NATSO Urges EPA to Deny SRE Petitions in Supplemental RVO Comments
NATSO and its industry allies on October 31 urged the Environmental Protection Agency (EPA) to deny all small refinery exemption (SRE) petitions arguing that granting SREs will undermine domestic biofuel production by introducing uncertainty into fuel markets, depressing values for the tradable credits known as Renewable Identification Numbers (RINS), and discouraging new biofuel investments.
In comments filed in response to the agency’s Supplemental Notice of Proposed Rulemaking addressing the Renewable Fuel Standard (“RFS”) volumes for 2026 and 2027, NATSO said all refiners, regardless of size, embed the costs of renewable volume obligations into their gross processing margin. Small refiners carry the same market risks and uncertainty confronting larger refiners when making RIN purchase decisions. If EPA grants SRE waivers, it should reallocate waived obligations to avoid removing gallons from the program and creating year-to-year market volatility.
“SREs are predicated on the notion that certain obligated parties are subjected to ‘disproportionate economic harm’ caused by their RFS compliance obligations. That premise is demonstrably false,” NATSO wrote. “All refiners, regardless of size, recover their RIN compliance costs through market-based fuel pricing. Because RIN costs are passed through and recovered, they do not impose net compliance burdens and cannot create disproportionate economic hardship.”
If the agency continues to grant SREs, NATSO said it is essential that waived gallons be reallocated to other obligated parties to avoid undermining blending incentives. Anything short of full reallocation nullifies the integrity of the agency’s overall volumes, penalizes downstream entities who comply with the law, and rewards strategic non-compliance.
The comments were signed by NATSO, SIGMA: America’s Leading Fuel Marketers, and the National Association of Convenience Stores (NACS).
The RFS prompts fuel retailers to incorporate biofuels into their diesel supply as a means of lowering prices for consumers and gaining market share. NATSO, SIGMA and NACS members constitute approximately 90 percent of fuel sold at retail in the United States, including virtually all retail sales of biodiesel and renewable diesel fuels that are incentivized under the RFS.
Fuel retailers have made significant investments in blending systems, storage infrastructure, terminal modifications, and long-term supply contracts to accommodate the RFS. Small refinery waivers fundamentally weaken the RFS by lowering demand for biofuels and diminishing the value of these investments.
Read the full comment letter here.
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