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IX. Statutory and Executive Order Reviews

C. Regulatory Flexibility Act (RFA)

I certify that this action will not have a significant economic impact on a substantial 

number of small entities under the RFA. In making this determination, the impact of concern is 

any significant adverse economic impact on small entities. An agency may certify that a rule will 

not have a significant economic impact on a substantial number of small entities if the rule 

relieves regulatory burden, has no net burden, or otherwise has a positive economic effect on the 

small entities subject to the rule.

The small entities directly regulated by the RFS program are small refiners, which are 

defined at 13 CFR 121.201 as refiners with 1,500 employees or less company-wide. The impacts 

of the RFS program as a whole on small entities were addressed in the March 26, 2010, RFS2 

rulemaking (75 FR 14670), which was a rule that implemented the entire program required by 

the Energy Independence and Security Act of 2007 (EISA 2007). As such, the Small Business 

Regulatory Enforcement Fairness Act (SBREFA) panel process that took place prior to the 2010 

rule was also for the entire RFS program and looked at impacts on small refiners through 2022.

For the SBREFA process for the March 26, 2010, RFS2 rulemaking, EPA conducted 

outreach, fact-finding, and analysis of the potential impacts of the program on small refiners 

which are all described in the Final Regulatory Flexibility Analysis, located in the rulemaking 

docket (EPA–HQ–OAR–2005–0161). This analysis looked at impacts to all refiners, including 

small refiners, through the year 2022 and found that the program would not have a significant 

economic impact on a substantial number of small entities, and that this impact was expected to 

decrease over time, even as the standards increased. The analysis included a cost-to-sales ratio 

test, a ratio of the estimated annualized compliance costs to the value of sales per company, for 

gasoline and/or diesel small refiners subject to the standards. From this test, it was estimated that 

all directly regulated small entities would have compliance costs that are less than one percent of 

their sales over the life of the program (75 FR 14862).

We have determined that this final rule will not impose any additional requirements on 

small entities beyond those already analyzed, since the impacts of this final rule are not greater 

or fundamentally different than those already considered in the analysis for the March 26, 2010,

rule assuming full implementation of the RFS program. As shown above in Tables I-1 and I.A-1

(and discussed further in Sections II and IV), this rule finalizes the 2014, 2015, and 2016 volume 

requirements for cellulosic biofuel, advanced biofuel, and total renewable fuel at levels 

significantly below the statutory volume targets. This exercise of EPA’s waiver authorities 

reduces burdens on small entities, as compared to the burdens that would be imposed under the 

volumes specified in the Clean Air Act in the absence of waivers – which are the volumes that 

we assessed in the screening analysis that we prepared for implementation of the full program.

Regarding the biomass-based diesel standard, we are finalizing an increase in the volume 

requirements for 2014-2016 over the statutory minimum value of 1 billion gallons. However, this 

is a nested standard within the advanced biofuel category, for which we are finalizing significant 

reductions from the statutory volume targets. As discussed in Section III, we are setting the 

biomass-based diesel volume requirement at a level below what is anticipated will be produced 
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and used to satisfy the reduced advanced biofuel requirement. The net result of the standards 

being finalized in this action is a reduction in burden as compared to implementation of the 

statutory volume targets, as was assumed in the March 26, 2010, analysis.

For this final rule, EPA has conducted a screening analysis to assess whether it should 

make a finding that this action would not have a significant economic impact on a substantial 

number of small entities. Currently-available information shows that the impact on small entities 

from implementation of this rule will not be significant. EPA has reviewed and assessed the 

available information, which suggests that obligated parties, including small entities, are 

generally able to recover the purchase cost of the RINs necessary for compliance through higher 

sales prices of the petroleum products they sell than would be expected in the absence of the RFS 

program.1, 2 Even if we were to assume that the cost of RINs were not recovered by obligated 

parties, and we used the maximum values of the illustrative costs discussed in Section II.I, the 

gasoline and diesel fuel volume projections from the October 2015 version of EIA's Short-Term 

Energy Outlook, and current wholesale fuel prices, a cost-to-sales ratio test shows that the costs 

to small entities of the RFS standards are less than 1% of the value of their sales.

While the rule will not have a significant economic impact on a substantial number of 

small entities, there are compliance flexibilities in the program that can help to reduce impacts on 

small entities. These flexibilities include being able to comply through RIN trading rather than 

renewable fuel blending, 20% RIN rollover allowance (up to 20% of an obligated party’s RVO 

can be met using previous-year RINs), and deficit carry forward (the ability to carry over a 

deficit from a given year into the following year, providing that the deficit is satisfied together 

with the next year’s RVO). In the March 26, 2010, final rule, we discussed other potential small 

entity flexibilities that had been suggested by the SBREFA panel or through comments, but we 

did not adopt them, in part because we had serious concerns regarding our authority to do so. 

Additionally, as we realize that there may be cases in which a small entity experiences 

hardship beyond the level of assistance afforded by the program flexibilities, the program 

provides hardship relief provisions for small entities (small refiners), as well as for small 

refineries.

3 As required by the statute, the RFS regulations include a hardship relief provision (at

40 CFR 80.1441(e)(2)) which allows for a small refinery4to petition for an extension of its small 

refinery exemption at any time based on a showing that compliance with the requirements of the 

RFS program would result in the refinery experiencing a “disproportionate economic hardship.”

EPA regulations provide similar relief to small refiners that are not eligible for small refinery 

relief. A small refiner may petition for a small refiner exemption based on a similar showing that 

compliance with the requirements of the RFS program would result in the refiner experiencing a

 

1 For a further discussion of the ability of obligated parties to recover the cost of RINs see "A Preliminary 

Assessment of RIN Market Dynamics, RIN Prices, and Their Effects," Dallas Burkholder, Office of Transportation 

and Air Quality, US EPA. May 14, 2015, EPA Air Docket EPA-HQ-OAR-2015-0111

2 Knittel, Christopher R., Ben S. Meiselman, and James H. Stock. “The Passthrough of RIN Prices to Wholesale and 

Retail Fuels Under the Renewable Fuel Standard.” Working Paper 21343. NBER Working Paper Series. Available 

online http://www.nber.org/papers/w21343.pdf.

3 See CAA section 211(o)(9)(B).

4 A small refinery, as defined by the statute, is a refinery with an average daily crude throughput of 75,000 barrels or 

less. As this is a facility-based definition, not company-based as SBA’s small refiner definition is, it follows that not 

all small refiners’ facilities meet the definition of a small refinery.
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“disproportionate economic hardship” (see 40 CFR 80.1442(h)). EPA evaluates these petitions 

on a case-by-case basis and may approve such petitions if it finds that a disproportionate 

economic hardship exists. In evaluating such petitions, EPA consults with the U.S. Department 

of Energy, and takes the findings of DOE’s 2011 Small Refinery Study and other economic 

factors into consideration. For the 2013 RFS standards, the EPA successfully implemented these 

provisions by evaluating 16 petitions for exemptions from small refineries (one was later 

withdrawn).

Given that this final rule would not impose additional requirements on small entities, 

would decrease burden via a reduction in required volumes as compared to statutory volume 

targets, would not change the compliance flexibilities currently offered to small entities under the 

RFS program (including the small refinery hardship provisions we continue to successfully 

implement), and available information shows that the impact on small entities from 

implementation of this rule will not be significant, we have therefore concluded that this action 

would not have a significant impact on a substantial number of small entities.