the disproportionate impact of the
RFS Program, which inherently requires a comparative evaluation.").

79	Hermes, 787 F.3d at 575; see Sinclair IV, 114 F.4th at 707.

80	Loper Bright Enters, v. Raimondo, 603 U.S. 369, 394-95 (2024) ("For example, some statutes 'expressly delegate[
]' to an agency the authority to give meaning to a particular statutory term. Batterton v. Francis, 432 U. S. 416, 425,
97 S. Ct. 2399, 53 L. Ed. 2d 448 (1977) (emphasis deleted). Others empower an agency to prescribe rules to "fill up
the details" of a statutory scheme, Wayman v. Southard, 23 U.S. 1, 10 Wheat. 1, 43, 6 L. Ed. 253 (1825)"); See
Wayman, 23 U.S. at 42-43 (distinguishing between "powers which are strictly and exclusively legislative.. .which
must be entirely regulated by the legislature itself, [and] those of less interest, in which a general provision may be
made, and power given to those who are to act under such general provisions to fill up the details.").

81	Loper, 603 U.S. at 371 (citingMichigan v. EPA, 576 U. S. 743 (2015)).

82	EPA also considers other economic factors that may impact its decision to extend the exemption.

83	2011 DOE Study at vii.

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The study developed metrics to evaluate whether small refineries would suffer an economic
hardship relative to an industry standard.84 These metrics include the small refinery's access to
capital/credit that may be needed to develop blending capabilities or purchase RINs, the
percentage of diesel production at the refinery compared to the industry average, the refinery's
three-year average refining margin versus the three-year industry average refining margin, the
local market's acceptance of renewable fuels, and whether the refinery operates in a niche
market that produces higher-than-average refining margins, among others.85 Each metric is
assigned a score that is then used to produce two overall scores, one for disproportionate impacts
and one for viability impairment.

In the early years of the program, DOE and EPA determined that a small refinery would
experience DEH—and would thus be eligible for an extension of the exemption—if it scored
above a set threshold on both the disproportionate impacts and viability impairment sections of
the DOE matrix. In an explanatory statement accompanying the 2016 Appropriations Act,
members of Congress directed the Secretary of Energy to recommend to the EPA Administrator
a 50 percent exemption of a petitioning small refinery's RFS obligations if the small refinery
scored above the relevant threshold on either section of the DOE matrix.86 In response to this
directive, the Secretary of Energy began providing EPA with findings that EPA consider
providing 50 percent exemptions for small refineries that scored above the threshold on one
section of the DOE matrix but not both. In June 2016, the Senate Appropriations Committee,
expressing concern over the denial of SRE petitions where the Agency determined that certain
refineries would experience a DEH as a result of compliance with their RFS obligations but
would still remain profitable, published a committee report that directed EPA to follow DOE's
recommendations and to report to the committee if it did not.87 Members of Congress renewed

84 Id.

85 Id. at 34-35.

86 Consolidated Appropriations Act, 2016, Pub. L. No. 114-113 (2015). The Explanatory Statement is available at
161 Cong. Rec. H9693, H10105 (daily ed. Dec. 17, 2015) (hereinafter "Explanatory Statement"). ("According to the
[2011 DOE Study], disproportionate economic hardship must encompass two broad components: a high cost of
compliance relative to the industry average disproportionate impacts and an effect sufficient to cause a significant
impairment of the refinery operations viability. If the Secretary finds that either of these two components exists, the
Secretary is directed to recommend to the EPA Administrator a 50 percent waiver of RFS requirements for the
petitioner. The Secretary is reminded that the RFS program may impose a disproportionate economic hardship on a
small refinery even if the refinery makes enough profit to cover the cost of complying with the program. Small
refinery profitability does not justify a disproportionate regulatory burden where Congress has explicitly given EPA
authority, in consultation with the Secretary, to reduce or eliminate this burden.") (emphasis added).

87 Department of the Interior, Environment, and Related Agencies Appropriations Bill, 2017, Senate Report 114-
281, 65 (June 16, 2016) (hereinafter "Senate Report") ("In response to several recent petitions, the Agency
determined that compliance with the RFS would have a disproportionate economic impact on a small refinery, but
denied hardship relief because the small refinery remained profitable notwithstanding the disproportionate economic
impact. This is inconsistent with congressional intent because the statute does not contemplate that a small refinery
would only be able to obtain an exemption by showing that the RFS program threatens its viability. Congress
explicitly authorized the Agency to grant small refinery hardship relief to ensure that small refineries remain both
competitive and profitable... When making decisions about small refinery exemptions under the RFS program, the
Agency is directed to follow DOE's recommendations ... and the [Explanatory Statement].")

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these directives in subsequent reports.88 EPA's new interpretation of CAA section 21 l(o)(9) is
consistent with these directives.

These directives to DOE and EPA prompted the Agency to reevaluate its approach to
SRE petitions. Initially, the Agency concluded that the better reading of CAA section
21 l(o)(9)(B) called for either fully granting or fully denying SRE petitions, precluding partial
exemptions.89 However, EPA announced that it was reconsidering its position on partial hardship
and partial exemptions in the 2020 RFS Rule.90 Acknowledging that it had previously concluded
that CAA section 21 l(o)(9)(B) did not permit a finding of partial hardship, the Agency
determined that the statute was silent on the issue and provided EPA discretion in determining
the scope of the exemption.91 EPA stated that its policy moving forward would be to follow
DOE's recommendations, including granting partial (50 percent) exemptions where
appropriate.92

A reading of CAA section 21 l(o)(9)(B) that includes authority for EPA to find partial
DEH is more consistent with the structure of the SRE and RFS provisions and congressional
objectives for the program than a reading that EPA lacks such authority. In 2005 and 2007,
Congress amended the CAA to establish the RFS program to "increase the production of clean
renewable fuels," among other purposes.93 The program was designed to provide obligated
parties with flexibility and included multiple means for them to comply with the program.94
Congress was particularly concerned with the impacts of the RFS program on small refineries. In
addition to the other compliance flexibilities available to all obligated parties, it provided other
means of addressing hardship that may arise in connection with a small refinery's RFS
obligations. Congress fully exempted small refineries from the RFS program until 2011 while
also directing DOE to study whether compliance with the program would impose a
"disproportionate economic hardship" on small refineries. If so, EPA was required to extend the

88	H. R. Rep. No. 114-91, at 112 (2015); S. Rep. No. 114-54, at 95 (2015); H. R. Rep. No. 114-632, at 63-64 (2016)
("Where the refiner or refinery shows a disproportionate economic hardship based on site specific factors and where
the Secretary of Energy recommends to EPA that a waiver, in partial or full, is warranted, the Committee finds the
Administrator has the necessary authority to grant a partial waiver."); S. Rep. No. 114-281, at 70-71 (2016); H. R.
Rep. No. 115-230, at 99-100 (2017); S. Rep. No. 115-132, at 93-94 (2017); S. Rep. No. 115-258, at 101 (2018); S.
Rep. No. 115-276, at 70 (2018). Subsequent report language does not speak to this topic.

89	"Decision on 2018 Small Refinery Exemption Petitions," Memorandum from Anne Idsal, Acting Assistant
Administrator, Office of Air and Radiation to Sarah Dunham, Director, Office of Transportation and Air Quality,
August 9, 2019.

90	85 FR 7016 (February 6, 2020) ("2020 RFS Rule").

91	Id. at 7052 (Noting that section 21 l(o)(9) is "silent with respect to EPA's authority to issue partial exemptions.
Nothing in the statute directly addresses this issue. No statutory language exists characterizing the scope of an
exemption; there are no terms employed such as 'partial' or 'full,' or '50%' or ' 100%.' Moreover, nothing in the
statute obligates EPA to provide full relief where we find that only partial relief is warranted.")

92	Id. at 7019. Subsequent EPA actions under the RFS program did not address the question of partial hardship in
EPA's projection of SREs in its annual rulemakings, or in its SRE decisions.

93	See Energy Policy Act of 2005 (EPAct), Pub. L. No. 109-58, 119 Stat. 594; Energy Independence and Security
Act of 2007 (EISA), Pub. L. No. 110-140, 121 Stat. 1492.

94	CAA section 21 l(o)(5)(A)-(C) (requiring EPA to establish a credit trading program allowing obligated parties
that acquire excess credits in one year to apply credits toward compliance in a subsequent year or to sell the credits
to another obligated party for use in its own compliance); CAA section 2ll(o)(5)(D) (permitting an obligated party
to carry forward a credit deficit into the following compliance year).

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exemption for at least two additional years.95 Congress also provided a mechanism for limited,
future exemptions for small refineries for the reason of DEH.96 In doing so, Congress crafted a
legislative balance that promoted greater use of renewable fuel while also considering the
impacts of the RFS program on small refineries.97 EPA's authority under CAA section
21 l(o)(9)(B) to find a partial hardship is a natural incident to this balance.98

The statutory structure of CAA section 21 l(o)(9)(B) supports the interpretation that EPA
has authority to find partial DEH. In crafting CAA section 21 l(o)(9), Congress created a series
of exemptions for small refineries that increase in stringency, reflecting Congress's intent that
exemptions would become more targeted over time. The initial exemption under subparagraph
(A)(i) had the greatest scope in breadth and duration. It applied to all refineries that met the
statutory definition of a small refinery and followed EPA's implementing regulations, and
applied for a period of five years, beginning in 2006 and expiring in 2011. The initial exemption
did not impose any other conditions or limitations.

In subparagraph (A)(ii), Congress imposed greater restrictions when compared to the
initial exemption. First, Congress decreased the pool of eligible small refineries by adding
additional eligibility criteria. Rather than applying to any small refinery that meets the statutory
definition, Congress limited the subparagraph (A)(ii) exemption by conditioning an extension of
the exemption on a DOE finding that the small refinery would experience DEH if required to
comply with its RFS obligations.99 Second, Congress decreased the duration of the subparagraph
(A)(ii) exemption, moving from five years to a minimum of two.100 These changes to the
structure of the exemption reflect Congress's intent that the exemptions become more targeted,
applying to those small refineries that need it most, those that would experience DEH as a result
of complying with their RFS obligations.

This intention is further confirmed by the text of the subparagraph (B) exemption, which
is even more circumscribed than subparagraph (A)(ii). Most notably, unlike the initial exemption
and subparagraph (A)(ii) extension, Congress in subparagraph (B) for the first time required
action on the part of the small refinery to receive an exemption. The small refinery must petition
EPA for an extension of the exemption. Further, Congress again shrank the breadth of the
exemption in subparagraph (B), dropping it down to a single refinery. It also further limited the

95	CAA section 2 ll(o)(9)(A)(ii)(II).

96	CAA Section 21 l(o)(9)(B).

97	Sinclair IV, 114 F.4th at 711 ("The RFS program reflects a carefully crafted legislative bargain to promote
renewable fuels, but also to provide an exemption mechanism for small refineries.")

98	Additionally, EPA's authority to either fully enforce or, under CAA section 21 l(o)(9)(B), to fully exempt a
refinery of its RFS obligations necessarily includes the authority to partially exempt the refinery of those
obligations. Cf. Soaring Eagle Casino & Resort v. NLRB, 791 F.3d 648, 659 (6th Cir. 2015) (holding that the tribal
power to exclude nonmembers from tribal lands "necessarily includes the lesser power to place conditions on entry,
on continued presence, or on reservation conduct"); see also Bremer v. Johnson, 834 F.3d 925, 931 (8th Cir. 2016)
(finding that a grant of "sole discretion ... necessarily includes authority to implement practices or procedures for
making decisions"). EPA does not understand CAA section 21 l(o)(9) to exclusively authorize EPA to either
completely obligate or completely exempt a small refinery while prohibiting the exercise of those authorities at
intermediate degrees. Such a reading would undermine the regulatory balance Congress has charged EPA with
continually refining.

99	CAA section 2ll(o)(9)(A)(ii)(II).

100	Id.

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duration of the exemption, down to a single year.101 Finally, Congress included additional
criteria for extending an exemption. In evaluating a petition under subparagraph (B), EPA must
consider not only the findings of the 2011 DOE Study, but also other economic factors. These
additional limitations evince Congress's intention that exemptions for small refineries would
become more targeted with time and reading CAA section 21 l(o)(9)(B) as including authority to
find partial hardship and partially exempt small refineries aligns with this intention.

A reading of CAA section 21 l(o)(9) that includes authority for EPA to find partial DEH
is further supported by the congressional goals of the RFS program. One of the purposes of the
RFS program is to "increase the production of clean renewable fuels," but in crafting the RFS
program, Congress was concerned that the program may impose special burdens on small
refineries and provided unique mechanisms to relieve small refineries of their RFS obligations if
such obligations rose to the level of DEH.102 These concerns may arise even when a small
refinery would experience a lesser degree of DEH when compared to other small refineries.
Consider the small refinery that scores above the threshold on one section of the DOE matrix but
not the other. Under an all-or-nothing reading of the CAA section 21 l(o)(9)(B) exemption,
unless there are other economic factors weighing in favor of extending the exemption, EPA may
decline to extend the exemption to a small refinery that scored above the threshold on one
section of the DOE matrix but not the other. This would leave the small refinery worse off, as it
would need to comply with all its RFS obligations despite evidence that such obligations impose
a greater degree of economic hardship on the small refinery when compared to other refineries,
as demonstrated by its score above the threshold on one section of the DOE matrix. Such a denial
would potentially implicate Congress's concerns regarding the impact of the RFS program on
small refineries.

However, the alternative of fully extending the exemption to a small refinery that only
scores above the threshold on one section of the DOE matrix is no better. Were EPA to fully
extend the exemption, the small refinery would not be required to retire any RINs for RFS
compliance despite evidence that the small refinery can shoulder a portion of its RFS obligations
without disproportionate adverse consequence. Fully exempting a small refinery that only scores
above the threshold on one section of the DOE matrix goes further than necessary to address the
DEH faced by the small refinery, thereby undercutting congressional goals for the RFS program.

Further, by fully extending the exemption when the small refinery only demonstrates
partial DEH, the small refinery receives a competitive advantage over other small refineries that

101	While CAA section 21 l(o)(9)(B) does not contain an explicit limit on the duration of the exemption extension, it
does clearly indicate that each SRE petition and EPA's evaluation thereof are individual acts. The statute permits I
small refinery" to petition for "an extension of the exemption" and provides guidance to EPA when "evaluating a
petition." (emphasis added). Considering that the statute creates new RFS obligations for a refinery on an annual
basis, both EPA and the courts have consistently interpreted section 21 l(o)(9)(B) as providing for exemptions for
specific compliance years. See Sinclair /, 874 F.3d at 1170 ("[CAA 21 l(o)(9)(B)] prescribes the overall process...
whether a refinery will suffer 'disproportionate economic hardship' if it is required to participate in the RFS
Program for a given year...") (emphasis added). Further, the absence of a specific duration in section 211(o)(9)(B)
when compared to section 21 l(o)(9)(A)(i) and section 21 l(o)(9)(A)(ii)(I) suggests that Congress meant for this
exemption to apply to a single compliance year, otherwise it would have provided a longer timeframe as it did in the
other sections. EPA has in the past exempted small refineries for multiple compliance years, but finds that in
general, the statute contemplates exemptions for a single compliance year.

102	EPAct, Pub. L. No. 109-58, 119 Stat. 594; HollyFrontier, 141 S. Ct at 2175.

18

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demonstrated a greater degree of hardship and received a full exemption. The former refinery is
better positioned to bear the costs of RFS compliance than the latter, yet both small refineries
receive the exact same outcome—complete discharge from their RFS obligations. This places the
small refinery experiencing partial DEH in a superior economic position than its counterpart.
Considering how careful Congress was in striking a balance between the economic concerns of
the refining industry and fostering renewable fuel demand, it cannot be the case that Congress
would have permitted a small refinery to game the system by incurring a benefit above and
beyond what is necessary to address the DEH faced by the small refinery.

Because neither fully denying nor fully granting an SRE petition in these edge cases
effectuates the purposes of the RFS program, EPA, exercising the discretion afforded by
Congress, finds that the middle path strikes the appropriate balance. By reading CAA section
21 l(o)(9) as permitting EPA to find partial DEH, the Agency can issue an exemption
commensurate with the degree of DEH experienced by small refineries in these situations. In
doing so, the Agency continues to bolster the demand for renewable fuels while also ensuring
that small refineries that experience DEH resulting from compliance with their RFS obligations
receive an appropriate exemption.

The decisions issued in this document are not retroactive because EPA is applying its
revised approach to currently-pending SRE petitions (both newly remanded and previously
undecided), which does not take away or impair "vested rights acquired under existing laws" or
create a "new obligation.. .in respect to transactions.. .already past."103 Rather, it confirms the
status quo that petitioning small refineries comply with preexisting RFS obligations; therefore,
no rights had vested in any of the small refineries' uncompleted transactions (e.g., their pending
petitions). These RFS obligations were previously imposed by Congress and implemented
through EPA regulations wholly separate from the SRE petition process. Moreover, Congress
delegated resolution of SRE petitions to EPA "at any time,"104 thereby expressly authorizing any
purported retroactive effect, and EPA reasonably adjudicated the SRE petitions by applying the
proper statutory interpretation to the facts at hand, making any purported retroactive effect
permissible.105 Additionally, EPA has repeatedly stated that small refineries should expect to
comply with their RFS obligations unless and until an exemption is received.106 As such, the
decisions issued in this document do not disrupt any reasonable expectations small refineries
could have regarding prior approaches. Moreover, any reliance petitioners could have plausibly
assumed regarding EPA's prior approach would be that EPA would return to its prior use of the
2011 DOE Study, when EPA granted a full exemption when DOE made a finding of 100 percent
exemption. But EPA's approach is to now grant both full and partial exemptions, as the DOE
matrix may suggest either full or partial exemptions for small refineries. Because EPA is
implementing a more expansive approach, there is no harm to small refineries for EPA to now
apply this new approach without providing notice.

103 Landgrafv. USIFilm Prods., 511 U.S. 244, 269 (1994); 42 U.S.C. § 7545(o)(3)(B)(ii)(I); 40 CFR 80.1406.

104 CAA section 21 l(o)(9)(B)(i), (ii).

1115 Nat'I Petrochemical & Refiners Ass '/? v. EPA, 630 F.3d 145, 159 (D.C. Cir. 2010).

1116 See. e.g.. "Financial and Other Information to Be Submitted with 2016 RFS Small Refinery Hardship Exemption
Requests," December 6, 2016, pg. 3 ("[petitioning small refineries should always presume that they are subject to
the requirements of the RFS program and include RFS compliance in their overall planning.") (emphasis added),
available at https://www.epa.gov/sites/default/files/2016-12/documents/rfs-small-refinerv-2016-12-06.pdf.

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IV. Implementation

This section describes how EPA will implement the decisions issued in this document.
EPA will extend the exemption for those small refineries receiving a full or partial exemption in
the manner described below with respect to either all or half the corresponding RFS obligations
for the relevant compliance years. Small refineries whose SRE petitions were decided in this
document may be required to take additional actions related to compliance as well.

A. RIN Return

Many small refineries granted full or partial exemptions by the decisions issued in this
document have already fulfilled their compliance obligations for past compliance years. To
implement the exemptions extended to those small refineries for those years, EPA will return the
corresponding RINs retired by those small refineries for each compliance year. For example, a
small refinery whose 2023 SRE petition is fully granted will have all the RINs it retired to
demonstrate compliance with its 2023 RFS obligations returned. A small refinery whose 2019
SRE petition is partially granted will have half the RINs it retired to demonstrate compliance
with its 2019 RFS obligations returned. As further explained below, EPA has determined that
returning RINs in this manner is the most equitable and least market-disruptive way to
implement exemptions when exempted parties initially complied with their putative RFS
obligations. While in the past EPA has declined to return expired RINs already retired for
compliance, EPA plans to return the expired RINs to small refineries whose SRE petitions were
granted in this document to provide small refineries the opportunity to utilize the RINs.

EPA acknowledges that the value of the RINs returned to exempted small refineries will
depend to a significant degree on whether they are "expired" or "unexpired." Pre-2023 vintage
RINs returned to small refineries will be "expired," meaning they cannot be used to meet future
RFS compliance obligations.107 In the abstract, these RINs retain residual value to the extent they
can be used to satisfy outstanding, non-exempted pre-2023 obligations by the small refinery. We
expect very few small refineries, if any, will have a compliance use for these pre-2023 vintage
RINs. However, 2023 RINs returned to small refineries will be available for trading or
compliance with open 2024 RFS obligations.108

B. Legal Authority

This method of implementing exemptions for parties who have already complied with
their RFS obligations is consistent with EPA's past practice, CAA section 21 l(o), EPA's RFS
regulations, and the Ninth Circuit's unpublished decision in Kern Oil & Ref. Co v. US EPA.109
The consequence of an SRE, when timely granted, is relief from the obligation to retire a
quantity of RINs derived from the applicable volume requirements.110 When a party that has
already retired RINs for a compliance year later petitions for and receives a corresponding

107 CAA section 21 l(o)(5)(C), (D); 40 CFR 80.1428(c).

108 The 2024 RFS compliance deadline is December 1, 2025.

109 Kern Oil & Ref. Co v. US EPA, No. 21-71246 (9th Cir. August 16, 2022) ("Kern Oil").

110 CAA section 2ll(o)(9)(A), (o)(2)(A); 40 CFR 80.1441.

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exemption, EPA has determined these exemptions are typically best implemented by reversing
the retirement transaction—that is, by returning those RINs to the party who retired them.

The structure of the RFS statutory provisions also indicates the RIN-return
implementation method is consistent with congressional intent: The CAA permits small
refineries to petition for an extension of the exemption "at any time," while also providing for
the expiration of RINs after a specified period of time.111 The CAA also requires in every
instance that RINs be associated with the refining, blending, or importation of renewable fuel.112
To properly give meaning to the various statutory provisions, the RFS statute allows small
refineries the flexibility to seek and receive exemptions "at any time," including before or even
long after the compliance deadline has passed and RINs of that compliance year vintage have
expired. The implementation of the exemption must also be consistent with the CAA, and thus
the compliance credits, or RINs, must correspond to real-world fuel volumes. This balancing of
competing interests is present throughout the RFS program.113

In Kern Oil, the Ninth Circuit noted that the CAA does not instruct EPA how to
implement exemptions granted after a small refinery has already complied with its RFS
obligations for a given compliance year. The court endorsed EPA's "default" method for
implementing such exemptions, explaining that EPA's reasoning was "persuasive" and thus
entitled to "respect."114 EPA is providing in this document a broader remedy than that approved
by the Ninth Circuit in Kern Oil. There, EPA had only refunded unexpired RINs to a small
refinery that had initially complied with its RFS obligations. Here, EPA plans to refund all
retired RINs—expired and unexpired—to exempted small refineries. Thus, in the absence of any
statutory instruction to the contrary, EPA believes the CAA contemplates the same result for
small refineries whether they receive exemptions before or after the relevant compliance
deadline. Given the statutory language, this approach is the only one supported by the statute.

EPA acknowledges that it has in exceptional circumstances permitted individual small
refineries to generate new, current-year vintage RINs as a method of implementing exemptions
when decisions denying those exemptions were vacated by a court.115 To the extent the present
action departs from that approach, EPA acknowledges that it is taking a different approach to
implement the exemptions here by uniformly returning the RINs retired for the exempted
compliance year. This choice is justified in large part by the sheer volume of exemptions EPA is
implementing in this document. EPA has chosen to uniformly apply its customary approach in
this document in the interests of administrative economy, equity, and limiting large-scale
disruptions to the RIN market that would occur if a corresponding number of new RINs were
generated and placed in circulation. We estimate that were EPA to allow small refineries to
generate new, current-year vintage RINs to replace the old, expired RINs used to satisfy their

111 CAA section 2ll(o)(9)(B)(i); (o)(5)C).

112 CAA section 2ll(o)(5)(A)(i).

113 Sinclair IV, 114 F.4th at 711. ("The RFS program reflects a carefully crafted legislative bargain to promote
renewable fuels, but also to provide an exemption mechanism for small refineries. EPA . . . cannot rewrite the
balance established by Congress.")

114 Kern Oil at *2 (citing Skidmore v. Swift & Co., 323 U.S. 134 (1944)).

115 See, e.g., Producers ofRenew ables United for Integrity Truth & Transparency v. EPA, No. 19-9532, Doc. No.
10110648841 (10th Cir. Feb. 23, 2022) (challenging RIN replacement remedies applied in five exemption
decisions).

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prior RFS obligations, approximately 3 billion new RINs would be introduced into the market.
This sudden and significant influx of RINs would result in decreased RIN prices, and in turn
decreased future investments in renewable fuel production. It is EPA's judgment that the benefits
of maintaining a stable RIN market and the connection between RIN generation and real-world
fuel volumes outweigh the refinery-specific benefits of generating new RINs. Further, EPA's
RIN-return method has been reviewed by an appellate panel and deemed lawful.116 Thus, EPA
has determined its implementation of the exemptions granted in this document is a reasonable
and prudent exercise of its authority under the Clean Air Act.

C. Reporting Requirements

As a result of the decisions issued in this document, nearly all affected small refineries
will need to submit revised compliance reports for one or more years reflecting the change in
their RFS obligations for that year. Such small refineries must submit revised compliance reports
by October 1, 2025, and will need to use a modified version of the RVO annual compliance
report form (RFS0304 form) that enables each entity to report exempted volumes of gasoline and
diesel fuel separate from any obligated volumes.

• Small refineries receiving a full exemption will need to submit a revised compliance
report reflecting zero gallons of obligated gasoline and diesel and zero renewable volume
obligations (RVOs) for that compliance year under the RVO categories, but must still
report their total annual production volumes of gasoline and diesel as exempted fuel
using the new exempted category.

• Small refineries receiving a partial exemption will need to submit a revised compliance
report reflecting 50 percent of their total annual production volumes of gasoline and
diesel as obligated fuel and 50 percent of their RVOs for that compliance year under the
RVO categories, but must still report the other 50 percent of their total annual production
volumes of gasoline and diesel as exempted fuel using the new exempted category. Such
small refineries will need to retire (or have already retired) sufficient RINs to fully satisfy
their 50 percent obligation or carry forward the outstanding obligation to the subsequent
compliance year as a RIN deficit if permitted under 40 CFR 80.1427(b).

• Small refineries receiving a denial may need to submit a revised compliance report if they
did not otherwise comply with their RFS obligations for that compliance year. Such small
refineries will need to retire (or have already retired) sufficient RINs to fully satisfy their
full obligation or carry forward the outstanding obligation to the subsequent compliance
year as a RIN deficit if permitted under 40 CFR 80.1427(b).

We are aware that some small refineries initially carried forward a RIN deficit from 2023
into 2024, received a denial or partial grant of their 2023 SRE petition, and thus may want to
now retire additional RINs toward that 2023 obligation. Because the 2024 compliance deadline
has not yet passed and 2023 RINs remain valid for use towards 2023 or 2024 RVOs, we are
allowing such small refineries to retire additional 2023 RINs towards their 2023 RVOs. Such

116 Sinclair Wyoming Refining Co., LLC v. US EPA, 72 F.51111137 (10th Cir. 2023) ^Sinclair III").

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RIN retirements must be completed and revised compliance reports must be submitted by
October 1, 2025.

In addition, we note that a small refinery receiving either a full or partial exemption for a
given compliance year is not exempt from having to comply with any RIN deficits that were
carried forward from the previous compliance year. Such small refineries must still retire (or
have already retired) sufficient RINs to fully satisfy their RIN deficits carried forward from the
previous compliance year.

V. Final Action on Petitions

Section 21 l(o)(9)(B) of the CAA gives EPA the authority to issue an SRE when a small
refinery demonstrates DEH. Based on EPA's statutory interpretations, consideration of the DOE
matrix and consultation with DOE, and confirmatory evaluation of other economic factors, EPA
finds that of the 175 pending SRE petitions for the 2016-2024 compliance years, 63 have
demonstrated DEH, 77 have demonstrated partial DEH that warrant partial exemptions, and 28
have not demonstrated DEH. We also find that seven of the pending SRE petitions for the 2021-
2024 compliance years are from refineries that are ineligible to petition for an SRE.

This document and the final actions discussed within it are not rulemakings and are not
subject to the various statutory and other provisions applicable to a rulemaking. These actions
are immediately effective upon issuance.

VI. Judicial Review

Section 307(b)(1) of the CAA governs judicial review of final actions by EPA. This
section generally provides that petitions for judicial review of final actions that are nationally
applicable must be filed in the United States Court of Appeals for the District of Columbia
Circuit, and petitions for judicial review of actions that are locally or regionally applicable must
be filed in the appropriate regional circuit.117 However, petitions for judicial review of a final
action that is locally or regionally applicable must be filed in the D.C. Circuit when "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."118

As the Supreme Court recently articulated in Calumet, the first step in determining the
appropriate venue for judicial review of an EPA final action is to ascertain whether the action at
issue is nationally applicable or locally or regionally applicable.119 If the action is nationally
applicable, judicial review belongs in the D.C. Circuit. If the action is locally or regionally
applicable, then the second step is to determine whether EPA has appropriately invoked the
"nationwide scope or effect" exception to "override the default rule" that judicial review of a
locally or regionally applicable action belongs in the appropriate regional circuit.120 The
exception applies, and judicial review of EPA's action belongs in the D.C. Circuit, if EPA

117 CAA section 307(b)(1).

118 Id.

119 Calumet, 145 S. Ct. at 1746.
120Id. at 1746.

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invokes the exception for a final action that is "based on a determination of nationwide scope or
effect" and accompanied by an EPA finding of this basis.121 A determination is "the justification
[EPA] gives for it[s] action, which can be found in its explanation of its action."122 A
determination has a nationwide scope when it applies throughout the country as a legal matter,
and it has a nationwide effect when it applies throughout the country as a practical matter.123
Finally, an action is "based on" a determination of nationwide scope or effect when the
determination "lie[s] at the core of the agency action," so as to form the most important part of
the agency's reasoning.124 Put another way, an EPA action is based on a determination of
nationwide scope or effect "only if a justification of nationwide breadth is the primary
explanation for and driver of EPA's action."125

In this document, EPA is adjudicating SRE petitions pursuant to the authority granted to
the Agency by CAA section 21 l(o)(9)(B). Each adjudication is a separate "action" for the
purposes of determining venue under CAA section 307(b)(1), and because each adjudication
only applies to a single refinery, each action is locally or regionally applicable.126 However,
EPA's adjudication of the relevant petitions is based on several determinations of nationwide
scope or effect that formed the core basis for the Agency's decision.

First, these adjudications are based on EPA's determination that CAA section 21 l(o)(9)
provides EPA with the authority to find that a small refinery would experience partial DEH if
required to comply with its RFS obligations and to extend a partial exemption. As detailed in
Section III.Ft, CAA section 21 l(o)(9)(B) grants EPA authority to temporarily extend the
exemption from RFS obligations to a small refinery that demonstrates "disproportionate
economic hardship," but the statute does not define that phrase or its components, suggesting
Congress left it to the Agency's discretion to "fill up the details" when determining how to
implement this provision.127 EPA interprets CAA section 21 l(o)(9)(B), based on the plain
language, structure, and objective of the statute, to provide the Agency with the authority to find
that a small refinery would experience partial DEH and to extend a partial exemption. This
determination has nationwide scope because it is an interpretation of a federal statute and CAA
section 211(o)(9)(B)(i) by its terms applies nationwide.128 Additionally, this determination has
nationwide effect because it applies generically to all refineries nationwide, regardless of their
geographic location.129

Second, these adjudications are based on EPA's determination that the DOE matrix is a
reasonable proxy for DEH, and EPA will defer to DOE's findings unless EPA's consideration of
other economic factors compels a different result. As detailed in Section III.E, CAA section
21 l(o)(9)(B) permits a small refinery to petition for an extension of the exemption from its RFS
obligations for the reason of DEH. The statute directs EPA to "consider the findings of the [2011

121 Id. at 1749-50.

122 Id. at 1750 (internal quotations omitted).

123 Id.

124 Id. at 1751.

125 Id.

126 Id. at 1748.

127 Loper Bright Enters, v. Raimondo, 603 U.S. 369, 394-95.

128 Calumet, 145 S. Ct. at 1752.

129 Id.

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DOE study] and other economic factors" in evaluating a petition but provides no further
instruction as to how to effectuate these obligations.130 As the author of the study and through its
work assessing SRE petitions in conjunction with EPA, DOE has developed extensive expertise
in evaluating economic conditions at U.S. refineries that is fundamental to the process both DOE
and EPA use to identify whether DEH exists for each petitioner. With limited exceptions, EPA
has consistently relied upon DOE's expertise in the Agency's adjudication of SRE petitions over
the life of the RFS program. Thus, EPA has determined that the best way to fulfill its obligation
to "consider the findings of the [2011 DOE study]" under CAA section 21 l(o)(9)(B) is to defer
to DOE's application of its matrix and resulting findings in evaluating whether a small refinery
would experience DEH. EPA has further determined that the best way to fulfill its obligation to
consider "other economic factors" is to independently assess all available information and weigh
whether this information compels EPA to depart from DOE's findings. This determination has
nationwide scope because it is both an interpretation of a federal statute and CAA section
21 l(o)(9)(B)(i) by its terms applies nationwide, and it is a rebuttable presumption that DOE's
finding as to whether a given small refinery would experience DEH, based on application of the
DOE matrix, is correct, unless EPA's consideration of other economic factors compels it to
depart from DOE's findings. Additionally, this determination has nationwide effect because it
applies generically to all refineries nationwide, regardless of their geographic location.

Third, these adjudications are based on EPA's determination that, when extending the
exemption, either wholly or partially, to a small refinery that has already retired RINs to comply
with its RFS obligations, CAA section 21 l(o) restricts EPA to returning some or all of those
retired RINs, commensurate with the degree of the exemption. As detailed in Section IV.B,
returning RINs in this manner effectuates the best reading of the statute. CAA section 21 l(o)(5)
requires that every instance of RIN generation be associated with the refining, blending, or
importation of renewable fuel. Section 21 l(o)(5) also requires that RINs expire after a certain
amount of time, while section 21 l(o)(9)(B) permits small refineries to petition for an extension
of the exemption "at any time." EPA interprets these provisions of CAA section 21 l(o) to limit
EPA to returning RINs retired for compliance, if any, when it grants an extension of the
exemption. This determination has nationwide scope because it is an interpretation of a federal
statute and CAA sections 21 l(o)(5) and 21 l(o)(9)(B) by their terms apply nationwide.
Additionally, this determination has nationwide effect because it applies generically to all
refineries nationwide, regardless of their geographic location.

This third determination also minimizes disruptions to the RIN market and RFS program,
akin to the Fifth Circuit's review of the April 2022 Alternative Compliance Action131 in
WynnewoodRefining Co., LLC v. EPA, 86 F.4th 1114 (5th Cir. 2023). In Wynnewood, the Fifth
Circuit concluded that the ACA was based on a determination of nationwide scope or effect
because the ACA was designed to mitigate the impact of the collective denials from the April
2022 SRE Denial Action on the RIN market.132 After denying 36 SRE petitions for the 2018
compliance year, EPA estimated that the small refineries would need to retire an additional 1.4

130 CAA section 21 l(o)(9)(B).

131 "April 2022 Alternative RFS Compliance Demonstration Approach for Certain Small Refineries," EPA-420-R-
22-006, April 2022 ("ACA").

132 Wynnewood Refining Co., LLC v. EPA, 86 F.4th 1114, 1119 (5th Cir. 2023).

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billion RINs to satisfy their 2018 compliance obligations.133 Concerned that such a drastic spike
in need for RINs would threaten the viability of the RIN market, EPA issued the ACA, which
required that the small refineries file a revised compliance report but did not require them to
retire additional RINs.134 The Fifth Circuit reasoned that, because the purpose of the ACA was to
address the continuing viability of the RFS program as a whole, it was based on a determination
of nationwide scope or effect.135 Similarly here, EPA's determination that the only permissible
means of implementing the extension of the exemption is by returning retired RINs is based on
concerns about the integrity of the RFS program as a whole. As explained in Section IV.B, EPA
estimates that, were the Agency to replace the retired RINs with current vintage RINs, it would
introduce approximately 3 billion new RINs into the market. The sudden mass influx of new
RINs would result in decreased RIN prices, leading to decreased future investments in renewable
fuel production and threatening the stabilty of the RIN market nationwide. EPA's approach of
returning retired RINs is designed to avoid these negative impacts to the RFS program.

Following the reasoning from the Wynnewood decision, because the purpose of this
determination is to address the continuing viability of the RFS program as a whole, it is a
determination of nationwide scope or effect.

The actions discussed within this document are based on the three determinations
outlined above, as these determinations lie "at the core of the agency action[s]" so as to form the
most important part of EPA's reasoning.136 The first and second determinations together form
the core basis for EPA's adjudications because the Agency has used both of them to create a
rebuttable presumption that application of the DOE matrix produces the correct DEH finding,
and EPA defers to that finding unless the Agency's consideration of other economic factors,
including refinery-specific information, compels the Agency to depart from that rebuttable
presumption. EPA's first determination is the first element of EPA's rebuttable presumption:
because the DOE matrix can result in a finding of full DEH, partial DEH, or no DEH, EPA must
first determine that the CAA provides the Agency with authority for finding partial DEH before
the Agency can consider deferring to those findings. EPA's second determination is the second
element of EPA's rebuttable presumption: the DOE matrix is a reasonable proxy for determining
whether a small refinery would experience DEH, and deferring to that finding is the best way of
fulfilling the Agency's statutory obligation to "consider the [2011 DOE Study]" and will result in
the correct DEH finding for that small refinery. Taken together, these two determinations—that
EPA has the authority to find that a small refinery is experiencing partial DEH and that the DOE
matrix is a reasonable proxy for determining whether a small refinery would experience DEH—
form the rebuttable presumption that is "the primary explanation for and driver of EPA's
action."137 Under this rebuttable presumption, EPA will defer to DOE's findings unless the
Agency's consideration of other economic factors compels a different result.

To fulfill its statutory obligation to consider "other economic factors," EPA did consider
refinery-specific information in its adjudications. However, these confirmatory reviews were not
the primary drivers of EPA's actions on these petitions. EPA considered refinery-specific facts

133 Id. at 1119-20.

134 Id. at 1117, 1120.

135 Id. at 1120.

136 Calumet, 145 S. Ct. at 1751.

137 Id.

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only to determine whether to depart from its rebuttable presumption that application of DOE's
matrix results in the correct DEH finding, and these considerations, for each small refinery,
confirmed that none of the refinery-specific facts rebutted the presumptive disposition. For
example, EPA considered information presented by small refineries regarding their financial
circumstances and found that the information was already considered in the DOE matrix or did
not otherwise justify departing from the finding reached by application of the DOE matrix. Thus,
EPA's consideration of refinery-specific facts was peripheral in comparison to EPA's rebuttable
presumption that application of the DOE matrix is the best means of determining whether DEH
exists.138 Notably, EPA's confirmatory review of refinery-specific facts did not change the final
decision for any of the SRE petitions.

Additionally, EPA's third determination—that the only permissible way to implement the
extension of the exemption from RFS obligations when a small refinery has retired RINs for
compliance is to return those retired RINs—is a core driver of EPA's actions because EPA's
adjudication of SRE petitions necessarily includes extending the exemption to meritorious
petitioners. But how EPA effectuates that extension of the exemption can look different
depending on whether the relevant small refinery has already demonstrated compliance with its
relevant RFS obligations by retiring RINs. Generally, the RFS statutory and regulatory
provisions require all obligated parties to comply with their RFS obligations. However, CAA
section 21 l(o)(9)(B) provides an exception when a small refinery demonstrates that it would
experience DEH. In other words, when EPA grants an exemption to a small refinery, that small
refinery is not required to retire any RINs to demonstrate compliance if it is a full exemption, and
only the number of RINs necessary to meet half of its RFS obligation if it is a partial exemption.
However, simply granting a petition does not necessarily effectuate the exemption in all cases. If
the exemption is granted prior to a compliance demonstration by the small refinery, then the
exemption is self-implementing. But if the small refinery has already demonstrated compliance
by retiring RINs, EPA needs to take an additional step to effectuate the exemption. For the
reasons outlined in Section IV.B and in this Section V, EPA has determined, consistent with its
interpretation of the Agency's authority under CAA section 21 l(o) and its policy interest in
treating all refineries that receive an exemption equally, that returning the retired RINs is the
only permissible way of implementing the exemption where a small refinery has previously
demonstrated compliance with its RFS obligations by retiring RINs. EPA's adjudications are
based on this determination because extending the exemption to meritorious petitioners is
necessarily a part of EPA's action on the SRE petitions and EPA's statutory interpretation and
policy considerations inform its implementation of the exemption for all petitioners.

For the reasons discussed above, EPA finds that the final actions discussed within this
document are based on determinations of nationwide scope or effect for purposes of CAA
section 307(b)(1) and is publishing that finding in the Federal Register. Under section 307(b)(1)
of the CAA, petitions for judicial review of these actions must be filed in the D.C. Circuit within
60 days from the date notice of this document is published in the Federal Register.

138 Id. at 1752.

27

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VII. Update on Status of Certain SRE Petitions

In this document, we are articulating the status of 34 SRE petitions for the 2016-2018
compliance years. Thirty-one of these petitions (all for the 2018 compliance year) were initially
granted in August 2019, while the remaining three petitions (for the 2016 and 2017 compliance
years) were initially granted in individual decision documents in 2017 and 2018. We are not
adjudicating these petitions in this document; instead, we rely on our prior actions to determine
their status.

The three petitions granted for the 2016 and 2017 compliance years were challenged in
Renewable Fuels Association v. EPA.139 The Tenth Circuit entered judgment in 2020, vacating
and remanding the decisions to EPA. In January 2021, the Supreme Court granted certiorari on
the question of eligibility.140 In June 2021, the Supreme Court held in HollyFrontier that the
CAA does not require a continuous exemption and remanded the decision to the Tenth Circuit. In
July 2021, the Tenth Circuit vacated its previous judgment, including the underlying RFA
decision, and transferred the matter back to EPA.141

The 31 petitions granted for 2018 were challenged in the D.C. Circuit. In 2021, EPA
requested a voluntary remand without vacatur of the decisions, which was granted in December
2021,142 resulting in the decisions being remanded to EPA without vacatur in December 2021.143

In the April 2022 SRE Denial Action, EPA denied the 34 remanded SRE petitions
discussed in this section. The D.C. Circuit vacated 32 of those denials (29 2018 petitions and
three 2016-2017 petitions) in Sinclair IV and remanded the decisions to EPA.144 Therefore, these
32 petitions are back before EPA. Because the 29 2018 petitions were originally remanded
without vacatur, we understand the status of those petitions to be granted as initially decided in
2019. Additionally, because the judgment invalidating the grant of the three 2016-2017 petitions
was vacated, those petitions are also understood to be granted as initially decided in 2017 and
2018.

139 Renewable Fuels Association v. EPA, 948 F.3d 1206 (10th Cir. 2020) ("RFA").

140 HollyFrontier, 141 S. Ct. 974 (January 8, 2021).

141 Renewable Fuels Association v. US EPA, U.S. App. LEXIS 40113 (July 27, 2021).

142 Order, Sinclair Wyomingv. EPA, No. 19-1196 (December8, 2021) {"SinclairIF').

143 In this document, we are choosing to adjudicate the five 2018 SRE petitions that were initially denied in August
2019 and also remanded to EPA without vacatur by the D.C. Circuit in December 2021.

144 The remaining two 2018 SRE petitions were also denied in the April 2022 SRE Denial Action on the alternative
grounds that the refineries were ineligible to petition for an SRE. The D.C. Circuit upheld EPA's denial of these two
petitions in Sinclair IV and thus the petitions remain denied.

-------