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Notice of July 2023 Denial of Petitions for Small Refinery Exemptions Under the Renewable Fuel Standard Program Publication: Federal Register Agency: Environmental Protection Agency Byline: Alejandra Nunez Date: 20 July 2023 Subjects: American Government  , The Environment, Petroleum
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[Federal Register Volume 88, Number 138 (Thursday, July 20, 2023)]
[Notices]
[Pages 46795-46796]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-15401]
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ENVIRONMENTAL PROTECTION AGENCY
[FRL-10686-01-OAR]
Notice of July 2023 Denial of Petitions for Small Refinery
Exemptions Under the Renewable Fuel Standard Program
AGENCY: Environmental Protection Agency (EPA).
ACTION: Denial of petitions.
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SUMMARY: The Environmental Protection Agency (EPA) is providing notice
of its final action entitled July 2023 Denial of Petitions for RFS
Small Refinery Exemptions (``July 2023 SRE Denial Action'') in which
EPA denied 26 small refinery exemption (SRE) petitions under the
Renewable Fuel Standard (RFS) program. EPA is providing this notice for
public awareness of, and the basis for, EPA's decision announced on
July 14, 2023.
DATES: July 20, 2023.
FOR FURTHER INFORMATION CONTACT: Benjamin Sarver, Office of
Transportation and Air Quality, Compliance Division, Environmental
Protection Agency, 1200 Pennsylvania Avenue NW, Washington, DC 20004;
telephone number: 202-564-1881; email address: sarver.benjamin@epa.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The Clean Air Act (CAA) provides that a small refinery \1\ may at
any time petition EPA for an extension of the exemption from the
obligations of the RFS program for the reason of disproportionate
economic hardship (DEH).\2\ In evaluating such petitions, the EPA
Administrator, in consultation with the Secretary of Energy, will
consider the findings of a Department of Energy (DOE) study and other
economic factors.\3\
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\1\ 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.'' CAA section 211(o)(1)(K).
\2\ CAA section 211(o)(9)(B)(i).
\3\ CAA section 211(o)(9)(B)(ii).
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II. Decision
The July 2023 SRE Denial Action \4\ relies on the same approach and
the same analyses described in the April 2022 SRE Denial Action \5\ and
the June 2022 SRE Denial Action.\6\ In those actions, we conducted an
extensive analysis and review of information provided to EPA by small
refineries in their SRE petitions and we found that all refineries face
the same costs to acquire RINs regardless of whether the RINs are
created through the act of blending renewable fuels or are purchased on
the open market. This happens because the market price for these fuels
increases to reflect the cost of the RIN, much as it would increase in
response to higher crude prices. In other words, this increased price
for gasoline and diesel fuel allows obligated parties to recover their
RIN costs through the market price of the fuel they produce. Because
the market behaves this way for all parties subject to the RFS program,
there is no disproportionate cost to any party, including small
refineries, and no hardship given that the costs are recovered. As a
result, we continue to conclude that small refineries do not face DEH.
Given this conclusion and the other reasons described in the July 2023
SRE Denial Action, we have denied 26 SRE petitions for the 2016-2018
and 2021-2023 compliance years by finding the petitioning small
refineries do not face DEH caused by compliance with their RFS
obligations.
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\4\ ``July 2023 Denial of Petitions for RFS Small Refinery
Exemptions,'' EPA-420-R-23-007, July 2023.
\5\ ``April 2022 Denial of Petitions for RFS Small Refinery
Exemptions,'' EPA-420-R-22-005, April 2022.
\6\ ``June 2022 Denial of Petitions for RFS Small Refinery
Exemptions,'' EPA-420-R-22-011, June 2022.
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III. Judicial Review
Section 307(b)(1) of the CAA governs judicial review of final
actions by the EPA. This section provides, in part, that petitions for
review must be filed only in the United States Court of Appeals for the
District of Columbia Circuit: (i) when the agency action consists of
``any other nationally applicable . . . final action taken by the
Administrator,'' or (ii) when a final action is locally or regionally
applicable but ``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.'' The
CAA reserves to EPA the complete discretion to decide whether to invoke
the exception in (ii) described in the preceding sentence.\7\
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\7\ Sierra Club v. EPA, 47 F.4th 738, 745 (D.C. Cir. 2022)
(``EPA's decision whether to make and publish a finding of
nationwide scope or effect is committed to the agency's discretion
and thus is unreviewable''); Texas v. EPA, 983 F.3d 826, 834-35 (5th
Cir. 2020).
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This final action is ``nationally applicable'' within the meaning
of CAA section 307(b)(1). Whether an action is ``nationally
applicable'' is a narrow inquiry based only on the ``face'' of the
action.\8\ The question is whether the action itself is nationally
applicable, not whether the nature and scope of the arguments raised or
relief sought by a petitioner challenging the action are nationally
applicable.\9\ On its face, this final action is nationally applicable
because it denies 26 SRE petitions for 15 small refineries across the
country located within 14 states in 7 of the 10 EPA regions and in 8
different Federal judicial circuits. This final action is based on
EPA's consistent nationwide application of its revised interpretation
of the relevant CAA provisions and using its ``common, nationwide
analytical method'' of RIN discount and RIN cost passthrough principles
for evaluating all SRE petitions, no matter the location or market in
which the small refineries operate.\10\
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\8\ Dalton Trucking, Inc. v. EPA, 808 F.3d 875, 881 (D.C. Cir.
2015).
\9\ S. Ill. Power Coop. v. EPA, 863 F.3d 666, 670-71 (7th Cir.
2017); ATK Launch Sys., Inc. v. EPA, 651 F.3d 1194, 1198-1199 (10th
Cir. 2011); RMS of Ga., LLC v. EPA, 64 F.4th 1368, 1372-1373 (11th
Cir. 2023).
\10\ S. Ill. Power, 863 F.3d at 671; ATK Launch Sys.,651 F.3d at
1197.
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To the extent a court finds this final action to be locally or
regionally applicable, the Administrator is exercising the complete
discretion afforded to him under the CAA to make and publish a finding
that this action is based on a determination of ``nationwide scope or
effect'' within the
[[Page 46796]]
meaning of CAA section 307(b)(1).\11\ In deciding whether to invoke the
exception by making and publishing a finding that this final action is
based on a determination of nationwide scope or effect, the
Administrator has also taken into account a number of policy
considerations, including his judgment balancing the benefit of
obtaining the D.C. Circuit's authoritative centralized review versus
allowing development of the issue in other contexts and the best use of
Agency resources. The substance of the Administrator's determination is
entitled to deference.\12\ In addition to applying a common analytical
method, this action decides SRE petitions for 26 small refineries
across the country located within 14 states in 7 of the 10 EPA regions
and in 8 different Federal judicial circuits. Where, as here, the
Administrator ``unambiguously determine[s] that [a] final action . . .
has nationwide scope and effect'' and publishes that finding, ``all
petitions for review of th[e] action belong in [the DC] Circuit'' under
CAA section 307(b)(1).\13\ This outcome promotes the principles
underlying CAA section 307(b)(1) and ensures that petitions for review
are consolidated in the D.C. Circuit where Congress designated them to
be heard, avoiding piecemeal litigation, furthering judicial economy,
and eliminating the risk of inconsistent judgments.\14\
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\11\ In the report on the 1977 Amendments that revised section
307(b)(1) of the CAA, Congress noted that the Administrator's
determination that the ``nationwide scope or effect'' exception
applies would be appropriate for any action that has a scope or
effect beyond a single judicial circuit. See H.R. Rep. No. 95-294 at
323, 324, reprinted in 1977 U.S.C.C.A.N. 1402-03.
\12\ The Administrator's determination is akin to other
determinations that Congress leaves to an agency's broad discretion,
such as the denial of a rulemaking petition, and merits considerable
deference. Cf., e.g., WildEarth Guardians v. EPA, 751 F.3d 649, 651
(D.C. Cir. 2014) (discussing Massachusetts v. EPA, 549 U.S. 497
(2007)); see also Vermont Yankee Nuclear Power Corp. v. NRDC, 435
U.S. 519, 543 (1978) (absent constitutional or statutory limitations
or otherwise ``extremely compelling circumstances,'' agencies
``should be free to fashion their own rules of procedure and to
pursue methods of inquiry capable of permitting them to discharge
their multitudinous duties''); NAACP v. FPC, 425 U.S. 662, 668
(1976) (reiterating the ``general proposition'' that agencies have
discretion to determine how to shape their regulatory and
adjudicatory actions).
\13\ Alcoa, Inc. v. EPA, No. 04-1189, 2004 WL 2713116, at *1
(D.C. Cir. Nov. 24, 2004); see also ATK Launch Sys., Inc., 651 F.3d
at 1199 n.4 (acknowledging Alcoa).
\14\ Texas v. EPA, No. 10-60961, 2011 WL 710598, at *4 (5th Cir.
Feb. 24, 2011).
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For these reasons, this final action is nationally applicable or,
alternatively, the Administrator is exercising the complete discretion
afforded to him by the CAA and hereby finds that this final action is
based on a determination of nationwide scope or effect for purposes of
CAA section 307(b)(1) and is hereby publishing that finding in the
Federal Register.
Under section 307(b)(1) of the CAA, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the District of Columbia Circuit by September 18, 2023.
Alejandra Nunez,
Deputy Assistant Administrator for Mobile Sources, Office of Air and
Radiation.
[FR Doc. 2023-15401 Filed 7-19-23; 8:45 am]
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