[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: [email protected].

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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