The Secretary of Energy 

Washington, D.C. 20585 

February 25, 2009 

The Honorable Lisa P. Jackson 

Administrator 

Environmental Protection Agency 

Washington, D.C . 20004 

Dear Administrator Jackson: 

7!1 i^ t~ ~ ? 

c . .~C7 ~IFl11 J ffl~ I1' 1 4~ 

Section 211(o)(9)(A)(ii) of the Clean Air Act, as revised by the Energy Policy Act 

of 2005 (EPACT 2005), requires that the Department of Energy (DOE) conduct a 

study for the Administrator of the Environmental Protection Agency (EPA) 

assessing whether the renewable fuel standard (RFS) would impose a 

disproportionate economic hardship on small refineries, defined as those facilities 

with capacities under 75,000 barrels per calendar day . 

Small refineries encompass a diverse range of businesses . Some will be able to 

generate credits through blending renewable fuels into their products; others may 

choose to purchase such credits from parties that over comply with the standards. 

There appears to be no shortage of credits available under the current RFS; the 

market appears to be liquid and competitive. While the Energy Independence and 

Security Act of 2007 (EISA) increased the volume and added additional 

categories of renewable fuel, there is no basis at this time to believe that the 

character of markets for credits will fundamentally change . While credit prices 

may increase, DOE has no reason to believe that a competitive market would 

disproportionately disadvantage participants who purchase credits rather than 

generate them through blending renewable fuels into their products. Therefore, 

DOE believes that the exemption for small refineries should not be extended at 

this time. Should markets change; small refineries maintain the right under 

EPACT 2005 to petition EPA for individual extensions of the exemption . 

Please find enclosed our study presenting DOE'S findings and explaining why 

DOE does not believe that the extending the exemption for small refineries 

beyond 2010 is warranted at this time. Should you have any questions, please call 

Ms . Carmen Difiglio at (202-586-8436) . 

Sincerely, 

Enclosure 

Steven Chu 

Printed with soy ink on recycled paper 
EPACT 2005 Section 1501 

Small Refineries Exemption Study 

Office of Policy and International Affairs 

U.S. Department of Energy 

January 2009 
Small Refinery Exemption Study 

Table of Contents 

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 

The Small Refinery Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 

Extending the Small Refinery Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., . . . . 4 

The Impact of EISA 2007 on the DOE study. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 

Compliance Options under the RFS1 and RFS2 Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

Review of the Current Market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

Future RFS Compliance Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

Characteristics of Small Refineries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 

Case Studies Of Refineries Affected By EISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 

Marathon Refining St. Paul Park Minnesota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 

Country-Mark Cooperative, Mt. Vernon, Indiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 

The American Refining Company Bradford, Pennsylvania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 

Record-keeping Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 

Discussion of Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 

Appendix A. List of Small Refineries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 

Table of Figures 

Figure 1 . RFS I and RFS 2 Volume Requirements 2006-2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

Figure 2. Average Monthly RIN Prices May - November 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

Figure 3 Monthly Trade Count in the RINSTAR® System. . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 8 

Figure 4. Annual Energy Outlook 2009 Compliance Cost Projections . . . . . . . . . . . .. . . . . . . . .. . . 9 
Executive Summarv 

The Energy Policy Act of 2005 (EPAct 2005) established a Renewable Fuel Standard 

(RFS) under Section 211(o) of the Clean Air Act (CAA), requiring the incorporation 

of renewable fuel, such as ethanol, in the transportation fuel mix. EPAct 2005 also 

exempted certain small refineries from compliance with the RFS through 2010. Under 

Section 211(o)(9)(A)(ii) of the CAA, DOE is required to determine if compliance 

with the RFS would impose a "disproportionate economic hardship" on small 

refineries, and convey to the Environmental Protection Agency (EPA) by December 

31, 2008, whether the exemption should be extended past 2010. 

Under certain scenarios small refineries using the exemption may realize significant 

economic benefits if they are not required to participate in the RFS program, either by 

the blending of renewable fuels or the selling of products that have lower production 

costs than their competitors . Such a scenario could encourage inefficient capital 

investments in the refinery industry . This study does not assess the potential for 

disproportionate economic advantages in extending the exemption for small 

refineries, nor would this be a basis for rejecting the extension of the exemption under 

Section 211(o)(9)(A)(ii) . 

Obligated parties, such as refineries, may fulfill their renewable fuel requirements 

through either blending renewable fuels into their products or purchasing credits from 

other parties who have exceeded their allocation of renewable fuel consumption. 

Thus, even if a refinery is limited through geography or lack of capital in its ability to 

generate credits by blending renewable fuels into its products, it may purchase credits 

from other parties. As long as credits are available for purchase and the market is 

competitive, small refineries should not be subject to disproportionate economic 

hardship from their choice to purchase credits rather than to generate them. Should 

market conditions change such that small refineries face disproportionate economic 

hardship, they may still petition the EPA for an extension of their exemption past the 

statutory date of December 31, 2010 . 
This study examines the current market for credits and projections for their future 

price and availability . At the present time, credits are available at a nominal value and 

compliance volumes have been in excess of the RFS requirements. Under these 

conditions, it does not appear that small refineries would be subject to 

disproportionate hardship by the RFS mandate if they are required to participate in 

the program. Additionally, the RFS legislation contains flexibility provisions that 

allow EPA to reduce the RFS volumetric requirements and issue Renewable 

Identification Numbers (RINs) to ensure that limits do not exceed industry's ability to 

supply renewable fuels or that implementation of the requirements would severely 

harm the economy or environment. Therefore, DOE concludes that the RIN market is 

likely to be competitive and that small refineries will not face disproportionate 

economic harm by their participation in the RFS program . 

Introduction 

Section 1501 of the Energy Policy Act of 2005 (EPAct 2005) amended Section 211 of 

the Clean Air Act (CAA) by adding Section 211(o), which required the 

Environmental Protection Agency (EPA) to promulgate regulations implementing a 

renewable fuels program. EPAct 2005 specified that the regulations must ensure that 

a specified volume of renewable fuel be used in gasoline sold in the U.S . each year, 

with the total volume increasing over time . The goals of the program include reducing 

the Nation's dependence on foreign sources of petroleum, increasing domestic 

sources of energy, and assisting in the transition to alternative fuels from petroleum in 

the transportation sector. 

The final Renewable Fuel Standard (RFS) program rule was published on May 1, 

2007, and the program began on September 1, 20071 . The Renewable Fuel Standard, 

as specified by the 2007 Final Rule, will be referenced as RFS 1 in this document. 

RFS 1 created a specific annual level for minimum renewable fuel use that increases 

1 During 2006 a Renewable Fuel Standard was established using the default compliance criteria as specified 

by EPAct 2005. 

2 
over time - resulting in a requirement that 7.5 billion gallons of renewable fuel be 

blended into gasoline (for highway use only) by 2012. Under the RFS 1 program, 

compliance is based on obligated parties meeting their annual Renewable Volume 

Obligation (RVO) (published annually in the Federal Register by EPA) . Obligated 

parties include refiners, blenders and importers of gasoline . The RVO is expressed as 

a percentage of total non-renewable gasoline sold by the obligated party in the 

specified calendar year. Compliance is demonstrated through the use of Renewable 

Identification Numbers, or RINs, a 38-digit serial number assigned to each batch of 

renewable fuel produced. For obligated parties (those who must meet the annual 

volume percent standard), RINs must be acquired either by blending renewable fuel 

into gasoline or diesel to show compliance or by acquisition of RINs from other 

parties that have exceeded their RVO. 

The Small Refinery Exemption 

Section 211(o)(9)(A)(i) of the CAA exempts small refineries from the RFS I 

requirements until the 2011 compliance period . Small refineries are defined under 

Section 211(o)(9)(A)(ii) of the CAA as refineries with average annual crude input 

below 75,000 barrels per day . Appendix A contains a list of candidate small 

refineries that meet the exemption criteria using the Energy Information 

Administration's (EIA) operable refinery capacity data from form EI-810, the 

Monthly Refinery Report. This list is merely illustrative, as additional refineries may 

meet the exemption criteria if their annual operations are significantly lower than 

their reported operable capacity . 

In preparation for the RFS 1 rulemaking, EPA convened a Small Business Impact 

(SUBREFA) panel to examine the impact of the RFS 1 on small businesses . 

Subsequent to the discussions of the SUBREFA panel, EPA chose to exempt small 

refiners, defined as refiners producing gasoline from crude oil with fewer than 1,500 

employees and less than 155,000 barrels per day crude processing capability, as well 

as small refineries as defined above, from the RFS 1 mandate through 2010. Some 

small refineries belong to large integrated energy companies which do not meet the 
criteria for small refiners, while some small refiners have refineries over 100,000 

barrels per day capacity which would not qualify for the small refinery exemption. 

EPA has tentatively concluded that it does not have the authority to extend the 

duration of the exemption period for small refiners as defined under the RFS 1 

rulemaking2. The statute permits the extension of the exemption period for small 

refineries as defined in Section 211(o)(9)(A)(ii ) of the CAA beyond its current 

expiration date of 2010. This report only evaluates the class of small refineries as 

directed under Section 211(o)(9)(A)(ii) of the CAA. 

Extendinp- the Small Refinery Exemption 

Congress specifically addressed the potential for an extension of the small refinery 

exemption in EPAct 2005 . Under section 211(o)(9)(A)(ii) of the CAA, the Secretary 

of Energy is required to conduct a study for the EPA Administrator to determine 

whether compliance with the RFS 1 would impose a disproportionate economic 

hardship on small refineries, defined as those facilities with capacities under 75,000 

barrels per calendar day. If the study found that a disproportionate economic 

hardship would occur, EPA is obligated to extend the RFS 1 exemption for at least 

two additional years . In addition, refineries still maintained the right to petition EPA 

for individual exemption from the program. 

Under certain scenarios, small refineries using the exemption might gain significant 

economic benefits through blending renewable fuels or selling products that have 

lower production costs than their competitors if they are not required to participate in 

the RFS program. Such a scenario could encourage inefficient capital investments in 

the refinery industry . This Study does not assess the potential for disproportionate 

economic advantages in extending the exemption for small refineries, nor would this 

be a basis for rejecting the extension of the exemption under Section 211 (o)(9)(A)(ii) 

of the CAA. 

`' "Final Report of the Small Business Advocacy Review Panel on EPA's Planned Proposed Rule 

Regulation of Fuels and Fuel Additives; Renewable Fuel Standard Program", September 5, 2008 . 

4 
The Impact of EISA 2007 on the DOE study 

While the underlying program structure is not expected to change, EISA revised and 

extended the RFS 1 fuels volumes required under EPAct 2005 . The revised program, 

referred to as RFS2, requires 36 billion gallons of renewable fuel by the year 2022 to 

be introduced into the transportation fuel mix and allows the renewable fuel to be 

blended into both gasoline and diesel fuel . Obligated parties will also include refiners, 

blenders and importers of both gasoline and diesel fuel . Unlike the RFS 1 program 

(which only required compliance with one total renewable fuel standard until 2012, 

and added compliance with a cellulosic biomass standard thereafter), obligated parties 

must comply with the four "nested" standards. Total renewable fuel, advanced 

biofuel, cellulosic biofuel, and biomass-based diesel must reach the 36 billion gallon 

requirement by 2022 . Of the 36 billion gallons of total renewable fuels mandated by 

EISA, 21 billion gallons must be advanced biofuel; of the 21 billion gallons of 

advanced biofuel required, 16 billion gallons must be cellulosic biofuel and 1 billion 

gallons must be biomass-based diesel . 

Figure 1 shows the volume requirements of RFS 1 (red line labeled "Old RFS") 

compared to the volume requirements of RFS2 for the different types of renewable 

fuels (bar chart), as defined by EISA, from 2006 through 2022. 

The provisions of EISA 2007 will expand requirements on obligated parties. Since 

there are four types of renewable fuels, obligated parties must obtain and demonstrate 

compliance with four different mandates using RINs . Second, the universe of 

obligated parties has been broadened to include both gasoline and diesel producers . 

Finally, the volumes required by the new mandate are substantially higher than those 

required in EPAct 2005, stretching the limits of domestic capability to produce and 

incorporate biofuels in the transportation fuel mix. 
40 

35 

30 c 0 

25 

CD 

20 0 

m 15 

10 

5 

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 

" Biodiesel 0 0 0 0.5 0.65 0.8 1 1 1 1 1 1 1 1 1 1 1 

M Any Advanced 0 0 0 0.1 0.2 0 .3 0.5 075 1 1 .5 2 2.5 3 3 5 3 5 3 5 4 

Cellulosic Advanced 0.1 0.25 0 5 1 1 75 3 425 5 5 7 8 5 105 13 .5 16 

My Renewable Fuels 4 4 7 9 105 12 12 .5 13.2 13 .8 14 .4 15 15 15 15 15 15 15 15 

-Old R FS 4 4.7 5.4 6 1 6.8 7 4 7.5 7 6 7 .7 7,8 7 9 8 1 8.2 8 3 8.4 8 5 8 6 

Figure 1 . RFS 1 and RFS 2 Volume Requirements 2006-2022 

Compliance Options under the RFS1 and RFS2 Programs 

The Renewable Fuel Standard programs (RFS 1 and RFS2) include inherent 

flexibility since compliance is based on a nationwide trading program, without any 

per gallon requirements and without any requirement that the refiner or importer 

produce the renewable fuel . By purchasing RINs from other program participants that 

have chosen to over-comply, obligated parties will be able to fulfill their renewable 

fuel obligation without having to make capital investments that may otherwise be 

necessary in order to blend renewable fuels into gasoline or diesel fuel . 

In a competitive market, RINs will be freely traded between parties at the marginal 

cost of production . In this case, the decision to blend as opposed to purchase credits 

should not disadvantage small refineries relative to other obligated parties . Based on 

the performance of the current market and forecasts of future market trends, we 

believe that sufficient RINs will be available at a price not disproportionately above 

the cost of production . Therefore, refiners without blending capability should pay no 

more than the marginal cost of production ; that is, the cost of the most expensive RIN 

produced by blending. In this case, the absence of physical capability to blend does 

6 
not impose a disproportionate economic hardship on small refineries as compared to 

other obligated parties . 

Review of the Current Market 

The current market is generally over-supplied with RINs . This condition can be seen 

by examining the traded price of RINs shown in Figure 2 . Over the period May -

November, 2008, RIN prices averaged less than $0.05 per gallon . Such a nominal 

price suggests that the transaction costs of transferring RINs constitute the majority of 

the value of the RIN. This implies that the market views blending ethanol as 

economic, even without the incentive of selling the generated RIN. 

May June July Aug Sept Oct Nov 

Month 

Figure 2. Average Monthly RIN Prices May - November 2008 

Source : Oil Price Information Service (OPIS) 

While there is no central exchange for trading RINs, various private parties facilitate 

the exchange of RINs. One such private party is Clean Fuels Clearinghouse, which 

runs the RINSTAR© Renewable Fuel Registry . As the Renewable Volume 
Obligation (RVO) increases, more obligated parties are expected to purchase RINs 

than generate their own. As more parties become aware of the RFS2 requirements, 

increased trading will result . Figure 3 shows the monthly trade count from the 

Renewable Fuel Registry starting from the program's inception in 2007. The actual 

number of RIN-gallons (that is the RINs associated with a gallon of renewable fuel) is 

far greater than the trade count, as a single trade may entail the transfer of RINs for a 

batch of renewable fuel . Since the Clean Fuels Clearinghouse is a private party, it 

only has data on its subscribing members, which is a subset of the market. The 

Registry does not attempt price discovery at this time, but merely facilitates the 

trading among parties and reports transfers to EPA. 

Monthly Trade Count 

Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec 

Figure 3 Monthly Trade Count in the RINSTAR8 SYstem 

Future RFS Compliance Costs 

Figure 4 shows a projection of the compliance cost per gallon of product, extracted 

from the National Energy Modeling System (NEMS) modeling run used to create the 

Energy Information Administration's Early Release of the Annual Energy Outlook 

2009 (AEO 2009) for the period 2009 through 2022 . The projected cost represents the 
weighted average cost of meeting the four compliance categories in dollars per gallon 

of gasoline or diesel fuel, the products covered by the program . EIA projects 

implementation of the RFS2 program should have a minimal impact on product prices 

through 2013 of less than $ .01 per gallon of product. Even after 2013, the EIA 

projections show only two years in which the RFS2 program raises product prices 

more than $.03 per gallon . Since the credit system will be used to transfer compliance 

costs to consumers, these costs may be used as a proxy to project the value of credits. 

DOE interprets EIA's projections to indicate that credits should be available and that 

credit prices will not be excessive. 

RFS2 Compliance Cost per Gallon Product 

W05 , 

$0 .04 - 

~ $0 .03 - 

0 

c 

0 

A 

a $0 .02- 

$0 .01 - 

$0 .00 I2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 

Year 

Figure 4. Annual Energy Outlook 2009 Compliance Cost Projections 

Characteristics of Small Refineries 

Small refineries comprise a very heterogeneous set of organizations. Some small 

refineries are part of large integrated corporations with both upstream and 

downstream activities . Others, while owning only a few or even one small refinery, 

are large enterprises with other lines of business . Finally, some companies have a 
single small refinery providing the vast majority of the value of the enterprise . While 

any particular small refinery may have geographic or other capital limitations, since 

the obligated party is the entire company, small refineries have options available to 

meet their RVO other than by blending in the mandated volumes of renewable fuels . 

They may allow other parts of the company to over-comply, or they may purchase 

RINs from other obligated parties. 

Table 1 lists a sample of small refineries that DOE has identified that are also owned 

by small companies, as defined in EPA's SUBREFA process. These refineries would 

be expected to have the most difficulty complying with the standard by developing 

facilities to blend renewable fuels into their products. The table shows the company 

name, location, and size of the refinery . Using EIA Form 815 data, DOE has 

identified those refineries that are close to terminals that currently blend ethanol . 

Since EIA does not track the commercial arrangements of refineries, this is a proxy of 

whether the refinery may actually use such a terminal to generate credits . Table 1 

includes all of the refiners from the Ad Hoc RFS 1 Small Refiner SUBREFA 

Coalition with the exception of Placid Oil . Placid has recently expanded its operable 

distillation capacity to 80,000 barrels per day, which may make it ineligible for the 

small refinery exemption if annual crude oil throughput is below 75,000 barrels per 

day. 

Table 1 . Select Small Refineries 

Com pan y Name Site State 

Operable 

capacity 

( 13131.,S/day ) 

Blending 

Ca p abili ty 

AGE REFINING INC SAN ANTONIO Texas 13000 

AMERICAN REFINING GROUP BRADFORD Pennsylvania 10000 

INC 

COUNTRYMARK MOUNT Indiana 23000 Y 

COOPERATIVE INC VERNON 

FORELAND REFINING CORP EAGLE SPRINGS Nevada 2000 

GOODWAY REFINING LLC ATMORE Alabama 4100 

KERN OIL & REFINING CO BAKERSFIELD California 26000 Y 

SAN JOAQUIN REFINING CO BAKERSFIELD California 15000 Y 

INC 

SILVER EAGLE REFINING EVANSTON Wyoming 3000 

SILVER EAGLE REFINING WOODS CROSS Utah 10250 

SOMERSET REFINERY INC SOMERSET Kentucky 5500 

US OIL & REFINING CO TACOMA Washington 37850 Y 

WYNNEWOOD REFINING CO WYNNEWOOD Oklahoma 54000 Y 

Source : EIA-810 and EIA-815 

10 
Case Studies of Refineries Affected By EISA 

EPAct 2005 defined an exemption for small refineries, not refiners . As illustrated in 

the examples described in this section, small refineries are extraordinarily diverse in 

size, capitalization, and role . We examine three small refineries to illustrate the 

various challenges small refineries might face in complying with the RFS2. 

Marathon Refining, St. Paul Park, Minnesota 

This 70,000 barrels per day refinery produces motor gasoline, diesel, and other 

products . It is part of the Marathon Oil Company, a large integrated energy company 

which is engaged in exploration and production of oil and oil sands, and refining, 

transporting, and marketing petroleum products. The refinery is located near 

numerous sources of ethanol in a state that has a statutory 10-percent-ethanolblending requirement for gasoline . Marathon has over one million barrels per day 

refining capacity company-wide and had revenues of over $65 billion in 2007. The 

company has the ability to blend 1 .2 billion gallons of ethanol annually, and has 

invested in ethanol production facilities . Therefore, the Marathon St . Paul refinery has 

many options to comply with its RVO. It may generate RINs through blending, or 

allow some other portion of the company to over-comply. 

Country-Mark Cooperative, Mt. Vernon, Indiana 

Country-Mark Cooperative is owned by a number of farm cooperatives . It runs a 

26,500 barrels per day refinery in Mt . Vernon, Indiana. The cooperative primarily 

sells diesel (both on-road and off-road) and gasoline, with profits accruing to the 

owning cooperatives . Country-Mark owns its own pipeline and four terminals. They 

already blend both biodiesel and E10. Therefore, the company has the capability of 

generating RINs or purchasing them. 
The American Refining Company Bradford, Pennsylvania 

The American Refining Company owns a single refinery in Bradford, Pennsylvania. 

It processes approximately 10,000 barrels per day of primarily locally-produced 

Pennsylvania crude, producing diesel and gasoline . The company has no terminals or 

blending facilities, and no terminals are nearby . Therefore, this company is an 

example of a refinery at which it would be commercially infeasible to install blending 

facilities and where RINs would likely be purchased from other parties. 

Record-keenina Recruirements 

Registration, recordkeeping, and reporting are necessary to track compliance with the 

RFS2 program . Since the RFS2 program contains multiple mandates, compliance will 

require multiple types of RINs, and will necessarily be more complex . 

The compliance requirements under the RFS2 program will likely be similar to those 

required under the RFS 1 program. Program registration for the RFS 1 program uses 

the same basic forms that EPA uses under the reformulated gasoline (RFG) and the 

Mobile Source Air Toxics (MSAT) anti-dumping programs, as these forms are well 

known in the regulated community and are simple to fill out. Reporting under the 

RFS 1 program currently uses a simplified method of reporting via EPA's Central 

Data Exchange (CDX), and records related to RIN transactions may be kept in any 

format . The period of record retention by reporting parties is five years, similar to 

other EPA fuel programs. 

As described previously, commercial services exist to handle record-keeping and 

assignment of RINs. Therefore, costs may be scalable relative to the size or number 

of RINs needed . At this time, commercial services can provide record-keeping, 

transfer, and verification of RINs for a nominal fee, thereby reducing the need for 

additional staff. 
Discussion of Results 

Small refineries encompass a broad category of businesses . Small refineries may be 

parts of large integrated petroleum companies with numerous refineries, a single or 

small group of refineries within a large diversified corporation, or a stand-alone 

organization with a single processing plant . Furthermore, as the actual generation of 

RINs occurs, the RFS2 program will have a different impact depending upon the 

corporate structure. Small refineries without access to blending capability may have 

to enter the RIN market. For stand-alone small refineries, transaction costs may create 

a significant burden, although third-party services are already available to ease this 

burden . For small refineries that are subsidiaries of larger companies, this is less of an 

issue. Finally, for small refineries that are part of integrated major or supermajor 

energy companies, RINs may be obtained internally or in the open market, and there 

is no reason to expect that they would be disproportionately harmed by inclusion as 

obligated parties in the RFS2 program . 

Conclusion 

Small refineries comprise a heterogeneous group of facilities . Some will be able to 

generate RINs through blending renewable fuels into their products ; others may 

choose to purchase RINs from refiners with RINs in excess of their RVOs . 

Currently there appears to be no shortage of RINs available under RFS 1 . The RFS2 

legislation has provided flexibility to ensure that the RFS2 RVO requirements will 

not exceed the renewable fuels industries' capabilities to produce renewable fuels and 

also provides alternative RINs if the RVO volumes are not economically viable . 

Markets are developing for the exchange and tracking of RINs . It is too early to 

project whether these markets will continue to be liquid and competitive; as long as 

these markets continue to the liquid and competitive, there is no reason to believe 

small refineries will be disproportionately harmed by inclusion in the RFS2 program . 

Therefore, DOE has not determined that any small refinery would be subject to 

disproportionate economic hardship under the RFS2 program and thus has determined 

that the exemption should not be extended beyond 2010. However, should 

13 
circumstances change and the RIN markets become non-competitive or illiquid, 

individual refineries still have a statutory right to petition EPA for an extension of the 

small refinery exemption. 
Appendix A. List of Small Refineries and Operable Capacity in BBLS/da 

Source : ElA _form E1-810 

COMPANY NAME SITE STATE _NAME OPERABLE CAPACITY 

AGE REFINING INC SAN ANTONIO Texas 13000 

ALON USA ENERGY INC BIG SPRING Texas 67000 

AMERICAN REFINING GROUP INC BRADFORD Pennsylvania 10000 

BIG WEST OF CALIFORNIA BAKERSFIELD California 66000 

BIG WEST OIL CO NORTH SALT LAKE: Utah 29400 

CALCASIEU REFINING CO LAKE CHARLES Louisiana 78000 

CALUMET LUBRICANTS CO LP COTTON VALLEY Louisiana 13020 

CALUMET LUBRICANTS CO LP PRINCETON Louisiana 8300 

CALUMET SHREVEPORT LLC SHREVEPORT Louisiana 42000 

CENEX HARVEST STATES COOP LAUREL Montana 55000 

CHEVRON USA INC HONOLULU Hawaii 54000 

CHEVRON USA INC SALT LAKE CITY Utah 45000 

CITGO ASPHALT REFINING CO PAULSBORO New Jersey 32000 

CITGO ASPHALT REFINING CO SAVANNAH Georgia 28000 

CONOCOPHILLIPS COMPANY BILLINGS Montana 58000 

CONOCOPHILLIPS COMPANY RODEO Califomia 76000 

COUNTRYMARK COOPERATIVE INC MOUNT VERNON Indiana 23000 

CROSS OIL REFINING & MARKETING INC SMACKOVER Arkansas 7200 

DELEK REFINING LTD TYLER Texas 58000 

ERGON REFINING INC VICKSBURG Mississippi 23000 

ERGON WEST VIRGINIA INC NEWELL (CONGO) West Virginia 20000 

EXXONMOBIL REFINING & SUPPLY CO BILLINGS Montana 60000 

FORELAND REFINING CORP EAGLE SPRINGS Nevada 2000 

FRONTIER REFINING INC CHEYENNE Wyoming 47000 

GIANT INDUSTRIES INC BLOOMFIELD New Mexico 16800 

GIANT REFINING CO GALLUP New Mexico 20800 

GIANT YORKTOWN REFINING YORKTOWN Virginia 59375 

GOODWAY REFINING LLC ATMORE Alabama 4100 

GULF ATLANTIC OPERATIONS LLC MOBILE Alabama 16700 

HOLLY CORP REFINING & MARKETING WOODS CROSS Utah 24700 

HUNT REFINING CO TUSCALOOSA Alabama 34500 

HUNT SOUTHLAND REFINING CO SANDERSVILLE Mississippi 11000 

KERN OIL & REFINING CO BAKERSFIELD California 26000 

LION OIL CO ELDORADO Arkansas 70000 

LITTLE AMERICA REFINING CO EVANSVII..L .E (CASPER) Wyoming 24500 

MARATHON PETROLEUM CO LLC CANTON Ohio 73000 

MARATHON PETROLEUM CO LLC SAINT PAUL PARK Minnesota 70000 

MARATHON PETROLEUM CO LLC TEXAS CITY Texas 72000 

MONTANA REFINING CO GREAT FALLS Montana 9500 

MURPHY OIL USA INC SUPERIOR Wisconsin 34300 

PARAMOUNT PETROLEUM CORPORATION PARAMOUNT California 50000 

PLACID REFINING CO PORT ALLEN Louisiana 56000 

SAN JOAQUIN REFINING CO INC BAKERSFIELD California 15000 

SHELL CHEM LP SAINT ROSE Louisiana 55000 

SHELL CHEM YABUCOA INC YABUCOA Puerto Rico 77900 

SILVER EAGLE REFINING EVANSTON Wyoming 3000 

SILVER EAGLE REFINING WOODS CROSS Utah 10250 

SINCLAIR OIL CORP SINCLAIR Wyoming 66000 

SINCLAIR OIL CORP TULSA Oklahoma 70300 

SOMERSET REFINERY INC SOMERSET Kentucky 5500 

SUNCOR ENERGY (USA) INC COMMERCE CITY Colorado 62000 

SUNCOR ENERGY (USA) INC DENVER Colorado 32000 

Tesoro West Coast MANDAN North Dakota 58000 

Tesoro West Coast SALT LAKE CITY Utah 58000 

VENTURA REFINING & TRANS LLC CUSTER Oklahoma 12000 

UNITED REFINING CO WARREN Pennsylvania 65000 

US OIL & REFINING CO TACOMA Washington 37850 

WYNNEWOOD REFINING CO WYNNEWOOD Oklahoma 54000 

WYOMING REFINING CO NEWCASTLE Wyoming 14000 

15 
UNITED STATES DEPARTMENT OF ENERGY 

1000 INDEPENDENCE AVE SW 

WASHINGTON, D.C . 20585 

OFFICIAL BUSINESS 

?z-~ 

The Honorable Lisa P. Jackson 

Administrator 

Environmental Protection Agency 

Washington, DC 20004 

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