Regulation of Fuels and Fuel Additives:


Renewable Fuel Standard Program


Summary and Analysis of Comments


Chapter 4


Exemptions for Obligated Parties


Assessment and Standards Division 

Office of Transportation and Air Quality 

U.S. Environmental Protection Agency 

EPA420-R-07-006 

April 2007 
RFS Summary and Analysis of Comments 

4 EXEMPTIONS FOR OBLIGATED PARTIES 

4.1 Small Refineries and Small Refiners............................................................... 4-1 

4.1.1 Exemption Should be Automatic .............................................................4-1 

4.1.2 Provisions for Small Refiners.................................................................. 4-3 

4.1.3 Foreign Small Refiners/Refineries........................................................... 4-8 

4.1.4 Other ........................................................................................................4-9 

4.2 Other Exemptions .......................................................................................... 4-10 

RFS Summary and Analysis of Comments 

4 EXEMPTIONS FOR OBLIGATED PARTIES 

What We Proposed: 

The comments in this section correspond to Sections III.C.3 of the preamble to 

the proposed rule, and are therefore targeted at exemptions to the Renewable Fuels 

Standard for obligated parties. A summary of the comments received, as well as our 

response to those comments, are located below. 

4.1 Small Refineries and Small Refiners 

4.1.1 Exemption Should be Automatic without the Need for Prior Application 

What Commenters Said: 

Marathon, the American Petroleum Institute (API), the National Petrochemical 

and Refiner’s Association (NPRA), and the Society of Independent Gasoline Marketers 

of America and the National Association of Convenience Stores (SIGMA/NACS) 

commented that EPA should change the small refinery provisions to automatically 

exempt small refineries in 2007, and that the gasoline produced by these exempted parties 

should be excluded from the overall calculation of national gasoline production. 

Commenters stated that requiring that refiners submit applications for the small refinery 

exemption is inconsistent with the small refinery provisions in the Energy Policy Act of 

2005 (amended CAA section 211(o)(9)(C) and (D)). API further commented that it 

believes that this will avoid uncertainty regarding the RFS obligation status of small 

refineries for 2007 while preserving the principle that small refineries must qualify for 

the exemption; and that the required RFS percentage for 2007 should take into account 

only those small refineries that have been fully confirmed as exempt. 

NPRA further commented that the proposed value of the required RFS percentage 

for 2007 (RFStd2007) would be smaller if the Agency would automatically assume that all 

small refiners and small refineries will decide to waive the exemption. The commenter 

also noted that the assumption that small refiners and small refineries are either all in or 

all out in 2007 makes a difference between estimating RFStd2007 as 3.45% or 4.02%. The 

commenter also stated that if the Agency assumes that all small refiners and small 

refineries are not in the RFS program in 2007 (as the proposed rule implied) and 

promulgates RFStd2007 at or near 4.02%, then regulatory over-compliance in 2007 is 

possible. The commenter stated that it believes that it would not be fair for EPA to 

promulgate a larger-than-necessary value for RFStd2007 and provide no accommodation 

for this oversight; the commenter suggested that EPA consider a rebate or a refund if the 

promulgated RFStd2007 is too high. Lastly, the commenter stated that there will not be an 

opportunity for RFS regulatory over-compliance in 2007 if EPA clearly explains that 

small refineries will not be obligated parties in 2007. 

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Chapter 4: Exemptions for Obligated Parties 

Additionally, regarding the regulations, API commented that in §80.1143 there 

should be a provision for small refineries and non-contiguous states and territories to optin effective with the first compliance period (2007). The commenter noted that the 

language currently would not allow such opt-ins to become effective until the 2008 

compliance period. 

Letters: 

American Petroleum Institute (API) OAR-2005-0161-0185 

Marathon Petroleum Company (MPC) OAR-2005-0161-0175 

Society of Independent Gasoline Marketers of America (SIGMA)/National Association 

of Convenience Stores (NACS) OAR-2005-0161-0234 

National Refiners and Petrochemical Association (NPRA) OAR-2005-0161-0170, -0232 

Our Response: 

In the proposal we stated that applications for a small refinery exemption must be 

received by EPA by September 1, 2007 for the exemption to be effective in 2007 and 

subsequent calendar years, and that the small refinery exemption would be effective 60 

days after receipt of the application by EPA (unless EPA notifies the applicant that the 

application was not approved or that additional documentation is required). The Energy 

Policy Act clearly intended to provide the small refinery exemption. Given the short 

timeframe between the effective date of this final rule and its implementation, there is not 

enough time for the typical application and approval process. Consequently, we are 

finalizing the rule without the need for applications. In order to ensure that this provision 

is not being misused, we believe that it is necessary for refiners to verify that their 

refineries meet the small refinery definition. We are thus finalizing that the small 

refinery exemption will become active immediately upon the effective date of this rule. 

Refiners will only be required to send a letter to EPA, by August 31, 2007, verifying their 

refineries’ status as small. 

As discussed below in section 4.1.2.1, we are extending, to qualified small 

refiners, the same exemption provided for small refineries; thus, we are finalizing that 

qualified small refiners receiving the small refiner exemption will also receive the 

exemption immediately upon the effective date of the rule. Small refiners will also be 

required to submit verification letters showing that they meet the small refiner criteria. 

This letter will be similar to the small refiner applications required under other EPA fuel 

programs, except the letter will not be due prior to the program. 

Please see section III.C.3.a of the preamble to the final rule for more information 

on the small refinery and small refiner verification letter requirements. Also note that a 

submission of the verification letter does not automatically mean that the refiner is 

entitled to the relief. They have to in fact meet the criteria for a small refinery or a small 

refiner. A submission of verification entitles a party to the exemption only in those cases 

where a party meets the criteria. 

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RFS Summary and Analysis of Comments 

With regard to the comment that we did not allow for small refineries and noncontiguous states and territories to opt-in in 2007, we do not anticipate that these parties 

will choose to waive the exemption given the design of the renewable identification 

number (RIN) program. They can receive and market RINs in their capacity as 

oxygenate blenders without subjecting themselves to the standard as an obligated party. 

Section III.A of the preamble to the final rule discusses how the applicable standards 

were calculated. 

4.1.2 Provisions for Small Refiners 

4.1.2.1 Extension of the Small Refinery Exemption to Small Refiners 

What Commenters Said: 

Marathon, ExxonMobil, Shell/Motiva, and API commented that they do not 

support the extension of the small refinery exemption to small refiners. Some 

commenters stated that they believed that EPA exceeded its discretionary authority by 

extending the exemption to small refiners. Other commenters stated that the Energy 

Policy Act specifically states that the exemption is for small refineries, and that it is clear 

that Congress did not intend for the exemption to be broadened to also include small 

refiners. The commenters all stated that they believed that §80.1142 should be deleted 

from the regulations in the final rule. Further, some commenters stated that after EPA 

includes small refiners back in the general RFS program, the applicable percentage for 

2007 should be recalculated to include the volumes of fuel expected to be produced by 

the small refiners. ExxonMobil also commented that it believes that small refiners should 

not be granted the exemption because verification of processing capability and/or 

employment records would be far more difficult, and in some cases impossible, for EPA 

to accomplish. API further commented that it also does not agree with the regulations at 

§80.1142(d), which it believes could allow two small refiners who merge to become a 

large company and still be exempted. 

The New York Department of Environmental Conservation commented that it 

believes that in programs where large capital equipment investments are involved, relief 

for small refiners makes sense, as it agrees that per barrel costs are generally greater for 

smaller units. However, the commenter stated that because this rule requires no 

significant capital investment for any refinery (large or small), compliance can be 

achieved by acquiring credits for renewable fuel. The commenter stated that it does not 

believe that small refiners are at a disadvantage and that EPA should not provide any 

exemptions for small refiners beyond what is required by the Energy Policy Act. 

(Additionally, the commenter’s comments implied that it did not agree with exemptions 

for small refiners or those for small refineries.) 

SIGMA/NACS, Countrymark, and the Ad Hoc Coalition of Small Business 

Refiners (Small Refiners) commented that they supported the expansion of the small 

refinery exemption to small refiners. SIGMA/NACS specifically stated that it believes 

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Chapter 4: Exemptions for Obligated Parties 

that the inclusion of small refiners in this exemption is a reasonable exercise of regulatory 

interpretation by EPA, and urged EPA to finalize this provision. The Small Refiners 

further commented that they did not insist on a SBREFA Panel predicated on the small 

refinery exemption being extended to small refiners. In its comments, NPRA did not 

explicitly state that it supports this extension of the provision, however its references to 

“small refineries and small refiners” implies that NPRA supports this provision as well. 

Letters:

Ad Hoc Coalition of Small Business Refiners (Small Refiners) OAR-2005-0161-

0214 

American Petroleum Institute (API) OAR-2005-0161-0185 

ExxonMobil Refining & Supply Co. OAR-2005-0161-0197 

New York State Department of Environmental Conservation (NYDEC) OAR-2005-

0161-0169 

Marathon Petroleum Company (MPC) OAR-2005-0161-0175 

Society of Independent Gasoline Marketers of America (SIGMA)/National Association 

of Convenience Stores (NACS) OAR-2005-0161-0234 

Shell Oil Company/Motiva Enterprises OAR-2005-0161-0215 

Our Response: 

As stated in the proposal, we believe that we have discretion in determining an 

appropriate lead-time for the start-up of this program, as well as discretion to determine 

the regulated refiners, blenders and importers, “as appropriate.” We continue to believe 

that some refiners, due to their size, generally face greater challenges compared to larger 

refiners. The Small Business Regulatory Enforcement Fairness Act (SBREFA) also 

recognizes this and requires agencies, during promulgation of new standards, to assess 

the potential impacts on small businesses (as defined by the Small Business 

Administration (SBA) at 13 CFR 121.201). 

In recent EPA fuel programs under the Clean Air Act, “small refiners” have 

historically been recognized in our fuel regulations as those refiners who produce fuel by 

processing crude oil, employ no more than 1,500 employees, and have an average crude 

oil capacity of 155,000 bpcd. These refiners generally have greater difficulty in raising 

and securing capital for investing in capital improvements and in competing for 

engineering resources and projects. Though the RFS program does not require that 

refiners make capital improvements, there are still costs associated with meeting the 

standard. While we were not required to assess the impacts on small businesses under the 

Energy Policy Act, we are required to do so under SBREFA. Based on our analysis, our 

assessment is that this rule will not impose a significant adverse economic impact. 

However, as small refiners informed us, there will still be economic impacts on these 

entities. Further, we believe that the number of small refiners that do not meet the Act’s 

definition of a small refinery is limited. Based on our current assessment of the refining 

industry, there are only three refiners that do not meet the Act’s definition of a small 

refinery but will qualify as small refiners for this rule. Therefore, we are finalizing the 

4-4
RFS Summary and Analysis of Comments 

proposed provision that the same exemption will be provided to qualified small refiners 

as to small refineries. 

We do not agree with the statements that the verification of small refiner 

processing capability and employment records will be difficult or impossible. For all of 

our previous fuel programs that have included small refiner provisions, small refiners 

have been required to submit extensive information with their small refiner applications 

showing that they do in fact meet the small refiner qualification criteria. The information 

that small refiners will be required to submit for the RFS program is the exact same, 

except it will be due after the program has begun rather than before (as our other fuel 

programs have required). Further, for any refiner who falsifies information regarding the 

qualification criteria, their small refiner status will be considered void as of the applicable 

date of the standard. This will also place the refiner in violation of the RFS rule 

requirements, and the refiner would be subject to Clean Air Act penalties of up to 

$32,500 per day per violation, as stated at section 80.1163 of the regulations. 

4.1.2.2 Participation in the RIN ABT Program 

What Commenters Said: 

Countrymark and the Small Refiners commented that they believe that small 

refiners should be able to generate RFS credits if they elected to blend renewables before 

2011 without formally opting in to the program, but they should not be held to specific 

RFS volumes under the program compliance requirements prior to 2011. The 

commenters stated that they believe that this will allow flexibility to small refiners and 

will be beneficial to the renewable fuels program in general as some small refiners will 

elect to blend and earn credits who would otherwise not enter into a blending program 

and those credits will keep the credit program function properly. The Small Refiners also 

urged EPA to clarify whether or not a small refiner blending ethanol at a terminal or any 

location without formally opting into the program before 2011 can separate RINs and 

sell, transfer, or bank them. 

CHS commented that it believes that a small refinery that is an oxygenate blender 

should be able to generate credits as if its RVO is zero (and thus whatever renewables 

they blend will be reflected as RIN credits available in the market). The commenter 

noted that it would like confirmation from EPA that such an entity can start its RVO and 

RIN credit building from a base of zero. 

Countrymark commented that it believes that many of the exempted small 

refineries will be owned by major oil companies or companies who do not meet the small 

refiner criteria that have been used in EPA’s past fuel programs. The commenter stated 

that small refiners are concerned that the small refinery exemption may create problems 

in credit trading and suggests that EPA monitor closely the activities of these refineries’ 

effect on the credit trading program. The Small Refiners commented that they believe 

that the cost and availability of credits are important issues to small refiners. The 

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Chapter 4: Exemptions for Obligated Parties 

commenters thus requested that the rule include a specific provision, similar to that in the 

proposed MSAT2 rule, to review the credit program and its impact on small refiners on a 

periodic basis. 

Letters:

Ad Hoc Coalition of Small Business Refiners (Small Refiners) OAR-2005-0161-

0214 

CHS Inc. OAR-2005-0161-0203 

Countrymark Cooperative OAR-2005-0161-0225 

Our Response: 

As previously stated, we have decided to finalize the provision to allow small 

refineries and small refiners to waive their exemption. Gasoline produced at a refinery 

which waives its small refinery or small refiner exemption will be included in the RFS 

program and will be included in the gasoline used to determine the refiner’s renewable 

fuel obligation. If a refiner waives the exemption, the refiner will be able to separate and 

transfer RINs like any other obligated party. Exempt small refineries and small refiners 

cannot separate a RIN simply by owning a batch. However, a RIN can be separated by 

these parties once the volume of renewable fuel is blended with gasoline or diesel to 

produce a motor vehicle fuel. In this respect they would be considered a blender as stated 

in the regulations at §80.1129. Thus if a small refinery or small refiner does not waive 

the exemption, the refiner could still separate and transfer RINs, but only for the 

renewable fuel that the refiner itself blends into gasoline. Exempt small refineries and 

small refiners who blend ethanol can separate RINs from batches without opting in to the 

program, so long as they own the renewable fuel at the time of blending. The 

commenters suggest that small refiners or refineries should be able to generate credits by 

blending renewable fuels into gasoline. However in the RFS program that we are 

adopting, refiners do not generate credits by blending renewable fuels. The RINs 

perform the function of credits, and they are generated by the renewable fuel producer, 

not the blender. However, as noted above, exempt refiners or refineries that blend 

renewable fuels into gasoline may separate RINs from the renewable fuel, as may other 

blenders. 

With regard to the comments concerning a review of the credit program, we are 

not finalizing a review of the credit program. We note that all of the information that 

parties are required to report annually will provide EPA with all of the information that 

we believe will be needed to assess the credit market in the event of any shortage or 

problem. 

4.1.2.3 Company vs. Facility Impacts 

What Commenters Said: 

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RFS Summary and Analysis of Comments 

The Small Refiners noted that companies with several facilities will be able to 

comply but still benefit from exemptions for their small refineries. The commenters 

noted that they generally endorse the RIN structure, but oppose its companywide (versus 

individual facility) compliance basis. The commenter stated that it estimates that over 

half of the 42 refineries that are expected to qualify as small refineries are refineries 

owned by large companies—the commenters stated that they are concerned about the 

disproportionate advantage which will be enjoyed by large companies which can spread 

RINs among several refining facilities. The commenters also commented that these 

larger companies may build or acquire their own ethanol production facilities, but that 

small refiners with only one plant operating in the same market area will be 

disadvantaged. 

Letters:

Ad Hoc Coalition of Small Business Refiners (Small Refiners) OAR-2005-0161-

0214 

Our Response: 

As discussed in Section 2.3.1 of this document, we are finalizing the RIN program 

structure as proposed, and therefore will be retaining the company-wide compliance 

aspect. Further, the mandates of the Energy Policy Act call for a nationwide trading 

program, thus EPA does not have the discretion to restrict this aspect of the program. We 

note that EPA believes such a nationwide trading program is appropriate under the 

circumstances of this program, and would adopt such a program in any case. Thus, even 

if we were to impose a facility-based trading program, the ability to trade nationwide 

would still default to company-wide trading for larger companies. 

The goal of the RIN program is to allow ethanol to be blended and marketed 

normally, and simply allow refiners to transfer RINs. The program allows for ample 

flexibility to obtain and trade RINs nationwide from refiners and oxygenate blenders. 

Given the number and variety of producers of renewable fuels (which are separate from 

the refiners that the commenters are concerned about) and the expected production 

volumes of renewable fuels, EPA believes that a smoothly functioning and competitive 

market for renewable fuels and the associated ability to separate RINs, and a market for 

RINs themselves, is likely to occur and this should address the concerns raised by the 

commenters. Further, the RIN program is for all refiners. 

For a more detailed discussion of the RIN program structure, please see sections 

III.D and E of the preamble to the final rule. 

4.1.2.4 Additional Small Refiner Concerns 

What Commenters Said: 

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Chapter 4: Exemptions for Obligated Parties 

Countrymark and the Small Refiners commented that the proposed rule did not 

address seasonality issues that they believe small refiners who market gasoline in nonattainment areas, or in areas with varying state RVP standards without one pound 

summer RVP waivers, may face. The commenters requested that EPA and the Energy 

Information Administration (EIA) study as early as possible the impact that varying state 

RVP standards have on the blending of renewable fuels. The Small Refiners also 

specifically requested that the RFS regulations allow subsequent revisions to the small 

refiner provisions to recognize the hardship which seasonality issues impose on small 

refiners if demonstrated by the EIA study. 

The Small Refiners also expressed the concern that in markets where corn-based 

ethanol production is expected to be significant, large refining companies could decide to 

meet their blending obligation at plants situated close to ethanol production sources— 

thus saving transportation costs incurred when ethanol is shipped to other markets. The 

commenters believe that this could result in an imbalance in the distribution of ethanol, 

with a concentration in the corn-belt area and lower coastal volumes, leading to lower 

gasoline prices which will disadvantage (and “in fact may be disastrous to”) small 

refiners or small refineries dependent upon gasoline sales. 

Letters:

Ad Hoc Coalition of Small Business Refiners (Small Refiners) OAR-2005-0161-

0214 

Countrymark Cooperative OAR-2005-0161-0225 

Our Response: 

The comments regarding seasonality issues are beyond the scope of this 

rulemaking. We believe that the Boutique Fuel studies required by Congress will help to 

alleviate the commenters’ concerns with regard to varying state RVP standards. 

With regard to the comment that some companies may choose to meet their 

blending obligation at plants close to ethanol production sources, we note that this is not 

an impact of our rule. Rather, this is an impact of the economic marketing of renewable 

fuels—a practice that our RIN system is designed to allow to continue unhindered. 

Renewable fuels can continue to be blended where it is most economical to do so, and 

RINs may be traded to refiners serving areas where renewable use would be less 

economical. 

4.1.3 Foreign Small Refiners/Refineries 

What Commenters Said: 

ExxonMobil commented that nothing in the Energy Policy Act requires EPA to 

grant relief to foreign small refineries. The commenter further stated that it believes that 

it is inappropriate to extend “this unlawful exemption” to foreign small refiners; and that 

4-8
RFS Summary and Analysis of Comments 

verification of processing capability and/or employment records would be far more 

difficult and in some cases impossible for EPA to accomplish. 

Letters:

ExxonMobil Refining & Supply Co. OAR-2005-0161-0197 

Our Response: 

As discussed in the proposal, in several recent fuel programs EPA has provided 

relief to foreign refiners when the fuel program provides relief to a subset of domestic 

refiners. In these circumstances we have decided to provide the same relief to foreign 

refiners who meet the same criteria for relief as the domestic refiners, with additional 

provisions for the foreign refiner related to ensuring that the program is fully enforceable 

against foreign refiners. EPA believes that this is an appropriate way to exercise our 

statutory authority, and is fully consistent with our obligations under the Global 

Agreement on Tariffs and Trade (GATT). As a result, we proposed the provision to 

extend the small refinery and small refiner exemptions to foreign small refineries and 

small refiners. The proposal contained the related enforcement provisions adopted in 

prior fuels regulations. This is consistent with prior fuel programs (e.g., anti-dumping, 

MSAT, and the fuel sulfur rules), which allowed foreign refiners to receive such 

exemptions. We are finalizing this provision. Under this provision, gasoline produced 

by foreign small refiners and foreign small refineries who apply for and demonstrate that 

they meet all of the regulatory requirements to receive these exemptions (including the 

additional provisions related to enforceability), will be exempt from the RFS standard 

such that obligated parties (importers or blenders) would not count these volumes 

towards their renewable volume obligations. 

4.1.4 Other 

What Commenters Said: 

In its comments, the Missouri Department of Natural Resources noted that it used 

the EIA/NPRA United States Refining and Storage Capacity Report, 2006 to determine 

that there are 137 refineries in the U.S., and that 57 of those refineries would qualify as 

small refineries for the RFS program. The commenter stated that this implies that 46 

percent of all U.S. refineries (and about 14 percent of crude throughput) will be exempt 

from the RFS program until 2011. The commenter stated that with the small 

refinery/refiner exemption, it is concerned that there are a number of states that have 

refinery operations but will be exempt under the provisions of the RFS due to the size of 

these refineries (including Georgia, Montana, Nevada, North Dakota, Oregon, Utah, 

Virginia, Washington, and Wyoming). 

Letters:

Missouri Department of Natural Resources (MDNR) OAR-2005-0161-0217 

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Chapter 4: Exemptions for Obligated Parties 

Our Response: 

To the extent the commenter is concerned that many states may have refineries 

that will qualify for the small refinery and small refiner exemptions, and that this could 

hurt the overall goal of the RFS program, we would note that the purpose of the 

nationwide RIN-based trading program is to ensure that obligated parties are able to 

comply with the standard while providing the flexibility for those parties to use 

renewable fuel in the most economical ways possible. In this regard, we expect the 

distribution and sale of renewable fuels to be marginally impacted at most by the 

requirements of this program, and with or without the small refinery and small refiner 

exemptions, we expect renewable fuels to continue to be used where it is most 

economical to do so. 

4.2 Other Exemptions 

What Commenters Said: 

Sutherland Asbill Brennan commented that although the mandated amounts of 

renewable fuels currently are projected to be exceeded by the actual amounts produced 

and consumed, such a status quo is not guaranteed. The commenter stated that a potential 

problem, such as a natural disaster in the U.S. agriculture sector, could make it difficult to 

meet Congress’ renewable fuels mandates and thereby drive the price of RINs high 

enough to disrupt the gasoline market. The commenter stated that it believes that the 

final rule needs to be flexible enough to address any such occurrences. The commenter 

further stated that a “change of rules”, if it is determined that the program is not 

sufficiently flexible to meet changing times and circumstances, would be inappropriate. 

The Missouri Department of Natural Resources commented that it believes that 

EPA may have incorrectly presumed that an obligated party would not be impaired in its 

ability to obtain sufficient RINs to comply with the applicable RFS standard in the event 

of a natural disaster. The commenter further stated that a reduction in gasoline 

production and the corresponding reduction in the demand for authorized RINs may fall 

short of the pre-determined compliance level, therefore rendering obligated parties out of 

compliance and subject to penalties. The commenter urged EPA to consider providing a 

temporary exemption in the event of a regional or national disaster. 

The Small Refiners commented that they believe it is impossible to predict at this 

early stage just how this program will impact small refiners, especially the RIN market. 

The commenter strongly requested that EPA include hardship provisions in the final rule, 

as they believe there are competitive disadvantages that may result for small refiners if 

the small refinery exemption is not expanded to small refiners and if the company-wide 

compliance structure of the RIN program is not changed. 

Letters: 

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RFS Summary and Analysis of Comments 

Ad Hoc Coalition of Small Business Refiners (Small Refiners) OAR-2005-0161-

0214 

Missouri Department of Natural Resources (MDNR) OAR-2005-0161-0217 

Sutherland Asbill Brennan OAR-2005-0161-0210 

Our Response: 

Under other EPA fuels programs, compliance is based on a demonstration that the 

fuel meets certain component or emissions standards. Unforeseen circumstances, such as 

a natural disaster, may affect an individual refiner’s or importer’s ability to produce or 

import fuel that complies with the standards. As a result, we have included in other fuels 

programs provisions for a temporary hardship exemption from the standards in the event 

of an unforeseen natural disaster which affects a party’s ability to produce gasoline that 

complies with the standards. Unlike most other fuels programs, compliance under the 

RFS program is based on a demonstration that a party has fulfilled its individual 

renewable fuels obligation on an annual basis, and compliance is demonstrated by 

showing the purchase of RINs associated with the production of a renewable fuel 

(generally a non-gasoline fuel) as compared to meeting specific gasoline content 

requirements on a per-gallon or annual average basis. The use of RINs to meet the 

renewable fuels obligation functions as a credit program, and there is a deficit carryforward provision allowing compliance to be shown over more than one year. In the 

event of a natural disaster, the volume of gasoline produced by an obligated party is also 

likely to drop, which would result in a reduction in the party’s renewable fuel obligation. 

As a result, we believe that an individual party would still be able to meet its renewable 

fuel obligation in the event of a natural disaster that affects the party’s refinery or 

blending facility. Therefore, unlike other fuels programs, we do not believe there is a 

need to include a temporary hardship exemption in the RFS rule to address an individual 

party’s inability to comply with its renewable fuels obligation due to unforeseen 

circumstances. 

Most of the concerns raised by the commenters relate to problems that would 

have a more regional or national effect, as compared to affecting one or a few 

individuals. In the event that unforeseen circumstances do occur which result in a 

shortage of renewable fuel and available RINs, we believe that Congress provided an 

adequate mechanism for addressing such situations in the Energy Policy Act (at section 

1541(a) [42 U.S.C. 7545(c)(4)(C)(ii)-(v)]). The Energy Policy Act provides that on 

petition by one or more States, EPA, in consultation with the Departments of Agriculture 

and Energy, may waive the required aggregate renewable fuels volume obligation in 

whole or in part upon a sufficient showing of economic or environmental harm, or 

inadequate supply. As a result, we believe that a renewable fuel supply problem that 

affects all (or a large number of) parties can be addressed using this statutory provision. 

We have carefully considered the comments; however, we do not believe that the 

comments provide a compelling rationale for providing a temporary hardship exemption 

from the RFS obligation based on unusual circumstances that goes beyond the provisions 

that Congress included in the Renewable Fuel Program. As a result, the final rule does 

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Chapter 4: Exemptions for Obligated Parties 

not contain provisions for a temporary hardship exemption based on unforeseen 

circumstances. 

In regards to the Small Refiners’ concerns, we note that we are extending the 

same exemption that small refineries are receiving to small refiners (as discussed above). 

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