Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...

determine the applicable percentage. EPA believes this is appropriate because the
percentage standard should be based only on the gasoline subject to the renewable
volume obligation. This would only occur though the 2010 compliance period when the
exemption ends. Calculation of the standard for calendar year 2011 and beyond would
include small refinery and small refiner volumes.
As discussed above, calculation of the standard requires projections of gasoline
use for the upcoming compliance period. EIA does not project small refinery or small
refiner gasoline volumes, so other methods of estimating these values are necessary.
EPA receives gasoline production data as a part of its fuel programs’ reporting
requirements that could be used for this purpose. However, since we do not receive the
data until late February, the most recent complete annual data set available would be
from two years earlier. Given this, the fact that this adjustment is only needed for 4
years, and because the total small refinery and small refiner gasoline production volume
is expected to be fairly constant compared to total U.S. gasoline production during this
period, we are proposing to estimate small refinery and small refiner gasoline volumes
using a constant percentage of national consumption. This percentage would be based on
the most recent small refinery and small refiner gasoline data available in time for the
final rule. Using information from gasoline batch reports submitted to EPA, EIA data
and input from the California Air Resources Board regarding California small refiners,
we have estimated this percentage to be 13.5%. 10 EPA requests comments on this
method of estimating small refinery and small refiner gasoline volumes.
The Act requires that the small refinery adjustment also account for renewable
fuels used during the prior year by small refineries that are exempt and do not participate
in the RFS program. Accounting for this volume of renewable fuel would reduce the
total volume of renewable fuel use required, and thus directionally would reduce the
percentage standard. However, there would be no available data on which to base such
an adjustment. Furthermore, EPA believes that the amount of renewable fuel that would
qualify (i.e., that was used by exempt small refineries and small refiners but not used as
part of the RFS program) would be very small. In light of the total volume of renewable
fuel required and the precision in which the statute specifies this total volume, the very
small volume at issue here would not change the resulting percentage. Under the
proposal, small refineries and small refiners are merely treated as any other renewable
blender until 2011. Consequently, whatever renewables they blend will be reflected as
RINs available in the market, and thus should not be accounted for in the equation used
to determine the standard. Therefore, EPA is proposing to assume this value to be zero.
We are proposing that the amount of renewable fuel used in Alaska, Hawaii, or
U.S. territories would not affect the amount of renewable fuel required nationwide. We
believe this approach is appropriate because the Act requires that the renewable fuel be
consumed in the contiguous 48 states unless Alaska, Hawaii, or a U.S. territory opt-in.
Additionally, renewable fuel produced in Alaska, Hawaii, and U.S. territories is unlikely
to be transported to the contiguous 48 states, and vice versa. Thus, including their
10 “Calculation of the Small Refiner/Small Refinery Fraction for the Renewable Fuel Program,” memo to
the docket from Christine Brunner, ASD, OTAQ, EPA, September 2006.
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