NATSO Files Amicus Brief in Support of Lawsuit Challenging EPA Small Refinery Exemptions
NATSO and several industry allies filed an Amicus Brief in the U.S. Court of Appeals for the District of Columbia Circuit arguing that the same market fundamentals which underpin the Environmental Protection Agency’s Renewable Fuel Standard Program (RFS) should underpin EPA’s small refinery exemption analysis.
NATSO filed the Amicus Brief along with SIGMA and NACS in support of a lawsuit challenging EPA’s 2025 decision to grant small refinery exemptions (SREs) based on assumptions that small refiners cannot recover RFS compliance costs.
The RFS establishes minimum volumes of renewable fuels to be blended into the fuel supply each year. A Renewable Identification Number (RIN) is attached to each gallon of biofuel to track compliance. Refineries that produce less than 75,000 barrels of crude oil per day can petition for hardship exemptions from their RIN obligation if they can demonstrate that complying would cause “disproportionate economic hardship.”
NATSO has long argued that EPA needs a transparent process to guide its assessment of small refinery waiver requests to ensure that such exemptions don’t undermine the law’s intent and decrease demand for biofuels.
The Amicus Brief argued that compliance costs for the RFS program are passed through to consumers under fundamental economic principles that apply across all fuel markets. EPA’s assumption that market fundamentals don’t apply to small refineries is “flatly inconsistent with the evidence and amici’s real-world market experience,” the amici said.
“EPA’s willingness to assume away fundamental market truths without supporting data is no way to run the RFS program. Amici have a direct interest in a well-functioning, data-driven RFS program—one in which policy outcomes and the investment decisions they inform are consistent with the RIN cost passthrough principle that governs fuels markets.”
The Amicus Brief further said EPA’s use of “evidence-free assumptions” that small refineries can’t pass on any of their Renewable Identification Number costs is “arbitrary and capricious.” RIN prices are baked in the crack spread as refiners charge their customers more money for fuel to reflect the refiners’ RIN costs.
EPA has previously reaffirmed that parties obligated to demonstrate compliance are able to recover their RFS compliance costs and that parties acquire RINS at the same cost regardless of whether they obtain them through purchase or by blending renewable fuels. The Amicus Brief said EPA refused to apply these principles to small refineries.
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